Ensuring bankability across the value chain, 30 th June 2015

Transcription

1 #1 Specialist Renewable and Cleantech Investment Banking and Consulting Boutique in Asia Pacific Solar Finance & Investment Asia 2015 Ensuring bankability across the value chain, 30 th June 2015

2 A Bankable Power Purchase Agreement What makes a PPA bankable.. Sustainably serve the country objectives AND provide a balanced commercial risk / reward Stable and visible regulation, clear incentives when required Minimum dispatch load and conditions if not achieved Off-take price structure (level, escalation) Power producers CPs before COD Interconnection & Metering arrangement Operating process and responsibilities Dispute resolution Insurance arrangements Liability and indemnification Change in Laws / Force Majeure Remedies and LDs Termination Page: 2

3 A Bankable Power Purchase Agreement What does NOT help Announcing a new policy in force 2 years later Setting a deadline for a tariff without announcing the tariff Announcing a FIT without the funding Fossil fuel subsidies Etc. Page: 3

4 Philippines Project Bankability Chart Overview of development in ground mounted solar projects RE Contract awarded Declaration of Commerciality & Financial Closure Project Commissioning & Electromechanical Completion Bankability Phase 1: Application for RE contract Phase 2: Predevelopment Phase with RE Contract (Max 3 years) Phase 3: Development Phase with RE Contract (1/2 to 1 Year) Phase 4: FIT application (50days) And Project Operational (25 Years) Site visit & assessment Feasibility study Construction & installation FIT endorsement and grant Business permits Permit bundle Grid connection Pre feasibility study Environmental compliance RE contract application & documentation Land lease /use & Grid impact others Declaration of commerciality Capital Injection Process Seed Development Capital Project Construction Capital Project Aggregation Opportunity Page: 4 Page: 6

5 The Philippines Project Economics Understanding the Solar Sector Barriers to Success Philippines Solar Financial Feasibility High CAPEX cost (including pre-development cost) Uncertainty of FiT until project Regulatory Approval Long gestation period Tremendous paper trail Evolving policy landscape (50MW => 500MW Solar) operationalisation High development equity risk premium Barriers to Success Technology and Installation Quality of installation Quality of equipment suppliers Asset management ability Strong local sponsor Credible EPC contractor and reasonable CAPEX Strong project management Financial & tax structure Path of project due diligence Page: 5

6 Risk Assessment Risk mitigation and proposed solutions Key Risks Mitigating Factors Development Risk In-depth project due diligence Stringent condition precedents Offtake Risk Assess credibility of off-taker Negotiate Take-or-pay PPA for long-term at a fixed rate Technology Risk Source highly reputable panels with strong performance/efficiency guarantees (low degradation) Construction Risk Full turn-key EPC Agreement with performance guarantees Contract with reputable EPC with track record in Solar development and strong local partners O&M Risk Full turn-key solution that includes O&M Climate Risk Conduct PVSYST report to determine solar irradiance and panel performance for the project site Investment Risk In-depth financial due diligence Cash disbursement peg to project milestones Healthy DSCR (average 2.5x, min 1.1, max 6.0) Page: 6

7 Innovations Improving bankability with innovations Panel Improvements Solar Energy Distribution Monitoring Tools Declining costs of panels and inverters Improvements in efficiency Declining degradation factor Cheaper solar storage products (batteries) Solar sharing (solar grid connectivity and distribution mechanism) Quick and more precise data capture Better analytics tools and access to data Financing Tax and legal optimised structure Cash extraction mechanism 7

8 #1 Specialist Renewable and Cleantech Investment Banking and Consulting Boutique in Asia Pacific Singapore Headquarters: New Zealand Office: Representative Office: Contact Us: ReEx Capital Asia Pte. Ltd 1 Raffles Place, Tower 1, #24 Singapore Ph: ReEx Capital Asia Pte. Ltd 360 Parnell Rd PO Box Parnell Auckland 1151, New Zealand Ph: SEA: Philippines, Malaysia EU: France US: California Investment Banking: ibanking@reexasia.com Low Carbon Consulting: consulting@reexasia.com