Transcript What is a climate project? - FIF Marketing

PRESENTATION OF IFU
Energipolitisk Konference
27/03/2014
Torben Huss
Executive Vice President
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WHAT IS IFU?
IFU’s board of directors is led by:
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IFU is a self-governing fund established by law in
1967
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Purpose: To promote economic activity in
developing countries
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Advises and invests with Danish companies in
developing countries and emerging markets
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Operates on commercial terms
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Environmentally and socially sustainable
investments
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Provides equity and/or loan financing
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Provides financing for greenfield projects,
acquisitions & expansions
Chairman
Michael Rasmussen,
CEO of Nykredit A/S
IFU’s executive board:
Tommy Thomsen,
Managing Director
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Deputy Chairman
Lars Andersen
Managing Director,
Arbejderbevægelsens
Erhvervsråd
Torben Huss,
Deputy Managing Director
IFU IS THE MOST EXPERIENCED EMERGING MARKET INVESTOR IN
DENMARK WITH 46 YEARS OF EXPERIENCE
1,200
investments
● Copenhagen
270
active
investments
● Beijing
● Cairo
● New Delhi
700
Danish
partners
99
countries
DKK 16bn
invested
DKK 145bn
exp. total
size of
projects
● Accra
● Nairobi
● Johannesburg
IFU/IØ
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IFU CREATES VALUE WITH DANISH PARTNERS
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Commercial viability of the business plan.
Adaptation to local culture.
Assessment of local partners.
Access to local networks and authorities.
• Deal structuring.
• Provide co-investors.
• Active ownership through board
representation.
• Structure exit process.
• IFU provides tools to handle CSR issues.
From 2003-2012 73% of new investments and 44% of contracted
amounts were with Danish SMEs.
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OVER THE LAST 5 YEARS, IFU HAS LAUNCHED SEVERAL INITIATIVES TO STRENGTHEN
ITS DEVELOPMENT IMPACT AND ATTRACTIVENESS TO DANISH COMMERCIAL
PARTNERS
Johannesburg
office
Accra
office
2008
Cairo
office
2010
2009
2011
Danish Microfinance
Partners
Gross
return
7,9%
8,5%
2012
7,3%
2013
IFU Investment Partners
10,3%
7,7%
p. 5
THE DANISH CLIMATE INVESTMENT FUND
DCIF was established in 2014 as a public-private partnership with the following
institutional investors:
Total commmitted amount: DKK 1.2bn
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DCIF WILL OPERATE IN ALL EMERGING MARKETS EXCEPT FOR
RUSSIA
INVESTMENT STRATEGY
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Active minority investor.
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Equity focus.
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Investment size DKK 10m to
DKK100m.
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Pre-agreed exit strategy.
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All major emerging markets except
Russia.
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Investment types: Renewable energy,
suppliers to renewable energy, energy
efficiency projects.
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Involvement of Danish investors or
suppliers (”Danish interest”).
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DKK 275m committed by the Danish
government and IFU, of which DKK
150m must be invested in countries
with GNI below USD 3,228.
DCIF investment countries
WHAT IS A CLIMATE PROJECT?
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Mitigation projects effectively reduce greenhouse gas (“GHG”) emissions
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Renewable Energy Projects e.g. wind, water, solar, biomass, geothermal
Suppliers to Renewable Energy Projects e.g. blades for windmills, photovoltaic cells
Energy Efficiency Projects (20% or more) e.g. technology upgrade, fuel switch
Alternative Energy Projects e.g. utilisation of landfill gas, biogas from agricultural residues
Materials or Equipment Projects e.g. insulation material, district heating systems
Transport Projects e.g. urban public transport system
Other projects able to provide substantial mitigation effects
Adaptation projects reduce the consequences of climate change (at least 50% of
total project investment costs incurred due to the actual or expected impacts of
climate change)
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E.g. water management, agriculture, disaster preparedness, coastal and natural resource
management, insurance and climate change information and consulting services
CASE: MALE WATER AND SEWERAGE COMPANY (MWSC) SOLAR,
MALDIVES
KEY FACTS
Project type
Country
Danish partner
Status
Fund participation
Expected total investment
Ownership
Expected return (IRR p.a.)
Solar based electricity
Maldives
NPP
Review
DKK 25m
DKK 55m
45%
17%
• Up to 8 MW rooftop PV solar plant
• MWSC is a desalination plant producing and
delivering all drinking water to the capital of Male
• MWSC wishes to supplement and party replace
the diesel-based energy production by solar
energy generated by rooftop PV solar plants
developed and owned by NPP on the roofs of
MWSC’s production, warehouse and
administration buildings
• NPP and MWSC will enter a 25-years PPA
• The Danish hardware content in a solar project
can include up to 46% of the equipment package
depending on the final equipment configuration
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CASE: LAKE TURKANA, KENYA
KEY FACTS
Project type
Country
Danish partner
Status
Fund participation
Expected total investment
Ownership
Expected return (IRR p.a.)
Wind farm
Kenya
Vestas Wind Sytems A/S
Signed
DKK 108m
DKK 4,791m
6.3%
19%
• 310 MW Lake Turkana is the largest wind
farm in sub-Saharan Africa
• 365 Vestas turbines are to be installed
• 15-year service contract with Vestas
• Purchase Power Agreement has been
signed with the Kenyan electricity
company
• Exit strategy: trade sale after 5 years
alternative the investors will be issue
redeemable shares
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CASE: DONG ENERGY NEW BIO SOLUTIONS, CHINA
KEY FACTS
Project type
Country
Danish partner
Status
Fund participation
Expected total investment
Ownership
Expected return (IRR p.a.)
2G bioethanol
China
Dong Energy Thermal Power
Signed
DKK 13m
DKK 26m
50%
4 - 11%
• Provides energy efficient refinery
technology for the production of 2G
bioethanol.
• The company will develop and establish
joint venture projects with large chinese
players.
• Option to invest in the project developed
alongside Dong Energy New Bio Solutions.
• Exit strategy: Put the shares to Dong
Energy New Bio Solutions.
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PROFILE
Value proposition
Nordic Power Partners (NPP) is a Joint Venture between
European Energy A/S (EE), a renewable energy project
developer & investment company, and the Investment
Fund for Developing countries .
The value proposition is to increase the geographical
scope of European Energy to developing countries utilizing
IFU’s vast experience and networks in these countries.
European Energy Solar Parks Garbantex
and Ocaña, Spain, and Wind Park Eichow,
Germany
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NORDIC POWER PARTNERS’ HOLISTIC VALUE CHAIN APPROACH
Traditional focus
P
h
a
s
e
s
Power sales
Politics / law
making
Financing
Farm
Partial sell-off
• Ensuring sound
judicial surroundings
for investments
D
e
t
a
i
l
s
Project
development
• Designate
geographical areas
for renewable energy
Cooperation with
partners on:
• Construct project
financing via various
ownership models
• Construct renewable
energy plants
• Land lease and
power purchase
agreements
• Turbines / Modules
• Operations
agreements
• Production estimates
by independent
verifiers
• Wind / solar studies
• B2B power sales to
utility companies via
power purchase
agreements
• Administration of
power plant
operations
• Partial sell-off to third
parties, usually 50% 80% of the assets
Time
Frame
Ongoing
10 - 30 months
1 - 6 months
1 - 6 months
20 - 30 years
Risk
Mgmt.
Preliminary countryspecific study
Project-specific risk
assessment
Financing through nonrecourse loans
Full service O&M
against operative risk
Guaranteed tariffs or
PPAs
The business model extends the financial investment case with deep know-how in renewable energy project development,
construction, operation, and key local insight in buyers of projects. Continuous risk-evaluation activities are carried out throughout
the whole development period, particularly in the initial market access and initial project assessment stages.
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IFU
Fredericiagade 27
1310 Copenhagen K
Denmark
Tel. +45 33 63 75 00
[email protected]
ifu.dk
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