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Safe project conditions for renewable energy – a challenge for a clean future

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

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Safe project conditions for renewable energy – a challenge for a clean future

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  1. Safe project conditions for renewable energy – a challenge for a clean future Peter Klessascheck, Head of Project Management Vilnius, 24 November 2010

  2. Index • PowerWind GmbH • Risks in project financing • Impact on Lithuanian Renewable Energy Law

  3. PowerWind GmbH at a glance • Founded in 2007 • Headquarters: Hamburg (Germany) • Production facility: Bremerhaven (Germany) • Products: • PowerWind 56 (900 kW) • PowerWind 90/100 (2500 kW) • 141 employees • Fully owned by Warburg Pincus, an international growth investor Source: BFB

  4. 33 WECs installed, 8 under construction, 32 more sold as of 22nd November Germany Poland Azerbaijan USA Italy Bulgaria Romania

  5. Risks in project financing

  6. Wind energy converters are usually owned by a SpecialPurpose Vehicle. This SPV has to pay allinvestment costs. Investment costs SPV

  7. Typical investment costs for a wind energy project WEC • Blade markings/aviation lights(according to building permit) • Shadow flicker modules(according to building permit) • Transport(costs depending on distance and accessibility of site) • Crane(costs depending on distance to site and local availability) • Transformer/switchgear(depending on project characteristics) Infrastructure • Roads and crane areas • Soil investigations • Foundations • Grid connection! extreme high costs in Lithuania due to tender system, presently there is no other regulation • Compensation payments for impacts on environment

  8. 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. Investment costs SPV Income from energy sold Equitymoney Dividend distribution and loan paid back to share holders Investors

  9. 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 Financing Bank Financing of investment costs, financed capital Investment costs SPV Income from energy sold Equity money Dividend distribution and loan paid back to share holders Investors

  10. 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.

  11. Typical topics analyzed in the rating procedure • Reports, studies (e.g. wind at site) and expertise • The technology used  WECs with type certificates are preferred • Permits for installation and operation of the WEC according to the planned conditions • Legal aspects in contract and permits • Reliability of the equity investors • Estimation of future energy consumption and related prices • Business plan Due to the unstable Lithuanian Law on Renewable Energy, the price per kWh and the law’s period of validity is uncertain

  12. Beside the debts and amortization the SPV has to pay the monthly operation costs. Debts and amortization Financing Bank Financing of investment costs, financed capital Investment costs SPV Income from energy sold Equity money Dividend distribution and loan paid back to share holders Operatingcosts Investors

  13. Typical operating costs for a WEC Technical & commercialmanagement 1,5-2,5% ofannualrevenues Land lease payments 4-8% ofannualrevenues Service 13% ofannualrevenues (Fullservicecontract = 1.1 Cent/kWh) Repairs Reserves Insurances

  14. Wirtschaftlichkeitsanalyse Energy produced Financial capital + Operatingcosts + Dividend 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! 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.

  15. Impact on Lithuanian Renewable Energy Law

  16. 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 info@powerwind.de Insert Photo

  17. Back up

  18. Wirtschaftliche Bedeutung: Arbeitsplätze Stand: 9/2005

  19. With its full range of features, the PowerWind 56 perfectly matches the technical challenges of the site in Azerbaijan • Highest energy yield in wind class II • Full-scale converter ensures that the system is suitable even for weaker grids • Three active cooling systems enable the turbine to be installed and operated also in regions with extreme climatic conditions • Compact design allows inexpensive transportation and installation even in locations with weak infrastructure

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