Transcript Safe project conditions for renewable energy – a challenge

Safe project conditions for renewable
energy – a challenge for a clean future
Peter Klessascheck, Head of Project Management
Vilnius, 24 November 2010
Index
o PowerWind GmbH
o Risks in project financing
o Impact on Lithuanian Renewable
Energy Law
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PowerWind GmbH at a glance
o Founded in 2007
o Headquarters: Hamburg (Germany)
o Production facility: Bremerhaven
(Germany)
o Products:
o PowerWind 56 (900 kW)
o PowerWind 90/100 (2500 kW)
o 141 employees
o Fully owned by Warburg Pincus, an
international growth investor
Source: BFB
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33 WECs installed, 8 under construction, 32 more sold
as of 22nd November
Germany
Poland
Azerbaijan
Italy
Bulgaria
Romania
USA
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Risks in project financing
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Wind energy converters are usually owned by a Special Purpose Vehicle.
This SPV has to pay all investment costs.
Investment
costs
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Typical investment costs for a wind energy project
WEC
Infrastructure
o Blade markings/aviation lights
(according to building permit)
o Roads and crane areas
o Shadow flicker modules
(according to building permit)
o Foundations
o Soil investigations
o Transport
(costs depending on distance and
accessibility of site)
o Grid connection!
 extreme high costs in Lithuania due
to tender system, presently there is no
other regulation
o Crane
(costs depending on distance to site
and local availability)
o Compensation payments for impacts
on environment
o Transformer/switchgear
(depending on project characteristics)
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One part of the SPV’s capital is invested by share holders. This loan is
paid back later by the SPV’s profits.
The SPV’s only financial income is generated by the WEC.
Investment
costs
Income from
energy sold
Equity money
Dividend
distribution
and loan paid
back to share
holders
German engineered wind turbines
Investors
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The main part of the SPV’s capital is financed by a bank. The credit is
paid back later by the SPV’s income.
Debts and
amortization
Financing Bank
Investment
costs
Income from
energy sold
Financing of
investment costs,
financed capital
Equity money
Dividend
distribution
and loan paid
back to share
holders
German engineered wind turbines
Investors
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In a rating procedure, the financing bank evaluates the probability
that the financed capital can‘t be paid back by the SPV as agreed in
the credit contract.
In general, the bank analyses the main risks caused by commercial,
technical and legal impacts.
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Typical topics analyzed in the rating procedure
o Reports, studies (e.g. wind at site) and expertise
o The technology used  WECs with type certificates are preferred
o Permits for installation and operation of the WEC according to the
planned conditions
o Legal aspects in contract and permits
o Reliability of the equity investors
o Estimation of future energy consumption and related prices
o Business plan
 Due to the unstable Lithuanian Law on Renewable Energy, the price
per kWh and the law’s period of validity is uncertain
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Beside the debts and amortization the SPV has to pay the monthly
operation costs.
Debts and
amortization
Financing Bank
Investment
costs
Income from
energy sold
Operating costs
German engineered wind turbines
Financing of
investment costs,
financed capital
Equity money
Dividend
distribution
and loan paid
back to share
holders
Investors
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Typical operating costs for a WEC
Land lease
payments
4-8% of annual
revenues
Reserves
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Technical &
commercial
management
Service
1,5-2,5% of annual
revenues
13% of annual
revenues
(Full service contract =
1.1 Cent/kWh)
Repairs
Insurances
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Wirtschaftlichkeitsanalyse
Energy produced
Financial capital
+
Operating costs
+
Dividend
The only income a SPV can generate comes from sales of the energy
produced.
This source is essential for paying off the financed capital, the operation
costs and finally a dividend to the investors!
Without a reliable Lithuanian Law on Renewable Energy, neither banks
nor investors will invest in the clean technology to the benefit for all of us.
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Impact on Lithuanian Renewable Energy Law
Present rate of
equity
Access to grid
Germany
Lithuania
15-20%
40%
Consequence
for Lithuanian projects
Fewer potential investors
Small projects
Guaranteed by
Renewable Energy Law
Guaranteed up to
Period of
20 years
guaranteed feed- (depending on potential
in tariff
of production site)
German engineered wind turbines
Tender system
High risk and high demand
on working capital already
in planning phase
 Avoid tender system
No regulation any more
(but 5 years are insufficient in order to
receive bank financing)
High risk for bank  no
financing or very high
interest rates
 Price should be fixed
for at least 13 years
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Thank you for your attention
PowerWind GmbH
Kehrwieder 8
20457 Hamburg - Germany
Insert Photo
www.powerwind.de
T + 49 (0)40 741067 - 0
F + 49 (0)40 741067 - 599
[email protected]
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Back up
Wirtschaftliche Bedeutung: Arbeitsplätze
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Stand: 9/2005
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With its full range of features, the PowerWind 56 perfectly matches
the technical challenges of the site in Azerbaijan
o Highest energy yield in wind class II
o Full-scale converter ensures that the
system is suitable even for weaker
grids
o Three active cooling systems enable
the turbine to be installed and
operated also in regions with
extreme climatic conditions
o Compact design allows inexpensive
transportation and installation even in
locations with weak infrastructure
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