Transcript Document

Renewable Energy
Purpose of the Power Purchase Agreement (PPA)
Nebojsa Arsenijevic, BREP Manager
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IFC – Internal Structure
Advisory Services (AS)
Investment Services (IS)
IFC Provides Advice, Including to:
• Businesses
• Public-Private Partnerships
• Supporting the Private Sector
IFC Investing Solutions Include:
• Loans
• Syndicated Loans
• Equity Finance
• Structured Finance
• Risk Management Products
• Local Currency Financing
• Private Equity & Invest. Funds
• Trade Finance
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Balkan Renewable Energy Program
Component
Activities
C1
Regulatory framework improvements
C2
Support to renewable energy sponsors (Market and company level)
C3
Support to financial institutions
(Market and bank level)
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Align national regulation with EU; Fulfill obligations in accordance to EC Treaty of SEE;
Design appropriate incentive mechanisms;
Increase transparency of concessions granting procedure (credibility);
Design investment promotion tools and mechanisms for SHPPs;
Increase “bankability” of projects and decrease collateral requirements;
Make predictable cash flow analysis and conditions for project financing.
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B2B workshops,
Support to Associations,
Knowledge sharing
Promotion of new technologies
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Designs cross-check,
Business plan preparation,
Finance modelling
CDM projects registration
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Training material development
Integration of Regulatory/ Budgeting/
Engineering and Risk in the Finance Manual
Country Level Workshops
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In-depth Training for SHPPs and PF
Support in First SHPP Assessment
Portfolio Analysis and Recommendation ( in
the second year)
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PPA and Common Misunderstanding
Opinion of Public Stakeholders:
• Off-take price and subsidizing period are already defined in
the law and decrees. Why to create such a long and
complex contract
Opinion of Private Stakeholders:
• Why should I bother with several contracts (PPA, GCA,
etc.). All these companies are publicly owned, they should
resolve all problem among themselves.
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Main Role of PPA
To allocate risks among contracting parties based on
the following criteria:
• Who is able to manage specific risk (sometimes it is only
one party)
• If both parties can manage specific risk – who can do it with
lower cost.
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Risks
Public Stakeholders:
Private Stakeholders:
• Change in Law
• Currency risk
• Physical off-take (not
linked with the PPA, but
with the GCA)
• Financial off-take
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Project development
Financial closure
Construction
Operation and maintenance
Risk of “fuel” availability
(wind, solar irradiation,
river flow, etc.)
Change in Law (example)
Change in Law that with increase or decrease
development / construction / operation costs
(unlike market price, FiT price is fixed, so no room
for producer to express that change in product price:
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Introduction of balancing responsibility for RE plants
Introduction of G component
Discriminatory law/bylaw/rule for RE
Discriminatory law/bylaw/rule for electricity producer
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Other potential improvements (no details)
Additional improvements:
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Guarantee of payment
Termination events and Termination payment
Dispute resolution
Direct agreement
Transfer of shares
Force majeure
• Deemed output (not part of PPA but GCA)
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