Prepared by: Samar Obaid Partner
TAS
Renewable Energy – Financing point view
16 May 2013
Presentation Agenda
1. Energy Leaders
2. MENA Cleantech Trends
3. How to Establish an RE Project
4. Investment Risks
Solar energy leaders
► The US is expected to remain one of the world’s largest solar markets through to 2013, as cheap solar panels coupled with state-level policies encourage market growth.
► India’s second ranking reflects its National Solar Mission initiative and recent corporate
commitments, such as Moser Baer’s US$1b expansion of its solar subsidiary.
► China remains in third place as oversupply in the international solar export market has driven down the value of its previously high-growth industry.
► Germany confirmed solar FIT cuts and spending caps—it is beginning to see the limits of new solar installations
.
Source: Ernst & Young Renewable Energy Country Attractiveness Indices, August 2012
Ernst & Young All Solar Attractiveness Indices(November2012)
45 46
47 48
49 49
52 53 53 56
60 61
64 66
70
Israel Portu…
Greece Brazil South …
Moro…
Spain France
Austr…
Italy Japan
Germ…
China
India
US
Ernst & Young All Wind Attractiveness Indices (November 2012)
► China plans to add 100 GW of wind capacity by 2015, but faces issues of grid capability and connectivity to power-hungry coastal cities.
► Continued growth in the US likely as developers seek to qualify projects in 2012 for production tax credit ahead of a possible phase out.
► UK and Germany have aggressive offshore wind development plans, e.g., the North Sea HVDC Supergrid connecting the UK, Germany, and Norway
► India continues to be a high-growth wind energy market, adding 3 GW in 2011, driven by government policy and incentives.
► Canada is a newer entrant but is aggressively pursuing its wind energy strategy with installations touching 5 GW at the end of 2011.
► Wind energy is becoming less geographically concentrated — 71 countries now have wind installations. Growth in Africa, South America and Asia.
50 51 51 52
53 54
55 55 58
62 62 63 63
68 76
South … Belgium
Ireland Brazil Italy Romania Poland Sweden France UK US Canada India Germany China
Wind energy across the globe
Consolidated Index for all Renewable Energies
► China: While consolidation in the solar sector as part of efforts to boost domestic installations and
rationalize government support for supply chain firms may restabilize growth in the long term, the renewable sector is still undergoing a transformation that could slow growth in the nearer future.
► Germany: While the Government has recently
increased the country’s renewable target from 35% of electricity to 40% by 2020, and is being proactive in implementing policy measures to create sustainable growth, more immediate changes are likely to put a strain on the clean energy market.
► US: The US falls to third place this quarter. While Obama’s victory is good news for the country’s clean energy sector, the election campaign has highlighted polarized views — both political and public — on the future of US energy policy and reinforces the
challenge posed by political divisions in generating a consolidated energy strategy.
RECAI — All Renewables Index — November 2012
49 50 51 52 53 54
55 56
64 65
66 70
Swe…
Austr…
Brazil Italy Japan
Cana…
UK France India Unite…
Ger…
China
The RECAI provide scores for national renewable energy markets, infrastructures and their suitability for individual technologies. The indices provide scores out of 100 and are updated on a quarterly basis.
MENA Cleantech Trends
Renewable capacity in MENA
Capacity growth driven by solar
1.4 1.5 1.8 2.2 2.6 2.8 3.7
Total (in GW)
Source: Bloomberg New Energy Finance market sizing data
0.3 0.3 0.4 0.5 0.6 0.8
1.4
0.2 0.3
0.6
0.8
1.0
1.0
1.3
0.8 0.9
0.9
0.9
0.9
0.9
0.9
0.1
0.1
0.1
2006 2007 2008 2009 2010 2011 2012
Marine
Hydro
Wind
Solar
Energy
MENA Cleantech trend
Renewable Energy Projects
Source: Clean Energy Business Council
0 20 40 60 80 100 120 140 160
0 5 10 15 20 25 30 35 40
Japan
Solar attractiveness rank as per EY Country Attractiveness Index
Ease of doing business rank
United States Germany
Australia France
S. Korea Saudi Arabia Spain
UAE
Portugal Austria China
Israel Italy
Tunisia Mexico Greece
Morocco
Romania Turkey
Canada South Africa
United Kingdom
Poland
Taiwan Belgium Ukraine
Brazil India
Sweden
Denmark Netherlands
Bulgaria Egypt
Chile
► Size of bubble represents the size of the solar PV market (until 2016)
► Solar attractiveness ranks as per Ernst & Young’s Country Attractiveness Indices (Nov 2012); top 35 ranks considered.
► ‘Ease of doing business’ ranks based on 2012 Doing Business Report - The World Bank.
Country solar attractiveness matrix
292
184
109 99
31 -
50 100 150 200 250 300 350
Saudi Arabia Morocco Egypt UAE Tunisia
930
1,460
632
0 200 400 600 800 1,000 1,200 1,400 1,600
Morocco Egypt Tunisia
Some significant new capacity is expected in the next five years
CSP
Wind Solar PV
Source: MAKE Consulting Source: Lux Research
Sources: Pike Research and CSP Today 520
250
175 140
100 100 100
- 100 200 300 400 500 600
Morocco Sudan Algeria Egypt Tunisia Jordan UAE
MWMW MW
► Iraq plans to award 150 MW of wind and solar projects in 2013
► Jordan aiming for 600 MW of wind power and 300 MW of solar power by 2015
► Arab Spring slows progress but unlikely to prevent goals being achieved in the long term National targets – proportion
of electricity from renewable sources (%)
42%
20%
12% 10% 10% 10% 10%
30%
7%
25%
20%
5% 5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2020 2030
Source: Publicly available information
There is potential across MENA region
How to establish RE project High level Procurement timeline
Month 1 Month
10 Month 9
Month 8 Month
6-7 Month
4-5 Month 3
Month 2 Month 1
Final Close Final
Stakeholder approval Preferred
bidder acceptance conditions cleared Evaluation
report
completed and awards
announced Bid received
preparation
South
Africa
Compliance Evaluation Pass/Fail
Price Competition
Saudi
EOI Pass/ Fail CompetitionPricePre- qualific
ation
Complet eness review
Mandato ry criteria
Related Criteria
Examples
►
Compliance Evaluation in South African Model is one step
►
No rated criteria in South African model (only price scoring)
(250) (200) (150) (100) (50) 0 50 100 150
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040
$m
Phase 2 Phase 3 Phase 2 Figure 4: Cash flow profile (indicative onshore wind project)
► Typical cash flows for renewables projects characterised by:
• Upfront capital costs
• Steady revenues from
commencement of operations through to end of subsidy regime
• Indexing revenue streams (not all regimes)
► For projects lasting longer than subsidy regime (e.g. France
onshore – 15 year subsidy) there is a merchant tail where prices may be more volatile and attract lower debt coverage ratios
► Tax structures often enable limited tax payments in early years as a result of the significant upfront capital spend requirement
