Transcript Title Page - JOBURG WASTE SUMMIT 2015

Industrial Development Corporation
25 March 2015
IDC funding for Green Energy – with a Waste focus
Rishel Dharmapall
Green Industries SBU
Content
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IDC and its mandate
IDC funding options for various stages of projects
IDC Green SBU - Green Funds
Types of Green Waste Projects funded by IDC
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Waste recycling
Waste gases/heat for cogen
Biogas projects & CHP & in Transport
Developing Waste energy projects n
• IDC’s role & offer
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The Industrial Development Corporation
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Established: 1940
Type of organisation: Development Finance Institution (DFI)
Ownership: South African Government
Total assets: over R112 billion
Main business area: Providing funding for entrepreneurs and projects (greenfields
and expansions) that are contributing to industrialisation and job creation
o Geographic activities: South Africa and the rest of Africa
o Products: Wide range of custom financial products to suit a project’s needs
including debt, equity, guarantees or a mixture of these
o Stage of investment: Early stage (feasibility), commercialisation, expansion
o Project development: Identification and development of projects adding to the industrial base
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Positioning as Industrial Development
Funder
Greater importance on social and developmental objectives
Greater importance on financial objectives
Government / NGOs
• Non-commercial focus
• Fiscal transfers and grants
• Development objectives
(social)
DFIs
• Commercial and development
focus
• Sharing risk
• Internally generated funds,
government funds, loans
Commercial Financiers
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High commercial focus
Private sector capital
Financial objectives
Known risks
• Industrial Development Corporation (IDC)
• Development Bank of Southern Africa DBSA)
• National Empowerment Fund (NEF) etc
IDC encourages cooperation with a variety of these institutions to achieve its goals
IDC addresses market failures / gaps by supporting investments, which may otherwise not happen, in partnership with
private sector companies
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IDC can be involved in Project Development Phases
Concept (Prescoping) stage
• Fit IDC & SBU
mandate?
• Viability?
• Screening of other
parties/shareholders?
Scoping stage
Pre feasibility study
• Desktop financial
model and BA type
report
• Review of
Technology/Process
and identify preferred
choice
• Operating partner
• Regulations (e.g.
Carbon credits, EIA,
Waste License, etc)
• Raw material security
(e.g. waste supply
Volumes)
• Offtake/Supply of
Product
• Financial model
• Outline scope of
work to
implementation stage
• Focus Prefeasibility &
Feasibility
• Request project
development budget
(internal and external
costs)– used to carry
out subsequent stages
Feasibility study (may
have 2 steps to
Bankable)
• Pilot Study
Implementation
•Plant
construction,
commission and
operation
•Financial model
•Signing of all
Agreements
• All Regulatory
approvals
• Funding Approval for
debt and equity
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Green Industries SBU:
Focus
Renewable Energy: Non-Fuel Power
Wind Power
Generation
Concentrated
Solar Power
Solar Photo
Voltaic Power
Hydro
Energy efficiency
Heat,
Electricity
& building
efficiency
Cleaner
production /
Industrial
Efficiency
Transport
Efficiency
Local
manufacturing
related to
renewable
energy & energy
efficiency
Fuel Based Energy
Waste to Energy
Biogas/ CHP/Cogen
Emission and pollution mitigation
Air pollution
control
Waste
Management/
Recycling
Services related
to renewable
energy & energy
efficiency
Clean
stoves
Bio Fuels
Bio Ethanol
Bio Diesel
Fuel Based Green Energy:
Industry structure
Waste Gas
Grown biomass
Organic waste
Animal litter
Steam turbine or
organic rankine
cycle
Combustion
Incineration or
Waste heat
Electricity
Steam
CHP/Cogen
Internal gas
combustion
On-site heating
Anaerobic
Digestion
Sewage sludge
Gas Cleaning
Gasification
Municipal solid
waste or
Biomass or Tyres
Sorting
Feedstock
Pyrolysis
Recycling
Primary Process
Liquefied
Biogas (LBG)
Compressed
Biogas (CBG)
Piped
gas
Vehicle fuel
Industrial fuel
Secondary Process
End Use
Fuel Based Green Energy: Approach
Biogas, Waste to energy and CHP/Co-generation
Feedstock (Fuel) security:
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Feedstock
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No feedstock security, no start
Challenge: Long term supply agreement to cover
debt tenure + 2 years
Quality, quantity, price & period
MFMA requirements for municipalities
Process/Investment options:
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Process
various
options
Investment
decision
Offtakes
Revenue
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Driven by feedstock qualities, quantities term
and off take options
Typical cost R15-35m/MW
High load factors (eg 90%)
Offtakes:
Project
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Low O&M cost
If Offtake/feedstock price strong
Repay debt quickly
Green Energy Efficiency Funds, eg, KfW & Afd
KfW /Afd
IDC
Concessional debt funding
Technical assistance grant
Develop Green Industries
Capacity building in clean energy finance
Green Energy Efficiency
Fund
Addresses market failure and funding barriers
Reduced interest loan - up to Prime less 2% or fixed at
10% (fund dependent)
Long payment term ( up to 15 years)
Stimulate energy efficiency and renewable energy investment
Technical assistance to:
-identify energy efficiency
and renewable energy
opportunities
-calculate the economic
and financial benefits
-support the selection of
eligible equipment and
enhanced performance
technologies.
Promote long term business competitiveness
-Modernisation of
businesses
-Increased company
profitability
-Improved product quality
and production capacity
-Lower vulnerability to
increasing energy prices.
Contribute to global climate
protection
-Measurement of
energy savings and
carbon reduction
-Enhanced company
image due to
contribution to reduction
of carbon footprint.
GEEF Characteristics
Criteria
 Own use
 Energy savings of 25% +
• Facility size: R500 million
• Loan size: R1 – 50 million
• Interest rate: Prime less 2%
• Term: Up to 15 years, based on payback period of the
investment
Programme supported by the German Cooperation and Development Ministry
• Standard fees will apply
Agency Development & Support (ADS)
• Establishment & facilitation of funds and support for public local economic
development agencies
• Designed to bridge gap between the public and private sectors and other development
organisations at a local level
• Currently funding some 34 agencies in various stages of development
Constraints for Project Development
• Compared to EU: Cheaper electricity, lower landfill tipping fees, minimal
offtake for heat.
• Access to municipal waste (DWA infrastructure for hydro)
• MFMA regulations on length of contracts
• Inability to fund municipalities
• PPP regulations & complexities, skills capacity in Municipality
• Bankable off-takers
• Wheeling arrangements
• Regulatory framework for alternative fuels
Jobs from Gas Sources
Jobs/R
million
Capex *
Jobs versus
crude refining
Jobs per 10 %
national fuel
volumes
Biogas from Waste
0.3
25x
40 000
Biogas from Crops
2
200x
350 000
0.4
20x
25 000
1
14x
14 000
Gas System
Landfill Gas
CNG Only
* Includes vehicle conversions distribution & filling station capex
Prospects
Thank you
Industrial Development Corporation
19 Fredman Drive, Sandown
PO Box 784055, Sandton, 2146
South Africa
Telephone 011 269 3000
Facsimile 011 269 2116
E-mail [email protected]
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