5th Annual Renwable Energy Finance in Practice 21 October Support Tendering - François van Leeuw CEO of Parkwind

Transcription

1 5th Annual Renwable Energy Finance in Practice 21 October Support Tendering - François van Leeuw CEO of Parkwind

2 AGENDA 1. Introduction to Parkwind 1. Corporate Overview 2. Shareholders structure 3. Current portfolio 4. Parkwind approach to offshore wind development 5. Project Development: QSSE and Risk Management as key drivers 2. Support tendering 1. Offshore wind tendering - what do we see in Europe? 2. From Decentralized to Centralized models 3. Competitive Tendering -what challenges for the industry? 4. Offshore wind market is maturing 5. Designing a renewable energy tender

3 INTRODUCTION TO PARKWIND N.V

4 1.1. Corporate Overview Parwind is a Belgian-based offshore wind developer since 2012 Parkwind is a team of 53 professionals and independent experts operating from Leuven and Oostende with: o Senior executives from the energy industry, finance and legal o An ownership group composed of key industrial and govermental Belgian players Parkwind is active during the full lifecycle of the windfarms from development to operations PARKWIND 4

5 1.2 Shareholders structure Annual Report Colruyt Revenu: CcfgC EUR 9,1bio Net Profit: EUR 336 mio Net Cash EUR 433 mio 10/17/2016

6 1.3. Current Portfolio Belgium Area Capacity Stage Belwind 165 MW Operational Northwind 216 MW Operational Nobelwind 165 MW Under construction Project Finance Build within time and budget High level of risk management Availibility: > 95% 10/17/2016 6

7 1.4 Parkwind approach to offshore wind development Parkwind s approach to offshore wind development isfully integrated 1 INVESTING 2 DEVELOPING 3 BUILDING 4 OPERATING Parwind is a build & hold developer with a view to develop long-term value for shareholders and investors 10/17/2016 7

8 1.4 Parkwind approach to offshore wind development (cont.) Parkwind as developer o As development manager, Parkwind and his teams develop offshore windfarms either alone or in co-development with a business partner (development period takes 12 to 15 months) Parkwind as investor o As a developer Parkwind brings its projects to financial close using non-recourse finance principles (usually taking a few weeks) and takes a relevant share in the projects as equity investor. Parkwind as construction manager o As construction manager Parkwind will coordinate the works offshore and manage the project with project director responsibilities. Parkwind as operations and maintenance manager o As O&M manager Parkwind is responsible for the daily management of the offshore windfarms 8

9 1.5 Project development : QSSE & Risk Management as key drivers Objectives Completing the project within the agreed time and budget respecting pre-defined quality, HSSE and social standards How Proactively identifying and managing risks Understanding risk and its potential impact upon objectives Identifying important risk origin Decision on how to manage the risk Finding risk mitigation tools or allocation Establishing risk awareness and prioritisation Risk Owners All members of project team Risk Register Risk registration and project evaluation Frequent updates 9

10 SUPPORT TENDERING

11 2.1. Offshore wind tendering What do we see in Europe? Competitive auctions for awarding subsidies is more and more what we see in the European offshore wind market Competitive auctions already in place in Denmark, and the Netherlands Germany is currently amending its existing support system NEXT? France, the US pushing offshore market to become a matured market LCOE: 100/Mwh in 2020 Countries Dates Projects /Mwh DNK Feb 2015 Horn Rev 3 103,1 DNK Near Shore Sept 2016 Vesterhav Syd and Vesterhav Nord NL July 2016 Borselle I & II 72,70 NL Dec 2016 Borselle III & IV? 63,84 (0.475 Danish kroner ) 10/17/

12 2.2 From Decentralized to Centralized models DECENTRALIZED MODEL CENTRALIZED MODEL Cluster Approach site selection by developers pre-development works at cost grid connection for developers Feed-in- Tariff Old German system UK system Based upon the Danish model one-stop shop approach site specific tender equal basis competition grid connection provided for cost effective process right to build fixed price per KWh (lowest) Followed by the NL and German system to come LOWER TENDER PRICES 10/17/

13 2.3 Competitive Tendering (Centralized model) What challenges for the industry? Pros & Cons of the Competitive Auction System? Efficient use of public budgets the largest volumes of production against the lowest cost Certain costs and risks related to the participation in a tender may tend to discourage the participation of small and medium developers (sunk costs for project development which cannot be recovered, or face dropped out penalties) Large market actors may have a favored position over smaller competitors to reach the lowest price, due to: - Big leverage on contractors (WTG suppliers, EPCI, etc ) - Economies of scale (portfolio approach) - Overall financing strategy (financing conditions, financial engineering, etc ) A sufficient number of bidders are required to participate to produce a competitive result Implementation rate is not 100% - Not all projects selected are carried out - Timing effect between bid time and operation - Bidders with too little knowledge cannot bring the project live 10/17/

14 2.4 What do we see in the offshore wind industry? Offshore wind market is maturing Cost reduction became the priority Standardisation and industry experience will support cost reduction of offshore wind projects Partnerships with industrials will help reducing Capex and support smaller developers Project Finance is not dead but Financial Institution need to adapt to lower structuring costs Financial Engineering shall be considered in the overall pricing What are the risks of going too low? It is NOT all about return: bidding too low will not allow developers to further invest in R&D Supply Chain shall be preserved : relationship with manufacturers and contractors is key Small players shall be able to compete with big utilities Oligolpoly is dangerous 10/17/

15 2.5 Designing a renewable energy tender Key considerations for governments How to find the optimized balance between the design elements? SUFFICIENT INTEREST auction design shall be simple, transparent and affordable Volume of product to be auctioned shall be clear Timing and commitments shall be set from the start Participation conditions shall not discriminate Initial costs shall remain as low as possible for developers EFFICIENT COMPETITION demand for support shall exceeds supply Prequalification requirements shall not be too high (Pre)- development fees Financial and technical requirements Stepping out penalties necessary but reasonable Guarantees, bonds Socio- economic development ACCEPTABLE RISK LEVEL FOR PARTICIPANTS Production site selection Secured Grid access 10/17/

16 Questions? Thank you