Report on impact of the economic downturn on the renewables sector

In a period of economic decline and environmental regulation to source green energy by the EU Commission utilities are exposed to increasing pressure to mitigate costs as well as make the correct environmental choices either through M&A or through organic carbon offsetting measures. This brief examines the key issues surrounding utilities and the opportunities in the renewables market.

Scope of this research

This brief provides you with a comprehensive account of opportunities in the renewables market through the economic downturn.
The impact of the current economic downturn on the renewables sector from an investment perspective.
Key recommendations on how to maximize the opportunity and the risks involved in the investment appraisal of green projects.
Key recommendations on how utilities can benefit from addressing the key issues and position themselves effectively for the future.
Research and analysis highlights

The key macroeconomic indicators highlight the speed and the depth of the economic downturn with reference to supply and demand-side impacts on investment appraisal, the availability of credit and the attractiveness of the renewables sector as a growth and opportunities market.

Prices act as key signals to decision makers in business planning, current commodity prices will be positive

M&A activity has been bullish but is set to change through 2009 as the economic climate affects both expectations and the availability of credit.

Key reasons to purchase this research

Understand the key issues and constraints facing the renewables industry through the current economic decline in the EU-27
Gain insight in to the strengths, opportunities weaknesses and threats concerning renewable investment
Understand Datamonitor's key recommendations on renewable generation, particularly through the current economic climate and legislative framework

TABLE OF CONTENTS :

CATALYST
SUMMARY
ANALYSIS
There was considerable warning of a global economic recession (1/2)
There was considerable warning of a global economic recession (2/2)The timeline that led up to what we now refer to as a global recession was firmly rooted in toxic mortgage-related debt traded on global capital markets by the major investment banks.
The ‘greatest’ recession is currently affecting the advanced economies
Datamonitor recognizes the speed and depth of the downturn in the UK
With the downturn come the market opportunities for innovators
Output has fallen globally and is set continue this trend for the foreseeable future
Equity markets around the world reflect the crisis in investor confidence
The business cycle has seen six recessions since 1970
Securitization has been at the root of the credit problem
The circular flow of income illustrates the capital funding dilemma
The paradox and failure of expanding credit has hurt renewablesAlthough securitization expanded credit, this ultimately led to a process that defined the 2007–08 credit crunch.
The idea of renewables as ‘distressed’ assets will not help green growth
The price and opportunity cost of commodities will play an important role in renewables investments
Oil and gas prices will influence the uptake of green energy and the EU Emission Trading Scheme
Current generation spreads favor fossil fuel-fired plants
However, the power curve shows positive price signals to generate
UK coal will be the input fuel of choice at future EU ETS prices
Economics and environmental obligations do not mix well
On average, prices have been in favor of alternative sources of generation
Price signals have to remain over a longer period to be effective
According to the Stern Review, global growth rests on renewables
The use of fiscal force to assist a ‘winner’ is a dangerous strategy
A purely government-led recovery should be side-stepped through 2009
The economy should be decoupled from ‘decarbonization
A simple SWOT analysis highlights the concerns and complexities surrounding renewables
The results show that, all other things being equal, renewable growth is uncertain in today’s recession
Datamonitor’s Financial Deals Database shows that the economic downturn offers a silver lining
The European wind market attracts the biggest deals by value1
Deals by regions illustrate Europe as a target destination
Wind and solar energy are the chosen technologies in Europe
By deal value, the EU is a highly attractive region for investors (2006-2009)
Two out of five deals globally are made in the EU region (2006-2009)
Adopting the Green New Deal will be important for the understanding of global renewable investment
The Keynesian Green New Deal ticks the boxes, but may fail to convince
Future forecasts predict light at the end of the tunnel
Government action and regulation will be the best signal to invest
The threat of nuclear remains a barrier to renewable success
Our bespoke services can be tailored to your specific needs
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Datamonitor consulting
Disclaimer

FIGURES
Figure: There was considerable warning of a global economic recession (1/2)
Figure: The ‘greatest’ recession is currently affecting the advanced economies
Figure: Output has fallen globally and is set continue this trend for the foreseeable future
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Figure: The business cycle has seen six recessions since 1970
Figure: Securitization has been at the root of the credit problem
Figure: The circular flow of income illustrates the capital funding dilemma
Figure: TypeFigTitleHere
Figure: Current generation spreads favor fossil fuel-fired plants
Figure: However, the power curve shows positive price signals to generate
Figure: UK coal will be the input fuel of choice at future EU ETS prices
Figure: Economics and environmental obligations do not mix well
Figure: According to the Stern Review, global growth rests on renewables
Figure: A simple SWOT analysis highlights the concerns and complexities surrounding renewables
Figure: The European wind market attracts the biggest deals by value1
Figure: The European wind market attracts the biggest deals by value1
Figure: Deals by regions illustrate Europe as a target destination
Figure: Wind and solar energy are the chosen technologies in Europe
Figure: Wind and solar energy are the chosen technologies in Europe
Figure: By deal value, the EU is a highly attractive region for investors (2006-2009)
Figure: Two out of five deals globally are made in the EU region (2006-2009)
Figure: Future forecasts predict light at the end of the tunnel

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