Private Equity s Perspective On ASEAN Renewable Energy

Transcription

1 Private Equity s Perspective On ASEAN Renewable Energy Biomass Asia Conference th May 2013 LIM, Yong Lee Managing Director Mizuho Asia Partners Pte. Ltd.

2 Headline News Renewables Provide 82% of New US Electrical Generating Capacity in 1Q2013 Renewable energy ( RE ) sources (i.e., biomass, geothermal, solar, water, wind) accounted for 82% of all new domestic electrical generating capacity installed in the first three months of 2013 for a total of 1,546 MW. The balance (340 MW) came from natural gas. Coal, nuclear power, and oil have provided no new generating capacity thus far this year. Renewable sources now account for nearly 16% of total installed U.S. operating generating capacity. This is more than nuclear (9.15%) and oil (3.54%) combined. The path towards a zero-coal, zero-nuclear future becomes clearer. Source: Federal Energy Regulatory Commission & US Energy Information Administration. 1

3 What The Future Holds For Renewables Bloomberg New Energy Finance Renewables will account for between 69% and 74% of new power capacity added between 2012 and 2030 worldwide. Driven by further improvements in the cost-competitiveness of wind and solar technologies and an increase in the roll-out of nonintermittent clean energy sources like hydro, geothermal and biomass. International Energy Agency 57% of power capacity added globally between 2012 and 2030 will be from renewable resources (including large hydro). ENTSO-E Europe's share of generation capacity using renewable sources will rise to at least 40% by 2020, exceeding capacity fueled by coal, natural gas and oil. It will reach 50% by We are beyond the tipping point towards a cleaner energy future. 2

4 Natural Disasters Shape Public Opinion Gallup Poll: 58% of Americans are worried about global warming (55% in 2012 and 51% in 2011) Pentagon Primary Panning Document: Climate change, energy security, and economic stability are inextricably linked. HSBC: Peak Planet scenario - global carbon budget from 2000 to 2050 will be consumed well before There is clearly growing awareness of the severity of climate change impacts, because it is already being felt, and a growing public opinion that is supportive of action. We are beyond the tipping point towards a cleaner energy future. 3

5 Renewables Attracting Investment Funds Renewables fund managers are looking to new emerging markets to tap expanding economies and accelerating power demand. While Asia s biggest emerging nations for clean energy are China and India, others such as South Korea, Thailand and Philippines are starting to attract more investments. More emerging countries are establishing regulatory frameworks to support clean energy and are also now stepping up measures to curb carbon output. A growing consensus that to address climate change and energy security, we must move towards renewable energy in electricity supply and eventually to provide renewable energy to offset fossil fuels in transportation and heating. Even Warren Buffet s Berkshire Hathaway has invested heavily into renewables via Mid American Renewables LLC. 4

6 Biomass In Electricity Generation 5

7 IEA : World Energy Mix

8 IEA : Generating Cost By RE Technology Type 7

9 Will ASEAN Be A Part Of The Cleaner Energy Future? 8

10 Can ASEAN Attract Funds For Renewables? Pace of industrialization and urbanization in ASEAN countries are accelerating. Energy demand is increasing. Motor vehicles population is rising. More solid waste and waste water are being generated. Greater consumption of meat and diary driven by higher incomes and purchasing power. Increasing demand for energy will underpin a stronger and buoyant energy market and energy price (if left to market forces). More agricultural & animal wastes will be generated by increased production of food crops, industrial crops and livestock. Supportive policies are in place in the form of FIT schemes and tax incentives to promote and accelerate growth of renewable and clean energy. 9

11 The Case For Investing In ASEAN Renewables GDP growth rate of 5.2% per annum from 2007 to Energy consumption in ASEAN will grow at an average annual rate of 4.4% from 375 MTOE in 2007 to 1,018 MTOE by Electricity will see the highest growth rate at 6.4% per annum. The rapid growth of electricity demand will drive increasing use of coal. To lessen the environmental impact of coal use by having a more balanced mix in electricity generation by (a) utilizing cleaner coal technologies (including co-firing) and (b) accelerating the development of clean and renewable energy. ASEAN will continue to be heavily dependent on oil. ASEAN has become a net importer of oil and net imports will further increase in the future in view of stagnating or declining oil production and rapidly increasing demand. 10

12 ASEAN Energy Mix ASEAN s energy mix is very dependent on fossil fuels especially oil and gas. ASEAN s electricity generating sector is heavily dependent on natural gas and increasingly coal. 11

13 ASEAN Has Abundant Biomass Resources ASEAN has abundant biomass and animal waste resources for renewable energy development. Palm oil : Indonesia & Malaysia are the No. 1 & 2 producers in the world. Coconut : Indonesia and Philippines are the No. 1 & 2 producers in the world. Rice : Indonesia, Vietnam, Thailand, Myanmar, Philippines and Cambodia are the top 10 producers in the world. Chicken : Indonesia, Malaysia, Thailand & Vietnam are top 20 producers in the world. Pig : Vietnam, Thailand and Philippines are top 10 producers in the world. Cattle : Indonesia and Myanmar are major producers. Thailand and Vietnam also has a sizeable cattle rearing industry. 12

14 Providing Conducive Environment Formulate policies to promote the utilization of renewables. FIT schemes. Provide incentives (including tax incentives) to encourage further development of renewable energy. Gradually remove subsidies to fossil fuel energy. Challenges: Reliability of supply and quality. Long term contracts with captive off-take. Cheap feedstock. Logistical nightmare especially with palm biomass. Collection. Transport. Storage. 13

15 ASEAN Has Solid Foundation For Biomass RE 14

16 ASEAN FIT Scheme & Electricity Tariff Avg Electricity Tariff (US cents/kwh) Singapore Philippines Vietnam Thailand Malaysia 9 Indonesia 8 15 Biomass FIT Scheme Tariff (US cents/kwh) N.A. 16 N.A. Adder 1 to for MSW % annual degression 10

17 Potential Sector For Investment Biogas from animal wastes: Chicken. Pigs. Cattle. Biomass from agricultural wastes: Palm EFB and POME. Rice husk. Coconut. Power Generation. Mother & Daughter mills concept for palm oil mills. Pellet production from palm EFB, rice husk and coconut shells. MSW waste (power generation & pellet production). 16

18 Why Biomass/Biogas As Renewable Energy? Biomass is biological carbon based material derived from living, or recently living organisms applicable to both animal and vegetable derived material The carbon used to construct biomass is absorbed from the atmosphere as carbon dioxide (CO2) by plant life, using energy from the sun. Plants may subsequently be eaten by animals / human and thus converted into animal biomass / human waste. If not eaten it is generally either broken down by bacteria or burned. Then it will releases the carbon back to the atmosphere, mainly as either carbon dioxide (CO2) or methane (CH4) These processes have happened for as long as there have been plants on Earth and is part of what is known as the carbon cycle. Two main technology options to make biomass as RE i.e. release energy directly in form of heat or electricity : Biochemical (Anaerobic Digestion) use of bacteria Thermal (Combustion / gasification) use of biomass direct or pallets / briquette Chicken waste Plant waste 17

19 Biochemical Technology Anaerobic technology is well proven POULTRY WASTES SECONDARY/TERTIARY WASTEWATER TREATMENT FACILITIES MONITORING POND 18

20 Business Model: Singapore BOT Concession A form of project financing, wherein a private entity receives a concession from the owner to finance, design, construct and operate the facility in exchange for an offtake purchase agreement to guarantee the purchase and payment of the products or services. At the end of the concession period, the facility is given back to the owner for free. OWNER : XXXXX (supply land / feedstock for free) Investor ( Simfoni SURE Global) BOT Concession Agreement for 12 years Shareholders Agreement Lenders (Leasing Co / Bank) After end of 12 years, the plant will be given back to the owner (NO FEEDSTOCK RISK) Project Company: Sure Agro Venture Lending Agreement Engineering Construction & Procurement (EPC) Co (ANAERGIA) EPC Agreement with Performance Bond Legislated to buy from RE producers below 10 MW at open market rate. (NO OFFTAKE RISK) Offtake Purchaser (EMC & Owner) Offtake Purchase Agreement Operation & Maintenance (O&M) Co (STOVER) O&M Agreement 19 5 plus 5 years O&M US$400,000 per year by Anaergia / Stover (REDUCE RISK OF OPERATION FAILURE)

21 Business Model: Singapore BOT Concession Singapore Concession - BOT for Hi-Tech Chicken Layer Farm A new 14.7 hectare farm in Lim Chu Kang has 500,000 chicken currently and plans to increase to 1,000,000 in response to Singapore Government s effort to increase local production of eggs from 23% to 30%. Attractive Concession Terms 12-year concession Free use of land Free feedstock Permission to take in other waste to collect tipping fees However, to expand, farm needs to properly treat the chicken waste and to achieve zero discharge. Attractive RE terms Legislated offtake by Energy Market Company Pte Ltd (80%) 20% power sold back to Owner Good tariff rate at US$0.16/kWh (per kilowatt hour) Daily volume manure to treat: 80 tons & will increase to 130 tons Designed by US leading technology provider Anaergia with over 1,600 installations worldwide 20

22 Business Model: Philippines BOT Concession Most of the 5 concessions are with leading MNCs in Philippines, namely Pepsi and San Miguel and San Miguel s contractors. 75% of the projects are completed pending additional funding to complete with cash flow coming in from 3 to 6 months. OWNERs : (Pepsi, San Miguel & San Miguel s contractors) Investor (Simfoni Sure Global) Shareholders Agreement Lenders MGL & BPI Lending Agreement Project Company: Simfoni Sure Philippines Engineering Construction & Procurement (EPC) Co SURE Inc EPC Contract (already completed) Land free use Feedstock (Biogas) : free waste Feedstock (Biomass) : purchase / site with abundance of feedstock (NO / LOW FEEDSTOCK RISK) Offtake Purchaser (Phil National Grid & Owner) Offtake Purchase Agreement Operation & Maintenance (O&M) by Simfoni Sure Philippines 21 Purchase agreement with National Grid Captive buyback by owners (NO OFFTAKE RISK)

23 Business Model: Philippines BOT Concession A TOTAL OF 5 CONCESSIONS FOR GENERATION AND SUPPLY OF POWER USING BIOMASS FROM RICE HUSK AND BIOGAS FROM PIG / CATTLE MANURE SUREPEP Inc: Rice Husk 1.25 MW Biomass Project for Pepsi Bottling Plant 1st of the 11 plants under Pepsi Power Play of converting diesel power to biomass to reduce energy cost and ensure energy security. Already been selected to do another 2 plants of 2MW each in Cagayan de Oro and San Fernando. SURE Vietnam Joint Stock Company: Pig Waste-to-Energy 2 MW Project for San Miguel Purefoods Vietnam 4,400 swine waste using Anaerobic Digestion in glass fused steel tanks producing 2 MW of electricity to overcome power shortage. 22

24 Business Model: Philippines BOT Concession SURE Eco Energy Philippines, Inc : Pig Waste-to-Energy 3.4 MW Project for San Miguel Contractors a) Sumilao Hog Farm of Monterey Corp. in Sumilao, Bukidnon b) Silangan Swine Farm, Inc. in San Jose, Lipa City and c) Holiday Hills Stock & Breeding Farm Corp. in San Pedro, Laguna. Treating over 10,000 sow level s waste in three farms producing 3.4 MW of power selling to the grid using anaerobic digestion in glass fused steel tanks. SURE, Inc Amigo Excel : Pig Waste to Energy 1.6 MW Project for Amigo and Excel Farms Excel / Amigo Farms are large-scaled pig farms with 30,060 and 20,150 heads respectively and use of anaerobic digestion to produce 1.6 MW of power. SURE, Inc : Cattle Waste-to-Energy 1 MW Project for D Meter Cattle Farm and Slaughter House Cattle Dung, Slaughter House Waste, Other Green Waste using anaerobic digestion with epoxy coated steel tanks. Located in San Simon, Pampanga. 23

25 Business Model: Philippines BOOT Concession La Suerte (as per IFC website) Summary of Proposed Investment Project number Company name Country Sector1 Environmental category Department Status : : : : : : : SURE Bioenergy Philippines Bio-Mass - Renewable Energy Generation B Limited Reg Ind, Infra & Nat Res, ASIA Pending Signing Project Description The Project is a greenfield 5MW rice husk biomass power plant located in Isabela, Northern Luzon developed by Solutions Using Renewable Energy ( SURE ) for La Suerte Rice Mill ( LSRM ) under a 10-year Build-Own-Operate-Transfer ( BOOT ) scheme. The Project will supply the electricity to LSRM, who is faced with inadequate and high cost of electricity mostly supplied with diesel fuel and disposal of increasing rice husks. To address these challenges, LSRM (with help of SURE as BOT contractor which will transfer the facility to LSRM after 10 years), decided to proceed with this biomass power plant project. The present status: Total MW 7 MW from 150 tons of rice husk Investment US$ 23 m IFC funding US$ 15 m Equity Needed US$ 8 m 24

26 Business Model: Supplying Biomass Pellets Biomass from agricultural wastes: Palm EFB. Rice husk. Coconut shells. MSW Biomass. Pellets used for co-firing in coal power plants. Export market. Local market. Pellets 25

27 Thank You Terima Kasih 26