UNFCCC African Regional Workshop
on preparing TT Projects for Financing
THE CLIMATE TECHNOLOGY INITIATIVE’S
PRIVATE FINANCING ADVISORY NETWORK
(CTI PFAN)
Peter StoreyGaborone, 4th September 2009
CTI PFAN NETWORK MEMBERS
CTI PFAN’S FUNDING PARTNERS
FE CLEAN ENERGY GROUP
INC.
Management
Consultant
Regulatory
Economics &
Finance
3
CONTENTS
Background & Introduction
� Introduction to PPL & CTI
� CTI PFAN - What it is & How it works
Review of the Pilot Phase
Overview of Current PFAN Coverage & Expansion Activities
� Global PFAN
� Investor Fora
� PFAN in Africa
Added Value of PFAN
Project & Selection Criteria
Summary
4
INTRODUCTION TO PPL
Financing Arranger / Advisor
� Structured Finance / Project Finance
� Structured Trade Finance
� Fund Management (dedicated closed-end investment funds)
Exclusively for Developing Countries & Transition Economies
Special Focus on Clean / Renewable Energy Projects
� other areas of know how (Infrastructure)
Privately Owned / Independent
� Holding Co & Headquarters in Cyprus
� Companies / Offices in Vienna, Kiev, Johannesburg
Involvement with CTI / UNFCCC since 2004
� Founder Member & Global Coordinator of PFAN
More Info @ www.ppl-int.com
5
INTRODUCTION TO CTI
Implementing Agreement under the IEA in support of UNFCCC Objectives. Currently 11 Member Countries:� Austria, Australia, Canada, Finland, Germany, Japan, Norway,
South Korea, Sweden, UK & US (Chair)
To promote more rapid development and diffusion of climate friendly and environmentally sound technologies through multilateral and international cooperation between the public and private sectors and between OECD Countries and Non-OECD Countries
CTI works with� Governments� IEA & UNFCCC Secretariats� Export Group on Technology Transfer (EGTT / UNFCCC)� International Organisations ( WB / UNDP / UNEP / UNIDO)� Business & Financial Sectors
6
HOW DID CTI PFAN COME ABOUT?
Recurring Findings of CTI Work & Experience� Absence of sufficient public monies to make a meaningful impact
on technology needs of developing countries� Importance of Partnerships� Need for targeted capacity building to create enabling environment � Essential role of Private Sector
Workshops on Innovative Financing of Technology Transfer in Montreal (2004) and Bonn (2005) with UNFCCC / EGTT� Large supply of money seeking good investment opportunities� Investment Gap � Shortage of good project / financing proposals that meet the
standards & criteria of private sector financing communities
A tool was needed to help project developers create bankable financing proposals and bridge the development gap to the money���� PFAN
7
WHAT IS CTI PFAN?
A Multilateral Initiative organised under the umbrella of CTI
� Funding from CTI Countries, USAID, APP, ICETT & REEEP
� Leverage Contributions from the Private Sector Members
Informal Network of Financing Professionals
� Private Sector Companies / Individuals
� Investors / Private Equity Funds / Banks
� Financing Consultants & Technical Advisors
� Commmon interest in providing finance & financing services to
climate friendly projects to support technology transfer
Aims:
� To mobilise private sector finance for climate friendly projects in
developing countries
� support UNFCCC objectives on Technolgy Transfer
� Capacity Building: financing skills & know how transfer
� Get more CE / RE / EE projects to financial close
8
WHAT SERVICES DOES
PFAN OFFER?
Offers a free consulting & coaching service to project sponsors &
developers to help them raise pivate sector finance
� Project Development
� Support & Advice on Project, Financing & Technical Structuring
� Support & Advice on Sourcing Finance
� Support & Advice on preparation of financing proposals &
investment memoranda
Technical Assistance
� Contributions to the cost of technical studies etc
Matchmaking Service: Contact Broking & Introductions
Money / Financing – directly from PFAN Members & their
Networks
9
HOW DOES IT WORK?
2 Project Identification & Selection Streams
� Unsolicited Submission through Network / UNFCCC / CTI etc
� RFP in connection with an Investor Forum
Induction Review
� Rigourous but non-bureaucratic
� PFAN Member assigned to project as dedicated coach / mentor
3 Further Reviews to guide project to Bankability & Financial Close
� Written report to developer at the end of Each Phase
� Recommendation / decision to continue or terminate support
� PFAN support can be terminated if financing thought unachievable
� Virtual Consultancy / Some hands-on ability during 4th Phase
Investor Forum Projects brought into pipeline after each Forum
10
PFAN REVIEW PROCESS
Ind
uctio
n
1st Review
Developer / Sponsor
PFAN Network
1st ProjectProposal
UpdatedProposal
UpdatedProposal
UpdatedProposal
FinancialClosing
2nd Review 3rd Review 4th Review
Contact Broking Advice $
TechnicalCashflows
CPsGeneral
Comm / Fin
11
HOW DOES IT WORK?
(Cost & Resource Allocation)
PFAN Services are provided free to the project developer / sponsor
� Subject to acceptance into pipeline & agreement of the conditions
Cost of providing the PFAN Services is absorbed by the Funding
Partners (CTI / USAID / APP / ICETT / REEEP etc).
� Fee paid to the PFAN Members / Consultants according to an
agreed discounted fee schedule
Provision of services subsidised by the PFAN Members
� Trade-off: access to the project pipeline for business development
� Right of First Offer to provide services / financing (non-binding &
fully competitive terms)
Success Fee on Financial Closing
� Shared between PFAN and the involved PFAN Consultant
according to an agreed schedule
12
PFAN STATUS
Review of the Pilot Phase
Pilot Phase successfully completed (2006 – Mid 2008)
Initial Network Establishment / Proving the Concept
Ongoing support of UNFCCC, EGTT & CTI Capacity Building
Activities
Endorsement in Bali COP 13 Decisions (4 / CP.13)
New Funding from USAID, APP & CTI confirmed 30.09.08 / and
from REEEP 31.05.09
� To establish PFAN as a Global Programme
� Establish Regional Networks – also in Africa
� Dedicated Country Networks in selected countries
13
PROJECT DEVELOPMENT IN THE
PILOT PHASE
Ca 65 Projects underwent Initial Review / Pre-Review
10 Projects formally inducted into development pipeline
� A further 10 – 15 projects would have been suitable for pipeline
induction had more resources been available
2 Projects brought to financial close (July 07 / Oct 08)
� Small Hydroelectric Power Station in Mexico (8,5 MW / USD 17 mio)
� Bio-Diesel Refinery in Brazil (66.000 tpa / USD 18 mio)
� Total of USD 35 million financing leveraged
3rd Project from the Pilot closed in Jan 09
� USD 1 miillion for Biomass Pelletisation Facility in RSA
� Up to USD 5 million for international project roll out
5 Projects at various stages of development carried over into full
scale operation
14
OVERVIEW OF GLOBAL PFAN
Latin America & Caribbean� Longest standing best positioned network� Coverage in Brazil, Chile, Columbia, Mexico� Caribbean SIDS in preparation� Investor Forum planned for Q1 2010� 8 projects in development pipeline / USD 132 million of investment
Asia� Launched late 2008 – Q1 2009 / fast expanding� Investor Fora in Singapore (for ASEAN), Philippines & Indonesia � Dedicated Networks in China, India, Indonesia, Philippines� 25 projects in development pipeline / USD 1,2 billion of investment
CIS / Eastern Europe � Regional Coordinator & some coverage in place� Formal launch planned for H2 2009� 1 project in pipeline / USD 5 million investment
15
INVESTOR FORA
Format � RFP / Selection of Projects (Finalists & Semi-Finalists)� Intensive PD & Financing Coaching for Finalists� Project Development Workshops for Finalists & Semi-Finalists� Investor Pitches / Showcasing of Finalists to investors� Awards for “best” proposals (independent panel of judges)
AFCEF-1 (Singapore, March 2009) � 11 Finalists / 10 Semi-finalists� USD 70 million investment requested / 2 - 3 million tpa CO2 red.� 100 investors at forum
Philippines (Manila, June 2009) � 6 Finalists / 4 Semi-finalists � USD 532 million total aggregate investment / 908.000 tpa CO2 red.� 20 Investors
Indonesia (Jakarkta, June 2009)� 7 Finalists / 3 Semi-finalists� USD 354 million total aggregate investment / 991.000 tpa CO2 red.� 15 Investors
16
PFAN IN AFRICA
Regional Network under construction & development� Local & International Advisors & Investors� PPL International as Regional Coordinator in Johannesburg� One project already closed� 2 Projects in pipeline / 2 under review
Project Handling Capacity � 30 - 40 projects over 3 years� Target: USD 38 million – 94 million of financing leveraged
Dedicated Country Networks in Uganda & Mozambique� Roll-Out from August / September 2009
Investor Forum planned for April 2010 � Applications from any African country will be eligible� Venue probably Johannesburg� RFP due for publication at end of September
17
EXAMPLE PROJECTS
USD 1 Mio for SA Energy Densification Technology (Bio-mass)
� SA Developer & Investor
� Transfer of Technology to China via PFAN Network in China
� Project Roll-Out in SA and Internationally
Sunlabob - Solar Rural Electrification & Lighting Project
� Innovative Financing & Delivery Model based on rental of
charging stations & lanterns financed by intermediary
� Transfer of successful from Laos to Uganda
� (Potential replication in Mozambique & Togo & others)
Solar Pumping, Irrigation & Power Supply for development of
small scale sustainable agricultural activity in Mozambique
� Transfer of successful Brazilian Project Model
18
ADDED VALUE OF PFAN
Early stage development funds / tools like PFAN are scarce and vitally important
Resource Optimisation� Sorts the good from the bad, enabling developers & investors to
concentrate on projects with investment potential
Access to Deal Pipeline for Investors
Direct Access to Investors for Developers
Symbiotic Network Effect� Promotion of alliances & relationships between developers /
investors / advisors in the Network� Exchange of Projects & Project Development Ideas
Risk Reduction through targeting of key risk points
Accelerated Development Progress
19
[TNAs / NAPAs / NAMAs] etc
[TNAs / NAPAs / NAMAs] etc
Projects & Initiatives
PRIVATE SECTOR
PRIVATE SECTOR
Project Development drivenby Private Sector Champion
Financing with Private Sector Capital
Project Development driven by Public Sector Champion
Financing with Public Sector / Donor Resources
PUBLICSECTOR
PUBLICSECTOR
PFAN
FilterProcess
PFAN
FilterProcess
• Commercial Projects & Businesses
• Good Returns• Well defined & self-contained
Cash Flows
• Policy Initiatives & Projects• Low Returns
• Social & Developmental Benefits
• Little identifiable Cash Flow
PPPsPPPs
PFAN’S Potential Filter Role -UNFCCC Process
20
PROJECT CRITERIA
Target Project Size: USD 1 – 50 million total investment volume
� Smaller & larger projects possible
� Ca 15% of portfolio for Micro-Projects (< USD 1 million)
Typical Project Type: CE / RE mitigation projects for generation of
power or production of biofuels
� Wind, Solar, Geothermal, Biomass, Biofuels, Small Hydro
� PFAN is technology neutral; but it needs to be proven
Also open for Energy Efficiency & Adaptation Projects & Proposals
from Upstream Businesses
� Manufacture & Development of CE / RE / EE technologies
Projects can go beyond pure CE / RE and combine other aspects
and components (water / agriculture)
Commitment of Developer to implement PFAN advice
21
What does the Ideal PFAN
Project look like?
Commercially & technically experienced Project Champion (Who?)� Financially committed: Equity stake
Proven Technology: can still be new / state of art (What?)
Reasonable Plan for Implementation (How?)� Risk Sharing & Diversification (consortia / suppliers / contractors)� Integrated project approaches & linkage
Consistent regulatory, legal & commercial framework (Where?)� Ability to quantify, manage, mitigate and price risk
Repayment Ability (What if?)� Strong Cash Flows & Cover Ratios under worst case conditions
Adequate Return (unique to each project) (Why?)� Also in consideration of all hard & soft factors and accruing
socio-economic benefits: Tripple Bottom Line approach� Reduction in GHG Emissions
22
HOW DO I GET SELECTED?
Informal Unsollicited Free Form Initial Proposal
� Answers to the What? Where? Who? How? Why? & What if?
Must be able to demonstrate Back of Matchbox Technical &
Commercial Feasibility (based on current available information)
� Positive Initial Feasibility (technical & commercial)
� Adequate Return on Investment / Financing capable of repayment
GHG Reduction Potential
PFAN targets developers / sponsors that do not have the resources
to pay for professional project development & financing advice
Cyclical Calls for proposals for the Investor Fora
� RFP for Africa Investor Forum scheduled for End September
23
FUTURE DEVELOPMENTS
Launch of a new activity to test whether the PFAN methodology
can be applied to deal with Adaptation, Forestry & Early Stage
Technology Development Projects
� Investigatory Workshops in early 2010
� Programme design & testing
� Pilot Programme from end 2010
Launch of stand-alone website
� By end of 2009
� Searchable database of all projects and activities
24
CLOSING SUMMARY
CTI PFAN is proving to be a succesful & worthwhile / valuable tool
� First project closures
� Considerable Financial Leverage: small input ���� big result
CTI PFAN is open for business & expansion in Africa:
� Programme will run 2009 – to end 2012
� Scaling-Up plans being implemented
� Dedicated African Networks under development
� Actively seeking new Projects in Africa
CTI PFAN would be delighted to help workshop participants
develop and structure their projects
� Please send any enquiries and project proposals to
Peter Storey, Global Co-ordinator ([email protected])
CTI PFAN NETWORK MEMBERS
CTI PFAN’S FUNDING PARTNERS
FE CLEAN ENERGY GROUP
INC.
Management
Consultant
Regulatory
Economics &
Finance