FACHKONFERENZN ERNEUERBARE ENERGIE: OFFGRID IN BOLIVIEN.

Transcription

1 FACHKONFERENZN ERNEUERBARE ENERGIE: OFFGRID IN BOLIVIEN

2 Financing & Funding Offgrid Projects With Renewable Energies focusing on Photovoltaics in Bolivia

3 Overview Introduction / Types of Financing German public financing programs International public financing programs Regional and country-specific financing Conclusions.

4 Types of financing Planning Project Procurement Construction Operation & development Maintenance Promotion schemes Promotion schemes Export financing Debtfinancing Project financing Promotion schemes According to value chain Specific and adpated project support opportunities through Funding gprograms Financing sources.

5 Planning and project development phase Non-investive support For market and project development phase Accompanying services Funding/grants for: Consulting Feasibility studies Training and advanced education measures Workshops.

6 Financing of investments Debt financing Based on balance sheets Different project periods (short, medium, long term) Project financing Foundation of a legally independent project company Long-term financing of economically self-sustaining projects (through project cash flow) Suitable for large projects with high invest volumes Moderate transaction costs High transaction costs

7 GIZ Support Bolivia is one of focus partner countries within the German development cooperation policy GIZ focuses on project development and monitoring Environment and climate is a focal point in South America developpp.de companies cooperations "Ideenwettbewerbe" (up to 200, EUR; application every 3 months) Strategic alliances (Substantial grant for projects > 750,000 EUR) Qualification + mediation of trained personnel (cooperation mit CIM)

8 Euler Hermes export credit guarantee "Hermes Cover by mandate and account of the German Federal Government Special SME product within this export credit gurantee scheme Buyer Credit Cover express Up to 5 M. EUR contract value, payment periods up to 5 years Grace period up to 18 months after completion Detailed information: (Consortium: Euler Hermes and PwC)

9 Hermes Cover conditions Bolivia Category 6 (0 low to 7 high) in the EH (OECD) Country category of risk assessment Premium rates for cover facilities up to 2 years in a range of % Short term: no formal restrictions i on cover Medium and long term cover facilities for smaller, foreign-exchange exchange generating projects of private buyers available for project financed and other structured finance deals Collateral: If the foreign buyer s creditworthiness is inadequate, bank security is required.

10 Support in the context of EEE* Dena RES Renewable Energy Solutions program (PPP projects) State of the art projects in attractive target markets Highly visible RE technology, prestigious institutions Co-financing of 235,000 EUR projects costs Incentives of 45 % (company s share: 55 %) RE installation (~95,000 EUR) Qualification and training concept (~95,000 EUR) Accompanying PR and marketing activities (~45,000 EUR) Incentives totalling ~ 106,000 EUR *German Export Initiative Renewable Energy

11 DEG Funding Products In addition to developpp.de program Feasibility studies up to 50% of costs, max. EUR 200,000 Climate partnerships with the private sector max. 50% of costs, max. EUR 200,000 Up-Scaling 25% equity requirement, max. 50% of costs, max. EUR 500,000 for innovative business models; repayable only when project is sucessfull Accompanying services (education, training, consulting services).

12 DEG Financing Products Specialized in debt financing of large project volumes Loans up to 40 M. EUR Tenors of 4-10 years Grace period of 1-3 years Equity capital financing Participation to 50% and EUR M. Syndication of (project) financing.

13 KfW Renewable Energies "Standard" Specialized in debt financing also of larger project volumes Loans up to 50 M. EUR Tenors of 5, 10 or 20 years (if equipment lifetime > 10 yrs) Grace period of 1, 2 or 3 years correspondingly For projects outside of Germany accordance with EU environmental standards required Bolivian companies may also apply within this program.

14 Export Credit Insurance International The Multilateral Investment Guarantee Agency (MIGA) is specialized in export credit insurance and guarantees for companies Small Investment Program (SIP) for SME: insurance package to common, non-commercial risks Exemption from process fees Reduced premiums (depending on country and project risk) typically yin a range from % of the insured value Up to 7.5 M. EUR insured value Tenors of 3-10 (max. 15) years Approval: 6-8 weeks after completeness of the documents

15 Inter-American Development Bank (IDB) Long-term debt financing of large projects on the "Structured and Corporate Finance Department" (SCF) Terms 3-15 years Loans from M. EUR Project value usually > 10 M. EUR Refinancing of local FIs / Banks

16 Inter-American Investment Corporation (IIC) IDB susidiary Focus on SME and loans up to max. 12 M. EUR Financing share of 33% (max. 50%) Tenors of 3-10 years Eligible for RE, e.g. FINPYME program offering technical assistance financing support for SME.

17 Priveate Equity (PE) & Venture Capital (VC) Bolivia is not yet a focus for VC and PE investors VC Investors are typically engaged in smaller projects starting from several thousand EUR invest Private Equity Investors/Funds tend to invest in larger projects with several million project volume However e PE Funds such as Real Infrastructure u Capital a Partners LLC (REAL), Conduit Investment Partners LLC or Victoria Capital Partners may be an option for larger projects in Bolivia The Latin American Private Equity & Venture Capital Association The Latin American Private Equity & Venture Capital Association (LAVCA) provides contacts and further information

18 Climate and Environmental Financing CDM due to its high transaction costs with little relevance, but may be additional value Climate Investment Fund (CIF), Clean Technology Fund (CTF) and Strategic Climate Fund (SCF) as well as Global Environment Facility (GEF) or Geothermal Development Facility (GDF) invest in country programs or large public projects Green Climate Fund to become one of the major climate and environmental financing agents in the nearer future Financing is typically not (directly) available to private sector companies, but may provide e.g. additional PPP opportunities

19 Capital Market Bolivia Inflation rate: 4.3 % (expectetd in 2015) Ease of doing business ranking: #155 (out of 189) Speculative grade ratings Ba3 by Moody s, BB by S&P and Fitch Local financing options Major commercial banks such as Banco de Crédito de Bolivia, Económico, Ganadero, Nacional de Bolivia, Los Andes ProCredit offer specific financing options for SME Interest rates about 11% Long-term loan tenors of years Volumes mostly in between EUR 100, ,000.

20 Financing dedicated to offgrid projects Programa Electricidad para Vivir con Dignidad (PEVD) Bolivia s initiative for rural electrification incorproates internationally supportet sub-programs such as IDB Programa de Electricificación ifi ió Rural (PER): finances a.o. pilot projects with USD 2.5 M.; ends in May 2016 KfW Programa Energías Renovables; focused on small hydro projects; ends in Dec 2018 Further details available at

21 Financing options FINPYME Credit (IIC) Loans EUR 90, ,000 Tenors of 3-7 years Processed directly through the IIC (IDB Group): FOCEM Fondo para la Convergencia Estructural del MERCOSUR Infrastructure fund provides USD 100 M. p.a. Approx. 50% of support for Paraguay

22 Local Financing Options Bolivian Bank (Hyperlink) Loan Term Banco de Crédito de Bolivia (Link) max. EUR 185,000 max. 10 years Banco Económico (Link) max. EUR 93,000 max. 10 years Banco Ganadero (Link) max. EUR 550,000 max. 12 years Banco Los Andes ProCredit (Link) n.a. max. 10 years Banco Nacional de Bolivia (Link) max. EUR 280,000 EUR max. 10 years

23 Clean Energy Investments Typical costs of debt in Bolivia: % average lending interest rate (short and medium term) % average cost of green micro debt Volume of green micro loans USD 13 Mio. Provided by 1,300 Borrowers.

24 Means of financing sources available in Bolivia Financing / Funding Source Local capital market Impact Moderate Access to international financing and funding High Dedicated d programs Offgrid Applications i Not available yet Dedicated programs Renewable Energy Not available yet

25 Typical challenges for smaller projects Project finance is not an option Credit financing depends on the company s balance sheet Availability and competitiveness of local credit financing Local interest rates? Tenor of loans? Experience and expertise of local banks? Access to international financing sources institutions

26 Typical challenges for larger projects Projects compete with other RE projects Reliability and creditworthiness of buyers in case of PPAs (e.g. public utilities) Equity share for project finance Legal security Risk mitigation Currency, e.g. denomination in lead currencies? Inflation, e.g. adjustment of remuneration? L k f i i fi i f Lack of experience in financing of new technologies Bildrechte deea-solutions

27 Conclusions Fincing opportunities are scarce (not only but especially in Bolivia) in a range between EUR 1 8 million due to the relatively high specific transaction costs (substantial efforts in combination with comparable low project investment volume) Support programmes and/or credit lines dedicated to RE / offgrid projects as well as Generally improved framework conditions i for these projects (e.g. less subsidized electricity tariffs) could significantly improve financing opportunities for the private sector, especially for SME, As lack of financing options remains a crucial obstacle for private sector engagement.

28 Do you have any further questions? At your disposal on behalf of the EEE Olaf Mecke Consultant ;

29 Thank you very much for your kind attention! ti

30 DEG Financing practice example 50 MW Florida Windpark, Uruguay, 2013 Cash-flow based, non recourse project financing (covered by 20 years UTE PPA) Project volume: 128 Mio. USD Share of private equity: 30% Structure: 90 Mio. USD consortial credit through DFIs (PROPARCO, FMO, DEG) Tenor: 15 years, 1.5 years grace period Interest rate: 6m LIBOR +4% p.a. Credit fees: 1% p.a. DEG, deviating investment numbers

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