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An Introduction to Rame Energy
Tim Adams, CEO, Rame Energy
Geneva, Zurich, Nov 2013
» Company Background
» Projects
» Mining/Industry & Energy
» Independent Power Producer
» The Future
» 2002 - Formed to target UK offshore
wind industry
˃ Supplier of engineering and specialist
construction services
˃ Wind turbine installation vessel design
» 2005 - Offshore Wind Project: Sandbank
24, German Bight
» 2006 - Contracted by Barrick Gold to
develop Veladero high altitude,
utility grade wind project in Argentina
» 2006 - Established office in Chile
» 2006 Onwards – Renewable energy project pipeline
» 2009 – turbine design contract for Chinese State owned enterprise
» Worked extensively with mining and industrial clients in Chile, and
on power projects globally in Pakistan, Alaska, Texas, Montana,
Vietnam, Thailand, Indonesia
» Now transitioning into a power provider for heavy industry
» 40 employees between UK and Santiago
» UK – Corporate Headquarters, Engineering and Commercial
departments
» Chile – Engineering, Project Management, Operations & Maintenance
» Representative offices – Singapore, Ecuador, Texas
Rame Energy
Seawind International UK
Seawind Marine Seawind Marine
Services
Seawind Chile Holdings
Seawind Services SPVs
» Full EPC services
» Power systems modelling and integration (hybrid)
» Project development, resource assessments, permitting,
» Logistics
» Generator design / modification
» Operating and maintenance services
» Rame scope: Design, installation, O&M
» 2 MW asynchronous generator, 80m rotor diameter
» Integrated into mine diesel generation system
» Argentina, 4,300 m a.s.l – highest operating MW class unit
in the world
˃ Adapted for high altitude operation, air density and power
conversion, extreme environmental conditions
» Challenging logistics, limited construction window
» Turbine reliably delivers substantial diesel savings
» Rame scope: environmental studies, permitting, technical
development, engineering, turbine supply,
commissioning, O&M
» 10 x 2 MW Units + 1 x 17 MW HFO
» Operational since 2009
» Rame provides on-going technical and maintenance
support
» Rame scope: full EPC package
» Wind – diesel - hydro hybrid
» El Toqui Zinc Mine, Patagonia
» Detailed electrical design to integrate the turbines into an existing
diesel/hydro power grid
» Extremely remote – limited access
» Challenging environment – extreme wind speeds, short construction
window, complex logistics
» Rame scope: feasibility study,
front-end engineering &
design
» Diesel – solar – waste heat
recovery hybrid plant
» 3 MW continuous, 4.5 MW
peak loads
» 2 MW photo-voltaic solar
energy array supply
» 1 MW waste heat recovery
plant
» Blended cost of energy:
$100/MWh
» Wind resource measured 90 locations selected 23 over 1 GW
» Selected for high capacity factors
» 100 MW ready to build, 300 MW within 48 months
» Involved in 34% of Chile’s installed wind power capacity
» Spread throughout the country and electrical system to provide
optimal technical/commercial generating solutions
» Commenced solar development
» Peak shaving diesel plants
» Energy shortages forecast 8,000
MW by 2020
» 98% of fossil fuels imported
» Demand driven by reducing hydro
power input & Increasing demand
from heavy industry
» Cut-off of LNG supplies
» Volatile spot market
» Pro-renewables legislation
» Ambitious renewables targets –
25% by 2024
» No feed-in tariff - unsubsidised
» Renewable certificates system
required by law to offset new
thermal capacity
Electricity Market by User 2012
Copper Industry’s Electricity Demand to 2020 in Chile
» Energy cost is a very substantial portion of the operational cost of a
mine, typically 20-30%
» Intelligent integration of renewables can address both energy cost
and carbon footprint for mines
» Industrial consumers cannot contract for energy blocks to meet all
their needs
» Resulting in exposure to spot market volatility and/or basic energy
shortfalls
» Constraints on expansion and new facilities, hard to predict future
operating costs
» Increasing reliance on high cost diesel generation
» Capital no longer available for non-core assets
» Creates the niche market for “Power Purchase Agreements”
» Intermittent sources attractive for partial supplies
» Power prices high
8
27
12 8
0
10
20
30
40
50
60
Spot Price Diesel Solar Wind
$c/
kW
h
ENERGY PRICE COMPARISONS
lower upper
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16
10
50
» Selling power to off-grid consumers by integrating renewables to
displace diesel consumption under a PPA
» Hybridisation – combining thermal & renewable generation
» Selling power through the grid to consumers under a PPA
» Power trading from the spot market and power pools to consumers
» Trading of renewable certificates (required under law for new thermal
generators)
Supply
Rame generates power
at the lowest possible
cost utilising the best
technology and the best
project selected from its
mature development
pipeline
Demand
Rame sells power to
large industrial
consumers with a high
price threshold driven by
their dependence on
sourcing energy in a
volatile market
Average Cost
8 – 14 cents kwh
Average Selling Price
10 – 24 cents kwh
Project
IRR
20%+
Rame Profit
Opportunity
Match customers power
needs to internally
created power
generation
developments
» Customer driven, not project led
» Maximization of power sale margin
» Fully integrated project development & delivery revenue
» Unsubsidised, commercially driven, private power sales
» International Mining Companies e.g. Barrick
» Blue-chip industrial companies
» Backlog of power needs (PPAs) 250 MW of power to supply
Four projects totalling up to 100 MW
Raki / Huajache (15 MW) Construction Start Q4 2013 Punta Chome (9 MW) Construction Start Q1 2014
Albatros (45 MW) Construction Start Q3 2014 Pampa Blanca (39 MW) Construction Start Q2 2014
» Monitoring since June 2009
» Land purchased
» Wind measurements and yields calculated by
independent consultancy GL-Garrad Hassan
» Environmental permits granted
» 10 year escalating PPA in place with Akzo Nobel
» Santander 80% equity partner
» Full EPC by Vestas 5 x 3 MW
• Recording wind data since 2006
• Land purchased
• Wind measurements and yields calculated by independent consultancy GL-Garrad Hassan
• Environmental permits for 6 turbine locations obtained
• 10 year escalating PPA in place with Akzo Nobel
• Santander 80% equity partner
• Full EPC by Vestas 5 x 1.8 MW
• Adjacent to Anglo American mining project Mantos
Blancos
• MOU with Anglo American in 2010 for use of land and
connection to substation
• 3 meteorological masts on site to determine wind
climate
• PPA with Anglo American
• EPC negotiation ongoing with Nordex
• Monitoring wind climate since 2010
• Preliminary energy yield analysis complete
• Permitting nearing completion
• PPA terms agreed with Antuko power pool
• Preliminary engineering complete
5 5
20 20
75
100
0
10
20
30
40
50
60
70
80
90
100
Total Construction
Cost
Bank Project Debt
Financing
Santander
Construction
Bridge Equity
Rame Initial Equity Santander
Refinanced with
Macquarie
Mezzanine Facility
Perc
en
tag
e (
%) Equity during construction
80% 20%
Rame Equity
100%
Completion Construction Phase
» Rame’s innovative financing structure allows for 100% ownership of
assets for 5% equity investment
Phase 3
Phase 2 Phase 1
Rame 20% Equity Rame 100%
SPV Senior Debt
76%
Santander 80% Equity
Macquarie Equity Facility
Senior Debt
Rame 51%
Institutional Buyer 49%
SPV
SPV
Senior Debt
» Build a portfolio of wholly owned generating power assets with
project returns in excess of 20%
» Post construction refinancing producing long term generating yields
of interest to pension funds and insurance companies looking for
stable cash flows
» Sell down 49% stake in project equities to these parties on a 8-9%
yield
» Refinance mezzanine facilities to lower cost of capital, retain control of
the generating asset, consolidate the balance sheet
1.00
1.44
2.45
0.00
0.50
1.00
1.50
2.00
2.50
3.00
Construction 0 months Completion 9 months Sell Down 24 months
Valu
e o
f $1 In
vest
ed
$1.00 $1.44 $2.45
» Typical investment value growth through project capital deployment
» Proven, profitable, debt free business with established relationships
with mining and heavy industry in Latin America, particularly Chile
» Focused on high yielding energy projects
» First 24 MW projects financed and construction contracts being
executed
» Bank Equity and debt facilities in place
» Company completed all pre-IPO preparations for target admission to
AIM in London end 2013
» Closing private pre-IPO rights issue offering up to 50% return to
forecast price at admission