Financing of Renewable Energy Projects in Turkey

Transcription

1 Financing of Renewable Energy Projects in Turkey

2 Corporate data DEG Founded: 1962 Legal form: GmbH (limited liability company) Employees: 380 DEG Head office: Cologne / Germany Shareholder: 100 % Kreditanstalt für Wiederaufbau (KfW), Frankfurt / Germany Equity capital: Balance sheet total: EUR 1.37 billion EUR 3.22 billion New business 2007: Portfolio 2007: EUR 1.2 billion EUR 3.6 billion 2

3 DEG member of KfW Bankengruppe. Advantages for our partners : Access to the total finance spectrum of the KfW Banking Group, from export financing covered by Hermes to long-term loans and equity Mobilisation of the required capital by joint financings e.g. a mix of DEG equity, mezzanine and KfW senior loan on short or long-term basis Active on all continents thanks to representative offices on the spot 3

4 Why to cooperate with DEG Political support Tenders, concession negotiations Financing skills Participation in development costs 4

5 DEG member of KfW Bankengruppe. Business areas Investment assistance in Germany and Europe Export and project finance Promotion of developing countries Consultancy and other services Tasks Promotion of SMEs and start-ups Promotion of housing, environment and climate protection, education, infrastructure and social issues Export and project finance, investment and corporate finance Promotion of developing countries KfW Entwicklungsbank: FC, governmental institutions DEG: private sector Consultancy to the federal government with regard to privatisation and other issues Brand names 5

6 DEG member of KfW Bankengruppe DEG is a subsidiary of KfW Bankengruppe. Its task within the banking group: Private sector promotion in development and emerging market countries through financing of investments of private enterprises in all sectors: agribusiness, services, infrastructure, processing industries and in the financial sector. 6

7 One of Europe s largest Development Finance Institutions. Since its establishment DEG has cooperated with more than 1,400 companies. It has provided financing in the amount of EUR 8,8 billion. It has so far achieved a total investment of more than EUR 50 billion. 7

8 DEG portfolio by region. Total volume: EUR 3.6 billion Projects with 500 companies in 80 countries Eastern Europe: EUR 725 million Asia: EUR 1.54 billion Africa: EUR 642 million Latin America and Caribbean: EUR 607 million Supraregional: EUR 67 million 8 Portfolio, as per: 31. Dezember.2007

9 DEG business New commitments and disbursements Supraregional 3% New commitments: EUR 1.2 billion (of these EUR 75 million risk sub-participations) Africa 16% Latin America 16% Risk capital: EUR 450 million (37% ) Disbursements: EUR 858 million Europe 20% Asia 45% New commitments by region; as per 31 December 2007 Products: Loans: EUR 958 million, of these mezzanine financings EUR 234 million Equity participations: EUR 215 million Guarantees: EUR 32 million 9

10 DEG new commitments Sectors Services 7,9% Agribusiness 1,3% Infrastructure 18,1% Manufacturing Industry 23,2% Finance sector 49,4% Investments in all sectors of industry: Agribusiness Manufacturing industry Infrastructure Finance sector New commitments by sector; as per 31 December

11 Portfolio Power DEG commitments EUR million of these supraregional EUR 9 million Investment countries 18 Companies Portfolio, as per: 31. Dezember.2007

12 Portfolio Turkey DEG commitments Companies 21 EUR million 12 Portfolio, as per: 31. Dezember.2007

13 Promotion of emerging markets: private power sector By means of: Equity Mezzanine Finance supported by technical assistance 13

14 Type of Transactions Expansion / Growth Greenfield projects Privatization 14

15 Financial instruments Equity Equity participation between 10 and 30 million No majority shareholding Preferred entry via capital increase Reasonable acquisition or conversion price Possibility of exit after 4-10 years via trade sale (i. a. tag-along rights) and / or IPO Expected equity IRR on market standards including capital gains and dividends paid after tax on project level, -based 15

16 Financial instruments. Mezzanine finance Amount: in principle between 10 and 30 million Subordination in relation to Senior Lenders (repayment, interest) Collateral (2nd ranking possible) Preferred tenor between 8-15 years Taylor made repayment structure (Bullet repayment possible, payment in kind structures) Expected Mezzanine IRR on market standards depending on project and country risk via fixed margin, deferred interest, performance kicker, warrants etc. Structure elements: Convertible loans, redemption rights, preferred shares, warrants etc. 16

17 Export vs. Project Finance by KfW IPEX Financing basis and requirements Export financing Financing basis Creditworthiness of the borrower/guarantor Full recourse to the borrower/guarantor Impact on the financial flexibility of the borrower/guarantor Financing requirements Margin primarily depending on creditworthiness of the borrower/guarantor Usual credit assessment Project financing Financing basis Cash flow of the project Non recourse or limited recourse to sponsors Financing requirements Margin primarily depending on project risks Comprehensive documentation (loan and securities agreements) Independent consultants (technical, legal, insurance) 17

18 Type of Projects Hydro (run of the river, small dams) Wind Biomass 18

19 Particular criteria Integrity, transparency of shareholder Quality of shareholder (know-how, finance, management) Experienced management Corporate governance Majority interest in the project company through private company and private management International accounting standards 19

20 Particular criteria Financing Equity ratio of at least 20 % Environment In compliance with local, EU and World Bank requirements Social Standards In compliance with international standards of the International Labour Organisation and the UN 20

21 Particular criteria Construction Adequate arrangements in place to cover cost overruns and completion risks (to the extent possible and adequate: e. g. EPC contracts, external advisors) Operation Adequate arrangements in place to cover operation risks (to the extent possible and adequate: e. g. Long term O&M contact with experienced operator, modern equipment and operating system) 21

22 Particular criteria Market: Adequacy of tariffs Merchant risks Creditworthiness of buyer (non-merchant) 22

23 Particular criteria Project due diligence on the basis of relevant contracts or drafts such as EPC contract, purchase contracts for turbines, lease agreements, power purchase or feed in contracts Availability & performance guarantees Two independent wind energy yield assessments provided by renowned assessors External lawyer required for legal due diligence 23

24 Particular criteria for Export Finance By KfW IPEX German / European Share of the contract value Satisfactory creditworthiness of the Borrower and/or Guarantor Cover by Euler Hermes or comparable ECA for loans of up to 85% of the contract value at least 15% down and interim payments (uncovered financing on a case-by-case basis) Investment volume should be at least EUR 30 Mio. 24

25 Technical Assistance Particular measure for project Enhancement (e. g. environmental support, education) 25

26 Managing the CDM Process One-stop CDM Services from DEG accelerate the pace of your CDM-Project-Cycle and finally the issuance of CERs by: Pre-Checks on Carbon Credit Potential of CDM Projects as decision basis Intermediation of qualified Consultants for preparation of PINs and PDDs Intermediation of Validation/Verifiaction Services by Designated Operational Entities Assistance in the Letter of Endorsement and the Letter of Host Country Approval Up-front finance of CDM transaction costs (preparation of PIN, PDD, validation and process management) to reduce your risk of non-registration Assistance in finding a buyer of issued Carbon Credits: Our access to KfW Carbon Fund as AAA-rated buyer of Carbon Credits might be one of several options for you to close an Emission Reduction Purchase Agreement (ERPA) 26

27 DEG Power Sector Selected References 27

28 Selected References Windfarm BOZCAADA Turkey The Challenge Financing the construction and operation of a windpark in a country with very limited experience in renewable energies (<1% at beginning of the project) Parent company Enercon GmbH (German investor) The Solution Supporting the internationalisation of a German investor Long-term loan by DEG Windpark on the Aegean island of Bozcaada with an estimated nominal capacity of 10.2 MW Loan amount: US$ 5,9 million Value Added by DEG Long-term international experience Deep knowledge of financing of renewable energy projects High level of technology and know-how transfer 28

29 Selected References Windfarm Miaoli Taiwan The Challenge Financing of Taiwans s first private wind farm Local currency financing in TWD in order to mitigate exchange risks The Solution Project finance on a local currency basis via a local bank by KfW IPEX and IKB covered by EULER Hermes (ECA) Mezzanine tranche by DEG 25 Enercon E70 wind turbines for the Miaoli wind farm in the north west of Taiwan Loan amount: 7,5 million Value Added by DEG Taylor-made mezzanine product Low interest and repayments during senior loan tenor Payment in kind after repayment of senior loan 29

30 Miaoli Houlong II Windfarm Project, Republic of Taiwan (1) New milestones set: First private windpark in Taiwan First Hermes covered windpark financing Unique cooperation within the KfW-Banking Group with KfW and IKB as Senior Lenders and DEG as Mezzanine Lender 30

31 Miaoli Houlong II Windfarm Project, Republic of Taiwan (2) Key characteristics: 25 wind turbines located on the north-western coast of Taiwan 49.8 MW output (about 186,000 MWh p.a.) Wind turbines delivered by German Enercon Total investment of EUR 66.8 million Investment financed by 18 % equity 12 % Mezzanine Loan provided by DEG 70 % Senior Loan provided by KfW/IKB with Hermes cover 31

32 Structure of the project Sponsor 1 VWind AG Sponsor 2 WPD AG Contractor Enercon EPC Contract EPK Contract Equity Contribution Loan Agreement KfW/IKB with Hermes cover Management InfraVest Co.Ltd. Mgmt Contract IPP Mezzanine Agreement DEG Power Purchase Agreement Local Utility TaiPower Fuel Supplier Fuel Supply Agreement Government Business License 32

33 Features of the DEG Mezzanine Facility EUR 7.5 million Completely subordinated to Senior Loan Tenor of 15 years including 2 years grace period Semi-annual instalments of 3% until 2017; remainder will be repaid in two instalments in the years 2018 and

34 Role of DEG DEG closes equity gap in this financing Promotion of renewable energy sector in Taiwan thus positive effects on environment Project enables reduction of fuel imports and thus dependence on foreign countries Transfer of technology and know how Prototype and mock-up model for other projects 34

35 Selected References 30 Hydro Power Plants South East Europe The Challenge Financing of up to 30 small hydro power plants in different countries High leverage The Solution Cooperation with a German company PCC with broad experience in electricity trade Support by experienced technical consultant PCC DEG Renewables GmbH Up to 30 small hydro power plants in South East Europe with an estimated capacity of 45 MW total. Equity: up to EUR 9 million Value Added by DEG Long standing international experiences Deep knowledge of financing of renewable power projects 35

36 Get in touch! Volker Siepen Vice President Tel.: Fax: Franz-Josef Flosbach Head of Department Europe, Middle East, Central Asia Tel.: Fax: Justus Vitinius Head of Infrastructure Department Tel.: Fax: / DEG Deutsche Investitionsund Entwicklungsgesellschaft mbh Kämmergasse 22, Köln, Germany Internet: 36