March 5 solar energy investment opportunities in the philippines ruth p briones


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March 5 solar energy investment opportunities in the philippines ruth p briones

  2. 2. TOPICS  Assessment of Philippines’s solar energy potential  Best practice examples of solar generation and investment returns in the Philippines  Outlining the project application process to secure approval  Foreign investment opportunities and project finance
  3. 3. PART I: Assessment of the Philippine Solar Energy Potential
  4. 4. 4 Solar Energy Potential in Asia PHILIPPINES: 4.5-5.0 kWh/m2/day
  5. 5. 5 The Renewable Energy Map Potential in the Philippines LUZON VISAYAS MINDANAO
  6. 6. 6 Sites/ Areas with solar energy Potentials in the Philippines 792,147,408 MWhr/year Rank No 68 globally, 2008 Second country in Southeast Asia in terms of irradiation and insolation. Solar irradiation: 1900 kilowatts a square meter
  7. 7. 7 Solar Energy Investment Potential for the Philippines SECOND COUNTRY IN ASIAIRRADIATION AND ISOLATION PHILIIPPINES Most comprehensive Renewable Energy Law in Asia Has all the foundation to become a renewable energy leader in the region owing to the strong semiconductor industry and the manpower base
  8. 8. 8 Solar Energy projects registered under DOE as of December 2013 AWARDED SOLAR PROJECTS PENDING PROJECTS UNDER RE LAW GRID USE 56 GRID USE 4 OWN USE 5 33.0 MW POTENTIAL CAPACITY  Grid use  Own use POTENTIAL CAPACITY 1,012.0 MW 1.594 MW
  9. 9. PART II. Best practice examples of solar generation and investment returns in the Philippines
  10. 10. 10 Best practice examples of solar generation and investment returns in the Philippines Asian Development Bank Rooftop Project CEPALCO 1.1 MW Photovoltaic Power Plant  Funded by Asian Development Bank  Installed in 2003  Commissioned in 2012  133rd largest solar power plant  574-kW worldwide , 2008  Consist of 6,480 Sharp ND-Q7E6Z Photovoltaic modules  Designed to provide 1,500 MWhr of electricity annually capacity located in its Ortigas headquarters;  Installed by Suntech with integration by Propmech  About 600 MWhr/year of solar electricity.  Largest rooftop installation in the country. •
  11. 11. 11 Best practice examples of solar generation and investment returns in the Philippines • Starbucks , St. Charge store, Quezon City, Philippines 1. Size: 20.58 kWp solar PV System designed 2. 3. 4. 5. 6. Source: with 84 Monocrystalline panel; Produced 3,671 kWh displacing 10.6% of electricity sourced from grid – ten months operation; Savings of Php 34,000.00 in ten months The system has a 25-year year economic life; Installed to replace expensive electricity sourced from grid and as cooling the temperature of the roof and interior; Promotes green advocacy of Starbucks
  12. 12. PART III. Outlining the project application process to secure approval of a Solar Renewable Energy Project
  13. 13. 13 Outlining the project application process to secure approval of a Solar Renewable Energy Project The Development Stages Site and project assessment II. Design and optimization III. Procurement IV. Installation and commissioning V. Operation and maintenance VI. Customer enablement I. Technical and Regulatory Requirements • Track Record/Experience • Work Program • Key Personnel Experience • List of Existing company owned equipment available for RE projects operations Financial Requirements: i. Audited Financial Statement ii. Bank Certification to substantiate the Cash Balance iii. Projected Cash Flow for two years iv. List of existing company owned equipment for the project
  14. 14. 14 The Department of Energy Renewable Energy Developer License Processes DOE DC2009-07-0011) Pre-development Stages RE Developer procure permits Service contract as RE Developer • Preliminary Assessment • Feasibility Study • Financial Closing • Declaration of Commerciality • Environmental Compliance Certificate • Free and Prior Informed Consent • Certificate of NonOverlap • Local Government Endorsements • Other government permits • Individual Filipino • Corporation: 60% Filipino; 40 % Foreign • 100% Foreign owned – shall register under the Philippine Laws for Technical and Financial Assistance
  15. 15. PART IV. Foreign investment opportunities and project finance for solar power
  16. 16. 16 Legal and Regulatory Institutional Frameworks For Foreign Investments in Solar Projects in the Philippines • Republic Act No 9513 -Renewable Energy Law • Executive Order No. 226-Omnibus Foreign Investment Code of 1987  Republic Act No. 7042- Foreign Investment Code of 1991  Republic Act No.7721- Foreign Banks Act  Republic Act No.7652 – Investors Lease Act  Republic Act No. 7718- Build- Operate- Transfer Law  Investment Priority Projects of 2014  Philippine Millennium Development Goals
  17. 17. 17 Sources and Manner of Financing A. Public Sector Loans – Government Banks ( Land Bank of the Philippines, Development Bank of the Philippines) B. Private Sector Loans ( World Bank, International Financing Corporation, Asian Development Bank) C. Short Term Loans D. Domestic Borrowings – local banks E. Other Financing Institutions – international and local
  18. 18. 18 Solar electric power has a great deal of appeal for investors looking at opportunities in the renewable energy market in the Philippines Easy to assess and forecast the availability of the resource. No variability associated with the cost of the main fuel, sunshine.  Compared to other renewable sources of energy, solar PV is quick to deploy. A utility scale solar PV plant can be developed in 1.5 years as compared to an average of 2 years for onshore wind and up to 7 years for a geothermal power plant. Rapid deployment makes solar an attractive solution in the Philippines in order to meet the country’s renewable portfolio standards and keep up with increasing energy demand.
  19. 19. 19 INVESTMENT PROPOSAL AND APPROVAL • Any investment proposal shall comply with certain requirements under Philippine laws. Project Funding Scheme Merger - must comply with the legal requirements under the Corporation Code of the Philippines; Acquisition - must comply with Section 40 of the Corporation Code and subject to the restrictions regarding foreign equity ownership under the 1987 Constitution. Management Contract - must comply with Section 44 of the Corporation Code. Joint Venture - may be entered into without legal restriction on registration unless the parties thereto form another business organization requiring registration such as a corporation or partnership
  20. 20. 20 INVESTMENT PROPOSAL AND APPROVAL PROJECT INFORMATION REQUIRED BASIC INFORMATION USUALLY SOUGHT BY AN INVESTOR/FUNDER • Name of proponent, Physical address, Postal address, Telephone number, Fax Number, Email address, name of contact person, Mobile Phone Number of contact person. • Brief description of investment proposal • Proposed Value of Investment • Proposed Corporate status of the proponent • Proposed capital of investment entity and • Site of proposed investment • Basis of access to site • Proposed duration of investment • Anticipated rate of return on investment • Environmental Impact of the investment • Amelioration and remediation of environment • • timing of capital take up • Name and references of the EPC contractor • • • • impact Proposed employment impact Number, grades and source of any proposed expatriate staff and proposed duration of their employment Anticipated benefits of the investment to the economy and infrastructure Audited balance sheet for proponent organization Due diligence certificate for proponent Company profile of proponent
  21. 21. 21 Technology: is it proven? The Solar Power investment bankability challenge Can the EPC provide references and has capability to deliver the project on time? What is the anticipated ROI? Will it be viable commercially with the Feed-in-tariff rate of Php9.68 per kWhr? When is the facility generate a good return?
  22. 22. 22 KEY DRIVERS IN SOLAR PROJECT FINANCE Project Analysis — Completion Risk Contractors Manufacturers Transmission Construction Contract Terms Construction Technology Risk Project Analysis — Operation Risk Operator Operating Costs
  23. 23. FOREIGN INVESTMENT OPPORTUNITIES AND PROJECT FINANCE Solar projects can be complex and funding sources fickle. It is important for developers to complete the solar project while funding is still available and to ensure investors the project will operate as planned.
  24. 24. 24 Foreign investment Opportunities and Project finance Foreign and local solar technology developers are pushing for a massive installation of solar panels on rooftops of households, commercial establishments and buildings in the country. Potential market for solar industry players : estimated at about $450 million, or P19 billion, yearly. Based on the 50,000 households (representing 10 per cent of the half a million constructions yearly) that can install solar panels with a capacity of 2 kilowatts. To produce a kilowatt of solar power from these rooftop panels, one would need to invest about $4,500 for the actual components and installation works. Investment can be recovered in about seven years; Solar panels usually last for at least 25 years.
  25. 25. 25 Please Contact: • Ruth P Briones • Email: • Phone Nos: +632 430 1725 • Mobile No: +63 916 627 0910