Financing concepts for projects on biogas in Ukraine Jasper Lauert GFA Consulting Group GmbH Kyiv, 26.09.2013
Content of the presentation 1. National support mechanisms 2. Specific renewable energy credit lines available in Ukraine 3. German support mechanisms 26.09.2013 Biogas Workshop, Kyiv, Ukraine 2
Part I National support mechanisms» Green Tariffs» Other support mechanisms 26.09.2013 Biogas Workshop, Kyiv, Ukraine 3
National Support Mechanisms Green Tariffs The most relevant supportive mechanism are the Green Tariffs: Introduced in 2009, revised in 2012 Established until 1 January 2030 and reviewed by the National Energy Regulatory Commission of Ukraine on a monthly basis with a guaranteed minimum floor set in EUR Eligible for: wind, solar, biomass and small HEPP, incl. biogas For each type of RE a factor is defined, which determines the final price Further differences are applied according to the installed capacity Gradual reduction of the tariffs is foreseen in 2014, 2015, 2020 and 2025 26.09.2013. Biogas Workshop, Kyiv, Ukraine 4
National Support Mechanisms Green Tariffs Cont d Several barriers exist: The floor price for biogas units is set at the same level as for biomass projects 123.9 EUR/MWh (conversion factor of 2.3) Contradictory to the international practice causing long pay-back period! Requirement for local content fixed proportions for biogas units at 30% with an increase to 50% for units commissioned after 1 January 2015 Barrier since the local market is still in development! Other relevant barriers: PPA and green tariff applied only after commissioning Terminology for biomass unclear and excludes products Connection to the grid lack of clear guidelines 03.10.2013 Company-Presentation GFA Consulting Group GmbH 5
National Support Mechanisms Tax regulations and others A part from Green Tariffs other supporting mechanisms include: Tax regulations: Corporate Income Tax Exemption for companies producing electrity only from RES or RES equipment on the territory of Ukraine. VAT and customs duties exemption for the RES equipment Reduced land tax for RES producers State programs of InvestUkraine that support the development of RES: Energy of Nature supporting wind and solar projects Energy of Biomass financing of FS, provision of assistance for land purchase or lease, support with administrative issues In development: National Energy Action Plan on Renewables 03.10.2013 Company-Presentation GFA Consulting Group GmbH 6
Content of the presentation Part II Specific renewable energy credit lines European Investment Bank European Bank for Reconstruction and Development Green for Growth Funds 26.09.2013 Biogas Workshop, Kyiv, Ukraine 7
European Investment Bank EIB is supporting the eastern partner countries as part of its neighbourhood policy (Russian Federation, Ukraine, Moldowa, Armenia, Azerbaijan and Georgia) budget 3.7 billion EUR Provision of loans to the public and private sector up to 50% of project volume provided directly or through partner banks The focus of support is on SMEs in the areas transport, energy, telecommunications and environmental protection. Via the Ukrainian State Export-Import Bank a programme with a volume of 100 million started in early 2013 to finance energy projects of SMEs Conditions include: total cost will not exceed EUR 25 million, with the credit volume up to EUR 12.5 million for the term of 15 years 26.09.2013 Biogas Workshop Kyiv, Ukraine 8
EBRD Sustainable Energy Financing Facility (SEFF) concept : Part of the Sustainable Energy Initiative (SEI) Provision of credit lines for EE and RE activities through local banks Technical assistance provided to the participating banks and project developers Three Financing Facilities in Ukraine: Ukraine Energy Efficiency Programme (UKEEP) The Ukraine Sustainable Energy Lending Facility (USELF) Ukraine Sustainable Energy Financing Facility (USEFF) under preparation 26.09.2013 Biogas Workshop Kyiv, Ukraine 9
Ukraine Energy Efficiency Programme (UKEEP) UKEEP is a credit facility targeting Ukrainian private SMEs in all sectors looking to invest in EE and RE Free technical assistance Dedicated EUR 60 million (current phase) to the UKEEP SME facility through Ukreximbank and Megabank Each loan can be up to USD 2.5-3 million. Smaller investments can be financed through the list of eligible materials and equipment Typical investments include various EE measures in industry, as well as Renewable Energy incl. biogas see www.ukeep.org 26.09.2013 Biogas Workshop Kyiv, Ukraine 10
The Ukraine Sustainable Energy Lending Facility (USELF) USELF is an investment facility of up to 50 million In addition, Clean Technology Fund (part of Climate Investment Funds) supports the Facility with 20 million. The Facility will probably be extended to 140 million The Facility provides direct debt finance combined with technical assistance Advantages for project developers Loans for biomass, solar, hydro or wind Projects starting from 1 and up to 15 million eligible (loan amount) Reduced transaction costs Long - term loan tenors Free-of-charge technical assistance www.uself.com.au 26.09.2013 Biogas Workshop Kyiv, Ukraine 11
The Ukraine Sustainable Energy Financing Facility (USEFF) Is expected to start shortly Is a credit line channeled through local banks (expected are at least three banks) with a volume of up to 200 million The Facility is expected to target both the energy efficiency and renewable energy sector Loan amount / projects is probably higher than in other programs medium term maturity terms are expected 26.09.2013 Biogas Workshop Kyiv, Ukraine 12
Green Growth Fund (GGF) Southeast Europe Established in December 2009 by EIB and KfW Investors/Donors: EC, BMZ, EIB, KfW, EBRD, IFC Investment fund combined with technical assistance Objectives: Broadening the financing base of EE and RE investments in the target region Increase awareness of energy efficiency and small renewable energy products among companies and private households Contribute to broadening and deepening the financial sector Financial instruments include medium- to long-term senior loans, subordinated loans, syndicated loans, letters of credit, guarantees and mezzanine debt instruments (for project SPVs) Investment contribution is limited at 10 million / project and maximum of 2 times the SPV s capital 26.09.2013 Biogas Workshop Kyiv, Ukraine 13
Green Growth Fund (GGF) Southeast Europe- cont d Technical assistance: Capacity building of partner institutions to set up energy efficiency and renewable energy lending operations Support to loan recipient / company Target partner institutions: Financial institutions (commercial banks and non-bank financial institutions, such as leasing companies) to finance mainly EE and RE investments in private households and small and medium-sized enterprises Small renewable energy projects as well as companies and municipal entities, direct financing of Energy Service Companies (ESCOs) www.ggf.lu 26.09.2013 Biogas Workshop Kyiv, Ukraine 14
Part III German Support Mechanisms 26.09.2013 Biogas Workshop, Kyiv, Ukraine 15
Overview German Support Instruments Various financial and technical support instruments available to foster RE investments RE Project / Investments with German participation: technology export or direct involvement Project Support Instruments: PPP projects Feasibility Studies Export & Trade Finance Investment Support Export Credit Agency 26.09.2013 Biogas Workshop Kyiv, Ukraine 16
KfW Renewable Energy Financing KfW supports German renewable energy projects in Germany and abroad Eligibility Investment by German company Company s turn over <500 Mio. EUR Project must be in compliance with EU environmental standards Terms and Conditions Loan volume up to 100% of investment costs maximum 10 Mio. EUR Interest rates on individual basis according risk, creditworthiness and capital market development Maturity up to 10 years with up to 2 years grace period Technical life-cycle > 10 years: maturity up to 20 years with up to 3 years grace period Fixed interest rates for 10 years Application Application to be put forward before contract closing E-Mail: infocenter@kfw.de Tel. +49 (0)800 539-90 01 26.09.2013 Biogas Workshop Kyiv, Ukraine 17
KfW IPEX Export Financing KfW IPEX-Bank provides project finance and offers trade and export finance. Target Group & Eligibility German Exporters and Foreign Buyers of German Exports Goods and Services Financed are exports insured via HERMES Credit Cover (not conditional) Substantial proportion of German technology and service Terms and Conditions Loan volume up to 25 Mio. EUR / max. up to 85% contract value Individual, case-by-case decision on interest rates Maturity: minimum 4 years Small Ticket Europe Export Finance for Small and Medium Companies Small Export Loans 0.5 to 5 Mio. EUR with maturities ranging from 2 to 5 years Application Application for Supplier Credit at every German Bank Institute Application Buyer Credit turn to KfW IPEX-Bank GmbH E-Mail: info@kfw-ipex-bank.de Internet: http://www.kfw-ipex-bank.de 26.09.2013 Biogas Workshop Kyiv, Ukraine 18
DEG Instruments DEG Deutsche Investitions- und Entwicklungsgesellschaft mbh A partner for German private-sector companies investing in developing and emerging-market economies. Variable equity participation in the company in the investment country minority stake with clearly defined exit strategies Project-specific mezzanine finance Long-term loans between 4-10 years maturity, max. 25 Mio. EUR Guarantees e.g. risk sharing with local bank 03.10.2013 Company-Presentation GFA Consulting Group GmbH 19
DEG Financing of Feasibility Studies DEG uses funds from the Federal Ministry for Economic Cooperation and Development (BMZ) to co-finance feasibility studies Target Group SMEs located and operating within the EU with a turnover of up to 500. Mio EUR Financial Support DEG provides a up to 50% of the feasibility study cost s upper limit 200.000 EUR Requirements Preparation of realistic private sector investment plausible in terms of successful implementation and profitability Application Further information and application form www.deginvest.de Phone: +49 (0)221 4986 1128 Email: machbarkeitsstudien@deginvest.de 03.10.2013 Company-Presentation GFA Consulting Group GmbH 20
Export Credit Cover Euler Hermes Export Credit Cover protects German Exporters against payment defaults and cash losses, due to: Political Risk and Economic Risks Eligibility Export of goods and services and structure financing / project financing None-marketable, but justifiable risks abroad Special focus on small and medium enterprises No minimum export value Terms and Conditions Variable maturity for energy efficiency, renewable energies up to 18 years Flexible redemption payment possible e.g. annuity Administrative fee + premium Premium depends on country rating, credit period, creditworthiness of buyer 26.09.2013 Biogas Workshop Kyiv, Ukraine 21
last, but not least...... we have a new project 26.09.2013 Biogas Workshop, Kyiv, Ukraine 22
Promoting Sustainable Production and Use of Bioenergy in Russia and Ukraine BIO-PROM is financed by the International Climate Initiative (German Federal Ministry for Environment BMU) Focus is identification and development of replicable bio-energy projects through: support in technical feasibility studies support in development of financing concepts match-making with technology providers, private and public investors Capacity Building and Political Cooperation Three Projects in the Ukraine will be selected via call for proposals (will be published shortly) and technical assistance will be granted free-of-charge www.bio-prom.net 26.09.2013 Biogas Workshop Kyiv, Ukraine 23
Thank you for your attention Jasper Lauert 26.09.2013 Biogas Workshop, Kyiv, Ukraine 24