financing for solar pv projects in chile · 2 financing for solar pv projects in chile pan american...
TRANSCRIPT
CIREC WEEK
Green Power Conferences
October 2015
Financing for Solar PV
Projects in Chile
2
Financing for Solar PV Projects in Chile
Pan American Finance (“PAF”) has conducted
research on sources of debt and equity capital for
solar PV projects in Chile for the period January 2010
to September 2015
During this period, Chile has emerged as the
Latin American country with the fastest growth
in solar PV
From 2012 to 2014, solar PV installed capacity grew
over 200x in Chile, versus less than 2x in the rest of
Latin America
Since 2010, 41 new solar PV projects representing
1.7GW of new capacity and total investment of
~US$4.5 billion
PAF identified 19 solar PV projects that have secured
debt and equity financing since 2010 representing 1.1
GW of new capacity and a total investment of
~US$2.7 billion, of which ~US$2.1 billion (~75%) was
financed with debt and ~US$0.7 billion (~25%) with
equity2
Global Irradiation
Global PV Capex Evolution (US$/W)1
42% 41%
40% 39% 39% 38% 37% 37% 36% 36% 35%
$3.24 $2.65
$1.71 $1.58 $1.50 $1.39 $1.31 $1.24 $1.18 $1.13 $1.09
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Module Other PV Capex
CAGR: (18%)
CAGR: (5%)
Source: Bloomberg New Energy Finance, Chilean National Energy Commission 1 Figures in 2014 US$/W; 2 Excludes 9 projects totaling 417 MW and ~US$736 million
funded on balance sheet and the Cerro Dominador solar PV project due to insufficient
data to differentiate between the solar PV and concentrated solar plant (“CSP”) portions
“The country’s
greatest potential
may lie in the
Atacama Desert,
where radiation
levels are higher
than any other part
of the world.” Maximo Pacheco
Chile Energy Minister
Horizontal irradiation (W/m2)
3
11% 17% 30% 49%
37% 15% 13%
15% 1%
9% 22%
63%
47% 50%
$2,386
$1,788
$2,509
$3,240
$2,727
2010 2011 2012 2013 2014
NCRE investment: Solar PV & Other NCRE
Solar PV and wind are the technologies of choice for renewable energy
investment in South America (excluding Brazil) – and solar PV is growing fast
Source: Bloomberg New Energy Finance; Definition: NCRE (non-conventional renewable energy)
NCRE additions: Solar PV & Other NCRE
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
2010 2011 2012 2013 2014
Periodic investments (US$ in millions)
Cumulative investments (US$ in millions)
Periodic additions (MW)
Cumulative additions (MW)
1,000
2,000
3,000
4,000
2010 2011 2012 2013 2014
12% 6% 28%
37% 35% 16%
68%
51%
28% 43% 43% 17%
12%
244 340 567 533
1,900
2010 2011 2012 2013 2014
Solar Hydro Wind Other NCRE
23%
40%
16%
18%
46%
21%
4
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
2010 2011 2012 2013 2014
37% 16% 41% 42% 54%
63%
84%
59%
58% 46%
$2,386
$1,788
$2,509
$3,240 $2,727
2010 2011 2012 2013 2014
NCRE investment: Chile & ROSA
Chile has become the target country for renewable energy investment in
South America (excluding Brazil), representing ~40% of NCRE investment since 2010
Source: Bloomberg New Energy Finance; Definition: NCRE (non-conventional renewable energy), ROSA (rest of South America, excluding Brazil)
NCRE additions: Chile & ROSA (MW)
Periodic investments (US$ in millions)
Cumulative investments (US$ in millions)
33% 31% 22% 72%
54% 244 340 567 533
1,900
2010 2011 2012 2013 2014
1,000
2,000
3,000
4,000
2010 2011 2012 2013 2014
Periodic additions (MW)
Cumulative additions (MW)
Chile ROSA
40% 48%
5
The levelized cost of energy (“LCOE”) of solar PV in Chile is less than natural gas
CCGT and approaching parity with wind, small hydro and coal-fired technologies
Source: Bloomberg New Energy Finance
Definitions: Solar Thermal Electric Generation (“STEG”), Combined Cycle Gas Turbine (“CCGT”); Crystalline Silicon “(c-Si”); Co-generating Heating Plant (“CHP”)
LCOE in Chile as of September 2015 (US$/MWh)
100 200 300
Coal fired
Wind - onshore
Small hydro
PV - c-Si tracking
PV - c-Si
Natural gas CCGT
CHP
STEG - parabolic trough w/ storage
H2 2015 Mid
Natural gas CCGT
Coal-fired
Wind and solar PV technologies are
competitive with traditional thermal
generation in Chile
Both wind and solar PV technologies
have LCOE lower than natural gas CCGT
technology and are almost at parity with
coal-fired technology
The LCOE for wind and solar PV
technologies is expected to continue
declining as they become more efficient
- Wind: taller and more efficient turbines
- Solar PV: price reduction in modules
6
58%
2%
20%
9%
10%
Solar PV is expected to become the largest source of renewable energy in Chile after
current construction projects are completed in mid-2017
Source: Chilean National Commission of Energy as of October 2015; Definition: NCRE (non-conventional renewable energy) 1 Includes projects that have obtained approval for EIS (15.2 GW), as well as projects under evaluation (7.6 GW)
Renewable energy projects by stage (MW)
30%
36%
16%
19%
86%
4% 5%
3% 2%
Operational Construction Pro forma 1
2,494 2,448 4,942
Solar - PV Solar - CSP Wind Small Hydro Other NCRE
Furthermore, solar PV is expected to represent 60% of an additional 28.0GW of renewable
energy projects that are in pre-construction stage 1
7
31% 44% 32% 10% 75% 55%
47%
19% 37% 87% 52% 51% 64% 45% 18% 37% 6%
42%
43%
38% 30% 13%
33%
56%
32% 23% 13% 10% 6%
34% 9% 5%
15%
50% 25%
17%
5%
19%
961 990 1,011 964
640
40
531
798
545
1,303
1,052
325 130
230 207 396 313
555
848 670
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Solar Hydro Wind All other sources
Solar PV is expected to remain single largest technology of choice for renewable
energy investment in Chile, adding over 4.2 GW to the system by 2035
Source: Chilean National Energy Commission as of October 2015
Expected total yearly capacity additions in the SIC & SING (MW)
Cumulative new capacity additions in the SIC & SING (MW)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
20
35
Solar Hydro Wind All other sources
SING-SIC Solar PV installed capacity is expected to grow from ~3% to ~14% by 2035
30%
9%
23%
3%
97%
14%
86%
Cumulative capacity additions (MW) Current Mix – 2015 Pro Forma Mix – 2035
19.4 GW 31.9 GW
8
9%
91%
26%
74%
3%
97%
Although solar PV capacity additions will primarily take place in the SING, they will
significantly impact the energy mix of both the SIC and SING grids
Source: Chilean National Energy Commission as of October 2015
SING
SIC
4%
96%
4.2 GW
15.2 GW
8.7 GW
23.2 GW
Expected capacity additions (MW) Current Mix 2015
Solar PV All other sources
42% 86% 28%
59%
37%
49% 63% 100% 51% 57% 26%
334 349
801
414
640
10
381 438
170
1,093
677
205 130 80 100
396 263 305
698 570
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
20
35
Solar PV All other sources
25% 22% 100% 38%
100% 6%
53% 100% 53% 100% 100% 100%
100%
100% 100% 100%
627 641
210
550
30
150
360 375
210
375
120 150 107
50
250
150 100
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
20
35
Pro Forma Mix 2035
9
79% 21%
60%
40%
Financing for Solar PV Projects in Chile
18 deals /
43 lenders
39 deals /
39 primary
sponsors
5%
21%
74% >70%
DFIs
Commercial
banks Local
investors Global
investors
19 deals
≤50%
51%-70%
Source: Bloomberg New Energy Finance; Press Releases; Pan American Finance data 1 Statistics based on transactions for which information was publicly available; 2 Reflects primary sponsor; 3 Excludes 9 projects totaling 417 MW and ~US$736 million funded on balance
sheet
Debt sources by participant type (2010-2015)1,3 Equity sources by sponsor type (2010-2015)1,2
Leverage (2010-2015)1,3
63%
37% PPA
19 deals
Merchant
PPA vs Merchant (2010-2015) 1,3
10
$0.00
$3.30 $3.09 $3.01 $2.57
$2.28
2010 2011 2012 2013 2014 9M2015
Source: Bloomberg New Energy Finance; 1Based on 19 solar PV projects that have secured debt and equity financing (excludes the Cerro Dominador solar PV project due to insufficient
data to differentiate between the solar PV and concentrated solar panel (“CSP”) portions); 2 Based on 2011-2015
Number of New Projects
New
Capacity &
Investment
Average Cost per Watt (US$/W)
0 1 1
7
3
7
2010 2011 2012 2013 2014 9M2015
Leverage (%)
Cumulative capacity
(MW)
0%
80% 84% 77% 84% 68%
2010 2011 2012 2013 2014 9M2015
Mean2:
75%
Financing for Solar PV Projects in Chile1
CAGR2: (8.8%)
%100 47% 22% 45% 100% 53%
78% 55%
$0 $3 $60
$824 $727
$1,107
0 1 20
295 578
1,064
2010 2011 2012 2013 2014 9M2015
n/a
n/a
Investments/year – Merchant
(US$ millions)
Investments/year – PPA
(US$ millions)
11
Attracting Financing to Chilean Solar PV Projects
Key Takeaways:
Solar PV projects remain bankable despite lower energy prices
Price declines in PV modules and other PV capex components result in lower required
investments
Properly structured projects can generate strong debt service coverage even at energy prices
below US$50/MWh – given high solar irradiation and energy yield
Merchant projects remain viable despite lower energy prices
In the last two years alone, 9 merchant solar projects have been financed
The SIC-SING interconnection (expected by 2018) will bring solar power generation to the main
consumption areas of the country, reducing price volatility
Loan tenor is highly important to returns
Don’t focus only on interest rate and spread
Increased loan tenor has a significant positive impact on equity returns
Experienced and financially strong sponsors do matter
Financial strength can mitigate completion and operating risks associated with a project
Availability of new capital is important when problems arise
12
Pan American Finance
Pan American Finance provides M&A and capital raising financial advisory services in
Latin America
In the last five years, our firm has advised on over US$1.0 billion in renewable energy
M&A and capital raising transactions
US$85 million Phase I refinancing and US$160 million Phase II long-term project financing for
Polaris Energy Nicaragua’s 72 MW San Jacinto Geothermal Power Project in 2010
Acquisition of certain assets of Conergy, German EPC contractor and solar PV developer, by
Kawa Capital Management in 2013
Joint venture between Sonnedix Solar and JP Morgan Asset Management’s Infrastructure
Investments Fund; over €300 million in new equity commitments by the JV partners in 2014
Acquisition, US$100 million bridge financing and US$300 million long-term project debt
financing for InterEnergy Holding’s 215 MW Penonomé Wind Project in 2014
Pan American Finance is currently advising on a US$140 million financing for a
>100 MW solar PV project in Chile
Our firm has gained extensive experience in the power and renewable energy sector
and has worked with numerous debt providers and equity investors
Development finance institutions
Local, regional, and global commercial banks
Strategic and financial equity investors
13
Pan American Finance
Transactions:
‒ M&A
‒ Restructuring
‒ Senior Debt
‒ Subordinated Debt
‒ Equity
Technologies:
‒ Solar
‒ Wind
‒ Geothermal
Geographies:
‒ Latin America
‒ Europe
‒ Asia
‒ South Africa
December 2014
US$ 16,000,000
Subordinated Long-term Debt
Project Financing
Panama
December 2014
US$ 284,000,000
Senior Long-term Debt Project
Financing
Panama
December 2014
US$ 375,000,000
Equity Private Placement
Bermuda
April 2014
US$ 100,000,000
Bridge Financing
Panama
April 2014
Acquisition of 215 MW Wind
Project in Panama
Panama
November 2010
Polaris Energy Nicaragua, S.A.
US$ 140,000,000
Senior Long-term Project
Financing
Nicaragua
US$ 30,000,000
Refinancing of existing
senior financing
November 2010
Polaris Energy Nicaragua, S.A.
US$ 20,000,000
Subordinated Long-term
Project Financing
Nicaragua
September 2013
Acquisition of Assets
USA/Germany
November 2010
Polaris Energy Nicaragua, S.A.
US$ 30,000,000
Refinancing of Existing
Senior Financing
Nicaragua
Infrastructure Investments Fund
Pan American Finance has completed over US$1.0 billion in transaction value for renewable
energy projects worldwide, including for geothermal, solar and wind
14
Pan American Finance
Edmund R. Miller
Senior Managing Director, Partner
Direct: +1 (305) 722 – 7244
Mobile: +1 (305) 987 – 0995 [email protected]
Pan American Finance, LLC and PAF Securities, LLC
601 Brickell Key Drive, Suite 604, Miami, Florida 33131
Tel: +1 (305) 577 – 9799 • Fax: +1 (305) 577 – 9766
Website: www.panamfinance.com
PAF Securities is an affiliate of Pan American Finance and a member of FINRA and SIPC
Mauricio Borgonovo
Managing Director
Direct: +1 (305) 722 – 7246
Mobile: +1 (305) 401 – 7009 [email protected]
Jabier Arbeloa
Managing Director
Direct: +1 (305) 722 – 7248
Mobile: +1 (954) 740 – 3719
Ben Moody
President & CEO, Partner
Direct: +1 (305) 722 – 7245
Mobile: +1 (786) 556 – 2273