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MANILA
MILO SJARDIN
4 JUNE 2012
/ / / / / / // / /// / / / / / / / / / / / / / / / / / / / /
CLEAN ENERGY FORUM ASIA, JUNE 2012
60
4 50 $46bn 6
10
0
3 4 4 5
2005
Solar
Wind
Note: Includes corporate and government R&D, and small distributed capacity. Adjusted for re-invested equity. Does not include proceeds from acquisition transactions
TOP 50 MANDATED LEAD ARRANGERS FOR CLEAN ENERGY PROJECT FINANCE, 2011 ($m)
2012
Other 1,533
Europe 16,976
European banks hit by debt crisis Japanese and US banks more active Basel III rules are slowly being implemented
Total 48,429
Loan tenors will shorten to meet funding requirement rules Rates will rise due to increased capital requirements
Source: Bloomberg New Energy Finance
KEY POINTS
Thailand very attractive due to high tariffs, long term target, local financing and good grid access Malaysia is attractive, but development is capped Indonesia particularly interested in geothermal, but improving for solar and wind
Source: Bloomberg New Energy Finance
1.0
0.8 0.6 0.4 0.2 0.0
POLICY
Combination of attractive short-term incentives with long-term energy goals to provide more policy certainty
POWER MARKET
Electricity market structure that is open to independent power producers and allows for easy access to the grid
Strong involvement of domestic banking sector (Thailand) as they are more comfortable with country risks and multilateral/bilateral financing (eg, Indonesia) Provision of power purchase agreements (PPA) with good default protection (eg, payment security fund)
FINANCE
PPA
10
1985
PRICES DROPPED 75% SINCE 2008, 45% IN 2011 2014: ANOTHER 25%?
2003 2006
2012
2012
0.1 1 10 100 1,000 10,000 100,000 1,000,000 historic prices Thin-film experience curve experience curve First Solar thin-film module cost Chinese c-Si module prices
MW (log)
Notes: Inflation adjustment using US PPI, R2 of c-Si regression = 0.94, R2 of FSLR regression = 0.98
9 8 7
6 5 4
$7.95
Japan residential
$6.69
$5.97
3 2 1
0 Q1 07 Q1 08
$1.01
Q1 09
Q1 10
Q1 11
Q1 12
People who pay $1/litre+ for diesel fuel Operational cost of fuel alone Off-grid diesel generation market Annual growth of the off-grid diesel market Cost of fossil fuel subsidies to governments
Source: Bloomberg New Energy Finance
Real IRR
25%
20%
Emerging markets loan
15%
10%
5%
$/litre diesel
0%
0.3 0.5 0.7 0.9 1.1 1.3
Assumptions: hybrid diesel generator operates for 12.5 hours per day on 50 cloudy days per year, battery bank sized to night time energy consumption, insolation 1400 kWh/kW/year, all prices are assumed constant in real terms (see associated research note for more details).
Sources: Bloomberg New Energy Finance, market player interviews, Deutsche Gesellschaft fr Internationale Zusammenarbeit (GIZ)
30%
Real IRR
$/litre Cost to Indonesian Government
25%
20%
Emerging markets loan
15%
10%
5%
$/litre diesel
0%
0.3 0.5 0.7 0.9 1.1 1.3
Assumptions: hybrid diesel generator operates for 12.5 hours per day on 50 cloudy days per year, battery bank sized to night time energy consumption, insolation 1400 kWh/kW/year, all prices are assumed constant in real terms (see associated research note for more details).
Sources: Bloomberg New Energy Finance, market player interviews, Deutsche Gesellschaft fr Internationale Zusammenarbeit (GIZ)
10
150GW
660GW
Size of off-grid diesel generation market PV capacity to replace that diesel market
860GWh
80%
11
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12
THANKS
MILO SJARDIN, MSJARDIN@BLOOMBERG.NET
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////////////////////////////
20
40
60
80
100
120
Pakistan Ethiopia
14
350 300
250
200 150 100 50 0 Q2 Q3 2009 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2012 2010 2011 Wind - offshore Wind - onshore Coal Natural gas Utility-scale Solar PV (cSi) (cSi tracking)
15
3.0
2.7 2.3
2.5
2.0 1.5
1.1
1.0
0.5 0.0 Thailand Indonesia Vietnam SEA
1.0
0.2%
0.1% 0.2 0.0% -0.1%
Philippines
Malaysia
% of world
Note: Includes corporate and government R&D, and small distributed capacity. Adjusted for re-invested equity. Does not include proceeds from acquisition transactions
16
Development banks SEA commercial banks Western banks 54.5 17.9 Japanese commercial banks Multinationals
14.7
31.1
22.7
Other
29.4
Note: Includes corporate and government R&D, and small distributed capacity. Adjusted for re-invested equity. Does not include proceeds from acquisition transactions
17
0.35
0.30 0.25 0.20 0.15
No project size
limitation on solar
0.10
0.05 0.00
Costs incorporate
Solar Wind
LCOE Tariff
Biomass
Mid-LCOE
Geothermal
Notes: Tariff only appears where available. Solar represents PVCsi technology, Wind represents onshore, Biomass covers biomass incineration, gasification and municipal waste-toenergy technologies, Geothermal represents geothermal flash technology.
18
0.35
0.30 0.25 0.20 0.15
0.10
0.05 0.00
Small generation
Solar Wind
LCOE Tariff
Biomass
Mid-LCOE
Geothermal
RISKS
Many large projects on balance sheet due to high cost of debt Debt at 12-14%, but can be 8-9% with multilateral funds incl currency hedge Counterparty risk, partly due to weak RPO enforcement Lack of resource and performance data, and little experience EPC
Source: Bloomberg New Energy Finance
30%
10%
Orrisa
5%
0%
11.0%
10.0%
11.5%
8.5%
9.0%
9.5%
12.5%
13.5%
10.5%
12.0%
13.0%
Equity IRR
Note: Maharashtra and Gujarat have feed-in tariffs of INR 11.16/kWh ($0.21/kWh) and INR 10.37/kWh ($0.19/kW)respectively. Projects in Karnataka, Rajasthan and Orrisa are allocated on the basis of competitive bidding with average rates of INR 8/KWh in Karnataka and Rajasthan and INR 8.5/kWh in Orrisa. We have assumed a 12 year repayment period with no moratorium in all cases expect the first where interest rate of 8.5% is accompanied by15 year tenure and 1 year moratorium.
14.0%
20