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Development & Financing of PV Power Plants & Key Issues in the Off-Grid/ Hybrid Sector. Conergy at a glance. Financing of PV Systems & Issues in Hybrid Systems. A. B. A. Conergy has a wide experience in all downstream sales channels; diversified sales approach is key to balance risks.

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Conergyat a glance

Financing of PV Systems & Issues in Hybrid Systems

A

B

slide3

A

Conergy has a wide experience in all downstream sales channels; diversified sales approach is key to balance risks

Conergy‘s downstream business

B2B

PROJECTS

Indirect sale to wholesale

EPC

(Engineering / procurement / construction of PV installations)

PD, Financing, EPC

(Development / financing / EPC of large PV power plants)

SALES CHANNELS

Direct sale to installers and sollateurs

RESIDENTIAL

COMMERCIAL (roof-top)

INDUSTRIAL (free-field)

Small 50 ~ 200 kWp 1)

Large > ~ 200 kWp 1)

> ~ 500 kWp 1)

< 50 kWp 1)

MARKET SEGMENTS

1) Indicative dimensions

Source: Conergy

conergy has a longstanding experience in asia and middle east

A

Conergy has a longstanding experience in Asia and Middle East

Overview of markets in APAC served by Conergy

APAC & Middle East markets

REMARKS

  • Presence in Asia Pacific and Middle East markets since 2005
  • Teams with global experience and local knowledge
  • Regional Headquarters in Singapore serving surrounding markets – regional engineering center of excellence
  • Offices in Australia, India, UAE, Thailand
  • Strategic partners in Thailand, Indonesia, Malaysia, the Philippines and Saudi-Arabia
  • Market entry in Japan currently in execution – own entity expected in H1/2013

Singapore

Middle East

Countries with own CGY-entity

Countries with EPC business driven by Singapore

Source: Conergy

slide5

A

Conergy offers high-quality solar systems and an all-round carefree service package for all sales channels from a single source

Conergy‘s solution portfolio

SYSTEM COMPETENCE

  • Based on more than 14 years of solar experience and its in-depth expertise as a former system manufacturer ....
  • .... Conergy integrates high-quality components and comprehensive services to all-round carefree solar system solutions
  • .... Conergy’s sales force has the expertise in all components, such as modules, inverters, mounting systems, cables and electrical parts
  • .... Conergy has the competence to ensure its high quality standards by strict quality management along the entire value chain

HIGH YIELD

DURABLE

SECURE

SIMPLE

Source: Conergy

in general conergy operates in a proven consortium approach with selected strategic partners
In general, Conergy operates in a proven consortium approach with selected strategic partners

A

Consortium Member

Local Partner

Engineering

Procurement

General role in project

Engineering

Procurement

Construction

PROJECT ENGINEERING

PROJECT MANAGEMENT

  • Overall conceptual design
  • Overall mechanical and electrical design
  • Main components supply
  • Commissioning support
  • Warranties
  • Local civil design
  • Local mechanical design
  • Local electrical design
  • Local components supply
  • Installation
  • Commissioning
  • O&M

Tasks

Conergy – Local Partner Consortium

slide7

Conergyat a glance

Financing of PV Systems & Issues in Hybrid Systems

A

B

slide8
PV Projects have the advantage to be comparable to financial products as they are straight forward on a technological perspective

Main characteristics of PV projects

  • Reliable
    • Technology is simple and passive
    • Maintenance is light
    • Module life time 25 years
  • Predictable
    • Sunlight is stable through the years
    • Energy yield are predictable and Regular
    • Output directly linked to quality of modules / inverters
    • O&M costs are stable
  • Safe
    • Returns are known well in advance
    • Economical reality does not vary too much from simulations
through the eyes of finance a project is risk management
Through the eyes of Finance a project is Risk Management

Overview of project development framework

FINANCE

ENVIRONMENT

“Framework”

PLAYERS

“human factor”

Project development

  • Mitigate the risks of a project by
    • Proper project documentation
    • Scenario Analysis
    • EPC Guarantees
  • Social Need
  • Political framework
  • Geological conditions
  • Promoters
  • Technology suppliers
  • Investors
  • Banks

PROJECT

Land + Rights

TECHNOLOGY

“Know-how”

  • Yield check
  • Technical feasibility
  • Technical/site risks
each partner in a project has a different goal
Each partner in a project has a different goal..

Project stakeholders and their goals

Sweat equity/Development Margin (15%)

EPC contractor

Equity Investor

Project Promoter

Money lender

One shot profits

Dividends (15%)

Annual returns

EACH ACTOR HAS A DIFFERENT

EXIT STRATEGY IN MIND

Project

Loan Interests (6 to 10%)

Annual returns

EPC Margin (10 to 15%)

One shot profits

typical finance cycle of commercial pv systems
Typical Finance Cycle of commercial PV Systems
  • Short term equity investors with
  • Equity IRR expectations around 14% :
    • Development banks (label+equity)
    • Hedge/Innovation funds (equity)
    • Industrial partners (exit strategy offer)

Equity

Partner

search

Promoters

+

Initial Investors

Joint Venture development

(SSA, SHA)

x

Financial close

Exit by sector IPO

Cash bring as Equity Injection into New/future project pipeline

Project construction

  • Exit by trade sale to long term equity investors
  • with lower IRR expectations (8 to 10%) :
    • Utilities
    • Pension funds

Preferred exit option

slide12
For an investor a bad project is a project showing him shadow areas and risks with no answers, no mitigations …

Overview Project risks

TECHNOLOGY RISK

PROJECT INTERNAL RISKS

  • Potential delays in EPC
  • Previous References project implementation (Shareholders/EPC) in the country
  • Degradation factor of modules (generation) over the years
  • Efficiency of components (Modules Inverters)
  • Guarantees on performance/yields
  • O& M issues
  • PPAS Capacity of local institutions to honor PPAs
  • PPAs duration and renegotiation risk
  • Land lease risks
  • Political stability and energy framework
  • Project geological location
  • Project administrative environment
  • Clear shareholding structure of SPV with clear leadership Clear ownership rights
  • One Majority shareholder mastering with track record
  • Clear exit strategies

ENVIRONMENT RISK

PARTNERSHIP RISK

slide13
For an investor a bad project is a project showing him shadow areas and risks with no answers, no mitigations …

Overview Project risks

TECHNOLOGY RISK

PROJECT INTERNAL RISKS

  • Potential delays in EPC
  • Previous References project implementation (Shareholders/EPC) in the country
  • Degradation factor of modules (generation) over the years
  • Efficiency of components (Modules Inverters)
  • Guarantees on performance/yields
  • O& M issues
  • PPAS Capacity of local institutions to honor PPAs
  • PPAs duration and renegotiation risk
  • Land lease risks
  • Clear shareholding structure of SPV with clear leadership Clear ownership rights
  • One Majority shareholder mastering with track record
  • Clear exit strategies
  • Political stability and energy framework
  • Project geological location
  • Project administrative environment

ENVIRONMENT RISK

PARTNERSHIP RISK

slide14
Overall private sector investments have the opportunity to bring efficiency and competition to the Off-Grid/ Hybrid Sector

Key points of concern for private investors

Some of the concerns can be addressed by the Government while education play a key role and can be driven by the private sector

A

No sovereign guarantees to counter bankability issue

B

Often remote access raises questions on O&M

C

Difficulties to pool projects in order to attract equity

D

Smaller systems difficult to debt-finance

E

Wider span in quality/ reliability compared to PV PP

F

Lack of education on RE in Off-grid markets