August 2013 Focussing on Renewable Energy especially CSP Rentia van Tonder Head Green Industries Content Green SBU Focus Portfolio amp Strategies 2 IDC amp Renewable Energy 3 IDCs role in CSP ID: 808550
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Slide1
Industrial Development Corporation’s approach in developing Green Industries
August 2013
Focussing on Renewable Energy especially CSP
Rentia van Tonder
Head: Green Industries
Slide2Content
Green SBU: Focus, Portfolio & Strategies
2
IDC & Renewable Energy
3
IDC’s role in CSP
4
Conclusion
6
Funding RE
5
IDC background
1
Slide3Introducing IDC
Established:
1940
Type of organisation:
Development Finance Institution (DFI)
Ownership:
State owned company, 100% owned by the SA government
Total assets:
R115 billion (30 September 2012 - group)
Total liabilities: R24 billion (30 September 2012 - group)Funding status:
Self financing, pays dividends and income tax
Credit rating: Baa1 (Moody’s) in line with sovereign ratingMain business area:
Industry development through the provision of funding resulting in job creationGeographic activities: South Africa and the rest of Africa
Products:
Custom financial products to suit a project’s needs including debt, equity, guarantees or a combination of theseStage of investment: Project identification and development, feasibility, commercialisation, expansion, modernisation
Number of employees: 804 (December 2012)
Slide4Vision, mission, objective and values
Values
Vision
To be “the primary driving force of commercially sustainable industrial development and innovation to the benefit of South Africa and the rest of the African continent”
Mission
The IDC is self-financing national development finance institution whose primary objectives are to contribute to the generation of balanced, sustainable economic growth in Africa and to the economic empowerment of the South African population, thereby promoting the economic prosperity of all citizens. The IDC achieves this by promoting entrepreneurship through the building of competitive industries and enterprises based on sound business principles.
Objective
Passion
Professionalism
Partnership
Outcomes
Lead
industrial capacity developmentPrimary:
Facilitate sustainable direct and indirect employmentSecondary:Improving regional equity, including the development of South African rural areas, poorer provinces and industrialisation in the rest of Africa;
Growing the entrepreneurial and SME sectors
Transformational impact on communities and growing black industrialistsEnvironmentally sustainable growth
Growing sectoral diversity and increased localisation of production
Slide5Positioning
Non-commercial focus
Fiscal transfers and grants
Development objectives (social)
Government / NGOs
High commercial focus
Private sector capital
Financial objectives
Known risks
Commercial Financiers
Commercial and development focus
Sharing risk
Internally generated funds, government funds, loansDFIs
Greater importance on financial objectives
Greater importance on social and developmental objectives
IDC does not directly compete with other institutions, but encourages cooperation with a variety of these institutions to achieve its goals
Industrial Development Corporation (IDC)
Development Bank of Southern Africa (DBSA)
sefaNational Empowerment Fund (NEF)Etc.
ABSA
Standard BankFirst National BankNedbank
Etc.
Slide6Green Industries SBU: Focus
Energy efficiency
Heat, Electricity & building efficiency
Cleaner production / Industrial Efficiency
Transport Efficiency
Waste to Energy
Fuel Based Energy
Co-generation
Emission and pollution mitigation
Air pollution control
Waste Management/ Recycling
Clean stoves
Bio Fuels
Bio Ethanol
Bio Diesel
Renewable Energy: Non-Fuel Power
Wind Power Generation
Concentrated Solar Power
Solar Photo Voltaic Power
Services related to renewable energy & energy efficiency
Local manufacturing related to renewable energy & energy efficiency
Hydro
Slide716 Projects
Exposure R620m
20 Projects
Exposure R185m
3 Projects
Exposure R193m
20 Projects
Exposure R1.5bn
Green Industries SBU:
Portfolio
Slide8IDC
Total Investment - R631m
Total Round 1 & 2 Investment R74.7bn
Total Investment – R16bn
Total Investment – R24bn
Total Investment – R34bn
SOLAR PV
WIND
CSP
HYDRO
IDC
Renewable Energy:
IDC’s participation
Slide9IDC Total Investment R7.7bn
7 Projects, 452MW, R1.9bn
1
Projects, 10MW, R204M
8 Projects, 213MW, R2.1bn
2 Projects, 150MW, R3.5bn
Renewable Energy:
Portfolio analysis
No Small IPPs (1-5MW)
RfP
released 20 Aug’13
IDC reviewed & commented on draft
Slide10GW
By June 2012
2
5
00MW
R75bn
Determination announced up to 2020: 6 900MW
Key considerations
:
Grid availability
Grid Intermittency & stability
Number of “Large” scale PV & wind projects
Lack of smart grid in SA
Load factor compared to coal based energy
Cost per kwh of RE
By 2030
18 000MW
R500bn
Renewable Energy:
Current reality…
Slide11Local content %
Avg Jobs
CSP has the highest potential for job creation
CSP Highest capital per MW
Local content targets expected to increase gradually with every bidding round
Indirect impact on rural
upliftment
and job creation
Research conducted to date on localisation potential:
SAPVIA: Rooftop study; Localisation Study with DTI
SAWEA: Local content workshops & engagement
SASTELA: Localisation study:
Ernest&Young
, GIZ, DTI
CSIR: Solar Roadmap Study & Workshops
DTI: Sets hurdle Local content for RE Projects
IDC impact
Renewable Energy:
Current reality…
Slide1250 MW : Round 2
150 MW
MW: Round
1
Release of
RfP
by DoE: CAP
NERSA REFIT PROPOSAL
Nov 2011
Oct 2009
May 2012
Aug 2011
Oct 2010 : SASTELA co-founded by IDC to promote CSP
Minister of Energy has made a further determination in December 2012 of 400 MW CSP allocation.
The industry is still waiting for a formal announcement regarding the CSP allocation for Mar’14
Preference towards CSP with storage.
IDC impact
Renewable Energy:
CSP tariff roadmap
Slide13Molteno
:
Dorper
Wind: 100MW
Jobs: 147
Rustenburg:
Rustmo
Solar PV: 7MW
Full Time Equiv. Jobs: 48
Malmesbury
:
Swartland
Solar PV: 6MW
Jobs: 27
Oyster Bay: Redcap
Wind: 80MW
Jobs: 275
Pofadder
:
KaXu
Concentrated Solar : 100MW
Jobs: 660
Caledon:
Klipheuwel
Wind: 27MW
Jobs: 47
Pofadder
:
Konkoonsies
Solar PV: 10MW
Jobs: 85
De Aar:
Mulilo
Solar PV: 10MW
Jobs: 35
Prieska
:
Mulilo
Solar PV: 20MW
Jobs: 71
Kenhardt
: Aries
Solar PV: 10MW
Full Time Equiv. Jobs: 60
Gouda: Aveng
Wind: 138MW
Jobs: 124
Former Ciskei:
Innowind
Chaba
Wind: 21MW
Jobs: 96
Port Elizabeth
:
Innowind
Grassridge
Wind: 60MW
Jobs: 230
Grahamstown
:
Innowind
Waainek
Wind: 24MW
Jobs: 107
Kakamas
:
Kakamas
Hydro10 MW
Jobs: 139
Upington:
Khi
Concentrated Solar : 50MW
Jobs: 727
IDC
funded
17
projects
Sishen
: Aveng
Solar PV: 75 MW
Jobs: 142
More opportunities for regional integration and development …
IDC impact
Renewable Energy:
Regional development & integration – SED and ED
Slide14Renewable Energy:
Opportunities for regional development & integration – SED and ED
Northern Cape (2% of population) got 52% of Investment = R39bn
Revenue streams to communities (2 CSPs):
Trust dividends
0.1% of total revenue on ED
1.0% of total revenue on SED
30% on preferential procurement
Initiated a workshop and task team between Green SBU, Strategy and R&I with CSIR to develop social impact assessment tool
2
% Investment
% Population
52%
IDC impact
Slide15IDC’s role in CSP
Key role
through project development and funding of PFS and BFS;
Potential to provide
base load
electricity;
Steep learning curve
New industry development and
risk taker
Total potential exposure to CSP could be more than R7bn (round 1 to 3);
Support to develop industry and
drive cost down.Potential to source funding to reduce cost, specifically for CSP
Importance to position industry as strategically important for future electricity supply.
Slide16IDC involvement in Concentrated Solar Power (CSP)
NameSize
Technology
Location
Community
IDC
Total IDC ExpStatus
XaXu (Abengoa
)100MW TroughPofadder!KaXu 20%29%
Under construction!Khi (Abengoa) 50MW TowerKeimoes
!
Khi 20%29%Under construction
Sol Africa50MW TroughUpington5%25%
Round 2 (IDC only a development partner)
iLangalethu100MW TroughUpington- Karoshoek5%20%
Bid Round 3Xina (Abengoa)100MW TroughPofadder
!Xina
20%20%Bid Round 3
Total potential exposure: R7,3bn
Slide17Financing CSP
Financing CSP in South Africa
New
industry – riskier compared to PV and Wind;
Financing of Trough technology easier than
Tower
;
Requirements from commercial banks – risk averse;
Importance of EPC and O&M experience and strength of partners;Long term
investment approach;
Slide18IDC Funding possibilities for RE projectsProject development through participation and cost sharing of bankable feasibility studies
Equity participationMinimum: Meaningful 10% with minority protectionMaximum: Not majority, 30% BEE and BBBEE fundingLending to Community Trust or BEE shareholder to invest in project
Repayment with dividends
Will allow 10-25% cash (trickle dividend) for community trust / BEE shareholders
Favours
community trust
conceptDebt participationSenior debt with tenure of 15 years post commercial operation date (COD)Interest capitalisation during constructionConstruction loan
Community
TrustBEE#
“HoldCo-B”Community“
HoldCo-C”
IDC
BEE#Project Company
Strategic Equity Partners
Developer
IDC Funding with Preference Shares
Ordinary shareholding
#
This could also be a BBBEE or NPO
Ownership and IDC funding
Slide19Renewable Energy:
Project Structure for a
REIPP
Power
Project in SA
Fixed price
LSTK Contract
Eskom
20-Year
Take-or-pay
Power Purchase
Turbine
supplier
10-Year
Operation
& Maintenance
Land
Owner
Long-term Land
Lease Agreement
BBBEE & BEE
Developer
Strategic
2. Institutional
3. IDC
Main Sub-contractors
EPC
Contractor
RSA
Balance of Plant
Supplier
RSA
Civil
Contractor
RSA
Electrical
Contractor
15%
85%
Shareholders
Agreement &
Shareholder Loan
Agreement
RE IPP Project
Wind / Solar/ CSP/ Hydro
Independent Power
Producer (IPP)
Environmental
Authorities
Construction
Permit & ROD
25%
Equity
International
Turbine/PV
Manufacturer
Intercreditor
Agreement
IDC
Commercial
Bank
s
Security SPV
Facility Agreements
CTA & Senior debt
Security
Agreements
& Indemnity
Debt Guarantor
Agreement
Direct
Agreements
75%
Debt
Generation
Licence
NERSA
Slide20Conclusion
Khi
tower
Aug
, 2013
at 173m
height
Slide21Conclusion
Slide22The Industrial Development Corporation
19 Fredman
Drive, Sandown
PO Box 784055,
Sandton
, 2146
South AfricaTelephone (011) 269 3000Facsimile (011) 269 2116
E-mail callcentre@idc.co.za
Thanks