Market evolution and CfD - Regensw
Strictly Private & Confidential
Market evolution and CfD
Credentials
The Leading Solar Asset Manager: q
Founded in 2008, 35 team members, focused on solar
q
Operating presence in 3 of the most attractive solar PV markets globally
q
Managing and monitoring over 1,100 solar plants (c.1.0GW, c. £3.1bn)
q
Client base of leading European Banks, Private Equity and listed equity investors
q
Investment manager with listed solar fund, Next Energy Solar Fund Limited
3
Time TOMMOROW Institutional Long term assets
Professionalising Securitising
TODAY -
New experienced players Major flux and change
Still fragmented
Fast moving Hyper entrepreneurial
Fragmented
Margin
Industry Evolution
Distortion of markets and a shrinking free market UK Electricity Market Reform………. will introduce a level of government intervention not seen in the country s power market since the early 1990s. The impact will be felt by UK power firms and could ripple across Europe (ww.risk.net)
q
q
q
q
Tom Glover, RWE q
c1/5th of the generating capacity that was available in 2011 needs to be shut down by the end of this decade due to old age or noncompliance with low-carbon rules (DECC), UK demand for electricity is set to increase between 50% and 80% by 2050. And …primary legislation to reduce greenhouse gas emissions by 80% in 2050 compared with 1990 levels DECC puts the cost of the investment needed to achieve these goals at £110 bn. EMR creates an artificial market for renewable through the CFD mechanism
Delivery Organisations
Acceptance timeline and risks
LCF Cumulative to 2020
The CfD issue for investors Placing panels and clipping coupons q
Actual costs are unclear
q
Meeting the original business plan
q
PPA downside risk and no balancing upside
q
Funding is built on worst case performance
q
Reducing availability of viable projects
q
Alternative investments always exist
q
18 month investment cycles
q
Resources are scarce and its expensive
q
frankly, my dear……
The Bridge
Construction
9
Developer Margin
Investor returns
CfD strike price
Performance optimisation Asset losses
The investment process
Origination
Rights creation
Value creation
Auction and contract
Construction
Short focus
Long focus
On-going Asset Management
10
Concentration of market 20 MW Team
50 MW
Build team
150 MW Growth team
300 MW Operational team
500 MW 1000MW Optimising team
Shared services
Common Platform
Cost per MWp
Technical leadership
In house team
Technical management
Book-keeping
SPV Management
Technical oversight
Team size (excluding leadership)
6
7
15
21
25
27
Key winning players q
q
q
Large companies that can run concurrent project and carry risks or slave capital; and Integrated players that can squeeze margin and control delivery within framework Politically astute players with multiple revenue streams
Or
q
Players that partner with funds that can navigate the terrain and reduce costs; and
q
Funds that secure performance optimisation strategies; and crucially
q
Funds that have the capacity or the partners to manage assets.
Questions
NextEnergy Capital UK: +44 (0)20 73239 9054 Italy: +39 02 3670 6201 South Africa: +27 (0)7358 60016 email: [email protected] www.nextenergycapital.com
Milan Office C.so V. Emanuele II, 30 20122 Milano
London Office 23 Hanover Square London W1S 1JB
Luxembourg Office 13-15 Avenue de la Liberté L-1931, Luxembourg
Cape Town Office Tyger Forum A 53 Willie van Schoor Ave. Bellville 7530, CT
Market evolution and CfD
Credentials
The Leading Solar Asset Manager: q
Founded in 2008, 35 team members, focused on solar
q
Operating presence in 3 of the most attractive solar PV markets globally
q
Managing and monitoring over 1,100 solar plants (c.1.0GW, c. £3.1bn)
q
Client base of leading European Banks, Private Equity and listed equity investors
q
Investment manager with listed solar fund, Next Energy Solar Fund Limited
3
Time TOMMOROW Institutional Long term assets
Professionalising Securitising
TODAY -
New experienced players Major flux and change
Still fragmented
Fast moving Hyper entrepreneurial
Fragmented
Margin
Industry Evolution
Distortion of markets and a shrinking free market UK Electricity Market Reform………. will introduce a level of government intervention not seen in the country s power market since the early 1990s. The impact will be felt by UK power firms and could ripple across Europe (ww.risk.net)
q
q
q
q
Tom Glover, RWE q
c1/5th of the generating capacity that was available in 2011 needs to be shut down by the end of this decade due to old age or noncompliance with low-carbon rules (DECC), UK demand for electricity is set to increase between 50% and 80% by 2050. And …primary legislation to reduce greenhouse gas emissions by 80% in 2050 compared with 1990 levels DECC puts the cost of the investment needed to achieve these goals at £110 bn. EMR creates an artificial market for renewable through the CFD mechanism
Delivery Organisations
Acceptance timeline and risks
LCF Cumulative to 2020
The CfD issue for investors Placing panels and clipping coupons q
Actual costs are unclear
q
Meeting the original business plan
q
PPA downside risk and no balancing upside
q
Funding is built on worst case performance
q
Reducing availability of viable projects
q
Alternative investments always exist
q
18 month investment cycles
q
Resources are scarce and its expensive
q
frankly, my dear……
The Bridge
Construction
9
Developer Margin
Investor returns
CfD strike price
Performance optimisation Asset losses
The investment process
Origination
Rights creation
Value creation
Auction and contract
Construction
Short focus
Long focus
On-going Asset Management
10
Concentration of market 20 MW Team
50 MW
Build team
150 MW Growth team
300 MW Operational team
500 MW 1000MW Optimising team
Shared services
Common Platform
Cost per MWp
Technical leadership
In house team
Technical management
Book-keeping
SPV Management
Technical oversight
Team size (excluding leadership)
6
7
15
21
25
27
Key winning players q
q
q
Large companies that can run concurrent project and carry risks or slave capital; and Integrated players that can squeeze margin and control delivery within framework Politically astute players with multiple revenue streams
Or
q
Players that partner with funds that can navigate the terrain and reduce costs; and
q
Funds that secure performance optimisation strategies; and crucially
q
Funds that have the capacity or the partners to manage assets.
Questions
NextEnergy Capital UK: +44 (0)20 73239 9054 Italy: +39 02 3670 6201 South Africa: +27 (0)7358 60016 email: [email protected] www.nextenergycapital.com
Milan Office C.so V. Emanuele II, 30 20122 Milano
London Office 23 Hanover Square London W1S 1JB
Luxembourg Office 13-15 Avenue de la Liberté L-1931, Luxembourg
Cape Town Office Tyger Forum A 53 Willie van Schoor Ave. Bellville 7530, CT
