Renewable Energy Investments · Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15...
Transcript of Renewable Energy Investments · Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15...
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Renewable Energy InvestmentsCentre for Environmental Rights
DATE:
24 October 2016
PRESENTER:
Peta Chennells
Senior Investment Analyst
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Agenda
Why Renewable Energy Makes Sense
– South African energy requirements
– Investment opportunity
– Socio economic development
Mergence renewable energy project video
Questions
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An authorised FSP: no. 16134
South African Renewable Energy Programme
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South Africa’s Energy Dilemma
Low Cost
Low
Carbon
Security of
Supply
Low Water
Job
Creation
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Abundant wind and solar resources
South African Wind Map
South African Solar Map
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42% of new capacity build from renewable energy
Source: Policy adjusted IRP (2030) DOE 26 Aug 2016
6.3 6.3
2.6
17.8
9.6
Coal Gas Hydro Renewables Nuclear
Coal15%
Gas15%
Hydro6%
Renewables42%
Nuclear23%
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6.4GWs allocated to 102 projects over 6 bid windows
1.4
1.0
1.5
2.2
0
1
2
3
4
5
6
7
BW1 (2011) BW2 (2012) BW3 (2013) BW3.5 (2014) BW4 (2014) Smalls (2015) Total
GW
s
Bid Window & Bidding Year
BW1 BW2 BW3 BW3.5 BW4 Smalls Total
Operational
(# of projects)100% 84% 0% 0% 0% 0%
43% (2.2GW,
44 projects)
Source: Policy adjusted IRP (2030) DOE 26 Aug 2016
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Dramatic Tariff Decreases
3.65
2.18
1.17
0.91
0.62
1.51
1.19
0.870.75
0.62
BW1 (2011) BW2 (2012) BW3 (2013) BW4 (2014) BW4E (2015)
Bid Window & Bidding Year
Average tariff in R/kWh (Apr-2016-R)
Solar PV
Wind
Source: CSIR; Cost of new power generators in South Africa, Oct 2016
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REIPP now 40% cheaper than Coal IPP
0.62
1.03
Renewable EnergyBW4E
CoalBW1
Average tariff in R/kWh (Apr-2016-R)
Source: CSIR; Cost of new power generators in South Africa, Oct 2016
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An authorised FSP: no. 16134
Renewable Energy as an Investment Opportunity
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Investment in Renewable Energy
R194bn committed investment
BW1 BW2 BW3 BW3.5 BW4 Smalls
R654bn forecast investment
Source: Policy adjusted IRP (2030) DOE 26 Aug 2016
194.1
654
2016 2030
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Invested R1.2bn across 12 Projects
Track record:
- Invested R1.2bn in 12 Round 1 and Round 2 projects
- Committed over R400m to 5 small projects
- Fund raising for second renewable energy debt fund
Noblesfontein | NC8% Fund allocation
Soitec | Touwsriver, WC8% Fund allocation
Herbert | Douglas, NC9% Fund allocation
Van Stadens | PE, E Cape
8% Fund allocation
Greefspan | Prieska,
NC3% Fund allocation
Soutpan | Limpopo6% Fund allocation
Dassieklip | Caledon, WC8 % Fund allocation
Witkop | Limpopo9% Fund allocation
Kalkbult | De Aar, NC8% Fund allocation
Kouga | Oyster Bay, EC 4% Fund allocation
Solar Capital 1 | De Aar,
NC10% Fund allocation
74MW 44MW 20MW 27MW 10MW
28MW 27MW 30MW 75MW 80MW 75MW
Solar Capital 3 | De Aar,
NC18% Fund allocation
75MW
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Renewable Energy as an Investment
Stable long term predictable cash flows
Strong returns coupled low volatility
Low probability of default & high recovery rates
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Long-term Debt backed by Long-term Contracts
Mergence REDF
Project Co
Shareholders
Eskom Holdings
4. Debt (70%)1.Power
Purchases
3. Equity
(30%)
SA Government
2. Limited Guarantee
20 Year PPA
Other Financial Institutions
15 Year Loan
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Long term stable and predictable returns to investors
0
20
40
60
80
100
120
140
160
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47
Semi-Annual Periods
Total Expenses Debt Servicing costs Total PPA Revenues(ZAR)
Source: Mergence data
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Comparable market returns with reduced volatility
12.0%
8.5%
7.7%
10.0%
11.2%
9.1%
20 years 10 years 5 years
Bonds CPI + 5%
0%
5%
10%
15%
20%
25%
30%
35%
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
Bonds
CPI + 5%
Source: Mergence data, Rolling 3 year average annual geometric returns: 1990 - 2016
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Low defaults and high recovery rates
Source: Addendum to Moody’s Project Finance Defaults Study, 1983 – 2013. World Availability Based PPP
2.5%
83.2%
Average default rate Average recovery rate
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Mergence Performance Summaryas at 30 September 2016
100
105
110
115
120
125
130
135
140
145
Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16
Mergence Renewable Energy Debt Fund Jibar + 3%
Source: Mergence Renewable Energy Debt Fund, Sept 2016
• Excluding 10% capital appreciation – EY Valuations (since inception
19% increase)
• No defaults on any of our projects
Net Returns Since Inception
Fund 10.4%
JIBAR + 3% 9.3%
Outperformance 1.1%
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An authorised FSP: no. 16134
Socio Economic BenefitsRenewable Energy Investments
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Stringent Economic Development Criteria
Bidding Projects
Economic development commitments =
30% bid evaluation criteria
Includes:
– Local content % of total spend
– Job creation commitments
– Local community development
– BEE shareholding
– Socio Economic development spend
Successful Bidders
Successful projects legally commit to
economic development criteria
Monitored by DOE & Lenders
Failure to comply = loss of PPA
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What’s been committed so far?
112 000 FTE Jobs
R29bn community
income
R65bnlocal content
spend
Source: Policy adjusted IRP (2030) DOE 26 Aug 2016
R25bn development
spend
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Over R100bn
in investment
in South Africa
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Mergence community impact
R300m receivable from 28MW solar farm
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
R’m
Social & enterprise development (cum)
Community dividends (cum)
Average impact of projects
Ownership
3 - 10% Local community Trust ownership
Socio-Economic Development
1 -1.5% of revenue for socio economic
development in local (mainly rural) communities
Enterprise Development
0.6% of turnover on enterprise development –
targets education and skills development
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1 300 children will receive
school shoes and jerseys,
while 8 400 children will receive
books
Free community Wi-Fi to the
value of R745,000 installed within
previously disadvantaged
community
R700 000 spent on a computer
laboratory and equipped the
Community Training Centre
How the projects benefit their communities
Limpopo area De Aar, Northern Cape De Aar, Northern Cape
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An authorised FSP: no. 16134
Conclusion
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Conclusion
Renewable Energy makes sense for everyone!
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An authorised FSP: no. 16134
Questions?