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Safe project conditions for renewable energy – a challenge for a clean future. Peter Klessascheck, Head of Project Management Vilnius, 24 November 2010. Index. PowerWind GmbH Risks in project financing Impact on Lithuanian Renewable Energy Law. PowerWind GmbH at a glance. Founded in 2007 - PowerPoint PPT Presentation
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Safe project conditions for renewable energy – a challenge for a clean future
Peter Klessascheck, Head of Project Management
Vilnius, 24 November 2010
2German engineered wind turbines
Index
o PowerWind GmbH
o Risks in project financing
o Impact on Lithuanian Renewable Energy Law
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PowerWind GmbH at a glance
o Founded in 2007
o Headquarters: Hamburg (Germany)
o Production facility: Bremerhaven (Germany)
o Products:
o PowerWind 56 (900 kW)
o PowerWind 90/100 (2500 kW)
o 141 employees
o Fully owned by Warburg Pincus, an international growth investor
Source: BFB
4German engineered wind turbines
33 WECs installed, 8 under construction, 32 more sold as of 22nd November
USA
Poland AzerbaijanGermany
Italy RomaniaBulgaria
5German engineered wind turbines
Risks in project financing
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Wind energy converters are usually owned by a Special Purpose Vehicle. This SPV has to pay all investment costs.
Investment costs
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Typical investment costs for a wind energy project
WECo Blade markings/aviation lights
(according to building permit)
o Shadow flicker modules(according to building permit)
o Transport(costs depending on distance and accessibility of site)
o Crane(costs depending on distance to site and local availability)
o Transformer/switchgear(depending on project characteristics)
Infrastructureo Roads and crane areas
o Soil investigations
o Foundations
o Grid connection! extreme high costs in Lithuania due to tender system, presently there is no other regulation
o Compensation payments for impacts on environment
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Dividend distribution and loan paid back to share holders
Investment costs
Investors
Equity moneyIncome from energy sold
One part of the SPV’s capital is invested by share holders. This loan is paid back later by the SPV’s profits.The SPV’s only financial income is generated by the WEC.
9German engineered wind turbines
The main part of the SPV’s capital is financed by a bank. The credit is paid back later by the SPV’s income.
Debts and amortization
Dividend distribution and loan paid back to share holders
Financing Bank
Investment costs
Financing of investment costs, financed capital
Investors
Equity moneyIncome from energy sold
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In a rating procedure, the financing bank evaluates the probability that the financed capital can‘t be paid back by the SPV as agreed in the credit contract.
In general, the bank analyses the main risks caused by commercial, technical and legal impacts.
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Typical topics analyzed in the rating procedure
o Reports, studies (e.g. wind at site) and expertise
o The technology used WECs with type certificates are preferred
o Permits for installation and operation of the WEC according to the planned conditions
o Legal aspects in contract and permits
o Reliability of the equity investors
o Estimation of future energy consumption and related prices
o Business plan Due to the unstable Lithuanian Law on Renewable Energy, the price per kWh and the law’s period of validity is uncertain
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Debts and amortization
Financing Bank
Investment costs
Financing of investment costs, financed capital
Investors
Equity moneyIncome from energy sold
Beside the debts and amortization the SPV has to pay the monthly operation costs.
Operating costs Dividend distribution and loan paid back to share holders
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Typical operating costs for a WEC
Land lease payments
4-8% of annual revenues
Land lease payments
4-8% of annual revenues
Technical & commercial
management
1,5-2,5% of annual revenues
Technical & commercial
management
1,5-2,5% of annual revenues
Service
13% of annual revenues
(Full service contract = 1.1 Cent/kWh)
Service
13% of annual revenues
(Full service contract = 1.1 Cent/kWh)
ReservesReserves RepairsRepairs InsurancesInsurances
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The only income a SPV can generate comes from sales of the energy produced.
This source is essential for paying off the financed capital, the operation costs and finally a dividend to the investors!
Wirtschaftlichkeitsanalyse
Energy producedFinancial capital
+Operating costs
+Dividend
Without a reliable Lithuanian Law on Renewable Energy, neither banks nor investors will invest in the clean technology to the benefit for all of us.
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Impact on Lithuanian Renewable Energy Law
Germany Lithuania Consequence
for Lithuanian projects
Present rate of equity
15-20% 40% Fewer potential investors
Small projects
Access to grid Guaranteed by Renewable Energy Law Tender system
High risk and high demand on working capital already
in planning phase Avoid tender system
Period of guaranteed feed-
in tariff
Guaranteed up to20 years
(depending on potential of production site)
No regulation any more (but 5 years are in-sufficient in order to receive bank financing)
High risk for bank no financing or very high
interest rates Price should be fixed
for at least 13 years
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Thank you for your attention
PowerWind GmbH
Kehrwieder 820457 Hamburg - Germany
www.powerwind.de
T + 49 (0)40 741067 - 0F + 49 (0)40 741067 - 599
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Wirtschaftliche Bedeutung: Arbeitsplätze Stand: 9/2005
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With its full range of features, the PowerWind 56 perfectly matches the technical challenges of the site in Azerbaijan
o Highest energy yield in wind class II
o Full-scale converter ensures that the system is suitable even for weaker grids
o Three active cooling systems enable the turbine to be installed and operated also in regions with extreme climatic conditions
o Compact design allows inexpensive transportation and installation even in locations with weak infrastructure
