Financing your Solar Investment in Mexico

Transcription

1 Financing your Solar Investment in Mexico El financiamiento del proyectos fotovoltaicos Volker Schwab, Senior Investment Manager, DEG Mexico Office México D.F., 10 November 2015

2 DEG Facts and Figures DEG Established 1962 Employees 503 Company seat Cologne Shareholder KfW Frankfurt Equity EUR 2.1 billion Balance sheet EUR 5.3 billion New business EUR 1.5 billion Portfolio EUR 7.8 billion KfW Ownership Federal Republic of Germany (80%) and the federal states (20%) Rating AAA/Aaa, 3rd largest bank in Germany Balance sheet EUR 479billion World's Safest Bank 2014 according to Global Finance Magazine s Ranking of the World s 50 Safest Banks 2

3 DEG s financial products Equity Expected return Preferred equity Convertible debt Subordinated debt Senior unsecured debt Senior secured debt Main requirements: Risk Long-term Tenor Private Investment Investment in Developing or Emerging Markett 3

4 Investor observations on the Mexican Solar PV market Solar PV with positive contribution to Mexican Energy Market, e.g. Diversification of energy sources. Addressing transmission bottlenecks. Synchronization of supply and demand. Distributed Generation: Good business case. It s happening, but mostly through individual, disperse projects. High transaction costs, difficulties in aggregation/standardization. Our focus here is on Utility Scale projects: Small Producer Model pursued by most developers in recent years did not show big success, mainly due to volatile / unpredictable tariff. Wholesale Energy Market will need time to take off. Regulatory/psychological insecurity. Lack of bankable PPAs energy auctions will bring new opportunities. Cost disadvantages (esp. vis-à-vis other renewables) currently limit the growth of utility-scale solar projects in Mexico. Over the coming years, we expect these disadvantages to disappear. 4

5 Sources of Financing in the Mexican Solar PV Market: Debt Debt sources Commercial versus development banks. Local versus international banks. Niche banks (e.g. Nadbank for Northern Mexico). Issues to consider Usually, banks start to get interested at ready-to-build stage. Bankable PPA is THE most important factor. PPA currency and PPA tenor impacts universe of financiers. Risk-mitigation factors such as First-Tier modules, EPCturnkey from recognized supplier etc. Debt sizing done differently by each bank, but expect equity requirement of 20-40%. Bankable PPAs as main bottleneck for debt financing. 5

6 Sources of Financing in the Mexican Solar PV Market: Equity Sources of equity Family and friends. Strategic investors (sector players, offtakers, equipment suppliers etc.). (Specialized) Private Equity funds. Local and international institutional investors (e.g. pension funds/ Afores/ Fibra E). Selected banks also have equity operations. Yield Co s. Issues to consider Moment of investing. Time horizon/exit (Developers versus Asset Holders/Operators). Corporate Governance. Size (single project versus portfolio of projects). Equity versus Mezzanine structures. The more advanced-stage, sizeable and institutionalized a project, the easier to obtain equity 6

7 DEG s investment focus What we are looking for Long term investment projects with a developmental impact, e.g. through climate protection. Companies with a track record in their industry or a strategic partner. Companies with willingness to conform to international standards of corporate governance. German relation (sponsor, equipment etc.) welcome, but not necessary. DEG financing usually starting at 10m USD. Solar in Mexico: Fixed price PPA in USD or MXN (offtakers not necessarily AAA). 7

8 German government and DEG grants Amounts up to 200 TEUR, 50% cost sharing Program For whom? Use of funds? From whom? developpp.de Feasibility Studies Technical Assistance Climate Cooperations German and European corporates German and European corporates, up to EUR 500 Mio. Sales Existing or potential DEG clients Existing or potential DEG clients Projects with a broader development impact, e.g. training centers for employees or suppliers, community building etc Co-Financing of external cost in connection with feasibility studies regarding investments in a DEG partner country Social and environmental measures; optimization of business and production processes; risk consultancy; training and qualification Climate protection measures that would otherwise not be implemented, e.g. pilot plants, introduction of innovative technologies etc. 8

9 Our Team in Mexico Dr. Stefan Blum Director Representative Office Mexico Tel.: Sergio Viso Equity & Mezzanine Corporates Tel.: Johannes Goderbauer Equity & Mezzanine Corporates Tel.: Eduardo Avendaño Energy / Project Finance Eduardo.AvendanoFranco@deginvest.de Tel.: Xochitl Melendez Office Manager Xochitl.Meldendez@deginvest.de Tel.: Ernesto García Loans Corporates Ernesto.Garcia@deginvest.de Tel.: Volker Schwab Energy / Project Finance Volker.Schwab@deginvest.de Tel.: DEG Deutsche Investitions- und Entwicklungs- gesellschaft mbh Oficina de Representación México Arquímedes #19 Piso 4, Bosque de Chapultepec, 11580, México D.F. Phone / Fax

10 Activities of KfW Group in Mexico Objectives Providing finance, advice, support for development and climate protection projects, in cooperation with governments and state institutions in developing and emerging countries Providing tailor-made long term finance to support the development of the Private Sector in Emerging Markets Providing commercial long-term finance to Mexican borrowers in the interest of German and European companies to promote exports, FDIs to Mexico, as well as strategic imports to Germany Economic Sectors Energy, Water, Urban mobilization, Biodiversity and climate Manufacturing & Services, Infrastructure, Agribusiness, Financial Services Manufacturing Industries, Basic Industries, Maritime Industries, (Offshore Oil &Gas), Energy Products Promotional loans Development loans Grants and accompanying measures Commercial long term loans Structured Finance Equity Export Finance (with/without ECA) Corporate lending Project Finance Example clients Portfolio USD 464 million 6 projects USD 381 million 36 projects More than 1.25 USD billion total KfW commitments in Mexico USD 407 million 10 portfolio clients 10

11 Why work with DEG? Tailor-made Solutions Equity/debt structures crafted according to project needs Currency flexibility (EUR, USD, MXN) Global Reach, Local Presence Investment experience in +80 countries 10 years office presence, over 40 years experience in Mexico Long-term Approach Maturities matching your business horizon (up to 20 years) Financial stability from a AAArated institution Seal of Quality DEG represents the Federal Republic of Germany Our involvement will enhance your company/project profile Partnership Developmental approach, beyond profit maximization Technical Assistance programs 11