Financing Renewable Energy

1. Financing Renewable Energy Alexandra McCann Office of Renewable Energy & Environmental Exports

2. U.S. Ex-Im Bank • Independent agency of the U.S. government established in 1934 to finance the export sales of U.S.-made goods and services • Provides Loan Guarantees, Export Credit Insurance, Working Capital Guarantees, Direct Loans, and maintains a Tied Aid Capital Projects Fund • Direct Loan rate for 18-year loan currently at 4.60% fixed • Ex-Im Bank’s support for renewable energy and environmental exports mandated in its Congressional Charter • $400+ million in renewable energy financed over the last 5 years • Major benefit for India! High Rating = Low Ex-Im Bank Guarantee Fee = 0.61% per year for 18-year loan • Up to 30% local cost support within the U.S. scope of supply; and, Capitalization of interest during construction

3. Ex-Im Bank and India • Ex-Im Bank's current financing to India totals $5.9 billion. • Ex-Im Bank has a number of renewable energy projects in its pipeline of projects • Case example: Ex-Im Bank provided a Medium-Term Loan Guarantee to London Forfaiting to support $2.25 million loan to Maharishi Solar Technology Pvt. Ltd. Of New Delhi to purchase a solar module production line from GT Solar. • Ex-Im Bank provided $2.45 billion medium- and long-term cost-effective funding to nine Indian financial institutions: • ICICI Bank Ltd. • Power Finance Co. • Infrastructure Development Finance Corporation • Industrial Development Bank of India • India Infrastructure Finance Company, Ltd. • State Bank of India • Infrastructure Leasing & Financial Services • India Renewable Energy Development Agency (IREDA) • Punjab National Bank.

4. Export Credit Insurance • Enables U.S. exporters to offer short- and medium-term credit directly to their customers. • Ex-Im Bank offers both Multi-buyer and Single-Buyer Insurance • Export credit is an attractive substitute to cash-in-advance, letters of credit and costly local bank financing. • Using Ex-Im Bank to insure a letter of credit instead of paying bank confirmation charges usually more cost effective. • Insures up to 180 days from date of importation of the goods; capital goods terms of 360 days-7+ years. • Only an invoice of the sale needed for O/A short-term credit • Insurance lowers reserve requirements for commercial banks.

5. Short-Term Credit Process 1. The U.S. supplier submits the application along with the required information to establish a credit limit for the foreign customer to Ex-Im Bank. 2. The information requirements from the company for credit limits are as follows: • $10,000 credit a favorable trade or bank reference. • http://www.exim.gov/pub/ins/pdf/eib99-14.pdf • $10,000-$50,000 credit a current credit report • can be ordered from a number of credit reporting agencies by the U.S. exporter (see www.exim.gov/pub/ins/pdf/eib99-08.pdf) • $100,000-$300,000 credit a current credit report plus a favorable bank or trade reference. 3. Ex-Im Bank’s Loan Officer analyzes the application and makes a decision on the amount of credit to be supported.

6. Loan & Guarantee Program • Guaranteed Loans made by commercial banks (U.S. or foreign) to a foreign buyer with a 100% unconditional repayment guarantee from Ex-Im Bank • Guarantee covers 85% of the U.S. content of the transaction. • Negotiated interest rates, usually a floating rate based on spread over 6-month U.S. dollar LIBOR rate • Loan fully transferable, can be securitized • Banks often finance the 15% required cash payment • Guarantee available in major foreign currencies

7. Direct Loan Program • Direct Loans made by Ex-Im Bank to a foreign buyer • Fixed interest rates based on a 1% spread over 3-,5-, and 7-year U.S. Treasury notes • Current interest rate for 18-year Direct Loan is 4.60% • If the contract has been awarded, only the international borrower may submit the final commitment (AP) application. • Ex-Im Bank requires the buyer to make a cash payment to the exporter equal to at least 15% of the U.S. supply contract. • 15% cash payment can either be borrowed from a lender or the exporter, or be from the buyer’s own funds. • Exporter paid with disbursement L/C • A negotiated credit agreement required for a Direct Loan

8. Direct Loan or Guarantee Process 1. The international borrower in the case of a Direct Loan, or guaranteed lender bank in case of a Loan Guarantee, submits the application for Final Commitment to Ex-Im Bankalong with the required information to establish the credit limit for the foreign customer. 2. The information requirements from the borrower are as follows: • A current credit report. • A current commercial bank reference. • Latest 3 years financial statements; interim statements if the latest year’s financial statement is older than 1 year. • Note: audited statements required for credits over $1MM • Copy of the export contract. 3. Ex-Im Bank’s Loan Officer analyzes the application and makes a decision on the amount of credit to be supported.

9. Conclusion • Ex-Im Bank: top priority to support renewable energy & environmental exports • Ex-Im Bank supports short, medium, and long-term financing to creditworthy Indian customers, and projects • Ex-Im Bank is interested in any size project • We will work with you to create “bankable” projects • We welcome your projects and your ideas! • craig.oconnor@exim.gov • alexandra.mccann@exim.gov • rob.guthrie@exim.gov Internet http://www.exim.gov