Project Development In East Africa From A Financier s Perspective

Transcription

1 Project Development In East Africa From A Financier s Perspective KCB Capital Limited (KCBCL) March 5 th, 2014

2 Table of Contents What are advisory services? Why would you need advisory services? What advisory services does KCB Capital offer?

3 Drivers of Renewable Energy in East Africa Search for cheaper source of generated power Domestic Interest by donor and international funding in climate change In this region renewable energy driven by basic economics Solar and Wind are mentioned less often

4 Basic Facts Feed-In Tariffs Large Hydro s 8cts Mini-Hydro s 8cts Geothermal 8.8cts Solar Off-Grid 20cts Solar On-Grid 12cts Wind Off-Grid 11cts Ministry of Energy Electricity Regulation Commission Purchasing Power Agreement Technical Studies

5 Technical Studies Technical studies that confirm feasibility of Hydro and Geothermal potential Wind Speed Studies Solar Can be difficult, expensive and tedious in this part of the world versus the potential benefits

6 Permissions Land Acquisition/Renting Prices can be prohibitive for large land acquisition Community land challenge Transmission Lines in Most Areas Sub-station costs Feed-In Tariff Regime is Fixed

7 Construction EPC guarantees to cover delays and/or cost overruns Operation and Maintenance Fee Availability of appropriate insurance

8 Permissions Land Acquisition/Renting Prices can be prohibitive for large land acquisition Community land challenge Transmission Lines in Most Areas Sub-station costs Feed-In Tariff Regime is Fixed

9 Project Milestones Incorporation of SPV Permitting Process and Grid Connection Purchasing Power Agreement Sourcing of Components Finalization of Technical Planning Step in of Equity Investor Confirmation of Debt Provision Construction Start End of Construction Phase Grid Connection Operational Phase

10 Risk Development throughout Project Life Cycle Development 6-18 months globally Uncertain regionally Construction 6 to 30 Months depending on technology Uncertain Operation 20 to 30 Years if properly maintained New and service back up new

11 Key Risks of Renewable Energy Political & Regulatory Risks Fairly low in Kenya thus far Some issues in Tanzania but being resolved Technical Risk Technology Risk Construction Risk Operational and Procedural Risk Geological Risk

12 Key Risks of Renewable Energy Commercial Risk Market Risk Supply Risk Creditworthiness of the Buyer/Seller Financial Risk Interest Risk Exchange Risk Inflation Refinance Risk

13 Conclusion In the region the reality is that each project is for now fairly different from the other Work in progress to standardize project progression and with reforms over the past 5 years we are getting there Funding Banks are getting more comfortable Balance Sheets in Dollars not large but syndication possible Donor Fund International Banks Private Equity and Infrastructure Funds Private-Public Partnerships

14 Advisory Services Critical to get a good advisor on side at early stage of project but that costs money More advisors now working in the region

15 Advisory Services