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P14 EME Africa
CTI PFAN West Africa Regional Coordinator
Albert Boateng
E-mail : [email protected]
Phone : (233) 275960468
Mentor
Marindame Kombate
E-mail : [email protected]
Phone : (233) 241273806
P14 EME Africa
CTI PFAN West Africa Regional Coordinator
Albert Boateng
E-mail : [email protected]
Phone : (233) 275960468
Mentor
Marindame Kombate
E-mail : [email protected]
Phone : (233) 241273806
CTI PFAN West Africa Forum for Clean Energy Financing (WAFCEF 2)
Project P14:
Decentralized Rooftop Solar Photo Voltaic
systems in Senegal
Dr. Krishna Heeramun
Technical Director
17 September 2015
Introduction
Decentralized Rooftop Solar Photovoltaic project in Senegal
Estimated 1500 systems to be installed over 2 ½ years
Focus on professional consumers (85 %)
Some large residential (15 %) consumers
Average size 11 KWp, 17 MWp total capacity
EME executed over 50 M USD projects in Electrical &
Mechanical engineering in Mauritius, Seychelles and West
Africa over the last 15 years.
Implementation structure
Renewable Energy Supply Company (RESCO) model
Equipment financed through offsetting of electricity self
consumed
Only 20 % of system cost payable
Beneficiaries become owners after 10 t0 12 years
The RESCO offers up to 12 year warranty, maintenance and
cleaning of modules during repayment period
Onus of effective production on RESCO
Business Model
Investors targeted
Offer 45 % cumulative redeemable preference shares to an equity partner against 9 M Euros representing 30% of Total Investment Earning a guaranteed return of 8 % for 10 to 12 years
Mezzanine finance: Debentures of 9 M Euros: 30 % of investment 6 % annual interest, Repayable within 8 years after 1 year operation.
Balance 40 % debt: Impact investor for loan of 12 M Euros Repayable within 7 years, 1 year moratorium 4 % annual interest.
Results based disbursement each semester over 2 years: 2.25 M Euros Equity per semester
Summary of Returns
Maintenance of preference shares for 12 years
Project IRR is 11.7 %
Equity IRR is 9.6 %
Maintenance of preference shares for 10 years
Project IRR is 9.3 %
Equity IRR is 7.8 %
• Guaranteed quarterly dividend payout in all cases for the preference shareholder.
• Low risk, long term, government guaranteed returns
Financial Highlights
Euros YEAR 3 YEAR 10
TOTAL REVENUES 6,459,702 7,285,849
TOTAL EXPENSES 1,399,127 1,852,393
EBITDA 5,060,575 5,433,456
PROFIT AFTER TAX 458,594 2,845,190
Dividends
Preference Shares 45 % 722,778 722,778
Ordinary Shares 55 % 100,891 625,942
Legal & regulatory framework Law on Self consumption of Renewable energy:2010
Application decree signed in Dec 2011
The Legal framework for NET Energy Metering exists
The tariffs for the purchase price of the surplus exported to grid is yet to be defined.
This Decentralized PV project does not require an export tariff
Incentive framework in Senegal Duty free facilities for solar PV for professional users
With signature of Financial decree, residential users will have duty free solar PV
1 M Euros Duty component when approved will be refunded to Site Owners through electricity bill
SUNREF can fund downpayment
Concessionary loans and
Investment grant of 10 % of loan amount
We can assist customers to apply for these facilities
Interest of SENELEC / Government Discussions ongoing with SENELEC and regulatory
Authorities in Senegal
Specific Interest of SENELEC for the project: Offload capacity from weak grid areas
Reduce risk of load shedding and allow additional connections
Offset expensive fossil fuel generation from non interconnected grids
Defer investment in infrastructure and generation capacity
Installation of electronic meters will help to counter commercial loses
Immediate implementation of 17 MW within existing legal and regulatory framework
Technology Equipment 100 % from Solarworld AG
Manufacturing in Germany for the past 40 years
Only fully integrated Manufacturer in Germany
Procurement contract with Solarworld
At very competitive prices
Design Standards, quality of installation: >25 years lifetime
East West orientation of PV modules for
Optimum roof space utilisation
Flatter production curve more compatible with self consumption
Client benefits Benefit from a refund of the Duty element if they
qualify
Become owners after repayment period at no residual cost
Offsetting up to 80 % of their electricity for another 13 to 15 years based on expected minimum 25 year lifetime.
Fix the cost of part of their energy consumption for 25 years
SWOT Analysis Strengths
Full internal control on the
value chain
Standardised preapproved
systems facilitate commissioning
Results based disbursement of
equity and loan
Weaknesses
Low Project IRR
Long repayment period
Opportunities
Higher offset tariff possible in
non interconnected grids
Decentralised PV has lower
impact on grid than large PV
farms
Threats
Users do not see the long term
perspective
Least cost approach could lead
Utility to favour coal over PV
Analysis, Mitigation of key risks
Non payment by SENELEC to the SPV to be mitigated upfront Formal legally binding agreement
Guarantee mechanisms like revolving LCs, escrow accounts and a sovereign guarantee.
Risk- Mitigation measure Natural calamity: Insurance taken by SPV
Non performance: Maintenance and Cleaning of system by SPV
Sensitivity analysis Shows robustness business model
The preference shareholder not affected because returns guaranteed
Critical Milestones March 2015: Factory visit to Solarworld Germany
August 2015: Procurement contract signed with Solarworld
Ongoing: Negotiations with SENELEC / Authorities
Dec 2015: Complete Negotiations with SENELEC
Sept 2015 to March 2016: Identify, negotiate and close with
financial partners
April 2016: Place orders and launch marketing
April 2016 to June 2016: Recruitment, training of engineers,
technicians and electricians.
July 2016: Start installations
Management Team Jocelyn Philogene: CEO
Entrepreneur with 25 years experience in Engineering
50 M USD Projects implemented over 15 years
Dr Krishna Heeramun: Technical Director
Electrical Engineer specialized in sustainable development
Supply Chain specialist with 22 years experience
Zaid Imrit: Finance specialist with 20 years experience
Didier Philogene: Solar PV specialist with 27 years experience
Local specialists to be recruited
Reasons to Invest, Conclusion
Why Senegal ?
Conducive institutional and fiscal framework
Potential for replication of Decentralized PV project in other West African markets.
Intrinsic robustness of the business model:
Distribution of risk across many clients in 3 target sectors,
Front loaded risk management approach through long term government supported contracts
Investment Ask:
Equity of 9 M Euros: 30 % of total investment
Debentures of 9 M Euros: 30 % of the total investment
Debt of 12 M Euros: 40 % of the total investment
Thank You
Dr Krishna Heeramun
Director of Engineering Sustainable Development,
EME WEST AFRICA ltd.
Rue 6xB Point E, Dakar, Senegal
Email : [email protected]
Phone (office) + (221) 338257015
(Mobile) + (221) 77 099 4698
