Challenges & opportunities in the Nordics · Nordic households enjoy one of Europe’s fastest...
Transcript of Challenges & opportunities in the Nordics · Nordic households enjoy one of Europe’s fastest...
Challenges & opportunities in the Nordics Experience from recent transactions
SEB Nordic Infrastructure and Renewable Energy Day, Oslo, June 8th, 2017
© 2017 Aquila Capital 2
Track Record in the Nordics 2
Nordic Market 3
Conclusions 4
Q&A 5
Aquila Group 1
Agenda
Contact details 6
© 2017 Aquila Capital 3
1 Assets under Management (AuM) based on Net Asset Value (NAV); Enterprise Value for Real Asset-funds
respectively; 2 Assets under Administration (AuA) of the AIFM Alceda includes funds managed by Aquila
Capital
Focused on alternative investments
Founded in 2001
6.1bn Euro AuM/AuA
Independently owned and operated
Fully regulated by BaFin (Germany) and CSSF (Luxembourg)
10 offices in Europe, Asia and Asia-Pacific
Institutional client focus
Overview Aquila Group1, 2
AuM Real Assets in EUR bn
AuM Real
Assets
57%
AuA
39%
AuM Financial
Assets
4%
Investment Center
Client Advisory
0,0
1,0
2,0
3,0
4,0
2010 2011 2012 2013 2014 2015 2016
Renewables Others
Aquila Group overview
As at 31.12.2016; Locations shown in the map also include investment affiliates;
© 2017 Aquila Capital 4
Solar PV Energy 2 Hydro Power 2
A leading renewables operator in Europe
Notes:
1 With approx. EUR 2.3 bn of Total Investment Volume (asset based) in renewables (developed or under construction), Aquila has become a leading asset manager in the growing renewables market in Europe. MW figures based on past and current
transactions. As of 31.12.2016. 2 Based on total investet capital of Aquila Capital in the respective asset class. As of 31.12.2016. 3 Source: The „Top 70 overview of European solar PV portfolios“ is provided by Solarplaza International BV („Solarplaza“).
Solarplaza assumes no responsibility for any errors or omissions in these materials. Solarplaza makes no commitment to update the information contained herein. The data used for this overview are as at 31.05.2016. www.solarassetmanagementeu.com
Active in renewables
since
2009
EUR 2.3 bn
total investment volume1
976 MW
based on transactions in
wind energy1
625 MW
based on transactions in
Solar PV energy1
430 MW
based on transactions in
hydropower1
Macro-driven strategic
approach
Dedicated investment team
with in-depth asset know-
how
Differentiated Investment
Opportunities
Disciplined underwriting
Fiduciary responsibility
Total invested capital in renewable energy assets
Wind Energy 2
France; 42%
Germany; 39%
Other; 19%
Norway; [WERT]
Other, 26% Sweden;
47%
Germany; 38%
Norway; 13%
UK, 2%
© 2017 Aquila Capital 5
Track Record in the Nordics 2
Aquila Group 1
Nordic Market 3
Conclusions 4
Q&A 5
Contact details 6
Agenda
© 2017 Aquila Capital 6
Nordic footprint
Country-Specific Track Record
(in m EUR):
JP
119 US
30 FR
811
DE
785
UK
48
TR
168
SE & NO
1.078
2011 2012 2013 2014 2015 2016 2017
Wind Midtfjellet I+II³
110 MW | Norway
Acquisition: 2015
Wind Midtfjellet III
40 MW | Norway FID:
2017
Wind Lehtirova
147.6 MW | Sweden
Acquisition: 2016
Hydro Tinfos
90 MW | Acquisition:
2014
Hydro Jopeland
40 MW | Norway
Acquisition: 2011
Wind Atlantic Portf.
61.2 MW | Sweden
Acquisition: 2014
Hydro NGK
119.4 MW | Norway
Acquisition: 2014
Wind Hökölen
64.8 MW | Sweden
Acquisition: 2016
Hydro Smakraft
160.9 MW | Norway
Acquisition: 2015
Wind Kokkola
14.4 MW | Finland
Signing: 2017
Wind Kappeln
24.2 MW | Denmark
Signing: 2017
Investment experience in the Nordics since 2011
© 2017 Aquila Capital 7
Högkölen (SE)
Under construction
COD: Q4 2018
Ownership: 100%
Capacity: 64.8 MW
Capacity factor: 43%
Turbines: Vestas V126 – 3.6 MW
Lehtirova (SE)
Under construction
COD: Q4 2018
Ownership: 100%
Capacity: 147.6 MW
Capacity factor: 37%
Turbines: Vestas V126-3.6 MW
Midtfjellet Phase I – III (NO)
Operational (110 MW) /
Extension (39.6 MW)
COD: Q4-2013
40 MW extension (Q4-2018)
Ownership: Majority, co-
investment
Expected capacity:
150 MW (incl. 40 MW extension)
Capacity factor: 32%
Turbines:
Nordex N90 – 2.5 MW
Nordex N100 – 2.5 MW
Nordex N117 – 3.6 MW
c. 462 MW
since 2014
c. 1.5 TWh
of annual
production
32% – 47%
High
capacity
factors1
3
2
4
Nordic wind portfolio overview
Note:
1 Based on P-50 estimates
Atlantic Portfolio (SE)
Operational
COD: Q1 2015
Ownership: Minority, co-
investment
Capacity: 61.2 MW
Capacity factor: 36%
Turbines:
Vestas V90 – 2.0 MW
Vestas V100 – 2.0 MW
Vestas V112 – 3.3 MW
1
Kokkola (FI)
Under construction
COD: Q4 2018
Ownership: 100% (as of closing)
Capacity: 14.4 MW
Capacity factor: 43%
Turbines: Nordex N131 – 3.6 MW 5
6
Kappel (DK)
Operational
COD: Q2 2017
Ownership: 100% (as of closing)
Capacity: 24.2 MW
Capacity factor: 47%
Turbines:
Vestas V117 – 3.45 MW
Vestas V126 – 3.45 MW
© 2017 Aquila Capital 8
Track Record in the Nordics 2
Market 3
Aquila Group 1
Conclusions 4
Q&A 5
Contact details 6
Agenda
© 2017 Aquila Capital 9
Region
Rating1 S&P: AAA ()
Moody‘s: Aaa ()
Fitch: AAA ()
S&P: AAA ()
Moody‘s: Aaa ()
Fitch: AAA ()
S&P: AAA ()
Moody‘s: Aaa ()
Fitch: AAA ()
Currency EUR NOK, EUR investment structure possible NOK, EUR investment structure possible
Maturity Mature (2014: 57.4 TWh) 2 Mature (2014: 11.2 TWh)2 Mature (2014: 2.2 TWh)2
Wind resources Capacity factors: 18-25% Capacity factors: 30-40+% Capacity factors: 30-40+%
Energy yield assessments Usually reference data based Usually site-specific data based Usually site-specific data based
Capex incl. developers margin Relatively high Low Low
LCOE Unknown due to FIT Low Low
Support scheme
CfD for 100% of production, 20 y, 5.07 ct/kWh
(down from 8 ct/kWh)
Elcerts in addition to power sales, 15y, no fix price
(until 2035)
Elcerts in addition to power sales, 15y, no fix price
(until 2021)
Macroeconomic costs Significant, approx. 7 ct/kWh for consumer Low, approx. 0.1 ct/KWh for consumer Low, approx. 0.1 ct/KWh for consumer
Availability of commercial price
hedging instruments
Not available, not required Power: Up to 15y (good liquidity)
Elcerts: Up to 5y (decent liquidity)
Power: Up to 15y (good liquidity)
Elcerts: Up to 5y (decent liquidity)
Availability of KfW Financing Yes Depending on investment structure Depending on investment structure
Debt levels Up to 80% 40-60% depending on hedging structure 40-60% depending on hedging structure
Inflation indexation No Depending on hedging structure Depending on hedging structure
1 Source: www.tradingeconomics.com/country-list/rating, date: June 6, 2017; (stable) (negative) (positive); 2 Source: HSH Nordbank
Germany Norway
Comparison of selected wind markets
Sweden
© 2017 Aquila Capital 10
Electricity costs in the Nordics and Europe
SE:
36.9
NO:
33.9
FI:
37.5
DK:
34.6
EE:
37.5
LV:
37.7 LT:
37.9
PL:
37.1
NL:
41.4
DE:
37.6
FR:
59.8
UK:
66.0
IE:
52.9
ES:
57.3
PT:
56.4 IT:
55.9
GR:
45.8
BG:
39.6
RO:
40.9
HU:
45.1
AT:
38.0
CZ:
40.9
<= EUR 37.00 / MWh
EUR 37.01 – 40.00 / MWh
EUR 40.01 – 52.00 / MWh
> EUR 52.00 / MWh
No data
Source:
European Commission
ttps://ec.europa.eu/energy/sites/ener/files/documents/quarterly_
report_on_european_electricity_markets_q4_2016.pdf
Average wholesale baseload electricity price, Q4 2016
© 2017 Aquila Capital 11
Supported by attractive supply / demand dynamics and growing cross-border interconnections with the rest of Europe, the Nordic
power market offers an attractive pool of liquidity, with encouraging signs of development for additional wind capacity
The largest
and most
liquid power
market in the
world
NordPool spot1 is the world’s largest exchange for electrical energy measured in volume
NordPool power prices are mainly influenced in the short-term by weather conditions (e.g.
precipitations) and the cost of fossil power generation; influencing factors in the long-run are the
development of power demand, the aging of thermal generation capacities (nuclear, coal), the
build-out of interconnectors to other Continental European markets as well as the prices for
carbon emissions
Interconnector capacities expected to double, from c.4 GW today to c.8 GW by 2025 (c. 10 new
cross-border projects2)
Attractive
power market
dynamics
Heavy phase out of Swedish nuclear starting in the 2020’s
Nordic households enjoy one of Europe’s fastest growing populations (+22% in Norway and
+13% in Sweden by 2050), with high consumption per capita in both Sweden and Norway
Data centres becoming a relevant industry in the Nordics
Nordic countries are early adaptors of e-mobility
A growing role
for wind
With a large amount of flexible hydro capacity and limited land constraints, Nordic markets are
well positioned to integrate significant amounts of wind power
The seasonality of wind power, with more production in winter times, is well correlated with local
patterns in power demand and seasonal price peaks
Supported by Sweden’s target of additional 18 TWh /a new renewable production by 2030, the
region is likely to continue seeing increasing demand for renewable capacity, especially for wind
Sweden
Norway
Finland
Denmark
Hydro Nuclear CHP Condensing Wind Geothermal
Growing amount of cross-border interconnections
Status quo of energy mix in the Nordics
Source: Swedenergy, 2015
Renewable build-out targets achieved as of 2017 (TWh)
14.3
28,4
18.0 46.4
3.5 10.6
0
20
40
60
Sweden Norway To bebuilt
Total2020target
Ambitionincrease,Sweden
Total2030target
Source: Swedish Energy Agency, Norwegian Water Resources and
Energy Directorate
Notes:
1 Sweden, Norway, Finland, Denmark, Estonia, Latvia, Lithuania
2 SKM
Sound macro-story for Nordic wind
Source: Nord Pool Spot, Statnett, SKM
© 2017 Aquila Capital 12
Encouraging signals on Elcert market
• The new, prolonged Swedish 18 TWh target will be
included in the existing system,
• Projects in Norway can be built until end of 2021 to
be eligible for elcerts until 2035.
• There will be a substantially raised quota during the
period 2018-2020. That will lead to an increased
demand for certificates from 2018
• This will decrease the existing Elcert surplus of
approximately 12 million electricity certificates can be
down by 50% during the period.
• Apart from this there will be a linear raised quota
from 2020 and onwards, instead of the previously
backloaded curve
• .
• Sweden will introduce a stop mechanism towards
2030 to prevent an oversupplied system. The stop
mechanism should be in place in 2020.
• Technical adjustments to the system will be handled
by the Energy Agency and not by the
government/parliament, which means quicker
processes
New Elcert-quotas presented by Energimyndigheten and NVE
1Source: Neas Energy
© 2017 Aquila Capital 13
Track Record in the Nordics 2
Nordic Market 3
Conclusions 4
Q&A 5
Contact details 6
Aquila Group 1
Agenda
© 2017 Aquila Capital 14
Conclusions
Balanced hedging strategy to manage merchant risk remains essential
Challenges
As competition among investors for the best projects will increase, those investors will be successful, which provide “value-add” to the developer
Scarcity of high quality projects at good wind sites with grid connection is not yet a problem, but will probably be in the future as the superior sites are
developed and more investors will enter the market
Due to slightly higher domestic demand expectations, ongoing convergence with higher power prices in Continental Europe (driven by higher
commodity and carbon prices) and ambitious renewables build-out targets to replace phased-out thermal generation, we expect (in accordance to the
known forecast providers) power prices to rise
Further improvements of LCOE will also make site with less attractive wind resources economically viable for wind projects
The Norwegian-Swedish agreement on the transition of the Elcert scheme sent a strong signal and should have positive impact on Elcert pricing and
decrease backlog
Opportunities
The Nordic will stay an dynamic investment environment among others due to the following market trends:
The raise of corporate PPA with terms of up to 20y will allow for new, attractive debt financing structures
More and more utilities pursue an “asset-light” investment approach and seek for cooperation models with financial investors
There will be increasing competition for O&M as a third party O&M provider market will be established and result in even lower opex for wind
© 2017 Aquila Capital 15
Track Record in the Nordics 2
Nordic Market 3
Conclusions 4
Contact details 6
Aquila Group 1
Agenda
Q&A 5
© 2017 Aquila Capital 16
Track Record in the Nordics 2
Nordic Market 3
Conclusions 4
Q&A 5
Contact details 6
Aquila Group 1
Agenda
© 2017 Aquila Capital 17
Today’s presenter
Ingmar Helmke
Investment Manager | Director
Energy & Infrastructure EMEA
Tel: +49 875050 - 235
Email: [email protected]
© 2017 Aquila Capital 18
Offices
Important Notice: This document contains information and assessments. It constitutes neither an investment advice, any investment services nor the invitation to make offers or any declaration of intent. This
document serves for information purposes only regarding the products mentioned. A decision upon the acquisition of a product shall be made by applying the respective prospectus as well as the
complete sales documents in consideration of the respective risks as well as tax and legal consulting. The validity of the provided information is limited to the date of preparation of this document and
may change in course of your objectives or in course of other reasons, especially the market development. The sources of information are reliable, however we cannot guarantee the validity and the actuality of
the provided information. Historical information cannot be understood as a guarantee for future earnings. Predictions concerning future developments only represent forecasts. Statements to
future economic growth depend on historical data and objective methods of calculation and must be interpreted as forecasts. The products mentioned in this document describe long-term
investments that are associated with considerable risks. Investors must be prepared to suffer substantial losses or even total loss. Product-specific documents including the current sales prospectus, the key
investor information as well as the annual report can be requested free of charge at Aquila Capital Concepts GmbH, Valentinskamp 70, D-20355 Hamburg. The terms Aquila and Aquila Capital comprise
investment companies for alternative and real asset investments as well as sales, fund management and service companies of the Aquila Group. The respective responsible legal entities of the Aquila Group
that offer products or services are named in the corresponding agreements, sales documents or other product information. A publication of Aquila Capital Concepts GmbH.
Germany
Hamburg (Headquarters)
Valentinskamp 70
20355 Hamburg
Tel.: +49 (0)40 87 50 50-100
www.aquila-capital.de
Frankfurt
Neue Mainzer Straße 75
60311 Frankfurt/Main
Munich
Josephspitalstraße 15
80331 Munich
United Kingdom
London
17 Grosvenor Street
London W1K 4QG
Norway
Oslo
Sandakerveien 138
0484 Oslo
Czech Republic
Prague
Palladium
Náměstí Republiky 1
110 00 Prague 1
Luxembourg
Senningerberg
Airport Center Luxembourg
5, Heienhaff
1736 Senningerberg
Switzerland
Zurich
AQ Investment AG
Poststrasse 3
8001 Zurich
Spain
Madrid
Plaza de Colón, 2
Torre II - planta 7
28046 Madrid
Singapore
Singapore
No 8 Eu Tong Sen Street
#19-89 The Central
Singapore 059818