Financing Energy Projects in CEE Gbor Kiss EBRD
Financing Energy Projects in CEE Gábor Kiss, EBRD March 2011 Security of Energy Supply Conference – Pécs, Hungary 29 April 2011 © European Bank for Reconstruction and Development 2010 | www. ebrd. com
AGENDA I. Overview of EBRD: Mission and Guiding Principles II. EBRD Financing Capabilities and Requirements III. Power & Energy Utilities: Focus and Experience IV. Renewable Energy Case Studies
I. Overview of EBRD: Mission and Guiding Principles II. EBRD Financing Capabilities and Requirements III. Power & Energy Utilities: Focus and Experience IV. Renewable Energy Case Studies
EBRD: Foundations of operations • Apply sound banking principles to all projects – We do not subsidise • Advance the transition to a full market economy – Priority to promote private sector involvement and market expansion • Support, but not replace, private investment: additionality – Act as a catalyst for higher and riskier involvement of financiers • Achieve environmentally sound and sustainable development
Network of 36 offices in 30 countries
EBRD invests in times of crisis • Invested over € 62. 0 bn in more than 3, 119 projects since 1991* • AAA rating, € 23 bn base capital • € 9 bn invested in 2010, a 77% increase since 2008 * through 31 December, 2010 Annual business volume (ABV) • Portfolio is 83% Debt, 17% Equity Net cumulative business volume • Private sector > 79% of portfolio € billion
I. Overview of EBRD: Mission and Guiding Principles II. EBRD Financing Capabilities and Requirements III. Power & Energy Utilities: Focus and Experience IV. Renewable Energy Case Studies
Benefits of working with the EBRD • Strong, internationally recognized partner with long term perspective • Mitigation of political and regulatory risks • Policy dialogue with government and regulators • Grant-funded technical assistance • Finance and operations monitoring • Flexible deal structure • Debt finance to both public and private sector • Syndication under preferred creditor status • Catalyst to access additional debt EBRD value --added Value-added LT Debt Financing Shareholder ’s Value Equity Financing • Support of strategic investors • Perception of quality investment • Sector expertise through Board of Directors • Good corporate governance • Catalyst to access additional equity • Positioning as neutral party
EBRD Facilities LOANS • Project finance loans • Corporate loans with specified use of proceeds • Tenor of 10 -15 years EQUITY • EBRD equity stake typically below 2025% (meaningful, but minority) • Investment through capital increase • Invest in Funds to address smaller projects or larger stakes • Margin benchmarked to market • Fixed rate and/or local currency possible • Exit through IPO, trade sale or put/call agreement • Political and regulatory risk mitigation • EBRD can directly finance up to 35% of an enterprise's long term capital (or project costs for greenfield projects); additional funds mobilised through syndication
Leveraging commercial finance • Catalyst for commercial investment: Every € 1 invested or lent by the EBRD mobilises € 3. 1 from other sources • Equity: by investing as a minority shareholder we reduce the equity burden and add value through partnership • Debt syndication: The EBRD can syndicate all or part of the senior debt under A/B structures • Debt co-financing: The EBRD will work with or alongside other commercial banks to provide the appropriate debt package
I. Overview of EBRD: Mission and Guiding Principles II. EBRD Financing Capabilities and Requirements III. Power & Energy Utilities: Focus and Experience IV. Renewable Energy Case Studies
Primary objectives • Support sector reforms that enable energy sectors to function according to market principles (e. g. increased competition, market liberalization and private ownership) • Strengthen frameworks for regionalisation (trans-border transmission lines, energy trading) • Prioritise environmental, energy efficiency and renewable energy investments
Financings by sector Financing by Sector (2010) • Cumulative EBRD financing to power & energy projects since 1991 is € 5. 8 bn across 125 projects with € 21. 8 bn total value • In 2010 invested over € 1. 2 bn in 21 projects with a total value of € 8. 9 bn, • In the last five years, number of projects per year has doubled annual business volume has tripled • Renewables represent c. 20% of total financing today, comprised primarily of wind and hydro but also including biomass Unaudited as at 31 December 2010 Note: Renewable power does not include large hydro. Source: EBRD data
Focus on renewables Renewables financing by Region (2009 -2010) • In 2010 the EBRD signed € 220 mln of financing for six renewables deals with a total gross project value of € 820 mln • The EBRD has been most active in financing renewables projects in Poland, Hungary, Bulgaria and Turkey • Award winning transactions include St Nikola (Bulgaria), Rotor (Turkey) and Margonin (Poland) • Technologies financed to date include wind and hydro (together c. 90%) and biomass Unaudited as at 31 December 2010 Note: Renewable power does not include large hydro. Source: EBRD data • About half of the wind farms financed to date were equity investments, including 3 transactions with Iberdrola and 2 investments in equity funds
I. Overview of EBRD: Mission and Guiding Principles II. EBRD Financing Capabilities and Requirements III. Power & Energy Utilities: Focus and Experience IV. Renewable Energy Case Studies
EBRD: Wind farms financed Project Sponsor EBRD Investment Debt ü ü Equity - St. Nikola 156 MW - AES - EUR 70 mln - Suvorovo 60 MW - Grupo Enhol - EUR 60 mln Estonia - Raisner OU 130 MW - Iberdrola Renovables - EUR 0. 9 mln ü Hungary - Wind farm portfolio - Iberdrola Renovables - EUR 50 mln ü - Tychowo 50 MW - Global RPI - EUR 30 mln (in PLN) - Wind farm portfolio - Iberdrola Renovables - EUR 75 mln (in PLN) - Margonin 120 MW - EDP Renovaveis - EUR 45 mln (in PLN) ü Turkey - Rotor 135 MW - Zorlu Enerji - EUR 45 mln ü Mongolia - Salkhit 50 MW - Newcom - EUR 0. 4 mln ü - Enercap RE Fund - Various - EUR 25 mln - Fre. Energy - Nelja Energia - EUR 19 mln ü ü Bulgaria Poland Regional ü ü
EBRD: Hydropower plants financed Project Sponsor EBRD Investment Debt - Vez Svoghe 26 MW - Petrovilla - EUR 47 mln ü - Hydro OGK 10, 000 MW - Rus. Hydro - EUR 53 mln ü - Rus. Hydro Bond Issue - Rus. Hydro - EUR 110 mln ü - Power Sector Reconstruction 800 MW - KESH - EUR 30 mln ü - Okami and Lopota HPPs 3. 5 MW - Various - EUR 0. 2 mln ü - Enguri HPP Rehab - Govt of Georgia - EUR 56 mln ü Armenia - 20 Various HPPs 56 MW - Various - EUR 5 mln ü FYR Macedonia - Mali Hidro Elektrani 6 MW - Feroinvest Veles & AD - EUR 6 mln GRANIT Skopje ü Bulgaria Russia Albania Georgia Equity
Thank you for your kind attention! Gábor Kiss Principal Banker +36 (1)486 3031 Kissg@ebrd. com
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