hydro power hub
TRANSCRIPT
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HYDRO POWER HUBHYDRO POWER HUBGeorgian National Investment Agency 2013
VESTORGIA
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OVERVIEW OF GEORGIA’S (HYDRO-) POWER SECTOR
• Domesti c: Demand growth and increasing share of renewables requires an extension of hydropower generati on by around 65% unti l 2020
• Export: Georgia is surrounded by countries with a projected structural power defi cit (e.g. Turkey, Russia South) or expensive power generati on, opening up att racti ve export opportuniti es
• Power generati on accounts for 3% of GDP and ~ 1% of employment but is of high strategic importance to Georgia
• ~ 10% of power producti on are exported, but Georgia sti ll needs to import power during winter
• Georgia boosts signifi cant and economically viable HPP potenti al – already today 75% of power generated via HPP (2,700 MW) – 25% via thermal (mainly gas)
• All new HPPs operate in a liberalized market
• Cost of hydropower generati on is very competi ti ve in the region
• FDI infl ows amounted to USD 200 million in 2011 and are growing
• 65% of economically viable potenti al not yet exploited
• Projects of up to USD 750 million have been concessioned to investors from e.g. India, Turkey, Czech Republic and other counti es.
• Pipeline well fi lled with several large scale projects (100-702 MW) as well as 70+ smaller projects
Strong demand growth prospects
Importance of the sector low in terms of GDP and employment
Power sector with strong focus on cost competi ti ve HPP
Large projects have been placed and pipeline is fi lled
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IN IN GEO
• Electricity demand growing in line with high GDP growth
• Share of hydropower to grow in total generati on capacity
• Domesti c off take guarantees
Mostly covered by commissioned HPP developments
Investment opportunity for new HPP developments
• Turkey and Russia projected to have excess demand
• Armenia/Azerbaijan sti ll with generati on overhang
• Incremental generati on cost among the lowest in the region, ~50% lower than target market Turkey
• 160 MW currently available (to TK)
• Upgrade of infrastructure by 2014 to increase capacity by 5-10
• Transmission guarantee granted
• Agreement with Turkey under negoti ati on
• Export buyer SPV being discussed
OpportunitiesOpportunities Conditions for investmentConditions for investment Situation in GeorgiaSituation in Georgia EvaluationEvaluation
ALL CONDITIONS FOR CAPTURING OPPORTUNITIES FROM GROWING DOMESTIC DEMAND AND EXPORTS ARE IN PLACE
HPPs for HPPs for domesti cdomesti csupplysupply
Domesti c demand Domesti c demand growth and growth and off take guaranteeoff take guarantee
Excess demand Excess demand in neighboring in neighboring countriescountries
Competi ti ve Competi ti ve generati on costgenerati on cost
Transmission Transmission capacitycapacity
Off take guaranteeOff take guarantee
HPPs for HPPs for exportexport
VESTORGIA
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TWh, 2020TWh, 2020
Current installed capacity
1 High scenario assumes 6% CAGR of demand (in line with GDP), low scenario assumes 6% ti ll 2015, thereaft er 3%
Decreasing share of thermal
Projected demand
2020
Demand overhang to be covered
DOMESTIC DEMAND GROWTH REQUIRES AN EXTENSION OF HYDROPOWER GENERATION BY AROUND 65%
VESTRGIA
i ll d i j d d
2.1
DOMESTIC DEMAND AND SUPPLY PROJECTIONSDOMESTIC DEMAND AND SUPPLY PROJECTIONS
• • Georgia’s demand for electricity is increasing in line with expected GDP growth, requiring more HPP Georgia’s demand for electricity is increasing in line with expected GDP growth, requiring more HPP generati on capacitygenerati on capacity
• • Commissioned HPP developments likely to saturate the demand growthCommissioned HPP developments likely to saturate the demand growth
+65%+65%
15.7 6.2High scenario1
Lowscenario1
2.1
4.1
13.6
10.9
1.4
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IN IN GEO
TURKISH GENERATION DEFICIT IS EVOLVING TURKISH GENERATION DEFICIT IS EVOLVING OVER THE COMING YEARSOVER THE COMING YEARS
GEORGIA’S GENERATION COSTS ARE HIGHLY COMPETITIVE GEORGIA’S GENERATION COSTS ARE HIGHLY COMPETITIVE GENERATION COST, USD CTGENERATION COST, USD CT
TURKISH CONSUMPTION PROFILE PERFECTLY TURKISH CONSUMPTION PROFILE PERFECTLY MATCHES GEORGIA’S GENERATIONMATCHES GEORGIA’S GENERATION
TRANSMISSION CAPACITY IS CURRENTLY BEING UPGRADEDTRANSMISSION CAPACITY IS CURRENTLY BEING UPGRADED
Energy defi cit forecastTWh
Generati on cost USD Ct
Transmission capacity MW
High scenario
Low scenario
Generati on Georgia
Consumpti on Turkey
ATTRACTIVE EXPORT POTENTIAL IN THE REGION, PARTICULARLY IN TURKEY
Increased consumpti on due to air conditi oning
Surplus due to increased river fl ows
Current generati on tariff 2011
New generati on cost 2016
160
1,560 250850
160850
8801,480
VESTORGIA
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GEORGIA SURROUNDED BY COUNTRIES WITH A STRUCTURAL POWER DEFICIT OR EXPENSIVE POWER GENERATION
VESTRGIA
2020
Ukraine
Structural defi cit by 2020
Ad hoc defi cits projected No defi cit, but subsidized tariff s
No defi cit, but current tariff s > Georgia’s generati on cost
Romania
Bulgaria
Greece
Lebanon
Israel
Iraq
Iran
Turkmenistan
Azerbaijan
Armenia
Uzbekistan
TurkeyTurkey
GeorgiaGeorgia
South RussiaSouth Russia
1 Assuming current consumpti on and supply patt ern 2 This does not even include countries with heavily subsidized electricity generati on (e.g. Azerbaijan, Kazakhstan)
• • Turkey expected Turkey expected to have defi cit to have defi cit of up to 80-120 of up to 80-120 TWh by 2020, TWh by 2020, with seasonality with seasonality of its demand of its demand matching matching Georgia’s supplyGeorgia’s supply
• • Russia’s Russia’s Southern Southern districts will also districts will also experience a experience a structural defi cit structural defi cit of up to 40 TWh of up to 40 TWh by 2020by 20201
• • In other markets, In other markets, Georgia’s Georgia’s hydropower hydropower is very cost-is very cost-competi ti ve competi ti ve compared to compared to local tariff slocal tariff s2
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IN IN GEO
SETTING UP A REGIONAL EXPORT CONSOLIDATION SPV HELPS TO CONSOLIDATE EXPORT SUPPLY AND FACILITATE PPAs
ILLUSTRATIVE SETUP FOR EXPORT CONSOLIDATIONILLUSTRATIVE SETUP FOR EXPORT CONSOLIDATION EVALUATIONEVALUATION
Electricity delivery
Transmission agreement
ProceedsFunding and guarantee
COULD BECOULD BE
• Government of Georgia (contract specifi c guarantee/ stake)
• Private investor
Electricity delivery
PPA
PPA
Trans-mission fees
Several counter-parti es, depending
on off take countries
PowerPowerproducersproducers
Uti liti esUti liti es
Transmission Transmission providerprovider
Export Export consolidati on consolidati on
SPVSPV
SPV represents SPV represents single interface for single interface for power producers power producers
Increased Increased effi ciency in effi ciency in negoti ati ons negoti ati ons with uti liti es and with uti liti es and transmission transmission providersproviders
PPAs to power PPAs to power providers with providers with competi ti ve bid competi ti ve bid could generate could generate earnings potenti al earnings potenti al for SPVfor SPV
Market risk lies Market risk lies with SPV if foreign with SPV if foreign uti liti es do not uti liti es do not sign PPAssign PPAs
Ulti mate Ulti mate shareholdershareholder
VESTORGIA
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PROJECTS DESCRIPTION
NUMEROUS INVESTMENT OPPORTUNITIES IN HPP IN GEORGIA
• 7 large-scale HPP (100-450 MW) developments 7 large-scale HPP (100-450 MW) developments
– Clearly identi fi ed list of projects open for investment
– Packaged with att racti ve off take and export opportuniti es
• Domesti c off take agreement (subject to negoti ati ons)
• Export with transmission guarantee
• Buildup of a regional trading companyregional trading company with dual mission
– Consolidate export PPAs and transmission agreements with key off take countries (e.g. Turkey)
– Eventually develop modern trading/power pool infrastructure and regulati on
• Bundling of several of the ~ 70 existi ng small-/medium- Bundling of several of the ~ 70 existi ng small-/medium-scale projects (< 100 MW) into an investment fund scale projects (< 100 MW) into an investment fund
– Facilitates fi nancial investments into smaller HPPs
– Overcomes criti cal hurdles of small-scale HPP fi nancing to internati onal investors
Largescale Largescale HPP HPP developmentsdevelopments
Regional Regional consolidati on consolidati on and trading SPVand trading SPV
Renewable Renewable energy project energy project fi nance fundfi nance fund
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IN IN GEO
OUR COMMITMENTS ALONG 4 CRITICAL THRUSTS
Subject to negoti ati onSubject to negoti ati on
Pipeline of 7 large HPP projects
Increasing domesti c demand (+65% in 10 years)
Regional shortf alls and competi ti ve generati on costs
Full package of agreements provided by central government counterparty
Domesti c off take PPAs off ered (part of the year or year-round)
Cross-border trading agreement negoti ated with Turkey
Transmission infrastructure to in place/being upgraded, incl. take or pay transmission guarantees
Business friendly environment with favorable and simple tax system
Pre-packaged Pre-packaged HPP investment HPP investment projectsprojects
Guaranteed Guaranteed off take in local off take in local marketsmarkets
Att racti ve export Att racti ve export potenti al (incl. potenti al (incl. guaranteed guaranteed transmission)transmission)
Att racti ve Att racti ve investmentinvestmentenvironmentenvironment
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VESTORGIA
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THE GOVERNMENT OF GEORGIA FACILITATES YOUR INVESTMENT AND NAVIGATES THE NETWORK OF LOCAL PARTNERS
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Project entry/Project entry/negoti ati onsnegoti ati ons
Technical and Technical and licensinglicensing
TransmissionTransmission Distributi onDistributi onand off takeand off take
• Georgian Nati onal Investment Agency
• Georgian Nati onal Energy and Water Supply Regulatory Commission
• Georgian State Electrosystem
• Electricity System Commercial Operator
• Commercial distributors (e.g., Telasi, EnergoPro)
• Eligible direct consumers (Using more than 7 GW of energy)
• Export off takers
• Ministry of Energy and Natural Resources
• Electricity System Commercial Operator
• Industry-specifi c experti se through dedicated investment advisors• Experience in dealing with foreign investors• Links to all administrati ve and business partners
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IN IN GEO
HYDROPOWER PIPELINE BOOSTS SEVERAL NEW MEGAPROJECTS ABOVE 100 MW CAPACITY THAT ARE CURRENTLY OPEN FOR INVESTMENT
ProjectProject CapacityCapacity Ready to invest?Ready to invest?Forecast Invest. Forecast Invest. volumevolumeUSD millionsUSD millions
• Namakhvani Cascade
• Oni Cascade
• Fari HPP
• Khaishi HPP
• Tobari HPP
• Nenskra HPP
• Lentekhi HPP
• Hydropower pipeline also boosts ~70 small/medium projects (<100 MW capacity) that are currently open for investment
450 MW
270 MW
180 MW
400 MW
200 MW
210 MW
120 MW
926
599
297
620
310
491
189
NNEOEOEO
VESTORGIA
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NAMAKHVANI CASCADE
Installed Capacity
Av. Annual Generati on
Tvishi HPP
100 MW
386 GWh
Namakhvani HPP
250 MW
941GWh
Joneti HPP
100 MW
354 GWh
TotalTotal
450 MW 450 MW
1681 GWh1681 GWh
BASIC PARAMETERSBASIC PARAMETERS
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IN IN GEO
Cost itemCost item Cost (USD)Cost (USD)
Pre-design works 1,829,676
Design works 6,526,916
Pre-constructi on & environmental monitoring works 24,167,097
Unexpected costs (conti ngencies) – 15% 120,780,484
Preparati on of constructi on site and faciliti es 197,852,902
TOTAL INVESTMENT COST 925,983,711 TOTAL INVESTMENT COST 925,983,711
Constructi on of HPPs 572,175,289
Indirect investment costs 2,651,347
SUMMARY OF COSTSSUMMARY OF COSTS
NAMAKHVANI CASCADE
Note: Note: All the calculati ons are based on preliminary assumpti ons. Therefore any clarifi cati ons will cause appropriate changes in the fi nal results.
NAMAKHVANI HPP
TVISHI HPP
NAMAKHVANI
ZHONETI HPP
VESTORGIA
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NAMAKHVANI CASCADE
PROJECT DATAPROJECT DATA
Tvishi HPP Namakhvani HPP Joneti HPP
Dam Height 56.5 (m) 111 (m) 31 (m)
Dam Volume 13.1(mln.m3) 156(mln.m3) 12.5(mln.m3)
Res. area at max. level 0.97 km2 4.35 km2 1.25 km2
Reservoir volume 13.5% 156.0 mln m3 12.5 mio m3
Reservoir useful volume 121.2 Million USD 52.0 mio m3 6.0 mio m3
Maximal water head 12% 83.0 m 32.0 m
NAMAKHVANINAMAKHVANI HPP’s Cascade HPP’s Cascade
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IN IN GEO
BASIC PARAMETERSBASIC PARAMETERS
Total Installed Capacity 400 MW
Average Annual Generati on 1470 GW/h
KHAISHI HPP
ASSUMPTIONS AND FINANCIAL INDICATORSASSUMPTIONS AND FINANCIAL INDICATORS
Constructi on Cost 620 Million USD
Constructi on Period 5 Years
Domesti c Tariff 4.8 USc/KWh
Equity NPV 160.1 Million USD
Export Tariff 8 USc/KWh
Payback Period 15 years
Project IRR 11%
Number of Observati ons 30 years
Project NPV 126.4 Million USD
Equity IRR 15%
Note: Note: All the calculati ons are based on preliminary assumpti ons. Therefore any clarifi cati ons will cause appropriate changes in the fi nal results.
VESTORGIA
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KHAISHI HPP
PROJECT DATAPROJECT DATA
Dam Height 204(m)
Dam Volume 445(mln.m3)
Normal Headwater Level 910 (m)
Tailwater Downstream Pool 700(m)
Project Discharge 270 (m3/sec)
TOPOGRAPHIC MAPTOPOGRAPHIC MAP
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IN IN GEOE
ONI CASCADEBASIC PARAMETERSBASIC PARAMETERS
ASSUMPTIONS AND FINANCIAL INDICATORSASSUMPTIONS AND FINANCIAL INDICATORS
Total Installed Capacity 270 MW
Total Project Cost 598.9 Million USD
Average Annual Generati on 1255 GW/h
Net Present Value (Million USD) 270.0 201.8 135.5
Full Project Project Equity Full Project Project Equity Corp. Tax Corp. Tax
Internal Rate of Return 13.31% 12.57% 13.17%
Benefi t / Cost rati o 1.39 1.29 1.79
Balance year 13 15 18
Note: Note: All the calculati ons are based on preliminary assumpti ons. Therefore any clarifi cati ons will cause appropriate changes in the fi nal results.
VESTORGIA
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ONI CASCADE
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IN IN GEO
NENSKRA HPP
BASIC PARAMETERSBASIC PARAMETERS
Total Installed Capacity 210 MW
Average Annual Generati on 1,205 GW/h
VESTORGIA
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NENSKRA HPP
INVESTMENT COSTS AND ASSUMPTIONSINVESTMENT COSTS AND ASSUMPTIONS GEORGIAN GOVERNMENT OFFERGEORGIAN GOVERNMENT OFFER
Total Investment Cost 491 Million USD • 20 years Stability Period
Plant Factor 66% • Constructi on permit
Proporti on of Firm Energy 85% • Energy Generati on license
Constructi on Period 5 Years • Transfer of land right for 1 USD
Durati on life of project 50 Years • Full year PPA
Domesti c Tariff 6.9 USc/KWh
Export Tariff 8 USc/KWh
Note: Note: All the calculati ons are based on preliminary assumpti ons. Therefore any clarifi cati ons will cause appropriate changes in the fi nal results.
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IN IN GEOIN GEO
PROJECT DATAPROJECT DATA
Dam Height 173(m)
Dam Volume 200(mln.m3)
Normal Headwater Level 1060 (m)
Tailwater Downstream Pool 910(m)
Project Discharge 235 (m3/sec)
TOBARI HPP
BASIC PARAMETERSBASIC PARAMETERS
Total Installed Capacity 200 MW
Average Annual Generati on 810 GW/h
VESTORGIA
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ASSUMPTIONS AND FINANCIAL INDICATORSASSUMPTIONS AND FINANCIAL INDICATORS
Constructi on Cost 310 Million USD
Constructi on Period 5 Years
Domesti c Tariff 4.8 USc/KWh
Equity IRR 17%
Export Tariff 8 USc/KWh
Equity NPV 110.08 Million USD
Project IRR 12%
Payback Period 14 years
Project NPV 94 Million USD
Number of Observati ons 30 years
TOBARI HPP
TOPOGRAPHIC MAPTOPOGRAPHIC MAP
Note: Note: All the calculati ons are based on preliminary assumpti ons. Therefore any clarifi cati ons will cause appropriate changes in the fi nal results.
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IN IN GEO
NIN GEO
FARI HPP
Total Installed Capacity 180 MW
Average Annual Generati on 780 GW/h
BASIC PARAMETERSBASIC PARAMETERS
PROJECT DATAPROJECT DATA
Dam Height 173(m)
Dam Volume 240(mln.m3)
Normal Headwater Level 1300 (m)
Tailwater Downstream Pool 1060(m)
Project Discharge 103 (m3/sec)
VESTORGIA
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FARI HPP
ASSUMPTIONS AND FINANCIAL INDICATORSASSUMPTIONS AND FINANCIAL INDICATORS
Constructi on Cost 297 Million USD
Constructi on Period 5 Years
Domesti c Tariff 4.8 USc/KWh
Equity IRR 17%
Export Tariff 8 USc/KWh
Equity NPV 107.09 Million USD
Project IRR 12%
Payback Period 14 years
Project NPV 91.7 Million USD
Number of Observati ons 30 years
TOPOGRAPHIC MAPTOPOGRAPHIC MAP
Note: Note: All the calculati ons are based on preliminary assumpti ons. Therefore any clarifi cati ons will cause appropriate changes in the fi nal results.
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IN IN GEO
LENTEKHI HPP
Total Installed Capacity 120 MW
Average Annual Generati on 560 GW/h
IN IN GEO
BASIC PARAMETERSBASIC PARAMETERS
VESTORGIA
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ASSUMPTIONS AND FINANCIAL INDICATORSASSUMPTIONS AND FINANCIAL INDICATORS
Constructi on Cost 189 Million USD
Constructi on Period 4 Years
Domesti c Tariff 4.8 USc/KWh
Pre-tax Internal Rate of Return-Assets 10.9%
Export Tariff 8 USc/KWh
Pre-tax Internal Rate of Return-Equity 29.6%
Esti mated Cost per kW capacity $1,575 /kWh
Anti cipated Life-span 50 years
Simple Pay Back Period 7.6 years
LENTEKHI HPP
Note: Note: All the calculati ons are based on preliminary assumpti ons. Therefore any clarifi cati ons will cause appropriate changes in the fi nal results.
Lentekhi Project, 120 MWLentekhi Project, 120 MW
GEOLOGY MAPGEOLOGY MAP
INVESTAIN GEORGIA
GEORGIAN NATIONALGEORGIAN NATIONALINVESTMENT AGENCYINVESTMENT AGENCY
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E-mail: enquiry@investi ngeorgia.orgPortf olio Manager: Alexander SajaiaE-mail: asajaia@investi ngeorgia.org