scaling up renewable energy investments you can … · investments you can bank on esteban sarzosa...
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Scaling Up Renewable Energy
Investments You Can Bank On
Esteban Sarzosa
Infrastructure & Energy Division
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President Executive Vice President
VP Countries VP Sectors & Knowledge
VP Finance VP Private Sector
Multilateral Investment Fund
Inter-American Investment Corporation
Opportunities for The Majority
Structured & Corporate Finance “SCF”
“OMJ”
“MIF”
“IIC”
IDB Organizational Structure
SCF responsible for leading the Bank’s operations without sovereign guarantee
SCF invests in large companies, financial institutions, infrastructure projects, and mixed-capital entities
SCF partners with commercial banks, institutional investors, co-guarantors, and other co-lenders to mobilize private capital into high development impact projects
SCF Products
Structured and Corporate Finance - SCF
Loans – both senior and subordinated products
Credit enhancements covering up to 50% of total debt exposure for corporate issuers, securitizations and future flow transactions
Guarantees of up to 100% for trade transactions between issuing and confirming
banks within SCF Trade Finance Facilitation Program
Knowledge products to support topics such as gender equality, road safety, solar
efficient lighting, financial literacy for women and human capital development.
Privately controlled entities in all sectors
Utilities and other infrastructure operators
Banks and other financial market institutions
State-owned companies (non sovereign if meeting certain parameters)
Corporates
SCF Clients
The SCF Strategy
Energy
• Emphasis on renewable generation (Wind, Solar, Geothermal, Hydro)
• Promoting service improvements to energy transmission and distribution
• Focus on low access and supply areas
Transportation
• Toll Roads
• Airports
• Ports
• Increase capacity & access
• International safety standards
Water & Sanitation
• Water supply
• Water and waste treatment
• Energy efficiency
Overarching Priorities
Infrastructure
SCF approach to renewable energy investments
Support development, construction and operation of creditworthy green energy
investments that:
• contribute to the diversification of energy supply • reduce dependence on imported fossil fuels • reduce greenhouse gas emissions and environmental footprint of energy
generation • reduce consumption and growth in energy demand
Leverage through partnerships
Support technology transfer and innovation through technical assistance in
partnership with donors
SCF in Renewable Energy and Energy Efficiency
Short Term
Focus on the most effective investments and policies to close the gap between energy demand and supply Construction and rehabilitation of renewable energy plants
Energy efficiency programs
Short term SCF in Renewable Energy and Energy Efficiency
Medium term
Implement projects and programs consistent with sustainable energy matrix that includes energy policy reformulation Support national policy shift and implementation of large scale sustainable
energy and energy efficiency projects
Support technical assistance programs for renewable energy and energy efficiency, which will lead to concrete projects
Continue to support private investors in the region
Seizing the Opportunity
Track Record in Climate Friendly Investments
$1.5B in loans and guarantees to the private sector
annually, increasing to $2B
• Project finance
• Corporate finance
• Financial institutions
• Private equity funds
In 2011, over $700M in climate investments with total
project values exceeding $4B
• Renewable power
• “Green lines” for banks and private equity funds
• Industrial energy efficiency
• Agriculture methane capture
• Energy efficient hotels
Infrastructure
Renewable Energy
Wind Farms
• US$ 80 million – 396 MW Mareña wind farm in Mexico
• US$ 45 million - 250 MW Eurus wind farm in Mexico
• US$ 21 million - 67.5 MW La Ventosa wind farm in Mexico
• US$ 78.3 million - Bani and Pecasa 80.6 MW wind farms in the Dominican Republic
Geothermal
• US$ 40 million - San Jacinto-Tizate 72 MW renewable energy expansion in Nicaragua
Biomass
• US$ 6.5 million - 15.6 MW biomass cogeneration plant in Chile
Hydro
• US$ 40 million – Pando Monte Lirio 83 MW run-of-the-river hydropower plant in Panamá
Factors that impact the “bankability” of renewable power projects
Power purchase agreement (PPA) and length of contract
Price of power • Market price (merchant plants)
Proven and sustainable energy sector framework Creditworthiness of power off-taker
• Other options for sale (e.g. other off-takers) Creditworthiness and track-record of Sponsors Cost of capital Subsidies (tax incentives, accelerated
depreciation, renewable energy credits, carbon credits)
Resource potential (solarity, avg. wind speed, access to low cost and high quality biomass, geothermal/hydro resource)
Transmission • Access policies • Distance (for utility-scale) • Interconnection policies
$250M to provide concessional finance for climate change projects
Canadian Climate Fund
Co-financing with IDB Group loans for climate
change mitigation and adaptation projects
Concessional terms available to overcome clear cost
or risk barriers
Financial tools include: senior low cost debt,
subordinated debt, guarantees
Pivotal to technology scale-up
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