Challenges for Small Hydro IPPs in Africa. Dr. Michael Harbach, 1 st Africa Small Hydro Forum, 29 Nov. 2017

Transcription

1 Challenges for Small Hydro IPPs in Africa Dr. Michael Harbach, 1 st Africa Small Hydro Forum, 29 Nov. 2017

2 The ANDRITZ GROUP Overview ANDRITZ is a globally leading supplier of plants, equipment, and services for hydropower stations, the pulp and paper industry, the metal-working and steel industries, and solid/liquid separation in the municipal and industrial sectors. Sales by region 2016 (%) Headquarters: Graz, Austria Global presence: over 250 production sites and service/sales companies worldwide Emerging markets: 44% 6,039 MEUR Europe & North America: 56% KEY FINANCIAL FIGURES H AND 2016 Unit* H Order intake MEUR 2, ,568.8 Order backlog (as of end of period) MEUR 6, ,789.2 Sales MEUR 2, ,039.0 EBITA MEUR Net income (including non-controlling interests) MEUR Employees (as of end of period; without apprentices) - 25,390 25,162 H Europe North America China Asia (without China) South America Africa, Australia * MEUR = million euros 2

3 Company profile Worldwide leading position in four business areas Product offerings: electromechanical equipment for hydropower plants (turbines, generators); pumps; turbo generators Product offerings: equipment for production of all types of pulp, paper, tissue, and board; energy boilers Product offerings: presses for metal forming (Schuler); systems for production of stainless steel, carbon steel, and nonferrous metal strip; industrial furnace plants Product offerings: equipment for solid/liquid separation for municipalities and various industries; equipment for production of animal feed and biomass pellets 3

4 ANDRITZ HYDRO Facts and Figures Central Function ANDRITZ HYDRO Large Hydro Compact Hydro Service & Rehab Pumps Turbo Generator ANDRITZ HYDRO FIGURES 2016 Unit 2016 Order intake MEUR 1,500.3 Order backlog MEUR 3,269.6 Sales MEUR 1,752.4 EBITA MEUR Employees (without apprentices) 7, Order intake Sales Order backlog

5 Compact Hydro From Water to Wire concept (w2w) Lake River Dam Pressure line Turbine Shut-off valve Controller Generator Excitation Automation Control Protection Cooling and lubrication systems Aux. transformer Transformer Medium voltage Switchgear Grid - Industry - Household Water Construction Turbine Generator Auxiliary unit Switchgear Wire Scope of delivery COMPACT HYDRO Program 5

6 ANDRITZ HYDRO in Africa Selected references 6

7 Rural Africa: Access to electricity The case for small hydro IPPs World Bank Data (2014) 7

8 The case for small hydro IPPs Compact Hydro vs Large Hydro Small Hydro can be a significant driver for rural electrification and establishment / expansion of small grids If Small hydro power plants must be considered and dealt with differently, compared to Large Hydro. Tailor-made solutions, as are normal for Large Hydro Power Plants, are not economically in power plants of smaller sizes. The solution for economic success for Small Hydro is to combine well proven standardized equipment with special, tailor-made equipment for reaching best efficiencies at reasonable costs. Francis Pelton Kaplan But 8

9 Small Hydro IPPs Institutional challenges Small Hydro IPPs are usually private sector driven (individuals or companies expanding their business / investment portfolio) Few to no experience in dealing with the energy sector and with regulators Entrepreneurs faced with various demanding topics with substantial interdependencies between the different topics 9

10 Small Hydro IPPs Regional / site related challenges Site conditions: Challenging geological conditions (subsurface,..) Demanding weather conditions (temperatures, humidity, wind, lightning, ) Power plants at high elevation level ( > 1000masl) need more careful attention Difficult accessibility (transport, basic infrastructure, transmission lines,...) 10

11 Small Hydro IPPs Regional / site related challenges Site conditions: Challenging geological conditions (subsurface,..) Demanding weather conditions (temperatures, humidity, wind, lightning, ) Power plants at high elevation level ( > 1000masl) need more careful attention Difficult accessibility (transport, basic infrastructure, transmission lines,...) 11

12 Small Hydro IPPs Financing Status quo Location of all developed hydropower projects across Sub-Saharan Africa country-level ( ) Number and locations of developed hydropower projects 0 developed hydropower projects Government funding dominated China EXIM Bank funding equivalent to multilateral IFI + bilateral (non-china) + private funding combined Multiple funding partners (average 5.7 per project) sometimes resulting in a long time to reach financial close 1 developed hydropower project 2 4 developed hydropower projects 5 developed hydropower projects Funding source Total investment (US M) number of projects Average investment per project (US M) Rusumo Falls located over the Rwanda, Tanzania and Burundi border is placed in Rwanda. Ruzizi III located over the Congo DR, Burundi and Rwanda is placed in Burundi. Nangbeto project located in Togo and Benin, is placed in Togo Government (39%) Multi-lateral IFI (10%) China (EXIM Bank & others) (31%) Bilateral IFIs/ECAs (non-china) (14%) Private (6%) Total (100%)

13 Small Hydro IPPs Financing small tickets Project Finance / /? Total project value: EUR 5-15m Sponsor / Investor Thereof E&M: EUR m Project term: months SPV Project sponsor / developer Private / small business Special Purpose Vehicles (SPV) Civil ANDRITZ HYDRO Phases Initial Phase Feasibility Phase Construction Phase Operation Phase Know-how Financial Model (review, input), Project Structure, Financial Engineering, Financial Advisory Financing Venture Equity Debt 13

14 Small Hydro IPPs Financing requirements 14

15 Small Hydro IPPs Financing challenges Various financing partners available (from development banks and export credit agencies to commercial banks and private investors) Each financing partner has own criteria for assessment and eligibility technical, financial / economic, environmental and institutional feasibility sourcing requirements and local content IPPs usually implemented through special purpose companies no business history demonstrate financial strength of shareholder (personal income) Last, VAT laws need to be taken into consideration as well as SPCs have a biased VAT balance 15

16 Small Hydro IPPs long & difficult way COMPACT HYDRO ready to support SHPPs / IPPS are key to rural electrification and establishment / expansion of grids Keep specification simple / benefit from supplier experience Supporting / mitigating actions required from governments / international community ANDRITZ ready to support / cooperate with Experience from different / similar projects Matchmaking with financing institutions 16

17 Thank you Questions? 17