Financing of Photovoltaic Projects

Transcription

1 Energy Financing of Photovoltaic Projects Status and Perspectives Robert Markus Feldmann Deloitte & Touche Corporate Finance GmbH

2 Content 1. Introduction to Photovoltaic Power Plant Projects 2. Typical Structure 3. Project Time Frame 4. Project Financing Parameters 5. Financing Profile Example 6. Conclusions 7. Contacts

3 1. Introduction to Photovoltaic Power Plants

4 1. Introduction to Photovoltaic Power Plant Projects Typical Project Developer Issues: Project Equity, Guarantees Money / $ Project Developer Bank Financing ASSETS: Real Estate Suitable land & usage Civil Engineering Permits, connections Technical feasibility & dimensioning Component supplier selection EPC contractor selection Detailed financial & technical planning Construction execution Real Estate Land/ Surface Permits Source: Deloitte Hardware Technology Engineering, Construction, BOS EQUITY & LIABILITIES: Capital to fund development up to fully permitted Capital to fund construction phase Capital to fund finished power plant Guarantees, grants, subsidies (if any)

5 2. Typical Structure Parties involved Financial/ Technical/ Legal Advisors Owner (Equity Capital) Sponsor/ Initiator/ Developer Investment Dividends / After Tax Cash Flow FIT Income Project - Special Purpose Vehicle (SPV) kwh produced & sold Interest Long term credit Bank Debt Capital Physical Assets Operator Source: Deloitte

6 5. Typical Structure Value Chain Solar Power Plant Owner / Operator General Contractor/ Turn-key Contractor Component/ System Supplier - Mechanical Component/ System Supplier - Electrical Capital Provider Equity, Debt Developer Company - Independent Developer Company Captive, Manufacturer Developer Company Captive, Utility Intermediary, Agent Land Owner / Rooftop Owner

7 3. Project Time Frame 1/2 Source: Epuron / Deloitte

8 3. Project Time Frame 2/2 Source: Epuron / Deloitte

9 4. Project Financing - Parameters Balance Sheet Profit & Loss Assets: Plant Equipment Land (opt.) Equity & Liabilities: Shareholder Equity Mezzanine Debt/ Interestbearing, nonshareholder Equity Bank Debt Ca % Up to ca. 1x Shareholder Equity Ca % Revenues: Sales of kwh Costs: Operating Costs Administrative Costs Fuel Costs - ZERO (Sun is free) EBITDA: Depreciation & Amortization Financing Costs Tax Net Profit:

10 4. Project Financing - Equity Renewable Energy Projects can be placed amongst various investors: Financially oriented Investors Strategically oriented Investors Institutional Investors Private wealthy investors Retail investors Utilities - Multinational, regional, local Independent Power Producers Industrial Electricity consumers Type Annuity Seekers : Asset managers Pension funds Insurance companies Family Offices HNW Individuals Boutique Banks Direct or fund investment Closed end retail funds Citizen cooperatives Renewables Division Local physical assets Farmer cooperatives Special investment companies E.g. Solar plants on factory roofs Clean energy Energy Mix Motive Asset Diversification Quasi State Guarantee Real-Estate like Risk-return profile Better returns than bonds Less risk than shares Environmental benefit Clean energy portfolio standard Run it as a business, sell the energy to the grid Clean energy Energy Mix Source: Deloitte

11 4. Project Financing Bank Debt Specialized banks analyse each project and determine the debt level: Solar Project Debt Finance is easiest in countries, where the government guarantees the offtake and thus lends its typically superior rating to the project, cheapening the financing costs Source: HSH Nordbank/ Deloitte

12 4. Project Financing Requirements Requirements:

13 3. Project Financing - Risks Risks Detail Mitigation Development Risk Contracts, Permits, Deloper Equity Construction Risk Completion Deadline, Proven Turn-key Contractor Technology Risk Stable, consistent output, Proven components Operating Risk Interruptions, Operations & Maintenance Raw Materials/ Fuel Risk Cost/ availability of input Solar irradiation studies Offtake Risk Demand and payment State guarantee FIT, PPA, Country Risk Political, financial, regulatory Do not invest in poorly rated Exchange Rate Risk 20 year cash flow returns, Currency hedging, local currency Interest Change Risk Refinancing interest higher Long term fixed interest Force Majeure Risk Hail, storms, fire, etc. Insurances

14 5. Project Financing Profile Example

15 6. Conclusions From initial roots in Germany, the solar project development industry has quickly professionalized and internationalized Specialists have emerged, focusing on certain elements of the value chain only e.g. financing, foundations, central inverters etc. In new markets, such as Bulgaria, both international players and local start-up developers will have a role to play International players will coooperate with local supplier and agents Local players will seek foreign specialist expertise for certain tasks Financing is a challenge in new markets Specialist Analysts in banks are initially lacking Equity ratios need to be higher Currency and country risks are often higher Local investors also lack expertise initially Developers are often undercapitalized or underestimating complexities Sound assistance and advice can improve chances of success

16 7. Contact Cleantech & Renewables Leader EMEA Robert Markus Feldmann Partner Corporate Finance Advisory Tel: Fax: Mobil: Deloitte & Touche Corporate Finance GmbH Franklinstraße 50 D Frankfurt Tel.: +49-(0)