O Connor Retech 2012


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O Connor Retech 2012

  1. 1. WORKING DRAFT Last Modified 10/5/2009 8:52:41 PM Eastern Standard TimePrinted 9/29/2009 9:11:23 AM Eastern Standard Time Financing Renewable Energy: The Role of Ex-Im Bank Craig O’Connor, Director Document type Office of Renewable Energy & Date Environmental Exports CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of McKinsey & Company is strictly prohibited
  2. 2. TRACKERU.S. Ex-Im BankUnit of measure ► Independent agency of the U.S. government established in 1934 to finance the Title export sales of U.S.-made goods and services Unit of measure ► Provides Loan Guarantees, Export Credit Insurance, Working Capital Guarantees, and Direct Loans. Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM ► Ex-Im Bank’s support for renewable energy and environmental exports mandated in its Congressional Charter since 1992 ► FY2010 tripled its portfolio of renewable energy projects to $330 million, and doubled this to $721 million in FY2011. – Created the Office of Renewable Energy & Environmental Exports in 2008 Printed – Created a Renewable Energy Express Program in 2010 ► Environmental Exports Program offers enhancements: – Terms of up to 18-years for renewable energy projects – Up to 30% local cost support within the U.S. scope of supply. – Capitalization of interest during construction ► Ex-Im Bank financing is usually the most cost-effective source of financing for international customers to purchase U.S.-made technology1 FootnoteSOURCE: Source
  3. 3. TRACKER Ex-Im Bank Renewable-Energy Support FY2007-2011Unit of measure Title Unit of measure Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM Printed1 FootnoteSOURCE: Source
  4. 4. TRACKERUnit of measure LoanDirect ▪ Direct Loans made by Ex-Im Bank to a foreign buyer Title Unit of measure ▪ Fixed interest rates based on a 1% spread over Treasury notes Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM – Interest rate for an 18-year Direct Loan is 3.17% (as of March 14, 2012) ▪ The international borrower submits the Direct Loan application. ▪ Ex-Im Bank requires the buyer to make a cash payment to the exporter equal to at least 15% of the U.S. supply contract. Printed – 15% cash payment can either be borrowed from a lender or the exporter, or be from the buyer’s own funds. ▪ Exporter paid with disbursement L/C or buyer is reimbursed ▪ A negotiated credit agreement required for a Direct Loan ▪ Shipping must be made on U.S.-flag vessel (except air shipments)1 FootnoteSOURCE: Source
  5. 5. TRACKERCase Study: Gas Verde, S.A. - BrazilUnit of measure ► Ex-Im Bank approved a 12-year $48.5 million Direct Loan in May 2012 to finance the Title export of equipment and services for a biogas treatment facility in Rio de Janeiro. Unit of measure ► Ex-Im Bank’s current 12-year fixed-interest Direct Loan in U.S.$ = 2.43% Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM ► Gas Verde S.A. will install U.S. biogas technology to process raw landfill gas into high-grade methane to be sold to a Petrobras refinery under a 15-year sales contract.. ► The exporter is FirmGreen®, of Newport Beach, CA who along with its subcontracted companies supplied proprietary biogas-cleaning equipment run by FirmGreen’s patented VerdeControls™ operating software and other related services. ► Repayment for the loan is based on the creditworthiness of the main shareholders of Printed Gas Verde S.A. who will provide the repayment guarantee for the loan. ► The new biogas plant will capture and treat 20,000 normal cubic meters per hour (nM3/ hr) of raw landfill gas to produce 9,000 nM3/hr of fuel-grade biomethane gas. ►Reclamation of the biogas at the site will significantly reduce passive landfill emissions to the atmosphere. ►Biogas from the Novo Gramacho plant will directly replace an estimated 10% of the natural gas derived from fossil-fuel sources that is consumed at the Petrobras refinery. ► One of the world’s largest solid-waste landfills, Jardim Gramacho was the subject of “Waste Land,” an acclaimed documentary nominated for an Academy Award in 2011.1 FootnoteSOURCE: Source
  6. 6. TRACKERCase Study: Clipper WindpowerUnit of measure Ex-IM Bank made a $102 million Direct Loan on Nov. 26, 2009 to finance the Title export of 27 2.5-megawatt Clipper Windpower Liberty turbines to Mexico. Unit of measure Electrica del Valle de Mexico (EVM) is using Clippers turbines to power a Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM 67.5-megawatt wind farm at La Ventosa-La Mata in Oaxaca, Mexico. ▪ Area one of the worlds best wind resources with average wind speeds of 12 meters-per-second, and a total estimated wind resource of 6,000MW. Printed EVM will deliver electrical energy under 15-year self-supply agreements to four subsidiaries of Wal-Mart de Mexico, S.A.B. de C.V. ▪ EVM is owned by Frances EDF Energies Nouvelle. The project became operational in December 2009. First ever export sale for Clipper Windpower, first international installation of its 2.5-megawatt Liberty wind turbines.1 FootnoteSOURCE: Source
  7. 7. TRACKERCase Study: Gamesa – Cerro de Hula, HondurasUnit of measure ► Ex-Im Bank’s $159 million 18-year fixed rate Direct Loan to the project Title sponsor, Energía measurede Honduras S.A., (“EEHSA”) financed its purchase of Unit of Eólica 51 Gamesa G87 2-MW wind turbines for the 102-MW Cerro de Hula project. Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM ► EEHSA has a 50-year concession to operate the project, and 20-year PPA with the Honduran state-owned utility ENEE. ► The 18-year Direct Loan has a tailored semi-annual repayment term with a weighted average life of 10.5 years = 21-year loan term. Printed ► The project will be the largest in Central America, and will generate 6% of Honduras power, and is the first utility-scale wind project in Honduras. ► The wind turbines will be manufactured at Gamesa’s Pennsylvania manufacturing facilities. ► The project company is owned by Mesoamerica Energy is a renewable- energy company that develops, builds, owns and operates wind projects and other renewable-energy facilities in Central and Latin America.1 FootnoteSOURCE: Source
  8. 8. TRACKERLoan GuaranteeUnit of measure Title GuaranteedUnit of measure by commercial banks (U.S. or foreign) to a foreign Loans made buyer with a 100% unconditional repayment guarantee from Ex-Im Bank Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM ▪ Guarantee covers 85% of the U.S. content of the transaction. ▪ Negotiated interest rates, often floating rates based on spread over 6-month U.S. dollar LIBOR rate; banks can also arrange fixed interest rates Printed ▪ Loan fully transferable, can be securitized ▪ Banks often finance the 15% required cash payment ▪ Guarantee available in major foreign currencies ▪ Ex-Im Bank’s Local Currency Loan Guarantees can in turn support capital market issues in local currency1 FootnoteSOURCE: Source
  9. 9. TRACKEREx-Im Bank + IndiaUnit of measure► Ex-Im Bank is the first international financing institution to approve a solar-power project under Title Indias National Solar Mission, and one of the first for Gujarat. Unit of measure► Reliance Power Ltd. - 16.5-year Ex-Im Bank Direct Loan of $84.3 million to finance the 40MW Dahanu Power Project in Rajasthan using First Solar modules under the National Solar Mission. Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM► Dalmia Solar Power, Ltd. is using a $30 million 15-year Direct Loan from Ex-Im Bank to finance 2,918 Infinia Solar stirling engine concentrated solar modules for a 10MW project in Rajasthan.► Ex-Im Bank 12-year Loan Guarantee to PNC Bank for a $19 million loan to ACME Solar to finance First Solar thin-film modules for 15MW project in Gujarat; 25-year PPA with GUVNL. Printed► Tatith Energies Gujarat Private Ltd. on Sept. 30, 2011 was authorized for a $19 million Direct Loan to finance their purchase ofSolarWorld modules for a 5MW project in Gujarat under GUVNL offtake► Ex-IM Bank authorized a $16 million 16.6-year Direct Loan in July 2011 to finance a 5MW solar power project in Rajasthan for Azure Power that used First Solar thin-film modules.► Ex-Im Bank authorized a $9.2 million, 18-year loan for thin-film solar modules from Abound Solar, to Punj Lloyd Solar Power Ltd. for a 5MW solar power plant in Rajasthan.► Ex-Im Bank authorized financing for $3.7 million corporate loan to Universal Solar for a 2MW ground-mount PV project in Ahmedabad using Miasole thin-film modules.► The Bank also has about $500 million of India solar projects in the pipeline.1 FootnoteSOURCE: Source
  10. 10. TRACKER Areva Solar: Rajasthan Concentrated SolarUnit of measure ► Ex-Im Bank’s $80 million 16.5 year fixed rate Direct Loan financed the purchase of Title Areva’s concentrated solar technology to Reliance Power in Rajasthan, India. Unit of measure ► The project, "Rajasthan Sun Technique Energy Private Limited," is a subsidiary of Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM Reliance Power and is being co-financed by the Asian Development Bank and FMO, the Dutch development bank. ► Reliance Power was one of the successful bidders to develop 470 MW of concentrating solar power capacity under the first phase of the NSM. Printed ► This project uses a concentrated solar power technology known as compact linear Fresnel reflector (CLFR) from AREVA Solar Inc., Mountain View, CA ► This project (along with the Kogan Creek Solar Project in Australia) is the first to use technology of this kind from AREVA Solar on a large commercial scale. ► “Our strategic tie-up with Ex-Im is unmatched in terms of its scope and size. This partnership plays an important role in meeting Indias growing energy needs.“ - Jayarama P. Chalasani, Chief Executive Officer of Reliance Power1 FootnoteSOURCE: Source
  11. 11. TRACKERNorthern Power – Italy Community WindUnit of measure Title ► Ex-Im Bank provided a 15-year Loan Guarantee in Euros worth U.S. $6.4 million to Raiffeisen Bankof measure Unit (RBI International Finance) to finance the export of 15 Northern Power™ 100 kilowatt permanent magnet direct drive wind turbines to community wind projects in Italy. Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM ►ARG Energie S.R.L. of Avelino, Italy is the borrower on the transaction with PurEnergy, a leading wind energy developer based in Bisaccia, Italy, providing the installation, operation, and maintenance of the turbines. ► This transaction represents the largest-ever U.S. export of small wind turbines! Printed ►This transaction, processed under the Bank’s Renewable Energy Express Program, marks the first time Ex-Im Bank has financed a community wind power project supported on a project finance basis. ► The Italian Government has created an incentive program to promote the expansion of grid-connected small wind power projects under 200 kilowatts. ► Energy produced by the small wind projects is eligible for an attractive feed-in-tariff price that is fixed for 15 years.1 FootnoteSOURCE: Source
  12. 12. TRACKERCase Study: Jeoden Geothermal - TurkeyUnit of measure Title ► Ex-Im Bank of measure a $1.5 million Loan Guarantee in 2011 to finance the Unit approved export of 3 modular Pratt & Whitney PureCycle geothermal power units. Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM ► Jeoden Elektrik, the project sponsor, is an Istanbul-based company formed in 2010 to develop, construct, own, and operate renewable energy projects. ► Jeoden will own and operate a 750kW geothermal power plant project in Sarakoy, Denizli, Turkey. ► Electricity generated by the project will be sold under a 10-year PPA to Printed TEDAS, the Turkish state-owned distribution company. ► The Turkish Renewable Energy Law provides a 10-year official feed-in-tariff of 10.5 U.S. cents per kW guaranteed by the Ministry of Energy. ► World Business Capital made the Loan with repayment guaranteed under Ex-Im Bank’s Medium-Term Insurance program. ► The loan was made to Jeoden on a corporate finance basis.1 FootnoteSOURCE: Source
  13. 13. TRACKERCase Study: Geothermal Services ExportUnit of measure ► Ex-Im Bank approved a $4.86 million 15-year Loan Guarantee to finance Title the exportUnitenvironmental services to a geothermal power plant in Turkey. of of measure Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM ► POWER Engineers, Inc., an engineering consulting firm based in Hailey, Idaho, is exporting procurement, design and engineering services. ► The services were provided for a 45-megawatt geothermal power plant project in western Turkey. Printed ► Toronto-Dominion Bank made the loan under Ex-Im Bank’s Guarantee. ► This deal qualified for Ex-Im Banks 15-year financing terms under the Banks special initiative to support exports of renewable energy and water projects. ► Turkey is a growing market for renewable energy exports given a 2005 law requires electric utilities to buy at least 8% of their energy from renewable energy sources.1 FootnoteSOURCE: Source
  14. 14. TRACKERCase Study: - Generadora Trasandina - ChileUnit of measure Title ► Ex-Im Bank of measure a 10-year $1.9 million Loan Guarantee in 2011 to Unit approved finance the export of equipment for a biogas-to-energy system to Generadora Trasandina, S.A. of Chile Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM ► The exporter, Applied Filter Technology, Inc. of Snohomish, WA, custom designs, installs and operates biogas-to-energy systems . ► Generadora Trasandina, S.A. will use the equipment in the “Proyecto Central Los Colorados” to capture methane gas from a municipal landfill to generate electricity. Printed ► The electricity generated by the project will be sold under a 10-year PPA to KDM Energia y Servicios. ► The electricity from the project provides power to hundreds of homes and businesses in the City of Til-Til, in Central Chile ► PNC Bank made the Loan with repayment guaranteed under Ex-Im Bank’s Medium-Term Insurance program.1 FootnoteSOURCE: Source
  15. 15. TRACKERCase Study: Barbados Solar Roof ProjectUnit of measure Title ► Ex-Im Bank measure Unit of provided a 10-year Loan Guarantee to PNC Bank to finance a 1.4MW rooftop-solar project Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM ► Sustainable (Barbados) Recycling Centre, Inc. will use the electricity to power SBRC’s operations. ☼ SBRC is wholly-owned by Williams Industries. Printed ► This project one of the largest-ever Caribbean solar roof projects. ► The project provides significant savings in electricity costs. ► SolarWorld (U.S.) supplied the solar modules1 FootnoteSOURCE: Source
  16. 16. TRACKERExport Credit InsuranceUnit of measure Enables U.S. exporters to offer short- and medium-term credit directly to Title their customers, or for banks to insure credit lines and L/Cs. Unit of measure Export credit is an attractive substitute to cash-in-advance, letters of credit and costly local bank financing. Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM Insures credit repayments up to 180 days from date of importation of the goods; capital goods terms of 360 days-7+ years. ► Ex-Im Bank offers both Multi-buyer and Single-Buyer Insurance Process: 1. The U.S. supplier submits the application along with the required Printed information to establish a credit limit for the foreign customer. 2. Information requirements for the foreign buyer credit limits: ► $10,000 credit - a favorable trade or bank reference. ► $10,000-$50,000 credit - a current credit report ► $100,000-$300,000 credit a current credit report + favorable bank or trade reference. 3. Ex-Im Bank’s Loan Officer analyzes the application and makes a decision on the amount of credit to be supported.1 FootnoteSOURCE: Source
  17. 17. TRACKER Case Study: Wireless Energy - ChileUnit of measure ► Sunwize Technologies Inc. is using Ex-Im Bank’s Short-Term Insurance to offer “open account” credit to customers worldwide. Title Unit of measure ► Sunwize exports both modules and turnkey solar power systems. Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM ► Sunwize use of Ex-Im Bank Insurance is supporting their growth in exports as financing to overseas dealers enables financing to their customers, and projects. ► Wireless Energy Chile is using a $300,000 180-day credit line from Sunwize to finance their expanding operations, and to provide financing to their customers. Printed ▪ Cost to Wireless Energy Chile for the 180-day credit line = 1.15% ► Financing is often THE critical factor in financing export sales, open account credit has advantages for international buyers of U.S.-made equipment: ▪ “Supplier credit” attractive substitute to buyer using L/Cs ▪ Interest rates high in many international markets ▪ Increase order quantities to existing customers/distributors1 FootnoteSOURCE: Source
  18. 18. TRACKERCase Study: Southwest WindpowerUnit of measure ► Southwest Windpower, Inc., exports wind turbines to distributors and Title customers Unit of measure worldwide. in Turkey, and ► Ex-Im Bank’s Short-Term Credit Insurance enables Southwest Windpower Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM to offer “open account” credit terms to its distributors that enables them to place larger orders. ► Credit terms can range up 360-days open account; longer terms from 2-18 years also available under Ex-Im Bank’s Long-term programs. Printed ► Replaces bank financing and payment by L/Cs, enables customers to offer credit to their customers. ► The insured receivable also support Southwest Windpower’s working capital needs.1 FootnoteSOURCE: Source
  19. 19. TRACKERWorking Capital GuaranteeUnit of measure Title ► Ex-Im Bank provides 90% repayment Guarantee for working capital loans, Unit of measure revolving or transaction based, made by commercial lenders to small businesses to finance export sales. Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM ► The Working Capital Guarantee serves as the collateral to the commercial lender by mitigating the risk inherent when the source of repayment for the loan is an overseas contract. ► Enables exporters to finance materials, labor, and overhead to produce goods/services for export. Printed ► Enables exporters to cover standby letters of credit for bid and performance bonds, or payment guarantees. ► Enables the exporters to finance foreign sales receivables. ► Most Working Capital Guarantees provided by Delegated Authority Lenders (see www.exim.gov for a list) without prior Ex-Im Bank approval. ► In FY 2011, Calisolar, Amonix, Suniva, Miasole, Southwest Windpower, and others used this program to finance production for export sales.1 FootnoteSOURCE: Source
  20. 20. TRACKERConclusionUnit of measure Title ► Ex-Im Bank: top priority to support renewable energy & environmental of measure Unit exports ► Ex-Im Bank supports short, medium, and long-term financing to Working Draft - Last Modified 10/5/2009 8:52:41 PM9/29/2009 9:11:23 AM creditworthy international customers, and working capital guarantees to U.S. exporters ► Ex-Im Bank often plays a critical early-stage role in helping small clean tech companies finance their operations. ► With Ex-Im Bank’s early-stage intervention these companies can Printed grow their international business, increase profitability, and ultimately attract significant equity investment. ► Ex-Im Bank is interested in any size project ► We will work with you to create “bankable” projects ► We welcome your projects and your ideas! craig.oconnor@exim.gov1 Footnote Internet http://www.exim.govSOURCE: Source