DBSA RENEWABLE ENERGY FINANCING

Transcription

1 DBSA RENEWABLE ENERGY FINANCING Development Bank of Southern Africa Presented by Madalo Minofu Project Preparation Specialist: DBSA Project Preparation Funds Division 2 June

2 DBSA s Product Offering The following products are typically applied towards energy projects: Debt Mezzanine Debt Arranging Underwriting Long-term debt, 15 years ZAR financing Subordinated debt to support the LEE/BEE partners Lead Arranger Underwrite to ensure complete financing package Other products that could potentially be applied to enhance the projects: Equity Guarantees Project Prep Funding Direct equity in select projects to further enhance the project Partial credit enhancement of capital market issues to increase investor appetite and increase the tenor Funding applied towards project preparation 2

3 Key Investment Considerations / Critical Success Factors Clarity in the Regulatory Framework: Acts, Enabling Legislation, Licences and Conditions Regulatory and Legal Clarity in the regulatory environment Transparent procurement system Government s role in setting of tariffs Labour issues Assignment of contracts Securities Termination clauses 3

4 Key Investment Considerations / Critical Success Factors Sponsors and Operators with experience and a proven track record Commercial Considerations Government support and commitment Technology Strong sponsors Experienced operators Committed partners 4

5 Key Investment Considerations / Critical Success Factors Sponsors and Operators with experience and a proven track record Commercial Considerations Key terms of the PPA/Offtake Agreements Viability and robustness of cashflows Tariff mechanism Availability of cost effective funding Tenor considerations Currency issues Investment Returns 5

6 DBSA CASE STUDY 1 : 75 MW (64MW) LESEDI PV PROJECT TOTAL PROJECT COST : ZAR2 581 million (US$258 million) DEBT : EQUITY RATIO : 75:25 DBSA FUNDING : ZAR200M Senior Debt; ZAR148M BEE Loan (Equity Finance) PROJECT DEVELOPERS : Kensani Capital, Oakleaf Investments (Pty) Ltd and Solar Reserve OTHER FUNDERS : Rand Merchant Bank (RMB) EPC/ O&M CONTRACTORS: ACS Cobra, Gransolar and Kensani (Combined net worth R89.4 billion) Purpose: Loan Type: Tenor: Grace Period: Pricing: Margin Interest Capital Construction Senior 16.5 years 2 years 2 years 3 Months Jibar bps BEE Equity Financing Junior 13 Years 2 years 2 years 3 Months Jibar bps Source of Revenues from sale of electricity to ESKOM under a 20 year Power Purchasing Agreement (PPA). repayment 6

7 DBSA CASE STUDY 2 : 75 MW LESEDI PV PROJECT 7

8 DBSA CASE STUDY 2 : 75 MW (NET 64MW) LETSATSI PV PROJECT TOTAL PROJECT COST : ZAR2 568 million (US$256.8m) DEBT : EQUITY RATIO : 75:25 DBSA FUNDING : ZAR200M Senior Debt; ZAR148M BEE Loan (Equity Finance) PROJECT DEVELOPERS : Kensani Capital, Oakleaf Investments (Pty) Ltd and Solar Reserve OTHER FUNDERS : Rand Merchant Bank (RMB) EPC/ O&M CONTRACTORS: ACS Cobra, Gransolar and Kensani (Combined net worth R89.4 billion) Purpose: Loan Type: Tenor: Grace Period: Pricing: Margin Interest Capital Construction Senior 16.5 years 2 years 2 years 3 Months Jibar bps BEE Equity Financing Junior 13 Years 2 years 2 years 3 Months Jibar bps The Letsatsi (75 MW) and Lesedi (75 MW) projects, located in the Free State and Northern cape respectively, boast 150 MW of installed capacity and are capable of powering more than South African homes with clean energy. Both projects have executed 20-year power purchase agreements with Eskom and were completed in mid-2014 (Bid Window 1 projects) 8

9 DBSA CASE STUDY 3 : 72.5 MW (Net 69MW) SCATEC KALKBULT PV PROJECT TOTAL PROJECT COST : ZAR2 581 million DEBT : EQUITY RATIO : 75:25 DBSA FUNDING : ZAR248M Senior Debt; ZAR105M BEE Loan (Equity Finance) PROJECT Developers : Scatec, Simacel (Pty), Standard Bank and Old Mutual OTHER FUNDERS : Standard Bank and Old Mutual EPC/ O&M CONTRACTORS : Scatec Solar (Norway) Purpose: Loan Tenor: Grace Period: Pricing: Margin Potentia Type: Interest Capital l Exposu re Construction Senior 16 years 14 months 20 6 Months Jibar bps R248 months million BEE Equity Financing Junior 12 Years 14 months 20 6 Months Jibar bps R105 months million Current Exposure (28 Feb 2014) R248 million R101.3 million Solar Plant physical completion was reached in September 2013 on budget, 3 months ahead of schedule. The plant earned early operating revenues at 60% of the tariff price during October to December However, Scheduled Commercial Operation Date (SCOD) of 01 January 2014 was not met due to noncompliance with grid code connection requirements. The plant was operating at a reduced capacity of 63.5MW (net) versus the base case of 69MW (Net) for the 01 January to 10 March 2014 period. NERSA granted temporary exemption to allow the plant to operate at 69MW until 31 August 2015, whilst the plant implements remedial action. Resolution of SCOD is in progress and is expected to be finalized by 30 April 2015, well before the August 2015 deadline. The project is performing above budget and is expected to reach revised SCOD 9 with no debt cost overruns.

10 DUE DILIGENCE In consideration of providing funding to these projects, a rigorous due diligence process is undertaken at the DBSA to ensure projects meet minimum funding criteria such as: Meeting the minimum bid qualification criteria as per the Request for Proposals (RFP) under the Department of Energy s Renewable Energy Programme. Use of proven and bankable technology. Sponsors with proven technical track records in implementing such projects. Contractors with proven track records in implementing and operating such projects. Local Economic Development criteria including Black Economic Empowerment. Contractual Mechanism around EPC and Operation & Maintenance Contractors. Financial Viability. 10

11 Contact details Development Bank of Southern Africa Physical Address Postal Address Tel/Fax 1258 Lever Road Headway Hill Midrand P.O. Box 1234 Midrand Madalo Minofu Project Preparation Specialist: (Project Preparation Funds Unit) 11