Renewable Energy Investments Centre for Environmental Rights

Transcription

1 Renewable Energy Investments Centre for Environmental Rights DATE: 24 October 2016 PRESENTER: Peta Chennells Senior Investment Analyst

2 Agenda Why Renewable Energy Makes Sense South African energy requirements Investment opportunity Socio economic development Mergence renewable energy project video Questions

3 South African Renewable Energy Programme An authorised FSP: no

4 South Africa s Energy Dilemma Security of Supply Low Cost Job Creation Low Carbon Low Water

5 Abundant wind and solar resources South African Wind Map South African Solar Map

6 42% of new capacity build from renewable energy 17.8 Nuclear 23% Coal 15% 9.6 Gas 15% Hydro 6% Coal Gas Hydro Renewables Nuclear Renewables 42% Source: Policy adjusted IRP (2030) DOE 26 Aug 2016

7 GWs 6.4GWs allocated to 102 projects over 6 bid windows BW1 (2011) BW2 (2012) BW3 (2013) BW3.5 (2014) BW4 (2014) Smalls (2015) Total Bid Window & Bidding Year Operational (# of projects) BW1 BW2 BW3 BW3.5 BW4 Smalls Total 100% 84% 0% 0% 0% 0% 43% (2.2GW, 44 projects) Source: Policy adjusted IRP (2030) DOE 26 Aug 2016

8 Dramatic Tariff Decreases Average tariff in R/kWh (Apr-2016-R) 3.65 Solar PV Wind BW1 (2011) BW2 (2012) BW3 (2013) BW4 (2014) BW4E (2015) Bid Window & Bidding Year Source: CSIR; Cost of new power generators in South Africa, Oct 2016

9 REIPP now 40% cheaper than Coal IPP Average tariff in R/kWh (Apr-2016-R) Renewable Energy BW4E Coal BW1 Source: CSIR; Cost of new power generators in South Africa, Oct 2016

10 Renewable Energy as an Investment Opportunity An authorised FSP: no

11 Investment in Renewable Energy R194bn committed investment R654bn forecast investment BW1 BW2 BW3 BW3.5 BW4 Smalls Source: Policy adjusted IRP (2030) DOE 26 Aug 2016

12 Invested R1.2bn across 12 Projects 74MW 44MW 20MW 27MW 10MW 75MW Noblesfontein NC 8% Fund allocation Soitec Touwsriver, WC 8% Fund allocation Herbert Douglas, NC 9% Fund allocation Van Stadens PE, E Cape 8% Fund allocation Greefspan Prieska, NC 3% Fund allocation Solar Capital 3 De Aar, NC 18% Fund allocation 28MW 27MW 30MW 75MW 80MW 75MW Soutpan Limpopo 6% Fund allocation Dassieklip Caledon, WC 8 % Fund allocation Witkop Limpopo 9% Fund allocation Kalkbult De Aar, NC 8% Fund allocation Kouga Oyster Bay, EC 4% Fund allocation Solar Capital 1 De Aar, NC 10% Fund allocation 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

13 Renewable Energy as an Investment Stable long term predictable cash flows Strong returns coupled low volatility Low probability of default & high recovery rates

14 Long-term Debt backed by Long-term Contracts Shareholders Mergence REDF 3. Equity (30%) 2. Limited Guarantee SA Government 4. Debt (70%) 15 Year Loan Project Co 1.Power Purchases 20 Year PPA Eskom Holdings Other Financial Institutions

15 Long term stable and predictable returns to investors Semi-Annual Periods Total Expenses Debt Servicing costs Total PPA Revenues(ZAR) Source: Mergence data

16 Comparable market returns with reduced volatility 12.0% 10.0% 11.2% 35% 30% Bonds CPI + 5% 8.5% 9.1% 25% 7.7% 20% 15% 10% 5% 20 years 10 years 5 years 0% Bonds CPI + 5% Source: Mergence data, Rolling 3 year average annual geometric returns:

17 Low defaults and high recovery rates 83.2% 2.5% Average default rate Average recovery rate Source: Addendum to Moody s Project Finance Defaults Study, World Availability Based PPP

18 Mergence Performance Summary as at 30 September Net Returns Since Inception Fund 10.4% JIBAR + 3% 9.3% Outperformance 1.1% Excluding 10% capital appreciation EY Valuations (since inception 19% increase) No defaults on any of our projects 100 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

19 Socio Economic Benefits Renewable Energy Investments An authorised FSP: no

20 Stringent Economic Development Criteria Bidding Projects Economic development commitments = 30% bid evaluation criteria Includes: Local content % of total spend Successful Bidders Successful projects legally commit to economic development criteria Monitored by DOE & Lenders Failure to comply = loss of PPA Job creation commitments Local community development BEE shareholding Socio Economic development spend

21 What s been committed so far? FTE Jobs R65bn local content spend R25bn development spend R29bn community income Source: Policy adjusted IRP (2030) DOE 26 Aug 2016

22 Over R100bn in investment in South Africa

23 Mergence community impact R300m receivable from 28MW solar farm Average impact of projects R m Social & enterprise development (cum) Community dividends (cum) 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 0.0

24 How the projects benefit their communities Limpopo area De Aar, Northern Cape De Aar, Northern Cape children will receive school shoes and jerseys, while children will receive books Free community Wi-Fi to the value of R745,000 installed within previously disadvantaged community R spent on a computer laboratory and equipped the Community Training Centre

25 Conclusion An authorised FSP: no

26 Conclusion Renewable Energy makes sense for everyone!

27 Questions? An authorised FSP: no