CaixaBank - Confidencial Energy & Natural Resources José Mª Arzac · 2019. 5. 23. · José Mª Arzac Daniel Parejo Head Energy & Natural Resources Tel: +3491 412 11 10 [email protected]

Energy & Natural ResourcesProject Finance in Poland – Wind sector

CaixaBank - Confidencial

José Mª Arzac

Director de Negocio Internacional

Financiaciones Estructuradas

Disclaimer

Important NoteImportant Note

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Energy & Natural ResourcesEnergy & Natural Resources

Introduction

CaixaBank Structure Overview

CaixaBank International Presence

Project Finance International Experience Project Finance International Experience

Project Finance “To Date”

Project Finance Assessment

Investment Case

Project Finance Prospects

CaixaBank: structure overviewCaixaBank: structure overview

Introduction

4Asociación Española Eólica: Wind Sector in Poland

(1) Including the conversion of the exchange of Bonds issued by “la Caixa”(2) As of end of June 2014(3) Proposal approved by the Board of Directors of “la Caixa” that was presented at “la Caixa” Annual General Assembly scheduled for May 22, 2014

CaixaBank: international presenceCaixaBank: international presence

Introduction (cont´d)


(1) Market Value as of 30th January 2014(2) As of Dec 2013

Project Finance: international experienceProject Finance: international experience

US / CANADA / LATAM CENTRAL / EASTERN EUROPE

COUNTRY TECHNOLOGY INSTALLED POWER

Germany Wind 237 MW

France District Heating NA

Netherlands Wind Off-Shore 600 MW

Italy PV 35 MW

Portugal Wind 681 MW

Poland Wind 57 MW

Romania Wind 228 MW

TOTAL 1.838 MW

COUNTRY TECHNOLOGY INSTALLED POWER

USA Wind 382 MW

Transmission Line NA

Bioenergy NA

Mexico Wind 210 MW

Cogeneration 300 MW

Regasification NA

Canada Regasification NA

Chile1 Photovoltaic 146MW

TOTAL 1.038 MW

Inversión 2008-2013: 600 MM €

Introduction (cont´d)


Active Markets Potential Markets

1 Proyecto Laberinto: en cierre financiero

Nº Deals: 14 Nº Deals: 8

Inversión 2008-2013: 600 MM €


Introduction



Project Finance International Experience





Investment Case


Project Finance AssessmentProject Finance Assessment

Parameter Requirements

Electricity market

Electricity output

Price

Off-taker

Construction phase risk

Contracting

• Remuneration system (Feed-in, PTCs, Certificates)?• Certificates purchase obligation? Priority access? Are the balancing

market costs fix?• Credit-worthiness of the off-taker?• Grid extension & operation: public or private?• How often does the remuneration law change?

• Construction plan & mitigation of commissioning delays, PLA´s? Testperiod defects?

• EPC-Contractor or Multi-Contracting? Subcontractor‘s clauses?



Operational risks

Proven Technology

O & M

Due Diligence

Resource Assessment

Securing of Assets

• Resource assessment from independent consultants• Secured legal title to the land? (rental, lease, usufruct)• Collaterals concept based on experienced international legal advisors• Comprehensive DDs (Legal DD, Tax DD, Technical and Insurance DD)

Construction phase risk

Construction

Macroeconomicframework

• Dependence on supplier‘s know-how? /Alternative Reliable providers?• Volatility of O&M costs? Loss of licences?• Environmental monitoring plan? Business interruption?• Operational efficiency problems?• Interest rate changes? Cash-sweep?

• EPC-Contractor or Multi-Contracting? Subcontractor‘s clauses?• Turbine supply alternatives & purchase contract details, performance

guarantee, completion guarantees?

Investment Case: context of financing decisionInvestment Case: context of financing decision

Law Context

Access Priority: TSO/DSO obliged to give priority for transport/distribution of RES electricity

Obligation to purchase renewable electricity: last-resort suppliers whose grids are interconnected with specific RES. The price tobe paid to the operator of the RES was the average price of the sale of electricity on the competitive market in the previouscalendar year

Green certificates: those entities which generate electricity from RES would recover the difference between their operating costsand the average market price payable by the last-resort suppliers by trading in certificates for renewable energy, so-called ‘green

The Polish energy market: hard-coal and lignite based / Limited number of renewable energy sources / Very good resourceconditions (wind)

Project Finance “To Date” (cont´d)


and the average market price payable by the last-resort suppliers by trading in certificates for renewable energy, so-called ‘greencertificates’ (no time limit for obtaining GC´s)

Substitute Fee: last resort suppliers to satisfy their statutory obligations by either acquiring GC´s or paying a fee (“Substitute fee”)

Quota• EU Directive: 15% for 2020

• Polish Law: 12,9% for 2017

Revenue

Price• Fixed price

• Combination of the statutorily guaranteed priceof electricity and Substitute Fee

• Long-term contract for both the electricity andthe green certificates

• Selling to DSO under the priority dispatch rulesand trading green certificates on the EnergyExchange

• Modelling electricity prices on power stock exchange, powercommodities

• PPA’s: Off takers’ creditworthiness / Term of the PPA’s

• CoO max price = substitution fee (248,46 PLN/MWh2008) +annual inflation -None low limit!

• Changes (detrimental or beneficial?)

• EU Directive not yet implemented - Tenor

Investment Case: 24 MW Wind Farm (2010)Investment Case: 24 MW Wind Farm (2010)

Project Finance “To Date” (cont´d)

Construction

• Full EPC Contract with tier I Contractor

• Subcontracts

Turbine Supply Agreement (“TSA”) – Enercon

BoP & Interconnection: Elbud

Resource• Hqn P-50 Scenario: 2.325

• Hqn P-90 Scenario: 1.910

Asset • Wind Project - 24 MW

Location• Kisielice Municipality, located in the Northen part of

the country (237 KM from Varsovia).

TSA • Enercon E-82 2MW

PPA

Counterpart Energa Obrot

ObjectSale by the Seller to the Buyer of all of the Electricity

generated by the wind farm

Tenor 15y

CPA

Counterpart Energa Obrot

ObjectSale by the Seller to the Buyer of all of the Property Rights

arising from the Certificates of Origin


Vigencia de PPA + GCPA (Offtaker: Energa-Obrot)

2/2010 06/2025

Fin vida útilestimada activos

10/203506/2010

Construcción

06/2023

VencimientoPPA y GCPA

Vigencia de la Deuda Senior

VencimientoCrédito

Recálculo delCaso Base

2013

Full Cash Sweep

Cuotas fijadas en RW

2017 2020

Polonia UE

Tail s/ PPA y GCPA

Vto teórico en aplicación del Cash Sweep (si procede)

Tenor 15y

PriceAverage sale price of electric energy in the competitivemarket in the preceding calendar year (i.e 2010: 197,21

PLN/MWh)

arising from the Certificates of Origin

Tenor 15y

Price []% of the Substitute Fee published by the ERO


Introduction








Investment Case



Context and main issuesContext and main issues

Fossil fuels big concern

• EU energy emission targets - Transitional Plan gives additional 4 years (2016 to 2020)

• High cost for the economy - paying for carbon emissions

• Free carbon emission allowances for 5Y – not for new fossil power plants

Prospects of electricity deficit once demand picks up again

• Decomissioning of about 4-5GW of ageing capacity (hard coal fired)

Pressure to reduce carbon emissions and diversify away from coal does boost the prospects for Renewables

New Facilities - AuctionExisting Facilities – GC´s / Auction


Obligation to purchase renewable electricity: “obligedsupplier” (YoY designation)

Green certificates:

• 15 years (retroactive?)

• Coeficient factor for Co-fired / no GC´s for Hidro (>5MW)

Substitute Fee:

• Fixed at 2014 level (PLN 300)

• Not possible if GC´s are bellow 75% of penalty level (3months) – Demand of GC´s - still a CAP

Quota:

• 20% maximum (government to control quota within thatrange for several years capped at 20%)

Existing Facilities – GC s / Auction

Pre-cualification

• Zonning Plan / Planning Permit• Grid Connection: conditions issued - agreement signed• Construction Permit

Reference Price

Volume ofElectricity

• Failure to deliver will be sanctioned through penalties(50% of awarded price for volume not delivered)

• Will be set annually• Existing projects: average of Black Energy and GC´s of

previous year

FiP

• Differences between market price and awarded priceto be paid/received

• Creditworthiness of State Owned Company? /Settlement procedure? /

State Aid• Total value of State Aid to be specifies in 2ry legislation• Implications??

ContactsContacts

José Mª ArzacJosé Mª Arzac

Daniel ParejoDaniel Parejo

Head Energy & Natural Resources

Tel: +3491 412 11 10

[email protected] FerreronsDavid Ferrerons

National Business

Tel: +3493 404 65 34

[email protected]

International Business

Tel: +3491 412 14 56

[email protected]


Antoni JofreMarisa Cobos

Tel: +3491 412 11 43

[email protected]

Tel: +3493 404 65 13

[email protected]

Joan Gaitx

Tel: +3493 404 43 88

[email protected]

Olga Salvó

Tel: +3493 404 45 93

[email protected]

Gema I. López

Tel: +3491 412 11 83

[email protected]

Lourdes Moreno

Tel: +3491 412 14 56

[email protected]

Juan F. Fernández

Tel: +3491 412 16 14

[email protected]

Energy & Natural Resources

Thank you!!

Documents

CaixaBank - Confidencial Energy & Natural Resources José Mª Arzac · 2019. 5. 23. · José Mª Arzac Daniel Parejo Head Energy & Natural Resources Tel: +3491 412 11 10 [email protected]