FUNDING OF ENERGY INFRASTRUCTURE ENERGY INDABA 2017 November 2017 - PowerPoint PPT Presentation

FUNDING OF ENERGY INFRASTRUCTURE ENERGY INDABA 2017 November 2017

Business Overview 2 BioTherm Snapshot BioTherm Energy (“BTE”) is the leading African renewable energy project developer with a focus on wind and solar power development • BioTherm develops, finances, owns, and operates both wind and solar power plants to provide long-term clean electricity in South Africa (“RSA”) and Rest of Africa (“ RoA ”) 27 MW 11 MW 4.2MW South Africa: 11 MW Klipheuwel Wind Konkoonsies Solar PetroSA Waste Gas Projects Aries Solar Project Project Project Project N.Cape In Operation W. Cape N.Cape W.Cape South Africa: 33 MW 45 MW 86 MW 120MW Golden Projects Excelsior Wind Aggeneys Solar Konkoonsies II Solar Valley Wind Project Project Approaching Project Project E. Cape W.Cape N. Cape N.Cape Financial Close Shortlisted 250MW 4 Solar PPAs Winner of 34MW of Shortlisted in 20MW Rest of Africa: wind and 200Mw Awarded Solar Projects Solar PV Bid Successes solar Zambia Burkina Faso Ghana Egypt >3,000 MWs fully permitted, bid ready in South Africa Over 9 GW under  >250MW’s of PPA’s in rest of Africa in the process of being secured development  Secured two of the largest private PPA’s in South Africa  Attractive C&I portfolio with expansion into the off-grid sector

Our presence across Africa – 3 utility large scale projects Outside of South Africa, BioTherm is increasing its footprint in the rest of Sub-Saharan Africa through ground mount and rooftop projects. BioTherm has been awarded projects in:  Burkina Faso: 2 solar projects (38 MW), FC in Q2 2018  Ghana: 1 solar project (20 MW), FC in Q2 2018   Both projects have been awarded a US$ 1m USTDA grant. BioTherm was also prequalified in the following countries:  Ethiopia: 2 solar projects (200 MW)   Senegal: 2 solar projects (60 MW) DRC: 1 solar project (100-200 MW)  Egypt: 1 solar project (200 MW) and 1 wind project (250 MW)  Ivory Coast: 1 solar project (25 MW)  Cameroon: 2 solar project (25 MW)  Countries where greenfield/direct negotiations are taking place:  Operational plants/ awarded projects Ghana (60 MW)  Countries where BioTherm is prequalified Zambia (80 MW)  Greenfield / direct negotiations  Mozambique (30 MW)

Funding of Energy Infrastructure in Africa 5 Opportunity is  Our continent needs close to $300bn of investment in energy to fuel development. ripe A balanced  Huge emphasis on clean energy to meet 2030 Climate targets but a balanced energy mix is the ideal solution energy mix  To attract any form of investment into energy infrastructure, be it from local investors or foreign direct investors, ensure that we hold all stakeholders to account Broaden the  Ensure that investments in Africa’s energy sector does not enrich the few at the expense shareholder base of the many. In short, broaden the shareholder base with active participation while ensuring that there is a obligation towards skills transfer and job creation.  In 2008, only 6% had access to electricity – 4x growth in under 9 years. Rwanda  RDC – Development of energy infrastructure as one of 6 pillars in its Vision 2020 – a detailed and well implemented strategy framework through partnerships.

Opportunities to grow the economy 6 Domestically Regionally Civils Electricals   Electricals Export Opportunities for locally   produced or assembled products Local Assembly (learn from our motor  industry – BMW in particular) Services industry  Services Industry Developer/IPP’s    Legal  Technical  Operations and Maintenance Avoid manufacturing of complex  equipment – focus on components that can serve multiple markets Focus on job creation rather than  local content targets But to ensure a thriving local industry,  policy certainty is a must

Constraints 7 Policy:   must be long term in nature,  must be implemented in succession and with consistency  “stop start” strategies kill local supply chains  Requires buy in at the highest levels with implementation frameworks that form part of the National Development Plan Skills:   Invest in relevant (and transferable) skills development – this should not be an obligation on just the private sector, government must work with the private sector to implement well funded training programs  South Africa lacks a risk taking/entrepreneurial environment. Use of grant mechanisms/match funding  Develop local capacity to attract foreign direct investment (not the other way around)  Skills transfer should be an obligation and not just a commitment.

Typical Project Model 8 Equity Investor One 40% 60% Investor Two Development Capital – risky!! 100% PPA & IA Direct Agreement Construction Governments Management & Developer/IPP regulator O&M Agreement PPA & IA Direct Agreement AM Service Agreement PPA Agreement Electricity public Maintenance & utility Distribution Availability Distribution Agreement Guarantee Direct Agreement Agreement O&M Contractor Financing Documents Joint Lenders Project Company Debt Funding EPC Consortium Debt EPC Contract

Funding as a constraint 9 Funding:   Development is costly – huge sunk costs before you see any returns.. Ideally suited to those with large balance sheets – to create and grow a local developer supply chain, invest in people.  BUT there is no shortage of capital for a well developed project.  Manage both lender and equity investor expectations.  Targeting the lowest tariff does not solve for all of South Africa’s problems especially when we want to promote inclusive growth, skills development, and job creation. It all comes at a cost.

The unknown successes of REIPPPP 10 Job Creation  Socio Economic development  Enterprise Development  Management control  Skills Development 

11 BioTherm Energy Group Building 1 Ground Floor Design Quarter, Leslie Ave East Fourways, 2055 South Africa Email: jnyker@biothermenergy.com Tel: + 27 11 367 4600 Website: