The River Devoll Project

Transcription

1 EVN Hydropower Development in Albania The River Devoll Project Dr. Michael Laengle, CFO

2 Agenda > EVN Overview and strategy > Albania Electricity market in SEE > The River Devoll project 2

3 Company profile fact sheet 2007/08 EVN Business areas Countries Employees EVN is a leading integrated energy and environmental service group serving customer in Lower Austria and Central and Eastern Europe Electricity, gas, heating, water, waste incineration Austria, Albania, Bulgaria, Croatia, Cyprus, Denmark, Estonia, Germany, Hungary, Latvia, Lithuania, Macedonia, Montenegro, Poland, Russia, Slovakia, Slovenia, Turkey 9,342 ( 2.0%) thereof ~ 75% in abroad Revenue 2,397.0 EUR m (+7.3%) EBITDA EUR m (+3.3%) EBIT EUR m ( 15.6%) Net results EUR m ( 17.7%) Credit Rating Moody s: Standard & Poor s: A1, stable A, negative 3

4 EVN currently active in 18 CEE countries EVN presence Energy supply Drinking and wastewater project Waste incineration Power station under construction/project Group headquarters Regional location Highlights Energy supply > About 1 m electricity, gas, heat and water customers in Lower Austria > 1.6 m electricity, 40,000 heating customers in Bulgaria > 720,000 electricity customers in Macedonia Electricity generation > 1,829 MW generation capacity (gas, coal, hydro, wind and biomass) > Construction of a coal-fired power plant of 790 MW in Duisburg-Walsum, Germany Networks > 127,294 km electricity networks, 10,650 km gas pipelines and 540 km heating networks Environmental services > Waste incineration plants of 300,000 tons p.a. in Lower Austria, 360,000 tons p.a. in Moscow > More than 80 drinking and waste water plants for more than 10 m people 4

5 EVN s strategy - Focus on Energy and Environmental Services Traditional EVN core activities > Energy > Generation complemented by related infrastructure and environmental services > Environment > Waste incineration > Networks > Supply > Drinking water > Waste water > Benefit from strategic advantages: > Common customer basis ( one-stop shop ) > Know-how-transfer primarily in generation and networks > Regional synergies in operation and supply (currently mainly in Austria) > Benefit from administrative functions of head office for non-domestic activities > Optimisation of financial resources 5

6 EVN important energy market player in SEE Albania Serbia Skopje Macedonia Western Bulgaria Sofia Romania Bulgaria Plovdiv Greece North Eastern Bulgaria South Eastern Bulgaria Turkey Black Sea EVN s strategy: > Vertical integration increase of production capacities > Modernisation of grid networks > Active electricity trading > EVN assets: - Network operator / supplier - District heating plant in Bulgaria - Hydro power plants in Macedonia > Bulgaria: Fully liberalised electricity market starting on July 2007 fully negotiable prices versus long-term electricity supply agreements and limited generation capacities > Macedonia: Single-buyer model, some eligible customers, electricity prices amount to only one-third of the level in WE > Electricity prices amount to only 30-50% of the Western European level 6

7 Electricity sales and generation > Strong growth and high exposure in electricity supply 20,000 15,000 15,641 18,043 19,372 > Coverage ratio of the Group: ~20% 10,000 > Coverage ratio excl. Bulgaria and Macedonia: 60-70% 5, ,556 3,451 4, / / /08 Electricity sales Electricity generation > Mid-term target: - Increase of coverage ratio to min. 40% - Vertical integration in SEE 7

8 Agenda > EVN Overview and strategy > Albania Electricity market in SEE > The River Devoll project 8

9 Albania: Transition economy Romania > Strong GDP growth: : ~ 6.0% Serbia Sofia Bulgaria Black Sea > Best GDP forecast among transition economies in Europe e: % Skopje Tirana Macedonia Albania Plovdiv Greece Turkey > Strong expected economic development significant increase in electricity demand > Population: 3.2m > GPD/capita (2008): 6,400 EUR - 25% of EU-27-44% of EU-12 > Huge potential for basic infrastructure investment > Bottlenecks in the whole electricity sector: production, interconnection and transformers 9

10 Challenging electricity situation in Albania > Electricity demand: 6,700 GWh - Domestic production: 4,100 GWh - Import: 2,400 GWh > High dependency from electricity import > Current energy production represents only one-third of total hydro power potential > Hydro power potential: - River Drin: two HPP - River Vjosa: seven HPP - River Devoll: three HPP > Bottleneck in interconnections 10

11 Electricity demand scenarios for Albania GWh/a 25,000 20,000 > Electricity demand will triple until 2030 from 7GWh to ~ 20 GWh 15,000 10,000 5,000 > Expected growth rate: 5% p.a. with high volatility: - Winter period: 4% - Summer period: 7% historic demand high forecast medium forecast low forecast > Peak hour is at 9:00 p.m. and a strong increase again in the morning 11

12 Electricity market reform > Attract strategic investors in the sector through implementation of privatisation > Establish a competitive electricity market consistent with EU requirements: : Ratification of The Energy Community Treaty : new market model Restructuring of the national electricity company Unbundling of transmission and distribution system operators Separate wholesale and retail supply function 12

13 Energy sector Albania - Current situation > A free energy market (wholesale, balancing, ) is not established market liberalisation expected in mid-term > Agreements between market participants are subject for approval and enforcement by the Energy Regulatory Commission > Future development could be assumed similar to other more developed markets in the region or in the EU > Energy shortage and therefore energy outages are common > The whole region is not supplied adequately with energy > Further demand due to high growth of economy and population in Albania expected > Interconnection with the high-voltage electricity network enable export possibilities 13

14 Grid connection > Good integration into the Albanian network 14

15 Agenda > EVN Overview and strategy > Albania Electricity market in SEE > The River Devoll project 1. Project description 2. Concession Agreement 3. Business and financing model 4. Risks and challenges 15

16 1. The River Devoll Project > Concession for three large hydro power plants on the River Devoll in Albania > Capacity: 320 MW > Electricity production: 1,000 GWh p.a. > Investment: EUR 950m > 50:50% joint venture with Statkraft (Norway) > Excellent opportunities for peak energy due to flow conditions 16

17 1. Planned powerhouse locations 17

18 2. Conclusion of Concession Agreement > December 19, Signing Concession Agreement with the Ministry of Economy, Trade and Energetics - Signing Transmission Network Agreement with the Transmission System Operator > January 21, Ratification of the Concession Agreement by Albanian Council of Ministers > February 23, Ratification by Albanian Parliament > April 1, Effective date 18

19 2. Main elements of the Concession Agreement > BOOT concession > Joint venture with Statkraft (Norway) > Flexibility and optimisation of applied technology > Stepwise realisation of the three plants > Free marketability of electricity generated > Strong commitment from authorities and governmental institutions 19

20 3. Business model Statkraft EVN AG 50% 50% Joint venture project company Hydro power plants River Devoll Power purchase agreements Supply 20

21 3. Financing model > Raising of the funding after pre-construction phase > Project financing structure envisaged on a limited recourse -basis with a respective share of equity > Project-specific securities including: Completion guarantee for completion risks which are not transferable to the EPC-contractor during construction phase Appropriate sponsors support to mitigate economic risk during operation phase > Involvement of multilateral financial institutions and export credit agencies (ECAs) to cover political risks (e.g. EBRD, IFC, EIB, MIGA, OeKB) 21

22 4. Project challenges and opportunities > Challenges - Sophisticated technology (long diversion tunnels, high dams, existing dam structure) - Geological challenges - Environmental challenges - Social challenges - Approval procedure > Opportunities - Long-term investment - Growth market (shortage of electricity in SEE) - Renewable energy - Peak electricity - Free marketability on the whole region - Strong commitment from authorities / political institutions in Albania 22

23 4. Benefits for Albania > Increase of the domestic electricity production by ~ 20% state-ofthe-art hydro power storage system, highly flexible peak-load > Financial income for the budget at estimated cumulative EUR 1,000m through increased government's revenues > Increase of GDP growth rate by 2%, stimulation of the economy - Construction phase Directly: ~ 5,000 people for 6 years (= 30,000 men year) Indirectly: >2,500 people for 6 years (= 15,000 men year) Salaries directly: EUR 120m Salaries indirectly: EUR 60m Decreasing of the unemployment rate (currently: 13%) - Operating phase 300 permanent new jobs for joint venture company and suppliers Salaries (estimated on real terms): EUR 50m 23

24 Disclaimer Certain statements made in this presentation may constitute Forward-Looking Statements within the meaning of the U.S. federal securities law. Forward-looking information is subject to various known and unknown risks and uncertainties. These include statements concerning our expectations and other statements that are not historical facts. The Company believes any such statements are based on reasonable assumptions and reflect the judgement of EVN s management based on factors currently known by it. No assurance can be given that these forward-looking statements will prove accurate and correct, or that anticipated, projected future results will be achieved. For additional information regarding risks, investors are referred to EVN s latest annual report. 24