Development & Financing of PV Power Plants & Key Issues in the Off-Grid/ Hybrid Sector
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Development & Financing of PV Power Plants & Key Issues in the Off-Grid/
Hybrid Sector
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Conergy at a glanceA
Financing of PV Systems & Issues in Hybrid SystemsB
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Conergy has a wide experience in all downstream sales channels; diversified sales approach is key to balance risks
Conergy‘s downstream business
INDUSTRIAL (free-field)COMMERCIAL (roof-top)RESIDENTIAL
< 50 kWp 1) Large > ~ 200 kWp 1) > ~ 500 kWp 1) Small 50 ~ 200 kWp 1)
Indirect sale to wholesale EPC
(Engineering / procurement / construction of PV installations)
PD, Financing, EPC(Development / financing / EPC of
large PV power plants)
B2B PROJECTS
SALE
S C
HA
NN
ELS
MA
RK
ET S
EGM
ENTS
A
Source: Conergy 1) Indicative dimensions
Direct sale to installers and sollateurs
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Conergy has a longstanding experience in Asia and Middle East
Overview of markets in APAC served by Conergy
Source: Conergy
Middle East
Countries with own CGY-entity
Countries with EPC business driven by Singapore
APAC & Middle East markets REMARKS
Singapore
| Presence in Asia Pacific and Middle East markets since 2005
| Teams with global experience and local knowledge
| Regional Headquarters in Singapore serving surrounding markets – regional engineering center of excellence
| Offices in Australia, India, UAE, Thailand
| Strategic partners in Thailand, Indonesia, Malaysia, the Philippines and Saudi-Arabia
| Market entry in Japan currently in execution – own entity expected in H1/2013
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AConergy offers high-quality solar systems and an all-round carefree service package for all sales channels from a single source
Solutio
Conergy‘s solution portfolio
Based on more than 14 years of solar experience and its in-depth expertise as a former system manufacturer ....
l .... Conergy integrates high-quality components and comprehensive services to all-round carefree solar system solutions
l .... Conergy’s sales force has the expertise in all components, such as modules, inverters, mounting systems, cables and electrical parts
l .... Conergy has the competence to ensure its high quality standards by strict quality management along the entire value chain
SYSTEM COMPETENCE
HIGH YIELD DURABLE SECURE SIMPLESource: Conergy
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In general, Conergy operates in a proven consortium approach with selected strategic partners
Conergy – Local Partner Consortium
Consortium Member
General role in project
Tasks
Engineering Engineering Procurement ConstructionProcurement
PROJECT ENGINEERING PROJECT MANAGEMENT
• Overall conceptual design• Overall mechanical and electrical
design
• Main components supply
• Commissioning support
• Warranties
• Local civil design• Local mechanical design• Local electrical design
• Local components supply
• Installation • Commissioning
• O&M
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Local Partner
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Conergy at a glanceA
Financing of PV Systems & Issues in Hybrid SystemsB
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PV Projects have the advantage to be comparable to financial products as they are straight forward on a technological perspective
Main characteristics of PV projects
Reliable| Technology is simple and
passive
| Maintenance is light
| Module life time 25 years
Predictable| Sunlight is stable through
the years
| Energy yield are predictable and Regular
| Output directly linked to quality of modules / inverters
| O&M costs are stable
Safe| Returns are known well
in advance
| Economical reality does not vary too much from simulations
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Through the eyes of Finance a project is Risk Management
Overview of project development framework
ENVIRONMENT“Framework”
TECHNOLOGY“Know-how”
PLAYERS“human factor”
PROJECT
FINANCE
| Social Need| Political framework| Geological
conditions
| Yield check| Technical feasibility| Technical/site risks
| Promoters| Technology
suppliers| Investors| Banks
Land + Rights
Project development
| Mitigate the risks of a project by
| Proper project documentation
| Scenario Analysis
| EPC Guarantees
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Each partner in a project has a different goal..
EPC Margin (10 to 15%)
Loan Interests (6 to 10%)
Dividends (15%)
Sweat equity/Development Margin (15%)
Annual returns
Annual returns
One shot profits
One shot profits
EACH ACTOR HAS A DIFFERENT EXIT STRATEGY
IN MIND
Project stakeholders and their goals
Project
Project Promoter
Equity Investor
Money lender
EPC contractor
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Typical Finance Cycle of commercial PV Systems
Exit by trade sale to long term equity investorswith lower IRR expectations (8 to 10%) :| Utilities| Pension funds
Financial close
Preferred exit option
Short term equity investors withEquity IRR expectations around 14% :| Development banks (label+equity)| Hedge/Innovation funds (equity)| Industrial partners (exit strategy offer)
Joint Venture development(SSA, SHA)
Project construction
Exit by sector IPO
Equity Partner search
Promoters+
Initial Investors
Cash bring as Equity Injection into New/future
project pipeline
x
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| PPAS Capacity of local institutions to honor PPAs
| PPAs duration and renegotiation risk
| Land lease risks
For an investor a bad project is a project showing him shadow areas and risks with no answers, no mitigations …Overview Project risks
PROJECT INTERNAL RISKSTECHNOLOGY RISK
| Clear shareholding structure of SPV with clear leadership Clear ownership rights
| One Majority shareholder mastering with track record
| Clear exit strategies
| Potential delays in EPC| Previous References project implementation
(Shareholders/EPC) in the country| Degradation factor of modules (generation)
over the years| Efficiency of components (Modules Inverters)| Guarantees on performance/yields| O& M issues
| Political stability and energy framework
| Project geological location| Project administrative environment
PARTNERSHIP RISKENVIRONMENT RISK
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| Potential delays in EPC| Previous References project implementation
(Shareholders/EPC) in the country| Degradation factor of modules (generation)
over the years| Efficiency of components (Modules Inverters)| Guarantees on performance/yields| O& M issues
| Political stability and energy framework
| Project geological location| Project administrative
environment
| PPAS Capacity of local institutions to honor PPAs
| PPAs duration and renegotiation risk
| Land lease risks
For an investor a bad project is a project showing him shadow areas and risks with no answers, no mitigations …Overview Project risks
PROJECT INTERNAL RISKSTECHNOLOGY RISK
| Clear shareholding structure of SPV with clear leadership Clear ownership rights
| One Majority shareholder mastering with track record
| Clear exit strategiesPARTNERSHIP RISKENVIRONMENT RISK
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Overall private sector investments have the opportunity to bring efficiency and competition to the Off-Grid/ Hybrid Sector
Key points of concern for private investors
Some of the concerns can be addressed by the
Government while education play a key role and can be driven by the
private sector
A No sovereign guarantees to counter bankability issue
B Often remote access raises questions on O&M
C Difficulties to pool projects in order to attract equity
D Smaller systems difficult to debt-finance
E Wider span in quality/ reliability compared to PV PP
F Lack of education on RE in Off-grid markets
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OUR WORLD IS FULL OF ENERGY