Strategy in Solar Energy

Transcription

1 Strategy in Solar Energy

2 Norfund s solar strategy Partnership based approach Successful partnership with Scatec Solar 250 MW to date with Scatec & expect to grow rapidly Partnering also with KLP as financial co-investor Geography Focus on Norfund s core geographies: Africa; Central America; & SE Asia Technology Utility scale solar PV is the main focus (w Scatec) Re-looking at off-grid micro solutions - linked to mobile phone payment systems 2

3 Scatec Solar South Africa Kalkbult, Linde & Dreunberg: 190 MW Scatec South Africa (Kalkbult, Linde, Dreunberg) Three solar PV power plants totaling 190 MW in South Africa developed by Scatec Solar AS. Location 1 st project commissioned, other 2 under construction Linde & Dreunberg utilise tracking technology Investment highlights World class solar resources Several local partners, including local community trust as shareholder Benefits from solar price reductions Norfund s participation Equity Instrument: Amount: ZAR 235 million (NOK150m) KLP participating in Linde & Dreunberg projects % of Equity: ca. 21% Currency exposure: ZAR Potential future pipeline Two projects submitted in phase ¾ Projects in Namibia under discussion 3

4 Scatec Rwanda First solar PV in East Africa The project Location: Agahozo-Shalom Youth Village A 8,5 MW solar PV power plant in Rwanda in partnership with Scatec Solar Power is sold on a long-term contract to the utility backed with a Government guarantee The power plant produces more than 5% of Rwanda s total available capacity of 155 MW) Investment highlights: Financial Close complete in February Construction started in February Senior debt of 17 MUSD provided by FMO and EAIF Norfund s participation Invested by KLP Norfund Investments: Amount: Approx. 1 USDm % of Equity: 30% stake Invested by Norfund: Mezzanine/equity of 2.9 MUSD Currency exposure: USD Timeline Development June 2013 Feb. Construction phase (6 months) June Operations 25 years PPA 4 Construction starts Commercial operation

5 Agua Fria First wave of solar in Honduras The project Location: Pacific coast, Honduras A 50 MW solar PV power plant in Honduras in partnership with Scatec Solar Power is sold on a long-term contract to the utility backed with a Government guarantee Part of a 300 MW solar country programme Investment highlights: Debt signed in December Construction started in December Local bank & GIEK/ECN financing Norfund s participation Invested by KLP Norfund Investments: Amount: Approx. 12 USDm % of Equity: 30% stake Currency exposure: USD Sept Timeline Financing Dec. Construction phase (6 months) June 2015 Operations 20 years PPA 5 Construction starts Commercial operation

6 Key risks & risk mitigation Market risks Volume risks are low with solar A more stable source than hydro Contract all volumes at fixed prices through long-term PPAs Spot sale and/or annual price negotiations rare Counter-party risk: credit enhancement and/or government guarantees Sovereign guarantees, letter of support, risk cover/guarantees from multilaterals, bank guarantees Construction risks Relatively low with solar, but often tight deadlines imposed Scatec Solar has a good track record Grid connection and grid stability can be a challenge Political risks In our view these are lower than perceived A well structured project can have a lower risk profile than the country risk as such Energy projects are key to governments and politicians Partners can seek political risk cover from MIGA/GIEK Social & environmental risks Relatively low impacts compared to wind & hydro Mostly focus on land-related matters & social impacts Some projects have «benefit sharing» through share of revenues or rents paid to benefit local communities 6

7 Some experiences Governments have played a role in enabling all solar projects in our portfolio to date South Africa, Honduras, Rwanda Countries, markets and energy mix must be understood on a case-by-case basis Emerging energy markets can quickly become saturated with solar Solar increasing grid stability or instability? Balancing power available? Solar is key in Norfund s strategy for investment in clean energy onwards Next 3-5 years will be important for utility scale PV (first mover advantages) Partnership approach chosen to help tap into strong growth potential 7