20120507 rec bankability adb - mdaly - 05jun12
TRANSCRIPT
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RENEWABLE ENERGY CORPORATION
Selecting RECfor Financial Return
Matt Daly, General Manager
May 2012
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3 2011 REC All rights reserved. Confidential
About REC
Founded in Norway in 1996, REC is a leading
vertically integrated solar energy companyand employs more than 3,200 peopleworldwide
REC produces polysilicon, wafers, cells andmodules for the solar industry, and siliconmaterials for the semiconductor andelectronics industry
REC is also engaged in project developmentactivities in selected PV segments
2011 revenues close to USD $2.4 billion
REC is listed on the Oslo Stock Exchangeunder the ticker: REC
Over 200 patents pending or granted
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Agenda
Maximizing The Income Stream
Reducing Capital Expenditure
Risk Mitigation
Export Credit Financing
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Major contributing factors to PV project returns
IRR
COST OF FINANCE
- Interest rate- Term of loan
- Loan guarantor
- Timing of repayments
MAXIMISE REVENUE STREAM
- High yielding equipment
- Optimised design
- Ongoing maintenance
- Minimising degradation rates
REDUCE COSTS
- Reduce capital expenditureof equipment
- Maximise performance ratiovia equipment and design
- Efficient systems to limitoperating expenditure
- Incentives and subsidies
MITIGATION OF RISK
- Securing PPA
- Technology selection
- System durability
- Service & support
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Major contributing factors to PV project returns
IRR
COST OF FINANCE
- Interest rate- Term of loan
- Loan guarantor
- Timing of repayments
MAXIMISE REVENUE STREAM
- High yielding equipment
- Optimised design
- Ongoing maintenance
- Minimising degradation rates
REDUCE COSTS
- Reduce capital expenditureof equipment
- Maximise performance ratiovia equipment and design
- Efficient systems to limitoperating expenditure
- Incentives and subsidies
MITIGATION OF RISK
- Securing PPA
- Technology selection
- System durability
- Service & support
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REC panels installed in a power plant in Alicante, Spain.System size of 8 MW, powering 4 896 households
RIGHT HERE IN ALICANTE
Maximizing The
Income Stream
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Average irradiance levels in APAC 300-600W/m2
The majority of Asia has average irradiance levels under 600W/m2 between
sunrise and sunset
If you are not sure of the low-light efficiency levels of a module, ask themanufacturer
A performance simulation used to underpin project finance should take thisfactor into account
Al-BSF + Al Sydney 408 W/m2
Dehli 500 W/m2Tokyo 320 W/m2
Manila 346 W/m2
Beijing 320 W/m2
Bangkok 403 W/m2
Jakarta 370 W/m2
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2011: REC ranks as #1 in YEILD, kWh/kWp
Photon test 2011: most recognized test comparing module brands under reallife conditions, over several years
Generated more electricity than all its 45 competitors,6% more than test average
Average irradiance in this region is approx 230W/m2
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Module part load efficiency is extremely important
Al-BSF + Al
Every module will have a different efficiency curve
REC maintains high performance through all levels of irradiance
Source: REC efficiencies generated from TUV Rheinland test reports, Tier-1 and Poor-Si irradiation numbers havebeen recreated form electrical data using the one-diode model
80%
82%
84%
86%
88%
90%
92%
94%
96%
98%
100%
102%
0 100 200 300 400 500 600 700 800 900 1000
RelativeEfficiency (%)
Irradiance (W/m2)
REC Tier 1 -Si Poor Si
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Average irradiance levels highlight the STC deficiency
Al-BSF + Al
The STC nominal power rating is not the best indicator of expected performance
To make an appropriate assessment of a product special attention must be given to theefficiency level at the prevailing irradiance levels. Bangkok irradiance distribution showsthe importance of the curve
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How yield impacts project return
Al-BSF + Al
Assumptions: Site location in Perth, Australia with a Base yield of 1650kWh/m2/yr, Debt:Equity ratio of 70/30,
WACC of 11%, FiT of US$0.11/kWh and a CAPEX of US$2.70/W
Increases in yield can accelerate the project IRR in a non-linear fashion
Not all PV modules are made the same! They are NOT a commodity!
Project developers pay premium prices for higher yielding higher quality modules frombankable companies that have a proven strong warranty.
There are inherent technical features of REC modules that enable higher yieldgeneration throughout the modules life
-10%
-7%
-3%
0%
5%
8%
11%
-15%
-10%
-5%
0%
5%
10%
15%
-10% -5% 0% 5% 10%
IRR
Yield
Change In Yield
Linear Reference
8%
6%
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REC is reducing module cost AND improving performance
2012 cost reductions;
Increased cell & module efficiency
Improved sourcing of materials
Improved operational performance, debottleneckingand higher equipment availability
Reduced fixed costs and economies of scale insupport functions
2012 Product Improvements;
-0.43%/C to -0.40%/C;
NOCT reduced from 47.9C to 45.7C;
PTC:STC ratio > 91.3%;
STC values have 3% tolerance reducingmismatch losses between modules;
RPS/RSS: CLAIMS: < 30PPM
-15%
Q412Q112
-39%
Q310
Module Cash Cost Reductions
target
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REC Silicon
Volume Increase ~30kMT Best Cost Position Globally
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Residential home with 61 REC solar panels installed in Monterey, California.Annual capacity: 19 435 kWh 13.1 tons of CO2 saved annuallyRIGHT HERE IN CALIFORNIA
Reducing CapitalExpenditure
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How a module can reduce capital expenditure
Reducing system cost is more involved than simply
reducing the cost price of the module ($/W)
Modules can influence the developed cost in thefollowing ways:
Increasing efficiency reduces land and mounting structurecosts
Increased reverse current rating reduces the amount offusing
A high maximum system voltage that minimises the amountof strings and protection devices
Cable length that minimises additional string cables
Innovative frame design that allows for rapid installation rates
Equipment accessories that streamline the installationprocess
Packaging that reduces waste or simplifies transportation
By-pass diodes used to minimise yield loss from shading
Antireflection coatings to maximise sunlight transmission
Availability to finance via ECA
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REC production plant, Tuas, SingaporeRIGHT HERE AT REC
Risk Mitigation for the
Revenue Stream
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Durability tests to gain comfort in long-term performance
Most PV modules are warranted for a period of 25
years but few have been in the field for that time. Thosethat have are a vastly constitution than they were
How REC guarantees the lifetime of their product:
Highly automated production facility
Complete quality control (machine, man, method & material)
ISO 9001, ISO14001 & OHSAS18001 Certified in Singapore Optional loading up to 5400Pa under IEC61215 (551kg/m2)
TUV Salt Mist Corrosion - Severity 6
TUV Ammonia Corrosion
Extended qualification beyond IEC (DHT, TC, HF)
Combined cycle testing
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Industry leading linear warranty for REC modules
Module bankability is key criteria for solar
REC holds a strong reputation with banksin our active markets
25 year linear performance warranty
10 year product warranty
Maximum degradation rate of 0.7%
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EXPORT CREDIT: Who is GIEK?
31 March 2012: Norways Sovereign Wealth Funds total value is
USD$613 bn, holding 1% of global equity markets.
GIEK is the Norwegian ECA (Export Credit Agency);
Guarantees for Norwegian exporters on behalf of the NorwegianGovernment
Buyer credit (export credit)
Supplier credit guarantees
Bond guarantees
Investment guarantees
GIEKs general guarantee framework EUR 15.5 bnGIEK manages a portfolio of around EUR 10 bn (80% in the offshore
and maritime sectors)
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What are Commercial and Political Risks
Commercial risk:
Loss due to debtor becoming insolvent / going bankrupt
GIEK covers up to 70 90%
Political risk:
Loss due to conditions in the importing country:Confiscation, expropriation, nationalization, war or other
agitation
GIEK covers up to 95 100 %
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RENEWABLE ENERGY CORPORATION
THANK YOU
The content of this presentation is strictly confidential. REC is the exclusive owner or licensee of the content, material, and information in this presentation. Any reproduction, publication or reprint, in whole or in part,is strictly prohibited. The information in this presentation may not be accurate, complete or up to date, and is provided without warranties or representations of any kind, either express or implied. REC, as well as its
directors, officers and employees, shall not be responsible for and disclaims any liability for any loss or damages, including without limitation, direct, indirect, incidental, consequential and special damages, alleged tohave been caused by or in connection with using and/or relying on the information contained in this presentation.
REC is the exclusive owner or licensee of the content, material, and information in this presentation. Any reproduction, publication or reprint, in whole or in part, is strictly prohibited. The information in thispresentation may not be accurate, complete or up to date, and is provided without warranties or representations of any k ind, either express or implied. REC, as well as its directors, officers and employees, shall not
be responsible for and disclaims any liability for any loss or damages, including without limitation, direct, indirect, incidental, consequential and special damages, alleged to have been caused by or in connection withusing and/or relying on the information contained in this presentation.
THANK YOU!Matt DalyGeneral [email protected]
More Energy per M
Robust andDurable Design
Easy to Install
Energy PaybackTime of One Year
Optimized for allSunlight Conditions
The 5 Unique Selling Points of REC Modules
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REC has a strong track record of proven performance
Pandit Deendayal Petroleum University in Gujarat, India
(7.61% Above Expectations)
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REC has a strong track record of proven performance
81.980.5
85.791.8
83.784.0
Freiburg582kW
Italy5.7MW
France5MW
Yield report
Actual
Actual Performance Ratio* Examples (%)
* The performance ratio (PR) describes the relationship between the actual and theoretical energy outputs of the PV plant. Low
conversion losses (glass reflection, temperature losses, transformer losses ...) are leading to a high PR.