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FINANCING CLEAN ENERGY OXFORD UNIVERSITY
Catherine Bremmer
Head of Sustainable Finance Solutions May 2015
2 AGENDA
› Why financing Clean Energy is important to ANZ
› Growing global and local opportunity for Financing Clean Energy:
› Large-scale renewables
› Distributed Generation
› Energy Efficiency
› Largest market growth forecast for Asia:
› Renewables and Distributed Generation: ~$1.1*Tr USD in 2020;
› Energy Efficiency: ~Global energy market of $1.4* Tr USD in 2020;
› ANZ’s Clean Energy experience and lessons for financing Solar PV
› Case Studies
* IEA estimates of market size, although still small part of global energy market ** ANZ’s total exposure to renewables across PSF, RL and SL business units is ~$1.38bn at March 2013
3 ANZ’S OWN ENVIRONMENTAL TARGETS AND PERFORMANCE TO-DATE
Environmental footprint reduction targets › Greenhouse Gas, energy, travel, GHG, waste
and water Retrofit results › Reductions ranging from 5% - 25% in offices,
retail branches and data centres. › Staff prefer working in our retrofitted, flexible
workspaces.
Renewables › Remote sites › Large commercial offices › Retail branches › Data centres
Most sustainable bank globally for the sixth time in 7 years by the Dow Jones Sustainability Index. Key has been ANZ’s commitment to measuring and reducing its environmental footprint.
4 CHALLENGES AHEAD: LARGE-SCALE RENEWABLES – REGULATORY UNCERTAINTY?
LGCs
17th Feb RET Review
announcement
RET Review consultation and options
Independents announce
support of RET
5 CHALLENGES AHEAD: SMALL-SCALE SOLAR - DIFFERENT DRIVERS?
STCs
6 AUSTRALIAN SMALL-SCALE SOLAR PV GROWTH HAS ACCELERATED SINCE 2010 DRIVEN BY UNDERLYING ECONOMICS
› Small-scale: Falling PV prices and rising electricity price levels: payback 2-4 years
› STC / RET Review regulatory impacts? › Grid connection / Tariff impacts? › Installed capacity ~3 GW › Forecast growth to >7 GW by 2017. › Investment to 2017 is estimated at $7.3bn
› Emerging market dynamics makes finance options for roof-top solar devices more attractive: PPAs, leases, loans
› Growth to-date driven by residential › Growth in future driven by commercial › Off-grid market into mine sites to reduce
diesel fuel costs (mine life/offtake credit) › Securitiation - Secondary market?
PV INSTALLED CAPACITY FORECASTS SOLAR PANEL PAYBACK PERIOD FORECASTS
Source: SunWiz-SBS Solar Forecast 2012 - 2017
ROOFTOP SOLAR OPPORTUNITY
Payback period 2.5-4.5 years
$5-7bn investment
required
7 FINANCING SOLAR PV REQUIRES A RANGE OF FINANCE TYPES – RANGING FROM SMALL-SCALE TO LARGE SCALE PROJECTS
ANZ’s role in supporting Clean Energy / Solar PV customers: ANZ’s product capabilities and our super-regional reach enables customers to successfully develop renewable energy and distributed generation projects.
ANZ’s finance products cover Structured Asset Finance, Trade and Supply Chain, Foreign exchange & Environmental markets
› Advisory: Advisor into establishment of structures for Solar PV and Distributed Generation assets (equity and debt)
› Project Finance: for large-scale installations of distributed generation
› Structured Export Finance: very long term debt, provided in conjunction with Export Credit Agencies
› Structured leases and receivables finance: equipment backed lease (operating or finance), e.g. repayments linked to energy savings, security on asset being financed or against payment stream for services being offered
› Environmental Upgrade Finance: environmental council charge on land for property upgrades in Melbourne and NSW
› Markets & Securitisation: Trading and bundling of Solar finance receivables
› Co-finance with Government programs: e.g. ARENA, CEFC
8 SOLAR PV AND RENEWABLES FINANCE: WHAT IS REQUIRED?
ANZ Corporate Advisory, Project and Export Finance works across all the stages of the project life cycle to deliver successful projects
Commercialisation
Site Selection & Suitability Assessment
Contractual Arrangement
Divestment /Refinance
Process
Technological Solution
Construction & Funding
• Bankable technical solution: › Track record › Interaction with grid › Independent testing › Certification
• Bankability of contract structures:
› Offtake structures
› EPC/O&M arrangements
› Risk allocation
• Suite of project documents (O&M, AMA, Transmission Agreement, Retail licence?)
• Syndication with banks and sponsors – senior debt, sub debt and export credit
• Relationships with equity developers
• Optimal funding structures, e.g. timing of equity investment, tax considerations and efficient release of cash
9 ANZ ADVISORY: RANGE OF ROLES – ON THE DEVELOPMENT AND SELL SIDES
ANZ Corporate Advisory is a recognised leader and multiple award winner in structuring and executing project finance advisory mandates and has a successful track record in the renewables sector, mostly recently having advised Malakoff on its acquisition of Meridian’s 50% interest in the Macarthur Wind farm.
ANZ understands that each project will have different Advisory requirements
ANZ advised General Electric in relation to the 113MW Boco Rock Wind Farm development asset, the site farm is located in southern New South Wales (2013)
ANZ advised Hydro Tasmania on the divestment of 75% in Studland Bay and Bluff Point Wind Farms to Guohua Energy Investment Corporation, a wholly owned subsidiary of China’s Shenhua Coal Group (2012)
ANZ advised Malakoff Energy (Malaysian Power Company) on its 50% acquisition from Meridian Energy for the 420MW Macarthur Wind Farm in Victoria (2013)
ANZ advised Hydro Tasmania on the proposed divestment of an interest in the 168MW Musselroe Wind Farm, under construction, located in Tasmania (2013)
ANZ successfully advised Energy Australia on the proposed divestment of its majority interest in the 111MW operating Waterloo Wind Farm in South Australia (2013)
10 STRUCTURED EXPORT FINANCE: LONG TERM DEBT, PROVIDED WITH EXPORT CREDIT AGENCIES, REDUCES REFINANCE RISK AND INCREASES CERTAINTY EQUITY RETURNS
Australia
EFIC
Austria
OeKB
Germany
Euler Hermes
Italy
SACE
China
Sinosure/Chexim
Japan
JBIC/NEXI
Denmark
EKF
Finland
Finnvera
Sweden
EKN
Norway
GIEK
Belgium
Delcredere Ducroire
France
COFACE
UK
UK Export Finance (ECGD)
CANADA
EDC
USA
US EXIM
Korea
K-sure/KEXIM
Netherlands
Atradius DSB
ANZ ECA Relationship
ANZ ECA Team Location
New Zealand
NZ ECO
ANZ enjoys excellent relationships with all major ECAs with a dedicated team of ECA professionals around the globe
Switzerland
SERV
11 ANZ’S SIGNIFICANT BREADTH AND DEPTH OF CLEAN ENERGY EXPERIENCE
Hallett 4 Wind Farm
Mandated Lead Arranger, Sole Provider of Working Capital Facility, Facility Agent and Security Trustee
December 2013
AUD 362,800,000
Refinancing for the 132.3MW Hallett 4 Wind Farm
AUD 386,000,000
Finance for Meridian’s interest in the 420 MW Macarthur Wind Farm
Meridian Wind Macarthur Mandated Lead Arranger,
Underwriter, Bookrunner, ECA Arranger, Facility Agent
Security Trustee September 2011
AUD 478,000,000
Construction and Term Facilities for the 206MW Collgar Wind Farm
Collgar Wind Farm Financing Mandated Lead Arranger ECA Arranger and Agent
Facility Agent and Security Trustee
March 2010
AUD147,000,000
Construction and Term Facilities for the 55MW Mumbida Wind Farm
Mumbida Wind Farm Financing Lead Arranger, Sole Provider of Bank
Guarantee Facility, Facility Agent and Security Trustee
May 2011
AUD 338,000,000
Term Facility for the 192MW Waubra Wind Farm in Victoria, Australia
Waubra Wind Farm Mandated Lead Arranger and
Documentation Bank
February 2010
Waterloo Wind Farm Joint Lead Arranger
Facility Agent & Security Trustee
July 2009
AUD190,000,000
Construction and Term Facility for 111MW Waterloo Wind Farm in
South Australia.
Hallett 5 Wind Farm
Mandated Lead Arranger
May 2012
AUD 134,500,000
Funding for acquisition of Hallett 5 wind farm
Hallett 2 Wind Farm
Mandated Lead Arranger
May 2013
AUD 86,400,000
Refinancing for the 71.4MW Hallett 2 Wind Farm
Mandated Lead Arranger, Account Bank, Facility Agent and Security Trustee, ECA Agent, Escrow Agent
June 2013
AUD 528,000,000
Refinancing of the Macarthur Wind Farm Term Facilities
AUD179,000,000
Construction and operation of the 106.8MW Taralga Wind Farm in NSW
Taralga Wind Farm Mandated Lead Arranger,
ECA Arranger, Account bank, Facility Agent and Security Trustee
August 2013
AUD251,400,000
Construction and Term Facilities for the 113.2MW Boco Rock Wind Farm
Boco Rock Wind Farm Mandated Lead Arranger, Account Bank, Facility Agent and Security
Trustee
June 2013
AUD45,400,000
Construction and operation of the 20.0MW Royalla Solar Farm in ACT
Royalla Solar Farm
Mandated Lead Arranger
August 2013
Bald Hill Wind Farm
Mandated Lead Arranger, Sole Provider of Bank Guarantee Facility, Facility Agent and Security Trustee
October 2013
AUD 198,200,000
Construction and operation of the 106.6MW Bald Hill Wind Farm
AUD 294,600,000
Refinancing for the 206MW Collgar Wind Farm
Collgar Wind Farm Mandated Lead Arranger, Sole
Provider of Bonding Facility, ECA Agent, Facility Agent and Security
Trustee
November 2013
Hallett 4 Wind Farm
Mandated Lead Arranger, Sole Provider of Working Capital Facility, Facility Agent and Security Trustee
October 2009
AUD 362,000,000
Construction and Term Facility for the 132.3MW Hallett 4 Wind Farm
12 ANZ ADVISORY CASE STUDY: WOOLNORTH, HYDRO TASMANIA
› ANZ successfully advised Hydro Tasmania on its divestment of a 75% interest in its Woolnorth Wind Farm assets
› Consisted of the 65MW Bluff Point Wind Farm and the 75MW Studland Bay Wind Farm
ANZ ADVISORY ROLE
AUD 282,000,000
Advisor to Hydro Tasmania on its 75% divestment of the
Woolnorth Wind Farm Hydro Tasmania Financial Advisor
February 2012
We received over 16 indicative bids for the Woolnorth Assets and achieved a successful outcome for Hydro Tasmania
› Developed a transaction structure › Effective sale process with strong interest amongst global industry
players, trade buyers and infrastructure / renewable energy investors › Implemented an unwritten stapled debt package › Development of an off take agreement › Developed a transaction structure for the successful bidder exclusively
period to negotiate participation in development › Effective decision making and corporate governance › Coordinated a full due diligence process › Conduction financial modelling and analysis
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ANZ Mandated Lead Arranger, Sole Underwriter, ECA Arranger › Largest wind farm under construction in the
Southern Hemisphere › First sale of Vestas’ V112 wind turbines › First successful underwrite of a greenfield
Project Financing since the GFC in 2008
Project Outline › Macarthur Wind
Farm at 420MW consists of 140 x Vestas V112 3.0MW turbines.
› Unincorporated joint venture between AGL Energy Ltd and Meridian Energy Ltd.
Innovative Financial Solution Key Players: › AGL Energy and Meridian Energy as sponsors › EKF (the Danish Export Credit Agency) as guarantor › ANZ mandated to coordinate ECA and to structure debt finance
Clean Energy Finance Considerations:
› Financier with technical and industry knowledge enabled wind turbines uniquely suites to the wind conditions to be used
› ECA involvement reduced refinancing risk by provided 18yr long term financing
› Establishment of a facility with materially consistent terms to the sponsor’s other senior unsecured debt
Asia-Pacific Renewable Deal of the
Year
EXPORT FINANCE CASE STUDY: MACARTHUR WIND FARM
AUD 586,000,000
Financing of Vestas turbines for the Macarthur Wind Farm, Australia
Mandated Lead Arranger Sole
Underwriter, ECA Arranger
June 2011
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ANZ Mandated Lead Arranger
› Australia’s first non-recourse financing of utility-scale solar
› Royalla Solar Farm will be the largest PV solar facility in Australia
Project Outline › 20MW photovoltaic
solar plant to be constructed in Royalla, ACT
› FRV secured a 20 year Feed-in Tariff
› Construct under a fixed price, fixed term EPC contract
› Financial Close: August 2013
Innovative Financial Solution Key Players: › Sponsored by Fotowatio Renewable Ventures (“FRV”) › ACT Govt: integral to making Canberra, Australia’s solar capital › ANZ mandated to structure a non-recourse debt financing
Clean Energy Finance Considerations:
› Assisting Equity to finalise terms of the feed-in tariff with Government
› Demonstrating experience and strength in renewables and Project Finance conventions and expectations
› Structuring Finance to meet equity and Government’s key economic drivers, whilst providing an optimal balance of loan covenants
AUD45,400,000
Construction and operation of the 20.0MW Royalla
Solar Farm in ACT
Royalla Solar Farm Mandated Lead Arranger
August 2013
ANZ PROJECT FINANCE CASE STUDY: ROYALLA SOLAR FARM
15 WHAT’S NEXT FOR SOLAR PV FINANCE?
ANZ’s role in supporting Clean Energy / Solar PV customers: ANZ’s product capabilities and our super-regional reach enables customers to successfully develop renewable energy and distributed generation projects.
ANZ’s finance products cover Structured Asset Finance, Trade and Supply Chain, Foreign exchange & Environmental markets
› Advisory: Advisor into establishment of structures for Solar PV and Distributed Generation assets (equity and debt)
› Project Finance: for large-scale installations of distributed generation
› Structured Export Finance: very long term debt, provided in conjunction with Export Credit Agencies
› Structured leases and receivables finance: equipment backed lease (operating or
finance), e.g. repayments linked to energy savings, security on asset being financed or against payment stream for services being offered
› Environmental Upgrade Finance: environmental council charge on land for property upgrades in Melbourne and NSW
› Markets & Securitisation: Trading and bundling of Solar finance receivables
› Co-finance with Government programs: e.g. ARENA, CEFC
16 IMPORTANT NOTICE
This document, together with any information communicated by ANZ in any presentation or discussion relating to this document, (collectively, “information”) is confidential, and has been prepared and communicated by ANZ on condition that it is for the exclusive information and use of the recipient qualifying as a ‘wholesale client’ and authorised by ANZ (“you”), for the purpose of providing you with introductory background information only. No information may be used or relied on by any other person, or for any other purpose, without ANZ’s prior written consent. The information may not be reproduced, disclosed to any person or referred to in any document, by any person for any purpose (except to the extent required by law or a regulatory authority). The information, including any opinions and proposals, is subject to various assumptions and qualifications (the appropriateness of which are subject to significant uncertainties and contingencies, all of which are outside the control of ANZ). Any forecast, estimate, projection or other prospective opinion in the information (“projection”) may be based on information and assumptions supplied to ANZ by a third party, reflects the author’s judgment on the date of this document and is subject to change without notice (but without any duty to provide you with updates); it is provided on the understanding that assumptions, on which projections are based, may not be realised and that unanticipated events and circumstances may occur. To the greatest extent permitted by non-excludible law, ANZ, its related bodies corporate, and their officers, employees and agents (“ANZ Parties”): a. make no representation or warranty, express or implied, as to the accuracy, currency, reliability, suitability for your needs or completeness of the information; and b. disclaim liability for (and the information is provided on condition that all ANZ Parties are released from) any claim, loss, damage, cost or expense, whether direct, indirect, consequential or otherwise, arising (whether in negligence or otherwise) out of or in connection with the information, any reliance on it or any omissions from it. The information does not constitute, and under no circumstances is to be taken as, financial advice or an offer of (or invitation to make an offer for) advisory, financial, underwriting or other services, or other securities, products or facilities. ANZ and its related entities (“ANZ Group”) transact as principal, and on behalf of clients, a diverse range of services and products to and with clientele and market participants globally. ANZ Group may (including on an undisclosed basis) transact with or have an interest in any person, thing or matter referred to in the information, and may receive related benefits. Such persons may include your customers, competitors, suppliers, investors, counterparties and agents. You should not assume that ANZ Group transacts with you on an exclusive basis; where lawful, ANZ Group may also act as principal or for other clients in competition with you. © Australia and New Zealand Banking Group Limited (ABN 11 005 357 522) (“ANZ”). ANZ holds Australian financial services licence no. 234527.
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