Platts 20th Annual Central American Energy … · Platts 20th Annual Central American Energy...
Transcript of Platts 20th Annual Central American Energy … · Platts 20th Annual Central American Energy...
©Real Infrastructure 2017
REAL INFRASTRUCTURE
50 Main Street, White Plains, NY 10606
United States of America
For Inquiries: [email protected]
Platts 20th Annual Central American Energy Conference Panama, June 16, 2017
REAL INFRASTRUCTURE CAPITAL PARTNERS AND LRIF
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WHO WE ARE • Established in 2011, REAL Infrastructure Capital Partners is a private equity investment
firm.
• REAL is an independent firm 100% owned by its management team.
• Currently investing its LRIF fund and its LRIF Mexico Fund, REAL is focused in the renewable energy sector in Latin America and the Caribbean.
FUND INVESTORS • REAL’s LRIF I and LRIF
Mexico are private equity funds with a mandate to invest in renewable energy generating assets in Latin America and Caribbean countries.
REAL TEAM
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Juan F. Paez
Managing Partner Origination, Investment, Portfolio Management,
General Management
Stephen M. Pearlman
Managing Partner Portfolio Management, E&S Officer, CFO
Susana Lopez
Partner Investment, Compliance Officer, Valuation
Sebastian Libkind
VicePresident Origination, Investment
Ruben Martinez
Senior Associate Investment, Portfolio Management
Lachezar Tolev
VicePresident Portfolio Management, Administrative
Trident Services
Outsourced Administrative, Accounting, Financial
Reporting
Todd Hanson
Outsourced E&S
Bob Hart
Outsourced Independent Investment Committee
Member
Caribbean: Strategy focused on wind, biomass, WTE and solar
Colombia: Strategy focused on small hydro, wind and biomass
Peru: Strategy focused on small hydro, wind and biomass
Mexico:
Opportunities on small hydro, wind and biomass for self supply to large customers.
INVESTMENT REGION & TARGET PROJECTS
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Target Region & Focus Countries
Focus countries - Priority
Area of investment opportunities
Central America: Strategy focused on hydro, wind, solar and biomass to take advantage of high economic growth and high electricity prices.
CURRENT PORTFOLIO ACTIVITIES
5 Strictly Private & Confidential
El Salvador Solar PV - 17 MW In Construction
El Salvador Solar PV - 10 MW 5 MW Operational 5 MW Projects in construction
Guatemala Hydro: 22 MW Greenfield project pre construction.
Mexico Wind: 50 MW 50 MW in operation
El Salvador Solar PV - 27 MW Ready to Build Q3/17
Mexico Wind: 50 MW 50 MW in operation
El Salvador Solar PV - 13 MW Permitting
EL SALVADOR INVESTMENT STRATEGY
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Why El Salvador?
• Sound regulatory environment
• Solid track record of IPP participation
• No incumbent in renewable market
• High cost of energy
• Availability of PPAs Acquired PPAs Acquired 5.56 MW AC out of 11.12 MW AC 2013 CAESS bid
Acquired 20 MWAC 2013 Delsur Bid Won PPAs 14 MWAC from Delsur 2013 international tender 10 MWAC from Delsur 2016 international tender
OVERVIEW EL SALVADOR SOLAR PV PORTFOLIO
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Project Location Power
[MWn]
Peak Power
[MWp
PPA
[%output]
PPA term
[Years] Tender Status
PVGEN Tecoluca 1.20 1.44 100% 15 CAESS-CLP-RNV-
001-2013 In operation
Grupo Roca Tecoluca 1.20 1.44 100% 15 CAESS-CLP-RNV-
001-2013 In operation
RESU San Luis Talpa 1.20 1.51 100% 15 CAESS-CLP-RNV-
001-2013 In operation
Trinidad Acajutla 8.00 10.16 100% 20 DELSUR-CLP-RNV-
001-2013 In construction
Marquez Acajutla 6.00 7.62 100% 20 DELSUR-CLP-RNV-
001-2013 In construction
Alpha Solar San Juan Opico 0.76 0.97 100% 15 CAESS-CLP-RNV-
001-2013 In construction
Suno Power San Juan Opico 1.20 1.54 100% 15 CAESS-CLP-RNV-
001-2013 In construction
Sol de Opico San Juan Opico 3.02 3.87 0% N/A N/A In construction
Los Remedios Acajutla 20.00 25.60 100% 20 DELSUR-CLP-RNV-
001-2013 In permitting
Sonsonate Acajutla 10.00 13.00 100% 20 DELSUR-CLP-RNV-
001-2016 In permitting
Phase 1
Phase 2
OVERVIEW EL SALVADOR SOLAR PV PORTFOLIO
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Suno Power Alpha Solar Opico
RESU PVGEN Grupo Roca
La Trinidad Marquez Los Remedios Sonsonate
CHALLENGES IN DEVELOPMENT AND INVESTMENT
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Financing – Financial Closing Expected During Q3/2017
• Issues of SCALE in the Region – Individual Markets as Opposed to Regional
Market
• Small projects too small for project financing – built on all-equity
• Significant projects in Central America mostly rely on DFI/Multilateral institutions
• Bigger projects too big for local/regional lenders
Lack of depth – Too exposed to energy in region already
Lack of appetite – El Salvador (reached country limits)
Terms not competitive enough for competitive tenders
CHALLENGES IN DEVELOPMENT AND INVESTMENT
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Development Issues – Leading to Additional Cost (Overruns)
• Delay in response times
• Permitting (environmental, interconnection)
• Regulator (Overburdened)
Electricity sector
Telecoms
Fair
• Significant Credit deterioration
✓ Raises cost of capital
✓ Narrows pool of potential lenders
CENTRAL AMERICA RENEWABLES
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Recent History
CENTRAL AMERICA RENEWABLES
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• Government & Regulators Created the Right Conditions
✓ Fiscal incentives
✓ Regulatory framework
✓ Prioritize renewables in expansion plans
✓ Launched RFPs
• Conditions Ripe for Private Market Participants
• Economic Conditions Created Alignment of Interests - Win-Win Situation
Market Responded Accordingly
CENTRAL AMERICA RENEWABLES
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Fiscal and Regulatory Incentives for Renewable Energy demonstrates counties’ commitment to
attract private capital to this industry
Country Income Tax
benefits Exemption of Import Duties
Preferential VAT treatment
Price Support RPS (Renewable
Mandate)
Costa Rica
El Salvador
Guatemala
Honduras
Nicaragua
Panama
CENTRAL AMERICA RENEWABLES
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Significant progress has been made
Costa Rica
2010
2,614 MW
Costa Rica
2016
3,467 MW
El Salvador
2010
1,481 MW
El Salvador
2016
1,759 MW
Guatemala
2010
2,534 MW
Guatemala
2016
4,210 MW
Honduras
2010
1,635 MW
Honduras
2016
2,439 MW
Nicaragua
2010
1,073 MW
Nicaragua
2016
1,395 MW
Panama
2010
1,987 MW
Panama
2016
3,339 MW
30% 17%
46% 43%
54%
61% 40%
37% 65% 35%
53% 36%
CENTRAL AMERICA RENEWABLES
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Overall change in installed capacity (in MW) in Central American Region from 2010 through 2016:
Renewable
51%
Thermal
49%
Central America 2010
11,324 MW
Renewable
65%
Thermal
35%
Central America 2016
16,610 MW
Significant progress has been made
CENTRAL AMERICA RENEWABLES
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Renewable
65%
Thermal
35%
Central America 2010
40,668 GWh
Renewable
65%
Thermal
35%
Central America 2016
52,231 GWh
Electricity consumed (in GWh) by generation type in the Central American Region from 2010
through 2016:
Significant work still remains!
CENTRAL AMERICA RENEWABLES
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Recent trends in Spot Prices suggest a downward trend and the establishment of a virtual price cap hovering at around $100/MWh
WHAT LIES AHEAD? - RE CATALYZERS
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Renewable Energy Catalyzers/Momentum Supporters • Climate Change
✓Region very susceptible to climate effects ✓Paris agreement/commitments
• Political Support - Popular
✓Keeps cost of electricity Low - predictable
✓Green implications (clean/efficient)
✓Local – abundant local resource ✓Smart – helps with trade balance - keeps hard earned dollars at home for reinvestment
• Ample Resources still to be developed
• No one will Finance COAL (or unnecessary thermal)
Renewable Energy Will Win !
WHAT LIES AHEAD? – OPPORTUNITIES AS AN INVESTOR
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Country (RE Electricity use
Share, 2016)
Energy Plan Goals and Targets
Costa Rica (98%) VI Plan Nacional de Energía 2012–2030
(Ministry of the Environment and
Energy)
• Become carbon-neutral by 2021 (re-emphasizing commitment in Second Communication to the UNFCCC, 2009)
• Reduce residential energy consumption 7.8 percent between 2012 and 2030
• Equip 10 percent of households with distributed solar generation by 2020
• Provide 100 percent of population with access to energy by 2030
• Reduce electricity consumption in industry 8.5 percent by 2020
• Transform the vehicular fleet to be 39 percent high efficiency, 9 percent electric and hybrid plug-in, and 2 percent natural
gas by 2030
El Salvador (54%) Política Energética Nacional 2010–2024
(National Energy Council)
• Provide affordable and continuous power supply
• Build institutional capacity
• Reduce oil dependence
• Minimize detrimental environmental and social impacts of energy, considering climate change
Guatemala (59%) Politica Energética 2013-2027 (Ministry
of Energy and Mines)
• Cover current and future energy demand
• Strengthen electric power transmission
• Diversify the energy mix and reduce oil dependence
• Generate 80 percent of electricity from renewable sources by 2027
Honduras (50%) Visión del País 2010–2038
Plan de Nación 2010–2022 (Technical
Secretariat for Planning and External
Cooperation)
• Reduce reliance on hydrocarbons
• Mitigate and adapt to climate change
• Expand country-wide electricity coverage to 85 percent by 2015 and 90 percent by 2020
• Generate 60 percent of electricity from renewable sources by 2022 and 80 percent by 2038
• Invest $1.5 billion in renewable and hydroelectric sources by 2022
Nicaragua (50%) Plan Estratégico del Sector Energético
2007–2017 (Ministry of Energy and
Mines)
Plan Nacional de Desarrollo Humano
2009–2011
• Diversify the energy mix
• Promote renewables
• Maximize energy efficiency
• Promote competitive markets and policies to ensure coverage and access to energy
• Provide a regulatory framework
• Identify 4,500 MW of renewable energy capacity, including hydro, geothermal, wind, solar, and biomass
• Supply between 95.2 and 98.1 percent of the estimated electricity demand with renewable sources by 2017
Panama (67%) Plan Nacional de Energia 2009–2023
(National Secretary of Energy)
• Ensure domestic energy supply through renewable energy and energy efficiency
• Maximize the energy sector’s contribution to sustainable development
• Increase energy access
• Promote capacity building
• Develop biofuels in the transportation sector, and wind and hydropower in the electricity sector
OPPORTUNITIES AS AN INVESTOR IN NEAR TERM
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Curva horaria media mensual de un Proyecto eólico típico durante el primer semestre del año
WHAT LIES AHEAD? – OPPORTUNITIES AS AN INVESTOR
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Curva horaria media mensual de un Proyecto fotovoltaico típico durante el primer semestre del
año
Portfolio of Renewables
WHAT LIES AHEAD? – OPPORTUNITIES AS AN INVESTOR
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Know Your Customer
WHAT LIES AHEAD? – OPPORTUNITIES AS AN INVESTOR
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Generación portafolio mixto mes de Noviembre (típico invierno).
Effects of Seasonality
Generación portafolio mixto mes de Mayo (típico verano).
WHAT LIES AHEAD? - OPPORTUNITIES AS AN INVESTOR
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Opportunities as an investor
Distributed Energy Batteries
New Technology Renewables
WHAT LIES AHEAD? – OPPORTUNITIES AS A GOVERNMENT /REGULATOR
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Opportunities as a Government/Regulator
• CR goal to be 100% renewable by 2020
• Opportunity of a lifetime – Why not make the entire region 100% renewable? We believe it is possible to achieve similar goals in the next 10 years
• Can get there on a country by country basis – but why? goal whole regional market
• Create Regulatory Environment promoting RE
✓ SIEPAC not enough
✓ Operate as a truly integrated regional electricity market
✓ Maximize available resources