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Contact:www.iff-training.com+44 (0)20 7017 7190 [email protected]
A practical guide to the wide array of different renewable technologies and their impact on project finance structures
RENEWABLE ENERGY PROJECT FINANCE
Power project finance (which is dominated by renewable energy) is now over 50% of the entire project finance market and has become the dominant industrial sector. This course will teach you about the fundamental building blocks of project finance and how the market has adapted to the dynamics of the renewable energy industry. Once you have gained, or reinforced, an understanding of the building blocks, you’ll look at the differing renewable technologies and the impact on project finance structures.
You’ll look at how financing structures can adapt and how they can be robust enough to be able to withstand the challenges of this changing market environment. You’ll use case studies which have been specifically designed to illustrate the issues and techniques covered in the course. You’ll return to work with a power project financing “toolkit” incorporating
. project risk appraisal and mitigation
. project quantitative analysis and debt sizing structuring
. project finance loan documentation
YOU WILL STUDY:
. The outlook of lenders in project finance and the risk vs. reward position of debt financiers
. Risk identification, risk allocation and risk mitigation techniques that are incorporated in renewable energy project finance
. The key technical aspects of the renewal power sector and an insight on the changing structure of the industry
COURSE LEADERNEIL EDMONDS
Neil Edmonds has worked in the banking industry for over 35 years, with a particular focus on the power & utility and the oil & gas sectors. Over the past 4 years of his banking career, Neil has worked in the Loan Syndications team at Standard Chartered Bank focusing on Structured Finance transactions.
Neil’s involvement in the Power and Utility sectors dates back to the privatisation of the UK utility companies from 1989 onwards. Neil has been heavily involved in:
. The financing and subsequent, re-structuring of power generation assets in the UK. The prime example being the evolution of the 4GW Drax power plant, that in turn
. The financing of power and water desalination plants throughout the Middle East
. The financing of power plants in Europe and Asia
. The financing of thermal and renewal power plants in Africa, together with significant Country Risk mitigation
. The financing of onshore and offshore wind plants in UK and western Europe
. Solar Home Systems in emerging markets
ABOUT IFFIFF has been the chosen training provider of the world’s best finance and professionals since 1991. We are part of Informa PLC and the learning partner of the the SuperReturn, Flame and RiskMinds series of events.
• We continually develop and improve our training to make itmore effective for you
• You’ll learn from practising, highly-experienced financialexperts
• You’ll experience interactive and practical training -implement what you learn straight away
• We limit class sizes so the trainer can adapt the content tosuit you
DATES & PRICE Please contact a member of our team for more details
CONTACT US+44 (0)20 7017 [email protected]
IN-COMPANY TRAININGIFF’s bespoke training solutions will help you address your specific key business challenges. The programme is designed for you, with content focusing on the issues you and your teams are facing. The course can then be delivered at your choice of location face-to-face, digitally or a combination of the two.
. Tailored content - 100% targeted to cover your needs
. No travel or time out of the office – we will come to you
. Value for money – train teams of staff at the same time
. Risk free – we’ve been doing this for over 30 years
We will meet you anywhere in the world.
Please contact:Leigh Kendall on +44 (0)20 7017 7190 or email: [email protected]
Contact:www.iff-training.com+44 (0)20 7017 7190 [email protected]
COURSE AGENDA
Introduction - What is Project Finance?A broad financing technique that can be used and adapted to a wide range of capital intensive industries – a technique, not a product.• The main participants in a project finance deal• Highlighting the key differences between corporate & project
lending• Why do sponsors choose project finance? Several key
drivers• What is the nature of the underlying economic opportunity?
– how does this drive the behaviour of sponsors and lenders– state led or privately developed?– firm price offtake or market risk?– negotiated transaction or auction process?
• Understanding the risk-reward of both the sponsors andlenders– why do lenders behave as they do?
Project Finance and Renewable Energy• Background and history• Why has project finance become the main financing source
for renewables
Project Finance - Qualitative Risk Analysis Identify, Mitigate and Allocate • Sponsor – technical competence, ability to inject equity and
relationship with other joint venture partners• Technology risk – how lenders address rapidly evolving
technology in the renewable energy arena• Construction risk
– EPC Contracts, as preferred by lenders or different formsof construction contracting
• Operation and maintenance regimes– the importance of the plant availability and performance– how to address major replacement / maintenance capital
expenditure• Supply – how do lenders assess the risks associated with
– wind / sun / hydro– biomass– waste
• Lenders' advisors – their role in mitigating project financerisks
• Natural Force Majeure - insurance construction all risks andoperating insurance - the risk mitigation for natural forcemajeure
• Institutional infrastructure– the regulatory and legal infrastructure of the host country
/ region– electrical power = politics
• Environmental and social issues• Interest rate and Forex risks
EXERCISE
The class will be requested to review a case study and identify the key risk elements in the transaction and how they are allocated and mitigated.
Offtake Regime and Credit Quality• Traditional offtake regimes – Feed-In Tariffs, Green
Certificates and Contracts for Differences• Impact of intermittent capacity has on power systems• The emergence of “market” price in renewable energy
transactions and the potential implications of uncertainty• Credit quality of offtaker
– what is more important– a strong balance sheet or a regulatory regime that provides
the offtaker with sufficient revenue to meet its obligations?• The emergence of corporate PPAs
Emerging Market Transactions – How Are They Different from Developed Markets • Traditional Political Risk
– war, civil war etc– expropriation– currency convertibility and transferability
• Weak off-taker credit• Less competition in construction markets• Limited skilled resources and logistical issues• Untested / weak institutional infrastructure
Approaches to Manage Political Risk Issues • Risk transfer under Power Purchase Agreements to offtaker• Credit enhancement for offtaker - Government Guarantees or
Put/Call Option Agreements• Political risk insurance – MIGA/private insurance• Widening the range of stakeholders• Development focused lenders – Development Finance
Institutions (DFIs) and Export Credit Agencies (ECAs)• Lower leverage, shorter tenor and higher cover ratios• Local currency lending
Equator Principals• How lenders use the Equator Principals in emerging markets
as a framework to protect the environment
The Cashflow Model This section is designed to give participants an understanding of the structure of a Project Finance model and how it is used to assess the debt capacity of the project. Whilst we are not attempting to teach Project Finance modelling in this course, we want to demonstrate the function of the model.
Contact:www.iff-training.com+44 (0)20 7017 [email protected]
COURSE AGENDA
• Sources and uses – where the money is spent and where itcomes from
• The technical, operational and economic assumptions thatdrive the model, and where they come from
• Simplified model• CFADS – Cashflow Available for Debt Service• ADSCR – the level of “cushion” the lenders have when things
go wrong and debt service can still get paid• Debt capacity – determining how much debt the cashflow can
support• Impact on debt capacity of changing the underlying
assumptions – the negotiation tension between the sponsorsand the lenders
• Cover ratios– using the ADSCR– using the LLCR / PLCR as a “sense check”
• Sensitivity analysis – purpose and impact – what does thebanker test?
• The IRR/cover ratio interface• Debt Service Reserve Account and Maintenance Reserve
Account - funding sources and impact• Annuity repayment profile, equal repayments, sculpted
repayment profile – motivations• Cash - sweeps, hard mini-perm, soft mini-perm – an
exploration of additional risk management techniques
EXERCISE
Renewable Energy AuctionThe group will be arranged into small teams and asked to review the assumptions and output of a simplified Cashflow Model. They will be asked to review the imputs with a view to submitting a bid for a renewable Energy Project.
Project Finance Loan Documentation • Project documents and finance documents - an outline of the
range and scope• Loan Agreements – the core features
– conditions precedent– reps & warranties– covenants– events of default and options open to lenders
• Ancillary documents– Account Agreement– Intercreditor Deed– Common Terms Agreement– Direct Agreements
• Security and the limitations– security agent / trustee– physical asset security– contract assignment – EPC, offtake, O&M– bank account security
• Control accounts & the cashflow “Waterfall”– types of control account - disbursement, revenue,
compensation, debt service reserve & maintenancereserve accounts
– the cashflow waterfall – purpose, typical priority rankingand variations
Renewable Energy TechnologiesIn this section we will review the different renewable energy technologies and their impact on the market appetite and the financial structures that may be available.
The technologies that we will review include onshore wind, offshore wind, solar PV, concentrated solar (parabolic trough and tower), small scale hydro (run of river), large hydro and biomass• Construction and technology• Supply – wind, solar & biomass• Operation and maintenance• Revenue stream – volatility and certainty
CASE STUDIES
Three Offshore Wind Farms Review the evolution of the technology and how lenders have become increasingly comfortable with the construction and operational risks in the sector the technology has developed. The cases will illustrate the effects of competition (between lenders) in the sector and how structures have changed.
African Hydro Plant The issues relating to the construction of the plant and then what has happened to the project once the offtaker (Government) has seen lower cost new technologies come on-stream.
European Solar PV.This is probably the most accessible sector in Renewable Energy.
Kramer Wind Farm This onshore wind farm was developed using a Corporate PPA with a consortium of power buyers in The Netherlands.
CPD Certified:
IFF is recognised by the CPD Certification Service and have been approved to award CPD points towards professional development certifications. Attendance at this course will earn you 40 CPD points.
COURSES IN THE IFF PROJECT FINANCE PORTFOLIO
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Dates:11-15 November 20198-12 June 2020London
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el: +44(0)20 7017 7190TEmail: [email protected]
Dates:10 July 201904 December 2019 Learning
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THE MECHANICS OF
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Contact:www.iff-training.comTel: +44(0)20 7017 7190Email: [email protected]
Dates:11th September 20194th March 2020
POSTGRADUATE CERTIFICATEDELIVERED BY DISTANCE LEARNING OVER 20 WEEKS
THE MECHANICS OF
PROJECT FINANCE
Contact:www.iff-training.comTel: +44(0)20 7017 7190Email: [email protected]
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POSTGRADUATE CERTIFICATEDELIVERED BY DISTANCE LEARNING OVER 16 WEEKS
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