Financing and funding opportunities for bio, solar and wind energy in Peru

Transcription

1 Financing and funding opportunities for bio, solar and wind energy in Peru Olaf Mecke DFIC

2 Contents 2 Overview 1. Types of financing 2. German financing programs 3. International public financing programs 4. Peru - local funding opportunities 5. Conclusions

3 1. Types of financing 3 According to value chain Planning Project development Procurement Construction Operation & Maintenance Promotion schemes Promotion schemes Export financing Credit financing Project financing Promotion schemes Specific and adpated project support opportunities through: Funding programs Financing sources.

4 1. Types of financing 4 Planning and project development Non-investive support For market and project development Accompanying services Funding/grants for: Consulting Feasibility studies Training and advanced education measures Workshops.

5 1. Types of financing 5 Financing of investments Debt financing Based on balance sheets Different project periods (short, medium, long term) Rather smaller investment volumes Moderate transaction costs Project financing Foundation of a legally independent project company Long-term financing of an economically self-sustaining project (cash flow based) Suitable for large projects with high invest volumes High transaction costs

6 2. Financing support from Germany 6 GIZ Support Focus on project development and monitoring Peru is one of the partner countries with a bilateral country program Access to energy, sustainable rural development and climate change as focal area developpp.de private public partnerships "Ideenwettberwerbe" (up to 200,000 EUR; application every 3 months) Strategic alliances (Substantial grant for projects > 750,000 EUR) Qualification + mediation of trained personnel (cooperation mit CIM) Co-Financing (up to 50%).

7 2. Financing support from Germany 7 Dena Support RES Renewable Energy Solutions (PPP program) Lighthouse projects in attractive target markets Highly visibly 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

8 2. Financing support from Germany 8 Euler Hermes export credit insurance Export credit insurance of the government ("Hermes guarantees") Hedging of export financing, credit insurance, guaranties Tenors: 8.5 years; up to 15 years for RE Grace period up to 18 months after completion Credit cover-express ( FKD-express ) special insurance product for SMEs: up to 5 M. EUR contract value, payment periods up to 5 years Carrying out + information: (consortium Euler Hermes and PwC)

9 2. Financing support from Germany 9 Euler Hermes export credit insurance 8 country categories for risk assessment (0 low to 7 high) Peru: 3 No formal restrictions on cover, neither for short nor medium/long term transactions Collateral: normally not required.

10 2. Financing support from Germany 10 DEG Specialized in debt financing of large project volumes Loans up to 40 M. EUR Tenors of 4-10 years (grace period 1-3 years) Equity capital financing Participation up to 50% and M. EUR Syndication of project financing CDM financing depending on project size Solar starting from approx. 10 MW Wind starting from approx. 12 MW

11 2. Financing support from Germany 11 DEG activities in Peru Office in Lima Financing of large investments Also funding programs (grants), besides developpp.de, for Feasibility studies (up to 50% of costs, max. 200,000 EUR) Climate partnerships with the private sector (max. 50% and 200,000 EUR) Accompanying services (education, training, consulting services).

12 2. Financing support from Germany 12 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

13 3. International public financing programs 13 Export Credit Insurance International MIGA (WB Gruppe) The Multilateral Investment Guarantee Agency is specialized in export credit insurance and guarantees for companies SIP: Small Investment Program for SME: insurance package to common non-commercial risks Exemption from regular fees Reduced premiums 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

14 3. International public financing programs 14 Financing Options International Funds Private Equity Funds, such as Calvert Global Alternative Energy Fund Funds with public funding such as Emerging Energy Latin America Fund (I + II) CDM Little relevance, but possibly additional contribution (increase of IRR) High transaction costs (administrative costs, lengthy testing, proof of additionality, uncertainty of final outcome).

15 3. International public financing programs 15 Financing Options International IDB Long-term debt financing of large projects (SCF) Project volumes > 10 M. EUR Refinancing of local FIs IIC (IDB group) Project finance & SME focus with loans up to max. 12 M. EUR Financing share of 33% (max. 50%), Tenors of 3-10 years FINPYME programs (support from technical assistance to financing: 100, ,000 USD).

16 3. International public financing programs 16 Financing Options International La Corporación Andina de Fomento (CAF) Credit lines to local banks Major financing partner: COFIDE (Corporación Financiera de Desarrollo S.A.) E.g. PROPEL program for RE projects from 3 30 M. USD

17 4. Peru - local funding opportunities 17 Local financing Inflation rate 2.5% GDP growth 5.5% Access to financing products somewhat comparable to Germany Major commercial banks such as Santander, HSBC, BBVA or Scotiabank offering their financing portfolios Access to adapted financing facilities funded by international development banks via COFIDE Further information on FDI support at investment promotion agency PROINVERSION, incl. Energy sector project database

18 4. Peru - local funding opportunities 18 Funding RE RE financing experience e.g. at Banco Internacional del Perú S.A. (INTERBANK), Banco de Crédito del Perú (BCP), or Scotiabank Also project financing available for hydro, evtl. wind energy; Loans up to 20 M. USD (fixed or variable interest rates) Tenors of years, grace periods up to 2 years Law and 1058: Fiscal incentives Tax exemptions (e.g income tax) and accelerated depreciation for investments in infrastructure & RE power plants (up to 20% p.a.).

19 4. Peru - local funding opportunities 19 Financing options Especially through Cofide credit lines, e.g. PROBID Max. 20 M. USD, tenor max. 15 years (grace period 1 year) In USD, fixed or variable interst rate PROPEM BID Max. 300,000 USD (70,000 for working capital) Tenors up to 10 years (3 years respectively), 1 year grace period Restriction: company s turnover max. 1.5 M. USD

20 5. Conclusions Investment climate* 20 * Please see target market study by AHK Peru for comprehensive analysis of investment climate and framework conditions

21 5. Conclusions - Specific challenges 21 Financing small projects Project financing not suitable TA costs Hence no direct funding from international development financing institutions (private window) feasible Loans: dependence of credit financing based on company s balance sheets (local collateral?) Availability of local financing Loan tenors eligible for RE? Experience and expertise (risk assessment) local banks? Second financing phase required?

22 5. Conclusions - Specific challenges 22 Financing large projects Projects compete with other RE projects Reliability and creditworthiness of public utilities (as buyer within the PPAs) Mobilization of equity capital for project finance net cash flow required Legal security/guarantees Risk treatment and allocation hedging of risks? e.g.: Currency risk (Major currencies /adaption to volatile exchange rates?) Inflation risk (adjustment of remuneration?) Lack of experience in financing new / unknown technologies

23 5. Conclusions Bio, solar, wind energy in Peru 23 Means per financing source for RE in Peru Financing/ funding source Local capital market Access to international funding and financing Fiscal incentives for projects with RE Impact Moderate High Moderate Financing or funding porgrams for RE Low

24 Financing and funding opportunities for bio, solar, wind energy in Peru We are happy to assist you to find adequate financing opportunities for your project! Olaf Mecke Phone +49 (0) Fax +49 (0) Zweigertstr Essen, Germany