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Investor View on Auctions for Large-scale Biomass Project

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Daragh Duffy, Project Development Director, KBPP

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Investor View on Auctions for Large-scale Biomass Project

  1. 1. Investor View on Auctions for Large-scale Biomass Project February 2019 Daragh Duffy – Project Development Director
  2. 2. KBPP Project Background Site ESIA Fuel Supply Logistics Grid Connection EPC / O&M Letters of Intent Final Permitting PPA Financing
  3. 3. Technology Price per MwH Biomass is capital intensive but offers: • Baseload power • Grid balancing • Economic multipliers • Energy security 0,0 1,0 2,0 3,0 4,0 5,0 Solar Wind Biomass €Millions
  4. 4. Background to the UK Auction Transition • Quota based – Established / Less Established • Auction triggered once quota reached Technology Clearing Price (€c per KwH) Saving Over Strike (%) Onshore Wind (>5MW) 10.24 (11.0%) Solar PV (>5MW) 8.00 (37.5%) Biomass 16.00 0.0% Energy from Waste 10.30 0.0% Biogas 18.00 0.0% Offshore Wind 15.30 (15.0%) Established Less Established
  5. 5. Lessons from the UK Auction Transition Good parts • Balanced mature and immature technologies • Reduced Government spending • Prioritised political intent for offshore wind • Competitive market prices reduced Bad parts • Complex and Cumbersome • Slow uptake initially • Resulted in uncommercial bidding • Favoured big players
  6. 6. Investor View on Proposed Ukraine Auctions Positives • Financial Certainty • Transparency • Technology Specific allows immature to develop • Greater Regulatory Certainty • Reduced Collusion / Corruption risk Concerns • Lowest Price wins • Bidders ability not assessed • No transition for immature sectors • Grid Connection – corruption risk
  7. 7. Why it makes sense for Ukraine? Benefits • Competitive Pricing • Benefits Consumers • Budgetary Control • Better Renewable Target forecasting • Encourages FDI Potential Issues • Balancing of Competitive markets • Low Penalties for non– development • No incentives for economically beneficial projects • Quota “locking” may occur
  8. 8. Comparison of Technologies in Current FIT 70 50 30 10 10 30 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 €Millions Years Discounted Equity Cashflows by Technology on Current FIT Wind Solar PV Biomass
  9. 9. 9 KBPP LLC www.kbpp.com.uaKhemelnytsky Bio Power Plant LLC 10/1 Myru Str., Pechesky village Khmelnytskyi District, Khmelnytskyi Region, 31320, Ukraine © 2019 KBPP All Rights Reserved. “Energy cannot be created or destroyed, it can only be changed from one form to another.” ~ Albert Einstein

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