International Experience

Transcription

1 International Experience Financial Products Offered by FIs Models for IFI Participation 1

2 Financial Products Distributed Generation: PPAs or Leases EE Home Improvement/SME Loans C15 ESCOs: Loans,Equity/Quasi Equity, Forfaiting Receivables 2

3 Diapositiva 2 C15 definitely not true. non recourse project finance loans are even more likely to be syndicated so banks can share risks!! Cliff,

4 Financial Products Distributed Generation PPA Developer/vendor owns the equipment Monitors, maintains, insures, and guarantees production Facility pays monthly for the energy produced Fixed, escalating, or de-escalating monthly payments 15+ year contract C16 Lease Leasing company owns the equipment Monitors, maintains, insures, and guarantees production Facility pays monthly lease payments Fixed, escalating, or de-escalating monthly payments 15+ year contract

5 Diapositiva 3 C16 definitely not true. non recourse project finance loans are even more likely to be syndicated so banks can share risks!! Cliff,

6 Financial Products Solar Lease C17

7 Diapositiva 4 C17 definitely not true. non recourse project finance loans are even more likely to be syndicated so banks can share risks!! Cliff,

8 Example: Distributed Solar in the USA 5

9 Example: Distributed Solar in the USA SOLAR CITY 6

10 Example: Net Metering in the USA SOLAR CITY 7

11 Example: Distributed Solar in the USA SOLAR CITY SolarCity Enters Into Largest Rooftop Solar Aggregation Facility $250 M Syndicate led by BofA Merrill Lynch expected to finance more than 200 MW of solar projects SAN MATEO, Calif., March 25, 2014 SolarCity (Nasdaq: SCTY), a leading provider of clean energy, today announced it has received all commitments to its $250 million financing facility provided by a group of lenders that includes BofA Merrill Lynch as Sole Structuring Agent and Sole Syndication Agent, intended to finance more than 200 MW of solar power systems for homeowners and businesses. This financing is the largest aggregation facility for distributed generation solar projects to date, and the third such facility entered into by SolarCity. SolarCity has raised funds sufficient to finance more than $4 billion in solar projects. The loan is backed by high quality, longterm customer receivables that allow the company to deploy, aggregate and season a defined pool of assets. After the solar assets are fully deployed, SolarCity expects to refinance the facility in the securitization market. 8

12 Distributed Generation: IFI Financial Model Credit Scheme Reduced power bills generate funds for debt repayment Solar PV Developer/Vendor Leasing Co./Bank SPV 1. Origination 2. Permitting 3. Installation 4. Maintenance 5. Financing Credit Line to Developer or direct lending to end users Credit Line / Guarantee Facility / Securitization IDB CTF IFC 9 Funding

13 Distributed Generation: IFI Financial Model Equity Scheme 1. Origination 2. Permitting 3. Installation 4. Maintenance 5. Financing Credit Line Solar PV Developer/Vendor Leasing Co./Bank SPV Equity IDB CTF IFC Funding 10

14 Financial Products EE Home Improvement/SME Loans Industry Partners Approach Energy Audit Approach Driver: Normal equipment replacement/repair Single Technology deals brought by vendors Vendors prequalified; prescribe equipment standards Qualify for loan if meet efficiency standards Vendors collect financial data for loan approval Driver: Energy Cost Savings C20 Energy Audit required Qualify based on payback; % energy savings Bank or TA consultant develops deal flow Vendors collect financial data for loan approval Concessional loans Lower Pricing, Longer Tenor, Relaxed Collateral Encourage comprehensive EE package Capital Subsidy Encourage market entry

15 Diapositiva 11 C20 definitely not true. non recourse project finance loans are even more likely to be syndicated so banks can share risks!! Cliff,

16 C11 Financial Products: Working with ESCOs Lending directly to end-user (Loan on the balance sheet of the end-user) Energy services agreement Turnkey EE project installation & services ESCO Project Purchase $ End User Credit $ Loan/Lease finance payments Lender 12

17 Diapositiva 12 C11 just like A2 there should be same dotted line showing constrcution payments form the Lender to the ESCO Cliff,

18 C12 Financial Products: Working with ESCOs Option 1: Lending directly to end-user with ESCO guarantee (Combines savings guarantees from the contractor, effectively making the total agreement a performance contract) End User ESCO Construction Payments Lender 13

19 Diapositiva 13 C12 this model should be the same as A1 but then you just superimpose the savings guarantee line on top of it and then another line from ESCO to Lender showing "assignment by End User of any guarantee payments" Cliff,

20 Financial Products: Working with ESCOs Option 2: ESCO as Borrower The loan is on the balance sheet of the ESCO, not the end-user. However, with this financing structure the FI due diligence is similar to project financing, because the lender will also rely on the creditworthiness of the end user and the efficacy of the project. Energy End Users Energy Services Agreement: turnkey project installation and services ESCO Payment based on savings Loan / Investment Agreement: capital for project installation Financial Institution Debt / Service payments and assignment of project security 14

21 Financial Products: Working with ESCOs 15

22 Financial Products: Working with ESCOs 16

23 Financial Products: Working with ESCOs 17

24 Financial Products: Working with ESCOs EBRD ESCO Forfaiting Facility Bulgarian ESCO Fund (BEF), an SPV sponsored by Enemona, a successful Bulgarian ESCO. BEF purchases the receivables from the energy saving investments of Enemona. EBRD support 2007 loan: 7 million 2012 loan: 10 million Results of the first loan (by end of 2010) > 6 million invested in more than 30 buildings. total cost savings from these investments are estimated to be > 0.8 million /year. Total estimated energy savings: 15,000 MWh/year. CO2 emissions avoided: 4,900 tco2 /year. 18

25 Financial Products: working with ESCOs Comparison between Lending directly to end-user vs. ESCO as a borrower End User Payment End User End-user finance payment to lender is fixed ESCO End-user payment to ESCO can be based on savings (but often also fixed with guarantee of savings from ESCO as back-up) Balance Sheet On-balance sheet for end-user Can be off-balance sheet for end-user Credit Risk End-user credit risk assumed by lender ESCO exposed to enduser credit risk 19

26 Financial Products: Working with ESCOs Forfaiting Receivables Option 1: Does not meet customer needs for financing transactions that may be treated as trade payables rather than loans Option 2: Leaves ESCO with end user credit risk and long term receivables on balance sheet Forfaiting: ESCO originates transaction as extended trade payments Long term receivables are sold to bank which assumes the credit risk 20

27 Financial Products: Working with ESCOs Forfaiting Receivables Structure of ESCO Forfaiting Energy Services Agreement (ESA) Step 1 Equipment Procurement 1. ESCO performs reconstructions 2. ESCO provides performance guarantee 3. End User pays fixed monthly payment to amortize the investment 4. All the technology installed is pledged to ESCO End User ESCO Maintenance Agreement 1. ESCO performs maintenance of the system 2. End User pays fixed monthly payment for this service Assignment Agreement Step 2 Forfaiting Transaction ESCO assigns future receivables from the ESA to Lender together with pledge of assets. ESCO performance guarantee remains in force ESCO Lender Notice and Acknowledgement of Assignment 50% Partial Guarantee Guarantor (if needed) End User, ESCO and Lender also sign a Notice and Acknowledgment of Assignment where End User acknowledges the terms of the Assignment Agreement and further agrees NOT to set-off any future claims 21 21

28 Models for IFI Participation

29 IFI Model 1: IFC Guarantee Facilities Donor Grant IFC Grant leveraged (1:5) Facility Guarantee TA Bank 1 Bank 2 Bank 3 Debt Borrower 1 Borrower 2 23

30 IFI Model 1: IFC Guarantee Facilities Grant funding leveraged 5-6x with IFC funds Administrative facility only, not an SPC Dedicated local team(financial and technical expertise) Financing and TA delivery in one package by local team Small part of grant is used to finance operations of the local team Grant is used as a first loss cushion to IFC TA critical but driver is sharing of market entry risks HEECP, CEEF and CHUEE -IFC s largest SEF facilities to date, were implemented using this structure. Approx. US$ 700m of debt, up to projects (small to large) Risk-sharing facilities (1 st loss, pari-passu) up to 50%) Individual and portfolio guarantees Zero guarantee calls Typical project size from $10K up to $ 7m Market Transformations: Hungary -$70M in IFC guaranteed loans in multifamily housing EE led to more than $300M in loans w/o guarantees over 3 years 24

31 IFI Model 2: IFC Dedicated Advisory Program Donor Grant IFC Guarantee or Credit Line as requested Dedicated Advisory Program TA Bank 1 Bank 2 Bank 3 Debt Borrower 1 Borrower 2 Funding 25 flows TA + Admin

32 IFI Model 2: IFC Dedicated Advisory Program TA and financial functions are splitand delivered by different teams TA engagement comes first to build capacity of FI, followed by financing Structure allows for TA only, TA + financing, financing only engagements TA is the driver, IFC credit lines not so needed due to high liquidity of local capital markets; TA in most cases covered market entry risks without guarantees No special Facility is created; financing approved on project-by-project basis Used by SEF programs in Vietnam, Philippines, Indonesia, Russia etc. Implemented as credit lines as well as risk sharing facilities Advisory approx US$700m, Financing approx. US$50m Zero guarantee calls to date 26

33 IFI Model 3 WB Fund Donor Grant(s) WB Gov. Agency Fund Manager Fund Debt Guarantee TA Borrower 1 Borrower 2 Borrower 3 27

34 IFI Model 3 WB Fund No FI as an intermediary, fund acts as a lender Funded 100% by grants Implemented by a dedicated fund TA and financing delivered by one team Critical role in opening market by demonstrating financing viability where FIs unwilling Relatively small size, supports small transactions Flexibilityto offer wide range of financial products to adapt as market develops Bulgarian EE Fund (BEERSF), Romanian EE fund FREE), Indian Renewable Energy Development Agency (IREDA): Armenia R2E2 Funds provide debt, guarantees as well as portfolio guarantees Funds operate as a revolving facility May shift to credit lines for FIs as FIs enter the market 28

35 IFI Model 4 WB Credit Lines Donor Grant Credit Line WB Facility administration Implementing Agency Bank 1 State owned Bank 2 State Owned Borrower 3 Direct lending if agency is a Bank Debt Borrower 1 Borrower 2 Funding 29 flows TA + Admin

36 IFI Model 4 WB Credit Lines Implemented via government institutions or banks Uzbekistan EE (UZEEF), Ukraine EE, SME EE Turkey, Primarily targeting state owned enterprises, public facilities + institutions TA capacity is established within existing government institution 30

37 IFI Model 5 EBRD SEF Donor Grant TA (Outsourced) EBRD Credit Line with Credit Line Grant Kicker TA Bank 1 Bank 2 Bank 3 Debt Borrower 1 Borrower 2 Funding flows 31 TA + Admin

38 IFI Model 5 EBRD SEF Financing provided directly by EBRD to FIs TA outsourced to independent consultants Donor funds used as grantsto projects (10-20% of debt principal) AND as performance commissions to FIs EBRD uses identical structure in all its SEF programs Active in most Central and East European Countries Belarus, Bulgaria, Moldova, Georgia, Azerbaijan, Poland Romania, Slovakia, Turkey, West Balkans Committed 1.9b in credit lines to date since 2004 Supported with 200m of donor funds 32

39 IFI Model 6 Green for Growth Fund Southeast Europe Green for Growth Fund as an Instrument to Finance Energy Efficiency Projects* Fund Structure: Financial Instruments: Development ministries or donor agencies provide an investment into the most junior tranche (the C shares ) to absorb any losses; Medium to long-term senior loans; Subordinated loans; Letters of credit; IFIs mezzanine tranche (the B shares ) also serves to absorb any losses that might exceed the amount of C shares available in the structure. Guarantees; Mezzanine debt instruments; Equity; Local debt securities; and Senior securities ( A shares ) for private investors. Technical Assistance to support its investments. 33 *Monika Beck, KfW, Green for Growth Fund Southeast Europe, 2010

40 Discussion + Conclusions?? 34