standard chartered bank renewable...
TRANSCRIPT
Riyadh, 4th April 2011
STANDARD CHARTERED BANK
RENEWABLE ENERGY FINANCING ACTIVITIES
Global Bank of the Year
The Banker Awards 2010
Standard Chartered Bank Overview
3
Standard Chartered Bank
Over
150yearsin the world’smost dynamic
markets
Primary listings in London, Hong Kong, India
top 20in FTSE 100 Index
Market capitalisation of
USD61.7bas of 1 April 2010
Credit ratings
A+/A1/AA-(S&P/Moody’s/Fitch)
Founded in 1853 and headquartered
in London
More than 150 years of experience
across Asia, Africa and the Middle
East
– Top 3 foreign bank in each major
market and the largest international
bank in the Middle East and South
Asia
Award winning solutions span
across Transaction Banking,
Financial Markets, Corporate
Finance and Principal Finance
Footprint covers 75 countries,
80,000 employees, in Asia Pacific,
South Asia, Middle East, Africa,
Europe and Americas
4
Wholesale Banking Product Offering - Middle East
Financial Markets
Foreign Exchange
Rates
Credit
Commodities
Capital Markets
eCommerce
Corporate Finance
Corporate Advisory
Project & Export Finance
Structured Trade Finance
Structured Finance
Transaction Banking
Cash Management
Trade Finance
Client Access
Securities Services
Principal Finance
Corporate Private Equity
Real Estate Portfolios
Alternative Investments
Standard Chartered Bank - Middle East
Iraq
Saudi
Arabia
Yemen
Oman
Syria
UAE
EgyptLibyaAlgeria
Morocco
Tunisia
Lebanon
Qatar
Kuwait
Bahrain
Jordan
Middle East is part of SCB’s core footprint, and a key strategic market, present in the region for
over 60 years
Dubai is the regional centre for banking activities in the MENA region
Oman, UAE, Qatar, Bahrain and Jordan – Full Banking License
Egypt, Iraq and Iran – Representative Office
Libya – License for Representative Office
Saudi Arabia – Active in financing of IPPs
Standard Chartered Bank
Investment in Renewable Energy
6
Standard Chartered Investment in Renewable Energy in last 3 years.....
Wind
Geothermal
Hydro
Solar
WtE
0
1,000
2,000
3,000
4,000
5,000
6,000
Project Finance Private Equity Corporate Lending
Solar Water Heating
Water / Wastewater
Treatment
Hydro
De
al V
alu
e (
US
D M
) Lending to
RE
companies
USD
4.9Bln
Source: Standard Chartered Bank, Sustainability Review, 2010
Target to meet Clinton Global Initiative is to invest USD 8 Billion by 2012…..
7
Global activity in Renewable Energy
Confidential
Financial Advisor for Equity
and Debt Financing
INTERNATIONAL
Ongoing
Concentrated
Solar Power
US$50,000,000
2010
Sole Mandated Lead
Arranger for Construction
Financing
USA
Lead Arranger for the
Financing of 20m m3 per
year Water Desalination
Facility
NAMIBIA
Confidential
Ongoing
Water
Desalination
Lead Arranger for the
250MW Bujagali
Run-of-the-River
Hydropower Project
UGANDA
US$800,000,000
2007
Lead Arranger for the
Financing of 646MW Wind
Portfolio
ITALY & GERMANY
2008
EUR1,300,000,000
Financial Advisor for a Thin
Film PV Manufacturing
Facility
UAE
CONFIDENTIAL
2008
Financial Advisor and Lead
Arranger for Senior &
Subordinated Financing of
24MW Solar PV Project
SOUTH KOREA
US$196,000,000
2008
Bridge Loan (CNY150m),
Structuring Bank, MLA,
Facility Agent of 30MW
Waste-to-Energy plant
CHINA
CNY 600,000,000
2009
Financial Advisor & Sole
Lead Arranger for financing
of the 110MW Wayang
Windu Geothermal Plant
INDONESIA
US$300,000,000
2007
Mandated Lead Arranger
Wind Portfolio
INDIA
$240m
Ongoing
India Wind
Standard Chartered Bank
Middle East– Solar Focus
9
Solar Energy – Standard Chartered
Solar Energy
Global solar resource is estimated at 14mln TWh* (i.e. 800 times the total annual worlds electricity consumption)
Cumulative installed capacity estimated for 2010 of ~35GW** - under 1% of the solar resource potential
Compelling scale and cost characteristics
"I'd put my money on the sun and solar energy. What a source of power! I hope we don't have to wait till oil
and coal run out before we tackle that" Thomas Edison (1931)
60% of the Global
Solar Energy
resource is in
Standard Chartered’s
footprint
Many of our markets suffer from chronic under investment / undersupply in / of energy
Solar energy generating assets require significant project finance – core strength of Standard Chartered
Standard Chartered Footprint
* Source: World Energy Assessment: Energy and the Challenge of Sustainability,
UN/UNDP/World Energy Council, 2005
** Source: BNEF
Standard Chartered
10
Drivers of Solar Power in Middle East
High Energy Demand
Energy Supply Diversification / Energy Security
Environmental Factors / Water Constraints
Large Potential Solar Resource
Solid Political Will to Develop the Solar Industry
1
2
3
4
5
Financial New Investment By Region, 2004 – 2009, US$Bln
* Source: Bloomberg New Energy Finance, UNEP SEFI, 2010
New Investment volume adjusts for re-invested equity. Total values include estimates for undisclosed deals
Tax Credits /
Loan Guarantees
Feed in Tariff
Wind/Solar
Manufacturing
Leadership
Biofuel / Auction
Process
New Asset Financing – slow down due to Global Financial Crisis?
Source: WEF, BNEF, ‘Green Investing, 2011’
0
10
20
30
40
Q1 04
Q2 04
Q3 04
Q4 04
Q1 05
Q2 05
Q3 05
Q4 05
Q1 06
Q2 06
Q3 06
Q4 06
Q1 07
Q2 07
Q3 07
Q4 07
Q1 08
Q2 08
Q3 08
Q4 08
Q1 09
Q2 09
Q3 09
Q4 09
Q1 10
Q2 10
Q3 10
Q4 10
Global Asset Financing for New Build Clean Energy Assets, 2004 to 2010, USD bln
Sun sets on oil for Gulf Power Generation....
Is Solar a viable option for power generation in the Gulf Region?
Can a 100MW PV plant built in the Gulf Region provide positive IRR to oil-
producing countries if oil is valued at an international selling price?
Opportunity cost of selling oil in global market rather than using for domestic
purposes and replacing power requirements through solar PV
Sun sets on oil for Gulf Power Generation....
0%
2%
4%
6%
8%
10%
12%
14%
0 50 100 150 200 250 $/barrel
IRR Including Carbon Price IRR Excluding Carbon Price
Source: Bloomberg NEF/Standard Chartered Bank, Solar Middle East Research Note, January 2011
IRR
Positive IRR
depending on
the real price of
oil in 2030 with
Initial PV Capital
Cost of
US$3.14/W
Financing Considerations
16
Key Variables affecting the cost of electricity from solar power
FACTOR TECHNOLOGY
SPECIFIC
SITE
SPECIFIC
IMPACT ON COST
OF ELECTRICITY
Solar ResourceAmount of energy received by a unit area in a
given period of time (kWh/area/time) Inverse
EfficiencyMeasure, %, of a given technology to convert
the power of the sun to electricity at a given
ambient condition (e.g., solar radiation,
temperature, wind speed, humidity)
Inverse
Capacity FactorMeasure of what % of the time the power plant
will operate at full rated capacity Inverse
Installation CostsModule, Inverter, Balance of Plant (BoP),
engineering, procurement and construction
costs, other (land, development and design)
Direct
Operational CostsModule cleaning, SCADA system, monitoring
Direct
Cost of Financing (Debt/Equity ratio; equity IRR; cost
of debt)
Dependent on project risk-return analysis Direct
TaxesCountry specific
Direct
Policy/Incentivese.g., Feed-in-Tariff, ITC Grant, MACRS
Direct
1
2
3
4
5
6
7
8
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What Are the Typical Financing Risks?
• Technology risk in the absence of field data around commercial scale installation,
commissioning and operationsTechnology
Risk
Equipment
Supply / Cost
Risk
• On time delivery of equipment under equipment supply contracts
• On budget delivery of equipment under equipment supply contracts
Operations
Risk
• Power Curve / Net System Output / Degradation characteristics
• System Availability / Failure Frequency
• Equipment: Durability / Downtime
• O&M characteristics
Construction
and
Commission
Risk
• On time completion of construction, assembly, and installation under BOP EPC contracts
• On budget completion of construction, assembly, and installation under BOP EPC contracts
18
What Are the Typical Financing Risks?
Sponsor Risk
• Track record and credit rating of sponsor is critical to ensure successful completion and
operation of the project. To ensure that sponsor maintain its leadership in the project, lenders
will often require sponsor to retain management control on the project.
Market / Price
RIsk
• Importance of securing a reliable long term ‘take or pay’ PPA is the most common means
mitigating revenue risk. It must be entered into with a credit worthy counterparty and with
adequate sovereign performance undertakings (in the case of government owned off taker).
Political Risk
Government support and the importance of the project for the economic development of the host
country are critical.
• Political Violence – Nationalization, expropriation, sabotage, riots, terrorism, attacks, etc. may
cause physical damage to the project
• Convertibility and Remittance Risk – currency exchange control and restrictions on remittance of
foreign currencies in the host country particularly if the debt service payments are denominated
in a foreign currency
• Changes in Law and Policy of the Government Risk – enforceability of contractual obligations is
a basis of project financing structures. Any change in the relevant policy framework may cause
an adverse effect on the project
19
Sources of Funding
Critical for RE projects to assess all possible funding sources…
Commercial / Islamic
Banks
International
Commercial / Islamic
Banks
Export Credit
Agencies
Project
International Bond
Direct Funding
and / or
Comprehensive CoverUS$ / Local Currency US$ Loan
Needs credit rating
Sponsors
Equity
Subordinated
Shareholder
Loans
Multilaterals Direct Funding
Senior Shareholder
Loans
Sub-debt / Mezz
Financing
Banks,Shareholders,
Multilaterals
Institutional
InvestorsCommercial / Islamic
Banks
