Feasibility and Bankability of Bioenergy Projects

Transcription

1 Feasibility and Bankability of Bioenergy Projects Dr.-Ing. Matthias Eichelbrönner General Manager E.Quadrat, Mannheim, Germany Visiting Professor, University of Applied Sciences, Mannheim Member Advisory Board, German BioEnergy Association

2 Feasibility and Bankability of Bioenergy Projects Content 1. Observations made in Indonesia o Operation of a 6 MWel Biomass power plant o Project development: Biomass waste to goods and energy o 1.2 MWel Biogas power plant Belitung 2. Takings from meetings with Indonesian Banks o Capital and financial conditions o Quality offensive to improve project finance 3. Bioenergy bankability o Feasibility study o Calculation model o Input parameters and results 2

3 Fotos: E.Quadrat Observation - : 6 MWel Biomass Power Plant Location: Designed for: Indonesia 6 MWel; EFB and shells Boiler: designed for coal, built in 2007 Manufacturer: Fuel: Experience: Economy: Chinese company, did not finish commissioning blend of shells and mainly pressed EFB fibers - boiler is not suitable for biomass fuel available - achievable thermal power too low, inlet too small - efficiency very low under daily operating conditions (~18% efficiency under ideal conditions only) - nut shells (higher heating value) can be sold to the market at higher price compared to FIT - power factor very low, grid condition questionable not economical feasible was built to achieve CDM revenues, owner considers dismantling and new construction under new FIT (expected) 3

4 Observation - : Project development biomass waste to fibers and POME to energy plant Location: Target: Status: Intention: Assignment: Findings: Palm oil mill, Indonesia Usage of biomass residues and waste from palm oil mill Development status first concept, application for project finance Feasibility study to achieve project finance Red-Flag-Report to collect detailed project information to prepare feasibility study business concept existing, POM ok, POME lagoon digester existing biogas output unclear, grid access technically feasible, no permission, no contracts, no. etc. > conclusion no feasibility study executable, project delay 1 year minimum > quality of project development must be improved 4

5 Observation + : 1.2 MW el Biogas Project Belitung (1) Source: ANJ Group / PT. Austindo Aufwind New Energy 5

6 1.2 MW el Biogas Project Belitung (2) Reliable technology for covered lagoons Source: ANJ Group / PT. Austindo Aufwind New Energy 6

7 1.2 MW el Biogas Project Belitung (3) Project data Design: Input material: Manufacturer: 1,2 MWel; Nm3 Biogas per day POME effluent 495 m3 per day combustion engine MWM, Germany Start operation: 2013 Investment: Finance: Purpose: Tariff: 3,9 Mio. USD including grid connection 100 % equity by owner palm oil mill all electricity delivered into PLN grid 975 IDR/kWh (~6,5 Ct/kWh) IPP agreement with PLN, duration 15 years (no compensation of inflation) The time being PLN pays without delays. Owner: ANJ Group / PT. Austindo Aufwind New Energy, Jakarta, Indonesia Project development and detailed quality control 7

8 Feasibility and Bankability of Bioenergy Projects Content 1. Observations made in Indonesia o Operation of a 6 MWel Biomass power plant o Project development: Biomass waste to goods and energy o 1.2 MWel Biogas power plant Belitung 2. Takings from meetings with Indonesian Banks o Capital and financial conditions o Quality offensive to improve project finance 3. Bioenergy bankability o Feasibility study o Calculation model o Input parameters and results 8

9 Takings from Indonesian Banks: Bioenergy (04/14) PIP Indonesia Investment Agency All banks with State of Indonesia backing Experiences: Investments: Equity: Debt: Securities: no experience with bioenergy (the time being hydropower), remarks made: quality of project applications generally very low should be larger than 4 Mio. USD (minimum 1 Mio. USD); due diligence efforts significant 15 to 35% CAPEX, depending on refinance funds of banks IDR or US-Dollar, conditions differ Redemption: 5 to 10 years (20 years) Interest: differ, yearly adjustments, up to 5 years fixed collaterals on fixed assets, cash flow, PPA EPC guaranties and warranties, often corporate guarantees Precondition for project assessment: PPA and detailed project description 9

10 Selected Financial Conditions EXIM BRI SMI PIP Portfolios Finance product Palm Oil Industry; hydropower; no bioenergy so far Investments > 4 Mio. USD Loans: duration 6-7 years, interest < 5,75 %/a USD; 9.5%/a IDR; portion <=85% renewable energy feasible Investments > 4 Mio. USD Loans: duration 5-20 years, interest < 10 %/a USD; 11-12%/a IDR; portion <=65% hydropower, bioenergy; own consulting unit installed to support project developers Investments > 5 Mio. USD Loans: portion <=70% interest: bank is open for discussion on quality improvement to adjust interest rate 50 MioUSD funds available for renewable energy projects; Investments > 1 Mio. USD Loans: duration 5 (<=10) years, interest < 9.5 %/a USD portion <=65% Loan securities Requirements collaterals: revenues, property, machinery, fixed assets, corporate guarantee; PPA not sufficient PPA, feasibility study through bankable consultants collaterals: project assets; cash flow PPA, qualified references, EPC, strong off-taker Collaterals and assets PPA, detailed project preparation and description collaterals: limited recourse, project assets and cash-flow technical issues of a bioenergy project reported Information taken from interviews executed in April 2014 by E.Quadrat/GIZ; no guarantee provided if information is correct 10

11 Quality offensive to target lower interest costs Project Development Project Implementation Plant Operation Outcome: Higher project quality und transparency based on detailed monitoring, milestone and performance controlling would improve bankability significantly! Monitoring and Quality Control 11

12 Higher quality may lead to lower interest costs! 10 years Graphs show Net Present Value (NPV) effect of reduction of interest rate p.a. over 10 years amortization period. The inflation rate does not affect the results significantly, rather the amortization period. Example: 10 years period, a reduction of 2% points of interest rate at an inflation rate of 8% p.a. would create a NPV effect of 8, assumed the initial debt amounts to

13 Feasibility and Bankability of Bioenergy Projects Content 1. Observations made in Indonesia o Operation of a 6 MWel Biomass power plant o Project development: Biomass waste to goods and energy o 1.2 MWel Biogas power plant Belitung 2. Takings from meetings with Indonesian Banks o Capital and financial conditions o Quality offensive to improve project finance 3. Bioenergy bankability o Feasibility study o Calculation model o Input parameters and results 13

14 Detailed Feasibility Study to improve bankability Target: Content: Detailed and comprehensive study anticipating entire project life cycle Project Development Project Implementation Plant Operation Pre-Feasibility: - Feedstock supply - Technology details plant - O&M agreement/concept - Approvals, clearances - Technology fuel conditioning - personal concept - Development steps - EPC agreement, deliverables - Feedstock market - Implementation phase and liabilities - Performance control - Operation phase - Final acceptance test - Benchmarking of key figures - Financial model, detailed - Grid connection -. - Risk analysis and mitigation - Grid quality - Ownership and sponsors - Warranties and guaranties - Legal structure -. - Tax structure -. First analysis and description along the key components, milestones including technical and financial ones; CAPEX and OPEX estimation to check economic viability; detailed list of content to execute Feasibility Study Feasibility Study: Detailed and comprehensive description of all administrative, technical and financial details of the project including internal interfaces and dependencies; assessment of the drafts of all key agreements concerning feedstock supply, EPC, O&M, PPA, land lease; risk analysis and mitigation concept 14

15 Project Assessment: Pre-Feasibility Study Target: Content: First Step: Detailed and comprehensive study to prepare Feasibility Study and start bankability Description of project - Biomass / feedstock availability and potential competition - Components and interfaces - Financial model, revenues, CAPEX, OPEX, financial figures, equity and debt sourcing - Implementation and testing - Operation and maintenance -.. Red-Flag Report on project information exsiting 15

16 Biomass to Energy Calculation Tool (Pre-feasibility) Input table for key parameters: tariff per Indonesian region, technology and voltage level, CAPEX, OPEX, finance, feedstock, technical data Output tables for 15 years plant operation, including graphs, cash-flow, return on invest, return on equity and more Specific control figures like Debt Service Cover Ratio DSCR 16

17 Example: 1,2 MWel POME Biogas to Energy I Parameters and scenarios Rated power 1200 kwel Full load hours 7000 h/a Capacity factor 80 % Parasitic loads, aux. 4% Energy delivery MWh/a CAPEX Mio IDR USD OPEX 5,00% von CAPEX No feedstock costs No land lease Feed-in Tariff A 1575 IDR/kWh Feed-in Tariff B 1200 IDR/kWh Financial parameters Debt 70% Redemption period 10 years Interest rate 11% p.a. Inflation rate 7% p.a. 17

18 Successful biomass project feasibility and bankability Use of reliable biomass conversion technology from experienced suppliers Proper and detailed feedstock/biomass analysis, amount and quality and subsequently appropriate technology for plant dimension Alternative use of biomass feedstock - e.g. wood industry - to be assessed Detailed project engineering to prepare project finance Grid impact study for maximum feed-in power High quality of project development, implementation and operation to be assured Project operation, training of O&M personal essential to achieve high capacity factor ASEAN Guidelines for bioenergy project realization in preparation 18

19 & Co. Projekt- und Beratungs- KG Kolpingstraße Waghäusel Mannheim Office Weinheimer Straße 64a Mannheim Germany Amtsgericht Mannheim HRB Tel +49/(0)621/ Fax: +49/(0)621/