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Cost of Equity Best-in-Class Country Power Market Permits Social Acceptance Developer Grid /Transmission Counterparty Financial Sector Political Currency/Macro. Cost of Equity Kazakhstan BAU 1.3% 0.4% 0.5% 0.4% 1.0% 1.5% 1.3% 0.8% 1.7% 16.0% 7.0% Cost of Equity (USD) 5
Category Policy Derisking Instruments Financial Derisking Instruments Power Market Update transparent, long-term national renewable energy strategy Establish and run IPP bidding process, with bankable PPA Establish a renewable energy office in the regulator Permits Streamlined process for RE permits (dedicated onestop shop) Contract enforcement and recourse mechanisms NA NA Social Acceptance Awareness-raising campaigns NA Developer Technology R&D Support for industry associations Grid/Transmission Strengthen KEGOC s grid management capacity Transparent, up-to-date grid code Policy support for long-term national transmission/grid road-map Counterparty Reform and maintain creditworthy Financial Settlement Centre structure Financial Sector Fostering financial sector reform towards green infrastructure investment Strengthening financial sector s familiarity with renewable energy and project finance NA Take-or-pay clause in PPA Government guarantee for PPA payments Public loans to IPPs Public loans to IPPs Political NA NA Currency/ Macroeconomic NA Partial indexing of PPA tariff to hard currencies 6
Cost of Equity Kazakhstan BAU Power Market Permits Social Acceptance Developer Grid /Transmission Counterparty Financial Sector Political Currency/Macro. Kazakhstan Post-Derisking Cost of Equity 0.3% 0.1% 0.1% 0.0% 0.6% 0.9% 0.1% 0.0% -2.8% 0.9% 16.0% Cost of Equity (USD) 13.2% 7
LEVELISED COST OF ELECTRICITY (LCOE) LCOE (USD cents/kwh) 5.7 9.2 7.1 Baseline (unsubsidised) Wind Investment BAU Wind Investment Post-Derisking 8
Report s 2021 (5 year) wind investment targets: 1 GW If USD 275.6 million USD 1.6 billion in private sector investment in wind USD 804.7 million savings due to derisking (lower wind costs) USD 310.6 million savings due to avoided fossil fuel subsidies Wind energy generation costs decrease from USD 9.2 cents/kwh to USD 7.1 cents/kwh Emission reductions of 56.3 million tco 2 e over 20 years 9
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PRE-TAX LCOE (USD CENTS/kWh) 72.3 39.3 11.7 4.3 5.3 2.9 39.6 2.8 30.1 1.0 +83% +14% 50.1 5.0 2.0 45.2 12.0 27.9 Financing Cost (Equity) Financing Cost (Debt) Operating Cost (incl. fuel cost) Maintenance CapEx Investment Cost/ Depreciation 2. 15.2 9 Solar PV/Battery (off-grid) 2.1 3.6 Diesel Generator (off-grid) Low Investment Environment 2. 15.2 9 Solar PV/Battery (off-grid) 1.6 3.6 Diesel Generator (off-grid) High Investment Environment 11
REDUCE RISK TRANSFER RISK COMPENSATE FOR RISK DIVERSIFY RISK Policy Derisking Financial Derisking Financial Incentives Aggregation Examples: Clear regulations Streamlined customs Examples: Loan guarantees Public loans Examples: Tax incentives Grants (By Private Sector) 12
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CLIMATE AGGREGATION PLATFORM GLOBAL INDUSTRY WORKING GROUP (Composed of key industry actors) OUTPUTS: Strategic work programme Regional, national, technical sub-committees STANDARDISED TOOL KITS OUTPUTS: Develop and disseminate best practice, standardised: Template contracts Installation and O&M Due diligence metrics Transaction structures IN-COUNTRY DEMONSTRATION AND SCALE-UP (In partnership with other development actors) OUTPUTS (project funds for 4 countries): Technical support for pilot firstof-a-kind transactions Technical support for policy/market architecture 15
DEAL STEPS STAKEHOLDERS BARRIERS & PUBLIC MEASURES End Users Cons. Credit Info Companies Limited data on credit worthiness of end-users Support to develop national credit information markets Aggregating Entity Solar Co. Installers Manufacturers Fragmented approach to contracts, installation and O&M Standardized contracts, installation and O&M, performance metrics Special Purpose Vehicle (SPV) Legal Counsel Investment Bank (Tax Investors) Development Bank (credit enhancement) Lack of experience; high costs for deal structuring Piloting first-of-a-kind deals; online platforms for project ID; national industry associations S S S S S S S S S S S S Credit Rating Agencies Securities Regulator Lack of experience; inefficient due diligence; unconducive regulations Mock filings; common due diligence metrics; securities law reforms Investor Investor Investor Investor Investor Institutional Investors Financial Regulator Low demand due to lack of familiarity; lack of liquidity; inefficient due diligence; unconducive regulations Engage and raise awareness of investors; common due diligence 16
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