contract for differences (cfd) - Regensw
NEAS ENERGY - Route to Market
Overview •
Wholesale Power Market developments
•
Revenue Profiles Secured and Unsecured FIT CFD v ROC PPA
•
Key terms and conditions – PPA – Backstop PPA
•
Cash flows for CfD and ROC projects.
2
Who is Neas Energy? Leading Non-Utility PPA provider in Europe Around 6,000 MW installed capacity managed – 4,000 MW+ of renewables • ~ 2/3 of Denmark’s On-Shore Wind • 1,700 MW+ in Germany • 500 MW+ in Sweden
Fastest Growing PPA provider in the UK Started February 2013 – Grown with 300 MW+ in the last 9 months – Strong ties with top-tier Developers
3
Wholesale Market Developments
Long Term Price Trends £60.00
£58.00 Current £ per MWh
Sept 2013 £ per MWh
2015
£
49.77
£
52.25
-£
2.48
5%
2016
£
50.95
£
55.50
-£
4.55
8%
2017
£
51.24
£
56.31
-£
5.07
9%
2018
£
51.34
£
57.16
-£
5.82
10%
2019
£
51.36
£
58.02
-£
6.66
11%
2020
£
51.34
£
58.89
-£
7.55
13%
£56.00
£54.00
£52.00
£50.00
£48.00 2015
2016
2017
2018
Current £ per MWh
September 2013 £ per MWh
5
2019
2020
£ Diff
% Diff
Reference Price Performance – N2EX
6
N2EX Day ahead hourly auction high level info 2013 •
Maximum hourly price £155.04 per MWh (£175.04 2012)
•
Minimum hourly price £15.01
•
Average hourly price for the full year £50.15 per MWh (£44.70 2012)
•
Average peak time price £54.62 per MWh
•
Above £70 per MWh 540 times during 12 month period
•
2014 trends for Power prices to trend lower reflective of market conditions
7
£44.00
Oct 09, 2013 Oct 21, 2013 Oct 31, 2013 Nov 12, 2013 Nov 22, 2013 Dec 04, 2013 Dec 16, 2013 Dec 26, 2013 Jan 07, 2014 Jan 17, 2014 Jan 29, 2014 Feb 10, 2014 Feb 20, 2014 Mar 04, 2014 Mar 14, 2014 Mar 26, 2014 Apr 07, 2014 Apr 17, 2014 Apr 29, 2014 May 13, 2014 May 23, 2014 Jun 04, 2014
Sep 25, 2013 Oct 08, 2013 Oct 21, 2013 Nov 01, 2013 Nov 14, 2013 Nov 27, 2013 Dec 10, 2013 Dec 23, 2013 Jan 03, 2014 Jan 16, 2014 Jan 29, 2014 Feb 11, 2014 Feb 24, 2014 Mar 07, 2014 Mar 20, 2014 Apr 02, 2014 Apr 15, 2014 Apr 28, 2014 May 14, 2014 May 27, 2014
Price Development of Front Seasons Base load Winter 2014
£58.00
Base Load Summer 2015
54
£56.00 53
£54.00 52
£52.00 51
50
£50.00
49
£48.00 48
£46.00 47
46
8
Revenue Profiles Secured and Unsecured FIT CFD v ROC PPA
Solar Strike Price v 1.4 ROC Offer £250
£200
£150
£100
£50
£-
2015
2016
2017
LOW 1.4 ROC's
2018
2019
2020
2021
CENTRAL 1.4 ROC's
2022
2023
2024
HIGH 1.4 ROC's
10
2025
2026
2027
Strike Price £120
2028
2029
2030
Strike Price 105
2031
2032
2033
Strike Price £95
2034
Millions
Secured Income (Assuming 1000 MWh p.a.) £2.50 £2.24 £1.96
£2.00
£1.77 £1.50
£1.38
£1.82
£1.00
£0.50
£2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
Secured ROC income
Strike Price £120 11
Strike Price £105
Strike Price £95
Wind Strike Price v 0.9 ROC Option £180.000
£160.000
£140.000
£120.000
£100.000
£80.000
£60.000
£40.000
£20.000
£1
2 Low
3
4
5
6
7
8
9 Central
10
FIT CFD £95 STRIKE PRICE
FIT CFD £85 STRIKE PRICE
12
11
12
13
14 15 High
16
17
FIT CFD £75 STRIKE PRICE
18
19
20
Millions
Secured Income (Assuming 1000 MWh p.a.) £2.00 £1.77
£1.80
£1.58
£1.60
£1.40
£1.40 £1.20
£0.93
£1.00
£1.21
£0.80 £0.60 £0.40
£0.20 £2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
Secured ROC income
Strike Price £95 13
Strike Price £85
Strike Price £75
ROC Wave/ Tidal v FIT CFD £450 £430 £410 £390 £370 £350 £330 £310 £290 £270 £250 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
Low
Central
High
14
FIT CFD
Millions
Secured Income (Assuming 1000 MWh p.a.) £6.00
£5.68
£5.00 £5.37
£3.82
£4.00
£3.00
£2.00
£1.00
£2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
Secured ROC income 15
Secured CfD income
Payment Profile FIT CFD v ROC
FIT-CfD and RO Differences Renewable Obligation
FIT-CfD
Power Price Payment Supplier
Monthly in Arrears as to Payment terms agreed market mechanism
Reference price minus fee Monthly in Arrears as to Payment terms
Payment Government Subsidy
Minimum of 2.5 Months following generation month
Daily 28 days from point of generation
Data Level
Generation at meter
Generation at BMU
Credit Exposure
All Exposure with Supplier
Power Only. FIT CFD counterparty for Top up payment
Payment of LEC’s Certificates
Minimum of 2.5 Months following generation month
Minimum of 2.5 Months following generation month
Payment of GDUOS and Embedded Benefits
No change
No change
Exposure to Negative Prices
PPA dependent
PPA dependent
Payment Profile Scenario 1 – Reference price below FIT CFD Strike price
Generation Day 1
24 hours in advance expected generation traded
First FIT CFD Payment 28 days from point of generation
End of Calendar month
First PPA Power Payment for Power generated at Reference price
LEC Certificates transferred to Generator account
+ 1 month from generation
+ 2 month from generation
18
PPA Provider pays Generator for LEC certificates
+ 3 month from generation
+ 4 month from generation
Payment Profile Scenario 2 – Reference price above FIT CFD Strike price FIT CFD Payment 28 days from point of generation for Power below the strike price
Generation Day 1 – Power price for 2 hours above strike price
24 hours in advance expected generation traded
Day 3 Day 7 Supplier Supplier receives invoiced to payment pay for power from above strike exchange price
Day 12 Supplier makes payment FIT CFD Counterparty
End of Calendar month
19
PPA Power Payment for all Power generated at Reference price
+ 1 month from generation
Payment Profile Scenario 3 – Reference price goes below zero but not below strike price value
Generation Day 1 – Power price for 2 hours below zero
24 hours in advance expected generation traded
FIT CFD Payment 28 days from point of generation for Power below the strike price for negative hours generator receives full strike price
End of Calendar month
20
PPA Power Payment for all Power generated at Reference price. Netting negative N2EX trade values against positive
+ 1 month from generation
Payment Profile Scenario 4 – Reference price goes below zero and value of strike price value
Generation Day 1 – Power price for 2 hours negative below strike price value
We aim for a solution that requests shutdown of the plant for the affected hours
FIT CFD Payment 28 days from point of generation for Power generated outside of affected time period
End of Calendar month
21
PPA Power Payment for all Power generated outside of affected time period
+ 1 month from generation
PPA Overview and Key Terms
FIT CFD Key commercial terms- Intermittent Generation FIT-CfD
Discount to Reference Price
£ per MWh
Guaranteed Reference Price
Yes as part of £ per MWh discount
Fixed Discount Period
Discount fixed for terms maximum to the term of the FIT CFD. Longer the term the higher the fee
Imbalance exposure of generator
Expectation of planned and unplanned outages managed within Imbalance premium
Settlement Exposure
Supplier Reference price FIT CFD Top up payment
Management of additional benefits
LEC’s, EB and GDUOS will be managed via commercial agreement
KEY PPA TERMS FIT-CfD CREDIT RISK
Supplier seek for credit exposure to reflect true financial risk to the generator
LIABIILITIES CAPS
Equal to the risk each party faces
PAYMENT
Payment terms as to current PPA
TERMINATION RIGHTS
As with current PPA exposure for forward commitment in respect to Power delivery and Certificates
TERMINATION COSTS
Formula to reflect market exposure
RISK OF NOT GAINING A FIT CFD OFFER
PPA Falls away
LONG STOPS DATES
Mirror FIT CFD PPA
COMMISSIONING RISK
NO additional risk, test for achieving commissioning not increased. 24
Supplier default PPA Cash flow implication £140.00
£120.00
£100.00
£80.00
£60.00
£40.00
£20.00
£Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 Reference Price minus PPA Fee
• • • •
Actual credit risk exposure Interim Support Time Period to backstop PPA support Backstop payment 25
SSP
FIT CFD Top UP
ANY QUESTIONS
Overview •
Wholesale Power Market developments
•
Revenue Profiles Secured and Unsecured FIT CFD v ROC PPA
•
Key terms and conditions – PPA – Backstop PPA
•
Cash flows for CfD and ROC projects.
2
Who is Neas Energy? Leading Non-Utility PPA provider in Europe Around 6,000 MW installed capacity managed – 4,000 MW+ of renewables • ~ 2/3 of Denmark’s On-Shore Wind • 1,700 MW+ in Germany • 500 MW+ in Sweden
Fastest Growing PPA provider in the UK Started February 2013 – Grown with 300 MW+ in the last 9 months – Strong ties with top-tier Developers
3
Wholesale Market Developments
Long Term Price Trends £60.00
£58.00 Current £ per MWh
Sept 2013 £ per MWh
2015
£
49.77
£
52.25
-£
2.48
5%
2016
£
50.95
£
55.50
-£
4.55
8%
2017
£
51.24
£
56.31
-£
5.07
9%
2018
£
51.34
£
57.16
-£
5.82
10%
2019
£
51.36
£
58.02
-£
6.66
11%
2020
£
51.34
£
58.89
-£
7.55
13%
£56.00
£54.00
£52.00
£50.00
£48.00 2015
2016
2017
2018
Current £ per MWh
September 2013 £ per MWh
5
2019
2020
£ Diff
% Diff
Reference Price Performance – N2EX
6
N2EX Day ahead hourly auction high level info 2013 •
Maximum hourly price £155.04 per MWh (£175.04 2012)
•
Minimum hourly price £15.01
•
Average hourly price for the full year £50.15 per MWh (£44.70 2012)
•
Average peak time price £54.62 per MWh
•
Above £70 per MWh 540 times during 12 month period
•
2014 trends for Power prices to trend lower reflective of market conditions
7
£44.00
Oct 09, 2013 Oct 21, 2013 Oct 31, 2013 Nov 12, 2013 Nov 22, 2013 Dec 04, 2013 Dec 16, 2013 Dec 26, 2013 Jan 07, 2014 Jan 17, 2014 Jan 29, 2014 Feb 10, 2014 Feb 20, 2014 Mar 04, 2014 Mar 14, 2014 Mar 26, 2014 Apr 07, 2014 Apr 17, 2014 Apr 29, 2014 May 13, 2014 May 23, 2014 Jun 04, 2014
Sep 25, 2013 Oct 08, 2013 Oct 21, 2013 Nov 01, 2013 Nov 14, 2013 Nov 27, 2013 Dec 10, 2013 Dec 23, 2013 Jan 03, 2014 Jan 16, 2014 Jan 29, 2014 Feb 11, 2014 Feb 24, 2014 Mar 07, 2014 Mar 20, 2014 Apr 02, 2014 Apr 15, 2014 Apr 28, 2014 May 14, 2014 May 27, 2014
Price Development of Front Seasons Base load Winter 2014
£58.00
Base Load Summer 2015
54
£56.00 53
£54.00 52
£52.00 51
50
£50.00
49
£48.00 48
£46.00 47
46
8
Revenue Profiles Secured and Unsecured FIT CFD v ROC PPA
Solar Strike Price v 1.4 ROC Offer £250
£200
£150
£100
£50
£-
2015
2016
2017
LOW 1.4 ROC's
2018
2019
2020
2021
CENTRAL 1.4 ROC's
2022
2023
2024
HIGH 1.4 ROC's
10
2025
2026
2027
Strike Price £120
2028
2029
2030
Strike Price 105
2031
2032
2033
Strike Price £95
2034
Millions
Secured Income (Assuming 1000 MWh p.a.) £2.50 £2.24 £1.96
£2.00
£1.77 £1.50
£1.38
£1.82
£1.00
£0.50
£2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
Secured ROC income
Strike Price £120 11
Strike Price £105
Strike Price £95
Wind Strike Price v 0.9 ROC Option £180.000
£160.000
£140.000
£120.000
£100.000
£80.000
£60.000
£40.000
£20.000
£1
2 Low
3
4
5
6
7
8
9 Central
10
FIT CFD £95 STRIKE PRICE
FIT CFD £85 STRIKE PRICE
12
11
12
13
14 15 High
16
17
FIT CFD £75 STRIKE PRICE
18
19
20
Millions
Secured Income (Assuming 1000 MWh p.a.) £2.00 £1.77
£1.80
£1.58
£1.60
£1.40
£1.40 £1.20
£0.93
£1.00
£1.21
£0.80 £0.60 £0.40
£0.20 £2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
Secured ROC income
Strike Price £95 13
Strike Price £85
Strike Price £75
ROC Wave/ Tidal v FIT CFD £450 £430 £410 £390 £370 £350 £330 £310 £290 £270 £250 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
Low
Central
High
14
FIT CFD
Millions
Secured Income (Assuming 1000 MWh p.a.) £6.00
£5.68
£5.00 £5.37
£3.82
£4.00
£3.00
£2.00
£1.00
£2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
Secured ROC income 15
Secured CfD income
Payment Profile FIT CFD v ROC
FIT-CfD and RO Differences Renewable Obligation
FIT-CfD
Power Price Payment Supplier
Monthly in Arrears as to Payment terms agreed market mechanism
Reference price minus fee Monthly in Arrears as to Payment terms
Payment Government Subsidy
Minimum of 2.5 Months following generation month
Daily 28 days from point of generation
Data Level
Generation at meter
Generation at BMU
Credit Exposure
All Exposure with Supplier
Power Only. FIT CFD counterparty for Top up payment
Payment of LEC’s Certificates
Minimum of 2.5 Months following generation month
Minimum of 2.5 Months following generation month
Payment of GDUOS and Embedded Benefits
No change
No change
Exposure to Negative Prices
PPA dependent
PPA dependent
Payment Profile Scenario 1 – Reference price below FIT CFD Strike price
Generation Day 1
24 hours in advance expected generation traded
First FIT CFD Payment 28 days from point of generation
End of Calendar month
First PPA Power Payment for Power generated at Reference price
LEC Certificates transferred to Generator account
+ 1 month from generation
+ 2 month from generation
18
PPA Provider pays Generator for LEC certificates
+ 3 month from generation
+ 4 month from generation
Payment Profile Scenario 2 – Reference price above FIT CFD Strike price FIT CFD Payment 28 days from point of generation for Power below the strike price
Generation Day 1 – Power price for 2 hours above strike price
24 hours in advance expected generation traded
Day 3 Day 7 Supplier Supplier receives invoiced to payment pay for power from above strike exchange price
Day 12 Supplier makes payment FIT CFD Counterparty
End of Calendar month
19
PPA Power Payment for all Power generated at Reference price
+ 1 month from generation
Payment Profile Scenario 3 – Reference price goes below zero but not below strike price value
Generation Day 1 – Power price for 2 hours below zero
24 hours in advance expected generation traded
FIT CFD Payment 28 days from point of generation for Power below the strike price for negative hours generator receives full strike price
End of Calendar month
20
PPA Power Payment for all Power generated at Reference price. Netting negative N2EX trade values against positive
+ 1 month from generation
Payment Profile Scenario 4 – Reference price goes below zero and value of strike price value
Generation Day 1 – Power price for 2 hours negative below strike price value
We aim for a solution that requests shutdown of the plant for the affected hours
FIT CFD Payment 28 days from point of generation for Power generated outside of affected time period
End of Calendar month
21
PPA Power Payment for all Power generated outside of affected time period
+ 1 month from generation
PPA Overview and Key Terms
FIT CFD Key commercial terms- Intermittent Generation FIT-CfD
Discount to Reference Price
£ per MWh
Guaranteed Reference Price
Yes as part of £ per MWh discount
Fixed Discount Period
Discount fixed for terms maximum to the term of the FIT CFD. Longer the term the higher the fee
Imbalance exposure of generator
Expectation of planned and unplanned outages managed within Imbalance premium
Settlement Exposure
Supplier Reference price FIT CFD Top up payment
Management of additional benefits
LEC’s, EB and GDUOS will be managed via commercial agreement
KEY PPA TERMS FIT-CfD CREDIT RISK
Supplier seek for credit exposure to reflect true financial risk to the generator
LIABIILITIES CAPS
Equal to the risk each party faces
PAYMENT
Payment terms as to current PPA
TERMINATION RIGHTS
As with current PPA exposure for forward commitment in respect to Power delivery and Certificates
TERMINATION COSTS
Formula to reflect market exposure
RISK OF NOT GAINING A FIT CFD OFFER
PPA Falls away
LONG STOPS DATES
Mirror FIT CFD PPA
COMMISSIONING RISK
NO additional risk, test for achieving commissioning not increased. 24
Supplier default PPA Cash flow implication £140.00
£120.00
£100.00
£80.00
£60.00
£40.00
£20.00
£Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day Day 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 Reference Price minus PPA Fee
• • • •
Actual credit risk exposure Interim Support Time Period to backstop PPA support Backstop payment 25
SSP
FIT CFD Top UP
ANY QUESTIONS
