B U I L D I N G P A R T N E R S H I P S F O R E N E R G Y S E C U R I T Y

Transcription

1 "INOGATE Technical Secretariat & Integrated Programme in support of the Baku Initiative and the Eastern Partnership energy objectives" Project B U I L D I N G P A R T N E R S H I P S F O R E N E R G Y S E C U R I T Y

2 STUDY TOUR / SEMINAR on FINANCING EE and RES PROJECTS MAY 14-16, 2013 VIENNA, AUSTRIA

3 FINANCING EE and RES PROJECTS in the PARTNER COUNTRIES: CHALLENGES and FORMULA for SUCCESS Vahan Babajanyan EE / RE Source Financial Training & Research Expert, INOGATE TS

4 1. BUSINESS in the field of ENERGY EFFICIENCY and RENEWABLE ENERGY SOURCES

5 ENERGY: KEY PLAYERS ENERGY PRODUCTION GENERATION REGULATOR ENERGY SUPPLY ENERGY COMSUMPTION

6 BUSINESS in the FIELD of EE and RES ECONOMIC REFORMS POTENTIAL for ENERGY SAVING (ES) PROVEN TECHNOLOGIES ENERGY BUSINESS REALSITIC COSTS ENERGY LEGISLATION Tariff Policy Regulatory Acts COOPERATION between GOVERNMENT, ACADEMIA and BUSINESS!!!

7 BUSINESS in the field of ENERGY EFFICIENCY ENERGY BUSINESS MACRO MICRO Development Projects Regional and International Projects Governments, International Donors, IFIs SME Projects Private Sector Local / Eco SME, LFIs, Equipment Manufacturers, Consumers

8 BUSINESS in the field of ENERGY EFFICIENCY ASSESSMENT of Potential for Energy Saving ENERGY MANAGEMENT ORGANISATION MANAGEMENT ENERGY AUDIT RELIABLE DATA

9 ENERGY EFFICIENCY: BUSINESS and FINANCIAL INSTITUTIONS ANY upgrading has an element of EE and ES Huge EE/ES market in the CIS International EE/ES projects Engineering, Audits, ESCO Forms of Financing Risk Management Outsourcing

10 ENERGY EFFICIENCY: BUSINESS and FINANCIAL INSTITUTIONS MESSAGE to the BANK Energy Efficiency is! KEEP in MIND! a priority of global energy policy! DEVELOPMENT of the Policy! Recommendations on the Development of an EE / RES Policy

11 MESSAGE to the BANK RES: BUSINESS and FINANCIAL ISTITUTIONS Globally, RES investments are growing exponentially (very rapidly) 22 bln bln RES Investments > FES Investments 2013 ESTIMATES Over 300 bln BIOFUEL

12 RES BUSINESS FINANCIAL INSTITUTION PROJECT OWNER CONTRACTOR NETWORK OPERATOR TECHNOLOGY SUPPLIER RES PROJECT CONSULTANT PLANT OPERATOR ENERGY BUYER

13 RES BUSINESS VENTURE FUNDS INFRASTRUCTURE FUNDS Additional Issue Operating Assets BANK, LFI RES PROJECT EQUITY FUNDS / CAPITAL GRANTS PENSION FUNDS DIRECT INVESTMENTS BIOFUEL

14 BUSINESS in the field of RENEWABLE ENERGY SOURCES VENTURE FUNDS DIRECT INVESTMENTS Infrastructure / Structural FUNDS PENSION FUNDS High Risks PBP 4 7 years IRR % Risk Management PBP 3 4 years IRR over 25% Low Risks PBP 7 10 years IRR over 15% Low Risks PBP years IRR 10-15%

15 EE / RES FINANCING: SPECIFIC and DISTINCTIVE FEATURES BIG CAPITAL INVESTMENTS LONG PAYBACK PERIOD LONG PROJECT IMPLEMENTATION PERIOD ACTIVE ROLE of the REGULATOR WIDE RANGE of RISKS

16 2. FINANCING in the field of ENERGY EFFICIENCY and RENEWABLE ENERGY SOURCES

17 EE / RES FINANCING: SPECIFIC and DISTINCTIVE FEATURES MAKING USE of VARIUOS TOOLS MONEY FLOWS as a FORM of COLLATERAL ESTABLISHMENT of an IMPLEMENTATION CONSORTIUM FEASIBILITY ASSESSMENT FUTURE REVENUE

18 EE / RES FINANCING: COMRARATIVE ANALYSIS of SOURCES BANK, LFI 60% - 80% EQUITY FUNDS CAPITAL INVESTMENTS / ISSUE COMERCIAL LOANS LEASING (FINANCIAL / OPERATIONAL) PROJECT FINANCING OPERATION / CAPITAL FINANCING COLLATERALS, BILLS of EXCHANGE, LC

19 EE / RES FINANCING: COMPARATIVE ANALYIS of SOURCES TIME FRAME of INVESTMENT ATTRACTION UNLIMITED CLOSE to PROJECT LIFE CLOSE to PROJECT LIFE EQUAL to PROJECT LIFE EQUAL to PROJECT LIFE OPTIMISATION of ATTRACTION and REPAYMENT SCHEDULES!

20 EE / RES FINANCING: COMPARATIVE ANALYIS of SOURCES DIVIDENDS and REINVESTMENTS MANAGEMENT is INDEPENDENT in DECISIONS MANAGEMENT is INDEPENDENT in DECISIONS MANAGEMENT is INDEPENDENT in DECISIONS MANAGEMENT is INDEPENDENT in DECISIONS NO REINVESTMENTS OPTIMAL DIVIDEND to REINVESTMENT RATIO!

21 EE/RES FINANCING: COMPARATIVE ANALYSIS of SOURCES INVESTMENT DECISIONS for CREDITORS NO TRANSPARENCY NO TRANSPARENCY INSUFFICIENT TRANSPARENCY NO TRANSPARENCY HIGH TRANSPARENCY DEVELOPMENT of MECHANISMS to ENSURE TRANSPARENCY!

22 EE/RES FINANCING: COMPARARIVE ANALYSIS of SOURCES COMPLEXITY of FINANCIAL STRUCTURING LOW, LINITED POSSIBILITIES MIDDLE, GROWTH POTENTIAL LOW, LIMITED POSSIBILITIES LOW, GROWTH POTENTIAL HIGH, LIMITED FIELD OPTIMISE MANAGEMENT of CASH FLOWS!

23 EE/RES FINANCING: COMPARATIVE ANALYSIS of SOURCES TRANSACTION EXPENSES LOW / MIDDLE MIDDLE, ABOVE THE AVERAGE LOW, MIDDLE LOW, MIDDLE MOSTLY HIGH OPTIMISATION / REDUCTION of FINANCIAL EXPENSES!

24 EE/RES FINANCING: COMPARATIVE ANALYSIS of SOURCES LOWER LIMIT of FINANCING YES, WHEN ADDITIONAL ISSUE YES, DEPENDING on the SOURCE NO, DEPENDING on PROFITABILITY NO, DEPENDING on the SOURCE YES, HIGH NEED to CREATE a FINANCIAL BUFFER!

25 EE/RES FINANCING: COMPARATIVE ANALYSIS of SOURCES BASIS of CREDIT ASSESSMENT ANALYSIS of FINANCIAL REPORTING ANALYSIS of FINANCIAL REPORTING ANALYSIS of FINANCIAL REPORTING ANALYSIS of FINANCIAL REPORTING ToR, MONEY FLOWS COLLECTION of RELIABLE DATA / INDICATORS!

26 EE/RES FINANCING: COMPARATIVE ANALYSIS of SOURCES SECONDARY MARKET for a SOURCE of FINANCING DEVELOPED, GROWTH TREND DEVELOPED, GROWTH TREND LIMITED, POTENTIAL for GROWTH LIMITED, POTENTIAL for GROWTH LIMITED, TEETHING PROBLEMS REALISTIC ASSESSMENT of the CURRENT VOLUME!

27 EE/RES FINANCING: COMPARATIVE ANALYSIS of SOURCES DEBT-to-EQUITY RATIO CONSERVATIVE, UP TO 30-40% CONSERVATIVE, UP TO 30-40% HIGHLY CONSERVATIVE, 20-30% MAINLY AGGRESSIVE, UP TO 70% HIGHLY AGGRESSIVE, UP TO 70-80% PRIORITY to the MODERATELY CONSERVATIVE APPROACH!

28 EE/RES FINANCING: COMPARATIVE ANALYSIS of SOURCES SUBJECT of CREDIT / INVESTMENT ACTIVITIES OPERATING COMPANY with GOOD RECORDS OPERATING COMPANY with GOOD RECORDS OPERATING COMPANY with GOOD RECORDS OPERATING COMPANY with GOOD RECORDS SPECIAL PURPOSE COMPANY RECORD in PROJECT IMPLEMENTATION!

29 EE/RES FINANCING: COMPARATIVE ANALYSIS of SOURCES COLLATERAL on FINANCING ASSETS of COMPANY, SHAREHOLDERS, PARTNERS ASSETS of COMPANY, SHAREHOLDERS, PARTNERS ASSETS of COMPANY, SHAREHOLDERS, PARTNERS ASSETS to PLEDGE CASH FLOWS and ASSESTS AVAILABLITY of and ENSURING HIGH LIQUIDITY!

30 EE/RES FINANCING: COMPARATIVE ANALYSIS of RESOURCES SPONSOR S BANKRUPCY RESULTS in PROJECT s SUSPENSION RESULTS in PROJECT S SUSPENSION RESULTS in PROJECT S SUSPENSION RESULTS in PROJECT S SUSPENSION LIMITED IMPACT EXPERIENCE in PROJECT IMPLEMENTATION!

31 EE/RES FINANCING: SPECIFIC FEATURES of RISKS a COMPANY is the PROJECT s OWNER TEAM is the PROJECT S IMPLEMENTOR SHAREHOLDER EQUITY PARTNER RELATIONS BUSINESS REPUTATION MANAGEBILITY

32 EE/RES FINANCING: SPECIFIC FEATURES of RISKS ORGANISATION and TECHNICAL RISKS COMPLETION of the PROJECT TECHNOLOGY INFRASTRUCTURE CONSTRUCTION ADMINISTRATIVE

33 EE/ ВИЭ ФИНАНСИРОВАНИЕ: SPECIFIC FEATURES of RISKS FINANCING and OPERATION CONTRACT RISKS RISKS of UNDERFINANCING RISKS of OPERATION STAGE CURRENCY / INTEREST-RATE RISKS FINANCIAL SITUATION of INVESTOR

34 EE/RES FINANCING: PRINCIPLE of REDISTRIBUTION of RISKS OWNER PROJECT OWNER RISK 100% CREDITOR INSURER GUARANTOR CONTRACTOR SUPPLIER DEVELOPER

35 FINANCIAL PRODUCT BUSINESS Who is a BORROWER MANAGEMENT What GUARANTEES PROVISION HISTORICAL DATA EXPECTED RESULTS BUSINESS IDEA and PROJECT SHAREHOLDERS OPERATIONAL MANAGEMENT PROJECT MANAGEMENT GUARANTEE TANGIBLE COLLATERAL INTANGIBLE COLLATERAL

36 COLLATERAL GRAUAL INCREASE of COLLATERAL BASE PERIODICAL REVIEW of COLLATERAL PROPERTY HIGH LIQUIDITY ASSETS PROPERTY 40% - 60% EQUIPMENT, TRANSPORT PROPERTY GUARANTEES FLOATING CAPITAL 50% - 70% 20% - 30% 10% - 20% OTHER INTANGIBLE ASSETS 30% - 50% 30% - 50% 10% - 30% EQUIPMENT, GOODS, ETC. 30% - 50% 20% - 40%

37 EVALUATION PROCESS PROJECT OWNER CREDITORS, SOURCES of FINANCE EQUITY DEBT CAPITAL INSURANCE PROJECT FUNDS PROJECT IMPLEMENTATION RISK MANAGEMENT

38 EVALUATION PROCESS FUEL SUPPLIES PURCHACE of ENERGY EQUIPMENT SUPPLIES DESIGN and SUPERVISION CONSTRUCTION and COMMISSIONING CONSULTATIONS and AUDITS CREDIT REPAYMENT SUPPLIERS and CONSUMERS MANUFACTURERS and SUPPLIERS PROJECT ORGANISATION CONTRACTORS and SUBCONTRACTORS CONSULTANTS, ENGINEERING PROJECT IMPLEMENTATION

39 SPECIFIC FEATURES of EVALUATION LEGAL AUDIT 1 ANALYSIS of the PROJECT TECHNICAL AUDIT FINANCIAL AUDIT 2! SEPARATELY! ANALYSIS of the COMPANY CASH FLOWS PROFITABILITY SOLVENCY ANALYSIS of CONSOLIDATED INDICATORS PROJECT IMPLEMENTATION

40 DECISION CREDIT PRODUCT TYPE of CREDIT PRODUCT SIZE of CREDIT CURRENCY INTEREST RATE TERMS CREDIT PERIOD CREDIT SCHEDULE GRACE PERIOD REPAYMENT SCHEDULE

41 DECISION COLLATERAL / PLEDGE ESTIMATE, MARKET and LIQUID PRICE ENSURANCE, INSURANCE of LIQUIDITY BUY-BACK AGREEMENT FORM and TERMS of PLEDGE EXECUTION MONITORING TARGETED USE of CREDIT SUBJECT of MONITORING INDICATORS and SCHEDULE SPECIAL CONDITIONS

42 3. PARTNER COUNTRIES FINANCING of EE and RES PROJECTS

43 ARMENIA PARTNER COUNTRIES AZERBAIJAN BELARUS GEORGIA MOLDOVA UKRAINE

44 CREDIT PORTFOLIO, PARTNER COUNTRIES (March 2013, bln EURO) en.wikipedia.org PC s AM AZ BY GE MD UA CP/ GDP 39% 23% 20% 33% 39% 58% ARMENIA AZERBAIJAN BELARUS GEORGIA MOLDOVA UKRAINE Кредиты в промышленность и энергетику Кредитный Портфель

45 GROSS DOMESTIC PRODUCT (GDP), en.wikipedia.org PC s AM AZ BY GE MD UA GDP, Bln EU P / C, Ths EU PER CAPITA AUSTRIA 32,440 EU GDP AUSTRIA 418,03 Bln. EU

46 DISCOUNT and LENDING RATES, TERM up to 5 YEARS, March 2013, % LIBOR 0.75% A/W RATE 3.85% ARMENIA AZERBAIJAN BELARUS GEORGIA MOLDOVA UKRAINE Ставка рефинансирования Ставка коммерческого кредитования

47 1. Incentives to save energy, 2. Institutions for EE and RES stimulation, 3. Creation of favourable conditions for investments, 4. Creation of a simplified tax system, 5. Development and introduction of new technologies, 6. International cooperation, 7. Clear legislative framework, predictable methods of regulation EE and RES POLICY: State Support

48 ENERGY EFFICIENCY: Three Priorities for stimulation Reach the energy saving parametres which are compatible with the EU ones by Organisation and management Ensure the qualitative level of energy saving by 2018 Technologies and materials Attain GDP energy intensity compatible with the EU indices by

49 Favourable Depreciation Regime, Upgrading / Equipment replacement Tools for simplified crediting Application of leasing tools Attraction of cheap credit funds ENERGY EFFICIENCY: Investment Policy

50 THANK YOU!!! Feel free to visit our Web portal: Vahan Babajanyan EE / RE Source Financial Training & Research Expert, INOGATE Technical Secretariat bsvahan@mail.ru