Post on 04-Apr-2018
5
16.0%
7.0%
1.3%
0.4%0.5% 0.4% 1.0%
1.5%
1.3%
0.8%1.7%
Co
st
of
Eq
uit
y
Best-
in-C
las
s C
ou
ntr
y
Po
we
r M
ark
et
Ris
k
Perm
its R
isk
So
cia
l A
cce
pta
nce
Ris
k
Deve
lop
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Ris
k
Gri
d /
Tra
nsm
iss
ion
Ris
k
Co
un
terp
art
y R
isk
Fin
an
cia
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ecto
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Ris
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Ris
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/Ma
cro
.
Ris
k
Co
st
of
Eq
uit
y
Kazak
hsta
n B
AU
Cost of Equity (USD)
6
Risk Category
Policy Derisking
Instruments
Financial Derisking
Instruments
Power Market
Risk
• Update transparent, long-term national renewable energy strategy
• Establish and run IPP bidding process, with bankable PPA
• Establish a renewable energy office in the regulator
NA
Permits Risk • Streamlined process for RE permits (dedicated one-stop shop)
• Contract enforcement and recourse mechanisms
NA
Social Acceptance
Risk
• Awareness-raising campaigns NA
Developer Risk • Technology R&D
• Support for industry associations
NA
Grid/Transmission
Risk
• Strengthen KEGOC’s grid management capacity
• Transparent, up-to-date grid code
• Policy support for long-term national transmission/grid road-map
• Take-or-pay clause in PPA
Counterparty Risk • Reform and maintain creditworthy Financial Settlement Centre structure
• Government guarantee for PPA payments
• Public loans to IPPs
Financial Sector Risk • Fostering financial sector reform towards green infrastructure investment
• Strengthening financial sector’s familiarity with renewable energy and project finance
• Public loans to IPPs
Political Risk NA NA
Currency/
Macroeconomic Risk
NA • Partial indexing of PPA tariff to hard currencies
7
16.0%
0.3% 0.1% 0.1% 0.0%0.6%
0.9% 0.1% 0.0%0.9%
13.2%
Co
st
of
Eq
uit
y
Kazak
hsta
n B
AU
Po
we
r M
ark
et
Ris
k
Perm
its R
isk
So
cia
l A
cce
pta
nce
Ris
k
Deve
lop
er
Ris
k
Gri
d /
Tra
nsm
iss
ion
Ris
k
Co
un
terp
art
y R
isk
Fin
an
cia
l S
ecto
r
Ris
k
Po
liti
cal
Ris
k
Cu
rre
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/Ma
cro
.
Ris
k
Kazak
hsta
n
Po
st-
Deri
skin
g
Co
st
of
Eq
uit
y
Cost of Equity (USD)
-2.8%
8
5.7
9.2
7.1
Baseline(unsubsidised)
Wind InvestmentBAU
Wind InvestmentPost-Derisking
LC
OE
(U
SD
cen
ts/k
Wh
)
LEVELISED COST OF ELECTRICITY (LCOE)
9
Report’s 2021 (5 year) wind investment targets: 1 GW
If USD 275.6 million
• USD 1.6 billion in private sector investment in wind
• USD 804.7 million savings due to derisking (lower wind costs)
• USD 310.6 million savings due to avoided fossil fuel subsidies
• Wind energy generation costs decrease from USD 9.2
cents/kWh to USD 7.1 cents/kWh
• Emission reductions of 56.3 million tCO2e over 20 years
11
2.9
High Risk Investment Environment
Solar PV/Battery(off-grid)
Financing Cost (Equity)Financing Cost (Debt)
Investment Cost/Depreciation
Diesel Generator(off-grid)
Diesel Generator(off-grid)
Maintenance CapEx
Low Risk Investment Environment
15.2
4.3
11.7
39.3
30.1
2.839.6
Solar PV/Battery(off-grid)
Operating Cost(incl. fuel cost)
2.95.3
3.62.1
2.915.2
50.1
72.3
27.9
12.0
45.2
2.05.0
3.61.6
1.0
+83%
+14%
PR
E-TA
X L
CO
E (U
SD C
ENTS
/kW
h)
12
REDUCE
RISK
TRANSFER
RISK
COMPENSATE
FOR RISK
Policy
Derisking
Financial
Derisking
Financial
Incentives
Examples:
Clear regulations
Examples:
Loan guarantees
Examples:
Tax incentives
Streamlined customs Grants
DIVERSIFY
RISK
Aggregation
(By Private
Sector)
Public loans
15
GLOBAL INDUSTRY WORKING GROUP
(Composed of key industry actors)
OUTPUTS:• Strategic work programme• Regional, national, technical
sub-committees
STANDARDISEDTOOL KITS
OUTPUTS:• Develop and disseminate best
practice, standardised:• Template contracts• Installation and O&M• Due diligence metrics• Transaction structures
IN-COUNTRY DEMONSTRATION AND SCALE-UP
(In partnership with other development actors)
OUTPUTS (project funds for 4 countries):• Technical support for pilot first-
of-a-kind transactions • Technical support for
policy/market architecture
CLIMATE AGGREGATION PLATFORM
16
Aggregating
Entity
Special
Purpose
Vehicle (SPV)
S S S S
S S S S
S S S S
Investor Investor
Investor
Investor Investor
End Users Cons. Credit
Info Companies
Solar Co.
Legal Counsel
Investment
Bank
Development
Bank (credit
enhancement)
Installers
Manufacturers
Credit Rating
Agencies
Institutional
Investors
Securities
Regulator
Financial
Regulator
(Tax Investors)
STAKEHOLDERSDEAL STEPS BARRIERS & PUBLIC MEASURES
Limited data on credit
worthiness of end-users
Support to develop national
credit information markets
Fragmented approach
to contracts, installation
and O&M
Standardized contracts,
installation and O&M,
performance metrics
Lack of experience;
high costs for deal
structuring
Piloting first-of-a-kind
deals; online platforms for
project ID; national industry
associations
Lack of experience;
inefficient due diligence;
unconducive regulations
Mock filings; common due
diligence metrics;
securities law reforms
Low demand due to lack
of familiarity; lack of
liquidity; inefficient due
diligence; unconducive
regulations
Engage and raise
awareness of investors;
common due diligence