funding energy storage and renewable energy for corporate clients - PowerPoint PPT Presentation

“funding energy storage and renewable energy for corporate clients” by Duncan Abel – Nedbank: Energy Finance Confidential 1

Duncan Abel Energy Finance duncana@nedbank.co.za 23 OCTOBER 2018 Confidential 2

H OW THE BANK COULD FINANCE A SOLAR PV INSTALLATION Asset is Client owned • Term Loan – funding is secured by the assets on the balance sheet of the corporate entity purchasing the asset. Focus on overall financial health of the corporate entity – standard banking product and commonplace in South Africa • Asset Backed Finance – client purchases the solar PV / battery system and the bank has rights to the system as collateral for the loan. Focus is on the performance and value of the system, but with final recourse to the client balance sheet – Banks have been slow to develop this as an offering for solar PV projects as the 2 nd hand market for solar PV is has not evolved Term Loan Asset Backed Funding Confidential 3

H OW THE BANK COULD FINANCE A SOLAR PV INSTALLATION Asset is third-party owned • Project Finance – Non-recourse funding on the back of the projected cash flows from the project. Focus on the technical and economic feasibility of the project, contractual arrangements, project assets and cash flows. Banks have developed non-recourse portfolio funding models that follow project finance principals, whilst adapting the traditional due diligence requirements to the size of the individual projects and proposed portfolio. Biggest challenge is the certainty of the project revenue stream, different battery applications add to this complexity • ESCO Finance – Bank finances ESCO with loan secured by balance sheet of the ESCO and electricity savings from the client. Focus on overall financial health of the ESCO, secondary focus on the savings. ESCO financing has been slow to take off due size of the typical ESCO balance sheet and an inability to track savings over an extended period of time Project Finance Esco Finance Confidential 4

Our expertise and service offering ▪ Nedbank Corporate and Investment Bank’s Energy Finance team specialises in the provision of debt finance across the E NERGY F INANCE spectrum of energy projects from large scale utility projects to rooftop solar projects ▪ We are committed to funding various renewable energy projects including landfill gas, solar, waste to energy and wind turbine power ▪ The Energy team specialises in providing a complete deal solution through the following services – Project Advisory – to the project to the project sponsors, bidding consortia and tendering authorities. This includes Energy Financing Solutions providing advice on risk mitigation structures, feasibility studies, financial modelling and equity arranging – Project debt – This includes structuring, arranging and underwriting both limited recourse project finance debt and Corporate debt – Portfolio funding – which allows us to fund portfolios of small-scale projects whilst still applying the rigour and Nedbank is the number 1 lender in the South African principles of project finance which is normally only available to utility scale projects renewable energy sector – Project Equity and Mezzanine Debt – Includes structuring the deal to obtain the optimal debt to equity ratios, and arranging and underwriting these facilities – Hedging – Nedbank can provide both interest and foreign exchange hedging for project Our Team ▪ Nedbank Corporate and Investment Bank’s Energy team is recognised as one of the leading Southern African Lenders to Energy transactions. ▪ The team has extensive experience in arranging and structuring energy finance transactions across Africa successfully concluding non- and limited recourse finance deals within the energy sector across sub-Saharan Africa ▪ Our team is the market leader in the Renewable Energy Independent Power Producers Program (“REIPPP”) having provided funding to 42 projects in the REIPPP ▪ We have a dedicated team providing limited recourse portfolio funding to embedded generation projects where we leverage our project finance expertise to fund smaller projects on a portfolio basis ▪ In-depth knowledge, extensive experience, recognition of our clients‘ unique needs and a commitment to identifying new opportunities and providing innovative funding solutions has maintained our teams position as an energy funding market leader Confidential 5