A white paper issued by: Siemens Financial Services. © Siemens AG 2010. All rights reserved.

A Research Report from Siemens Financial Services May 2010

Energy Efficiency

Trends, Investment Challenges & Financing Solutions

Whitepaper

White Paper

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Table of Contents

1. Abstract ………………………………………………………………………………………………………… 3

2. Overview ………………………………………………………………………………………………………. 3

2.1 The looming energy crisis ………………………………………………………………………………. 3

2.2 Energy efficiency: A three-pronged approach ……………………………………………………. 4

2.2.1 Tapping renewable energy ……….…………………………………………………………………. 4

2.2.2 Efficiency in energy transmission: Smart Grids and HVDC ……………………………….. 5

2.2.3 Bringing efficiency to end-user applications …………………………………………………. 6

3. Energy Efficiency: the Investment Opportunity and Challenges ……………………………… 7

4. Opportunities in emerging economies (BRIC Markets) …………………………………………… 8

4.1 China ………………………………………………………………………………………………………….. 8

4.2 India ……………………………………………………………………………………………………………. 8

4.3 Brazil ……………………………………………………………………………………………………………. 9

4.4 Russia …………………………………………………………………………………………………………… 10

5 Opportunities in Mature Economies ………………………………………………………………………. 10

5.1 US ………………………………………………………………………………………………………………… 10

5.2 Germany ………………………………………………………………………………………………………… 11

6. Addressing the world’s energy needs efficiently with Siemens …………………………………. 12

7. SFS: A sought-after partner for ‘green financing’…………………………………………………….. 12

Figures

8. Key charts ………………………………………………………………………………………………… 14

8.1 About €2.7 trillion will have to be invested in energy projects

over the next 20 years ………………………………………………………............................ 14

8.2 Global energy-related CO2 emissions…………………………………………………………….. 15

8.3 Expected increase in renewable energy share of power generation …………………….. 16

8.4 Top 10 countries in clean energy investments in 2009 ……………………………………… 17

8.5 Announced government stimulus funding in clean energy,

2008-09 (in billions of dollars) ……………………………………………………………………… 18

8.6 The need for energy-efficient infrastructure …………………………………………………… 18

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1. Abstract Climate change is widely acknowledged as one of the biggest challenges confronting humankind today. A growing population and rising urbanization have resulted in massive depletion of natural resources and soaring energy costs, raising the specter of a very real and alarming environmental crisis. At the same time, At the same time, meeting the energy needs of the world remains important it. According to Siemens estimates, countries around the world will need to invest €2.7 trillion into their public infrastructure over the 20-year period starting in 2009. The question then is: How do we reconcile the twin goals of supplying energy and protecting the environment?

Energy efficiency offers the answer. By helping address the planet’s energy needs while reducing greenhouse gas emissions, energy efficiency promises to address the climate change challenge. A holistic approach to energy efficiency requires innovations along the energy conversion chain – from the source of energy and to its transmission and distribution all the way to its use by consumers in their day-to-day activities.

With its broad environmental portfolio and extensive expertise in financial solutions, Siemens continues to invest in further developing its position as the green infrastructure expert. The company offers an integrated solution comprising technology and financing to pave a “green” path for its customers around the world. This paper examines a comprehensive approach to energy efficiency, the investments committed by various governments in this area and the way forward for leading markets in the world.

2. Overview

2.1 The looming energy crisis

Soaring energy demand and resulting fossil fuel consumption have led to concerns over sustainable energy supplies as well as the impact of global energy consumption on the climate. The consequences of heedless energy consumption are, to say the least, dire. In its report World Energy Outlook (WEO) 2009, the International Energy Agency (IEA) presents two scenarios: a Reference Scenario and a 450 Scenario. The former captures the evolution of global energy markets in the absence of major regulatory changes, while the latter analyzes measures that need to be implemented to stabilize the concentration of greenhouse gas emissions in the atmosphere at 450 ppm (parts per million) CO2 equivalent by 2030, which will limit the global temperature increase to 2°C.1

WEO 2009 estimates that implementing the measures assumed in the 450 Scenario will increase cumulative energy-related investment over the period of 2010 to 2030 by $10.5 trillion. About 48 percent of the additional investment has to be made in OECD countries and non-OECD European Union member countries. Other major economies – those in Brazil, China, the Middle East, Russia and South Africa – account for another 30 percent of investments, while the remaining countries contribute 18 percent. International aviation accounts for the rest.

Siemens estimates that the investment required in the energy sector during the 20-year period starting in 2009 will be about $2,700 billion, or $2.7 trillion. These estimates are indicative of the huge task at hand.

1 How the Energy Sector can Deliver on a Climate Agreement in Copenhagen, special early ex-

cerpt of the World Energy Outlook 2009 for the Bangkok UNFCCC meeting, IEA, October 2009

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2.2 Energy efficiency: a three-pronged approach

Energy efficiency is the key to addressing the rising energy demand and limiting its environmental impact. It involves optimization of the entire energy chain and covers the energy mix, the production and transmission of energy and efficiency in end-use applications. More simply put, this translates into tapping more renewable sources of energy, creating smart grids and having a more energy-efficient infrastructure.

2.2.1 Tapping renewable energy

There has been an increased focus on harnessing such renewable sources of energy as the wind and sun, as evidenced by the steady flow of investments into this area from both the public and the private sector. Siemens expects the share of renewable sources in total energy generation worldwide to increase to 16 percent by 2030, or 5,580 terawatt hours (TWh).

In 2009, installed renewable energy capacity increased to 250 gigawatts (GW)2, enough to power an estimated 75 million households, while global investments totaled $162 billion.3 In the first quarter of 2010, investments surged 31 percent year-on-year to $27.3 billion, with growth led by China and increased financing in wind-energy farms.4 Bloomberg New Energy Finance has projected that 2010 will see record new investments in renewable energy of between $175 billion and $200 billion.

Wind energy dominates the renewable energy market, accounting for more than 50 percent of global clean energy investments and almost half of the installed clean energy capacity worldwide.5 According to the Global Wind Energy Council, global wind power capacity is slated to increase by 160 percent over the next five years to reach 409 GW by 2014.6 China is seen as the key growth driver, having already overtaken Germany to become the second-largest wind energy market. In fact, Asia was the biggest wind energy region in 2009, adding more than 14 GW of new capacity. Other regions driving growth in this market are North America and Europe.

Solar energy remains an expensive alternative, but it holds promise due to the abundant nature of the resource, and prices are expected to come down as the sector achieves economies of scale. The global solar photovoltaic electricity (PV) market witnessed an increase in installed capacity of about 6.4 GW in 2009 to reach a total capacity of over 20

2 Who’s Winning the Clean Energy Race? Growth, Competition and Opportunity in the World’s

Largest Economies, The Pew Charitable Trusts, March 2010 3 Bloomberg New Energy Finance press release

http://www.newenergyfinance.com/Download/pressreleases/111/pdffile/

4 Bloomberg New Energy Finance press release

http://www.newenergyfinance.com/Download/pressreleases/115/pdffile/

5 Who’s Winning the Clean Energy Race? The Pew Charitable Trusts, March 2010

6 Global Wind Energy Council press release

http://www.gwec.net/index.php?id=30&no_cache=1&tx_ttnews[tt_news]=251&tx_ttnews[backPi

d]=4&cHash=e6d3ba8596

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GW worldwide.7 In 2010, global cumulative installed PV capacity is expected to grow by at least 40 percent. Similarly, governments around the world are driving the uptake of solar thermal energy to meet consumers’ energy needs. According to estimates by Switzerland’s Bank Sarasin, China is already the world leader in the area of solar collectors, accounting for more than 65 percent of global installations, and the government is lending support in the form of subsidies for solar power projects under the Golden Sun program.8

2.2.2. Efficiency in energy transmission: Smart Grids and HVDC

As an automated, widely distributed energy delivery network, the Smart Grid of the future will be characterized by a two-way flow of electricity and information and will be capable of monitoring everything from power plants to customer preferences to individual appliances. It will incorporate the benefits of distributed computing and communications into the grid in order to deliver real-time information and enable the near-instantaneous balance of supply and demand at the device level.9 Smart grids will enable consumers to exert greater control over their energy consumption, work intelligently to sense overloads and minimize outages and allow the seamless integration of renewable energy sources.

Governments and private sector entities across the globe are increasingly pushing for an overhaul of the existing electric grid infrastructure. For instance, the US government has committed $3.4 billion in Smart Grid Investment Grants as part of the American Reinvestment and Recovery Act.10 This amount will be matched by industry funding for a total public-private investment in smart grids in the US that is worth over $8 billion. According to a report from Pike Research, such efforts will yield cumulative global spending of $200 billion on smart grid technologies from 2008 to 2015.11

Similarly, there is a growing trend toward adopting high-voltage, direct current (HVDC) technology that uses direct current for power transmission as opposed to the more common alternating current. Used for power transmission over long distances, this technology enables high transmission capacity with low energy loss, thus facilitating a reduction in the corresponding CO2 emissions.

Siemens is building a powerful 80 kilovolt HVDC system in China to transmit power from Kunming in Yunnan province to Guangzhou in Guangdong province over a distance of 1,400 kilometers. The power line, which will become operational this year, will supply power to 5 million households in the megacities of Guangzhou, Shenzhen and Hong Kong as well as reduce the country’s annual CO2 emissions by about 33 million tons a year as the electricity comes from a dozen hydroelectric plants.

7 EPIA press release http://www.epia.org/press-room/press-releases.html

8 Bank Sarasin press release

http://www.sarasin.ch/internet/iech/en/index_iech/about_us_iech/media_iech/news_iech.htm?refe

rence=94821&checkSum=F61F8040B3E98FB5FD96F662165667B6 9 The Smart Grid: An Introduction, the US Department of Energy

10 http://www.whitehouse.gov/the-press-office/president-obama-announces-34-billion-

investment-spur-transition-smart-energy-grid

11 Smart Grid Technologies, Pike Research, 4Quarter 2009

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2.2.3 Bringing efficiency to end-user applications

End-user infrastructure is the final component of the energy chain. Energy efficiency in areas such as buildings, transport and lighting can dramatically lower power consumption and greenhouse gas emissions around the world.

For instance, realizing that the US government is the largest energy consumer in the country, the American Recovery and Reinvestment Act included a provision of $10 billion to modernize federal buildings and housing to lower energy costs.12 This includes investments of $4.5 billion to convert federal buildings into high-performance green buildings.

Another instance that highlights the potential of this approach is China, where buildings are one of the largest energy consumers, accounting for as much as one-fourth of the country’s total energy consumption.13 In fact, residential and commercial buildings in China use more energy than the country’s iron, steel and cement industries combined. It comes as no surprise then that China is targeting to reduce energy consumption in buildings for all its cities by 50 percent by 2010 and by 65 percent by 2020, with 1980 as the base year.14 The ministry of construction estimates the cost of retrofitting existing buildings with energy saving systems will total $193 billion and be completed by 2020.

There is also an increased focus on curbing fuel consumption by vehicles. In this area, governments around the world are incentivizing the adoption of electric and hybrid vehicles as well as implementing stricter rules on vehicle emissions. For instance, the US government recently launched a new initiative to dramatically reduce greenhouse gas emissions and improve fuel economy for new cars and trucks sold in the country.15 The UK’s chancellor of the exchequer recently announced setting up a £2 billion green investment bank focused on investments in green transport and sustainable energy.16

12 Website of Nancy Pelosi, Speaker of the House of Representatives, US

http://www.speaker.gov/newsroom/legislation?id=0273

13 From Gray to Green, How Energy-Efficient Buildings Can Help Make China’s Rapid Urbanization

Sustainable; Boston Consulting Group and NRDC, October 2009

14 ClimateChangeCorp.com

15 Environmental Protection Agency’s website, http://www.epa.gov/otaq/climate/regulations.htm

16 The Chancellor of the Exchequer’s Budget statement, http://www.hm-

treasury.gov.uk/budget2010_speech.htm

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3. Energy Efficiency: the Investment Opportunity and Challenges

Many governments across the world pledged their support to clean energy in 2009, devoting more than $184 billion of public stimulus investments to the sector. The true impact of that support is still to come, with the bulk of the funds set to reach innovators, businesses and installers in 2010 and 2011.17

In addition to government support for energy efficiency, there is significant interest in the investor community about the opportunities in this area. For instance, preliminary estimates of the Cleantech Group and the audit firm Deloitte show that 2009 clean technology venture investments in North America, Europe, China and India totaled $5.6 billion in 557 deals.18 According to preliminary results capturing venture capital invest-ments in clean energy in the first quarter of 2010, a total of $1.9 billion was invested across 180 companies in these markets.19

Asset financing, the dominant class of clean energy finance, witnessed a 6 percent drop to $94.9 billion in 2009.20 Still, more than 80 percent of all clean energy financing was invested in physical assets that generate energy, with onshore wind being the dominant sector because of its relative maturity and scalability. With investments of $29.8 billion, China was the leader in asset financing, followed by the US ($11.2 billion).

Public market financing, which includes initial public offerings (IPOs), declined by 45 percent over the last two years after peaking at $22 billion in 2007.21 While many companies canceled their public offerings in view of the tough market conditions, strong IPO activity in China in late 2009 broke the drought.

However, the global financial crisis slowed growing mometum in energy efficiency. Seeking to understand the impact of the global financial-market meltdown on clean energy initiatives, a March 20091 study published by Siemens Financial Services (SFS) highlighted that green targets and business rules are becoming established within the private sector. Two-thirds of the respondents in the study cited the cost of greener equipment were becoming their chief obstacle to adopting green procurement policies. In this context, asset financing could play a critical part in enabling the transition to a greener business environment, especially in a time of scarce credit.

17 Who’s Winning the Clean Energy Race? The Pew Charitable Trusts, March 2010

18 The Cleantech Group press release, http://cleantech.com/about/pressreleases/20090106.cfm

19 http://cleantech.com/about/pressreleases/Q1-2010-release.cfm

20 Who’s Winning the Clean Energy Race? The Pew Charitable Trusts, March 2010

21 Ibid

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4. Opportunities in Emerging Economies (BRIC Markets)

4.1 China

China is emerging as the world’s clean energy powerhouse. The year 2009 saw the US lose its top spot in clean energy finance and investments for the first time, making way for China with its investments of $34.6 billion.22 China has not only built a strong manufac-turing base and export market for clean energy equipment, it has also set itself ambitious targets in the pursuit of green energy.

China is already the world’s leading renewable energy producer in absolute numbers, with an installed capacity of 152 GW.23 In 2007, the National Development and Reform Commission announced a new plan, with the targets for renewable energy accounting for 10 percent of primary energy consumption by 2010 and 15 percent by 2020.24 The plan envisages an investment of more than $200 billion to achieve these objectives.

In addition, State Grid Corporation of China, the largest power distributor in the country, recently announced plans to build a smart grid by 2020.25 The construction of the smart grid will help increase the share of clean energy capacity installed in China’s energy mix to 35 percent of total capacity.

4.2 India

India’s investments in clean energy in 2009 stood at $2.3 billion, according to The Pew Charitable Trusts.26 It is one of the leading nations for wind power, with 11 GW of capacity and strong provincial feed-in tariff policies. India has also launched the Jawaharlal Nehru Solar Mission with the aim of establishing itself as a global leader in solar energy. More specifically, the National Solar Mission will create a policy framework to enable deploy-ment of 20 GW of solar power by 2022; promote domestic manufacturing in the sector, especially in solar thermal; and deploy 20 million solar lighting systems in rural areas by 2022.27 The country aims to invest $19 billion into harnessing solar energy over a 30-year period.

In his budget speech earlier this year, the India’s finance minister announced a new National Clean Energy Fund (NCEF) for supporting research and innovation projects in

22 Who’s Winning the Clean Energy Race? The Pew Charitable Trusts, March 2010

23 Renewable Energy World Magazine, volume 12, issue 5, September/October 2009

24 Website of the National Development and Reform Commission

25 Media reports http://www.nasdaq.com/aspx/stock-market-news-

story.aspx?storyid=200905210825dowjonesdjonline000530&title=chinas-state-grid-corp-plans-

to-build-smart-gridby-2020

26 Who’s Winning the Clean Energy Race? The Pew Charitable Trusts, March 2010 27 Website of India’s Ministry of New and Renewable Energy http://mnre.gov.in/pdf/mission-

document-JNNSM.pdf

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clean energy technology.28 The government also decided to impose a levy on the use of coal, which will contribute to the fund.

According to the IEA’s World Energy Outlook 2009, India needs to invest more than $550 billion in low-carbon power generation between 2010 and 2030 to meet its 450 Scenario.29 The country needs to accelerate investments in nuclear power plants and strengthen policies to promote renewable energy sources in power generation. India also needs to further define and strengthen policies to promote cleaner transport, including the use of mass transport and more efficient cars.

4.3 Brazil

Brazil comes second behind China among emerging economies in terms of clean energy investments, having infused $7.4 billion in the sector in 2009.30 While investments declined in 2009 due to the financial downturn, the country experienced the second-highest investment growth rate over the past five years.

Brazil stands out as a clear leader in clean energy, with 9 GW of renewable energy capacity and the world’s leading ethanol infrastructure relative to the size of its economy. It also has one of the world’s highest biomass and small-hydro power capacities. To further encourage adoption of clean energy, Brazil offers priority loans for renewable power projects and has ambitious targets for ethanol.

Through its Proinfra (Program for Incentive of Alternative Electric Energy Sources) program, the Brazilian government encourages the use of renewable energy sources such as wind, biomass and small hydroelectric power stations, thus reducing greenhouse gasses and creating jobs.

According to data from the 2009 National Energy Balance published by Brazil’s energy planning company EPE (Empresa de Pesquisa Energética), 85.4 percent of Brazil’s current energy supply comes from renewable resources; of this, three-quarters comes from hydroelectric sources.31 In 2009, EPE also estimated that the country will require an investment in the electricity sector of $187 billion by 2017, while another $50 billion will be required for liquid biofuels used for transport and production of ethanol and bio-diesel.32

28 http://pib.nic.in/release/release.asp?relid=58419

29 How the Energy Sector can Deliver on a Climate Agreement in Copenhagen, special early ex-

cerpt of the World Energy Outlook 2009 for the Bangkok UNFCCC meeting, IEA, October 2009

30 Who’s Winning the Clean Energy Race? The Pew Charitable Trusts, March 2010 31 Renewable energy country attractiveness indices, Ernst & Young, February 2010

32 http://www.epe.gov.br/

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4.4 Russia

According to IEA’s World Energy Outlook 2009, Russia needs to invest more than $220 billion in low-carbon power generation over 2010-2030 to meet the 450 Scenario.

The country, which is heavily dependent on coal and oil, has set the objective to reduce its greenhouse gas emissions to 25 percent of 1990 levels by 2020.33 In December 2009, President Dmitry Medvedev wrote on his blog that Russia will enhance its energy and environmental efficiency through economic modernization based on energy-saving technology and the development of renewable energy sources. The country plans to spend 1.8 trillion rubles ($62.5 billion) from federal and local budgets to finance energy-saving projects by 2020, the head of the energy policy department in the energy ministry said in November 2009.

In 2009, the country also adopted a long-term blueprint on its energy strategy through 2030. The blueprint included pledges of huge investments to develop the country’s energy sector, stipulating 60 trillion rubles ($2.1 trillion) in funds through 2030.

5. Opportunities in Mature Economies

5.1 The United States

The United States ranked second in clean energy investments for the first time in five years in 2009.34 At $18.6 billion, the country’s clean energy investments were down 40 percent from the previous year. A bigger decline was avoided through long-term extension of federal production and investment tax credits and initial funding from the American Recovery and Reinvestment Act, which helped shore up investments in the second half of 2009.

The United States’ clean energy finance and investments are, however, lagging behind many of its peers. For example, the Pew report notes that Spain invested five times more than the United States last year in relative terms, and China, Brazil and the United Kingdom invested three times more. In all, 10 other G20 members devoted a greater percentage of gross domestic product to clean energy than the United States in 2009. The country also faces the threat of losing its leadership position in installed renewable energy capacity, with China surging ahead to a virtual tie over the last several years.

The subject of clean energy has generated immense debate in the US, and the govern-ment’s focus on retaining a leadership position is reflected in its policies and regulations. Despite its lead in this area, the country requires an investment of $1.5 trillion between 2010 and 2030 to transform its power industry to address its energy requirements and assuage environmental concerns.35

33 News reports on the Russian president’s statement on his blog

34 Who’s Winning the Clean Energy Race? The Pew Charitable Trusts, March 2010 35 Transforming America’s Power Industry: The Investment Challenge, The Preliminary Findings,

The Brattle Group, April 2008

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Under the American Recovery and Reinvestment Act, the US government earmarked investments of $34 billion in the somewhat overlapping areas of smart grid, advanced battery technology and energy efficiency. This includes an investment of $11 billion for the development of smart grids, $2.3 billion to support the development of advanced vehicle batteries and battery systems and another $2.5 billion to boost energy efficiency and renewable energy research, development, demonstration and deployment activities.

5.2 Germany

Germany is among the top investors in clean energy, infusing funds worth $4.3 billion in the sector, according to The Pew Charitable Trusts. It is currently the undisputed leader in the solar sector, with a total installed capacity of 5.3 GW. In 2009, renewable energy sources accounted for more than 10 percent of total heat, electricity and fuel consump-tion in Germany.36 More specifically, the share of renewables in electricity consumption increased to 16.1 percent. Investments in the renewable energy sector reached a record total of €17.7 billion.

The country has long supported the domestic renewable energy sector through feed-in tariffs. Its ambitious targets include growing the share of renewable energy to at least 30 percent of electricity consumed and 14 percent of heating requirements by 2020.37 The German government will subsidize the heating sector by up to €500 million annually over the next several years. KfW, a development bank owned by the German government, has been awarding low-interest loans for a number of programs, while renewable energy in the transportation sector will be promoted by the Biofuel Quota Act, passed in 2006.

However, there are several challenges that the country has to tackle in its quest for clean energy leadership. In the electricity sector, for example, requirements for market and network integration need to be improved. In the heating sector, policy measures need to be strengthened, particularly with regard to existing building stocks; and in the bio-energy sector, sustainability standards need to be implemented. In addition, the government needs to maintain the effectiveness of existing support schemes while continuing to improve their efficiency on the basis of monitoring the costs and incentives.

36 Federal Ministry for the Environment, Nature Conservation and Nuclear Safety

http://www.bmu.de/english/current_press_releases/pm/45816.php

37 Renewable Energy in Europe: Strong Political Will Required for Ambitious Goals, DIW Berlin,

volume 5, December 2009

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6. Addressing the World’s Energy Needs Efficiently with Siemens

As the threat of climate change looms larger than ever, the world is increasingly challenged to continue on the growth path of industrialization and urbanization while limiting the environmental impact of this progress. Energy efficiency has emerged as a viable approach to execute this tough balancing act.

By combining its experience, industry expertise and financial know-how, Siemens offers a compelling solution for increasing energy efficiency and reducing greenhouse gas emissions. A leader in climate protection technologies, Siemens has an extensive portfolio that encompasses solutions in virtually all fields relating to energy generation, distribution and use – from applications in buildings and lighting to transportation and industry – as well as environmental technologies such as water purification and air pollution control. These products and solutions helped its customers reduce their CO2 emissions by 210 million tons in 2009. In addition, Siemens has strong internal commitments to reduce its own carbon footprint, with a goal to achieve a 20 percent increase in energy efficiency between 2006 and 2011.

Although energy-efficient products and solutions often pay for themselves within an economically reasonable timeframe, they usually require an initial investment that should not be underestimated. To enable the use of these innovative, energy-efficient products and solutions, Siemens not only manufactures them, but, when desired, it helps its customers to finance their purchase and use. As an international provider of financial solutions in the business-to-business sector, Siemens Financial Services (SFS) offers its customers integrated technology and financing solutions.

7. SFS: A Sought-After Partner for “Green Financing” The steep increase in financing costs following the global credit crisis presents a significant challenge to potential investors as well as companies involved in the energy efficiency arena. SFS offers the right answers with its customized financial solutions and enables investments in innovative technology and sustainable infrastructure. The company offers a broad range of solutions from project and export finance to equity participations and venture capital to equipment and working capital finance to help its customers go green.

In January 2010, a consortium comprising Siemens Project Ventures, the equity invest-ment arm of SFS, and Mainstream Renewable Power won the contract to develop a 4 GW wind farm in the ‘Hornsea’ zone of the United Kingdom by 2020. Leveraging the expertise of the consortium partners and the Siemens Energy Sector, the project has been financially and technologically optimized using a holistic life-cycle approach. Electricity generated by the project will cover 4 percent of UK’s electricity needs and supply power to about 3 million households.

Siemens Venture Capital, part of SFS, was among the group of investors that recently infused $14 million into the electric vehicle charging infrastructure firm Coulomb Technologies. In addition, Siemens is working on developing an integrated solution with the firm, combining the former Siemens hardware and software with Coulomb Technolo-gies’ solutions.

Cannon Power Group was looking for funding options to expand its Windy Flats wind farm project in Washington state in the US. SFS provided a $178 million senior secured credit facility to the group to support the expansion. The funds were used to expand the project with additional Siemens wind turbines and to recapitalize a portion of the existing credit facility. Siemens thus acted as the single supplier for both the equipment and the funding requirements of the group.

In August 2009, Siemens also invested $15 million in Arava Power Company, the Israeli market leader in developing solar power plants. The investment, made through Siemens Project Ventures, played a key role in the initiation of work on Israel’s first commercial solar farms. In addition to picking up a 40 percent stake in Arava Power, Siemens is also

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handling project management, including engineering and construction of the photovoltaic plants. The alliance will build solar plants with a total output of 40 MW, thus contributing to Israel’s aim of meeting about 10 percent of its total energy needs through renewable energy by 2020.

Planning to set up a heating network for the Licang District in China, Jin Hong Heat and Power Co. chose Siemens’ state-of-the-art control systems and services for an efficient, environmentally friendly heating solution. The power company, however, needed a financing arrangement to help them realize their plans. Siemens offered a one-stop-shop solution that combined the equipment, services and a funding package to suit the Chinese company’s budget. The leasing solution provided by SFS solved the company’s cash flow problem, enabling it to meet the residents’ heat supply requirements in time.

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8. Key Charts

8.1 About €2.7 trillion will have to be invested in energy projects over the next 20 years

Source: Global Insight, Siemens data, SFS calculations

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8.2 Global energy-related CO2 emissions

Source: How the Energy Sector can Deliver on a Climate Agreement in Copenhagen, International Energy Agency, October 2009

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8.3 Expected increase in renewable energy share of power generation

VESTMENT IN CLEAN ENERGY: GLOBAL TRENDS BY QUARTER (billions of $)

Source: Siemens Energy Sector

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8.4 Top 10 countries in clean energy investments in 2009

Source: Who’s Winning the Clean Energy Race? Growth, Competition and Opportunity in the World’s Largest Economies; The Pew Charitable Trusts, March 2010

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8.5 Announced government stimulus funding in clean energy, 2008-09 (in billions of dollars)

Source: Who’s Winning the Clean Energy Race? Growth, Competition and Opportunity in the World’s Largest Economies; The Pew Charitable Trusts, March 2010

8.6 The need for energy-efficient infrastructure

Source: Siemens estimates