challenges and opportunities in the photovoltaic (pv)

Copyright © Sojitz Corporation 2004 1

23rd – 25th January, 2012

Challenges and Opportunities in the Photovoltaic (PV) Markets

Martin SupancicExternal Financial Advisor, Machinery Division of Europe, Russia & NIS

Strategic M&A and PortfolioManagement for the Energy Industry

Amsterdam, the Netherlands

Sojitz Europe plcDüsseldorf Branch

http://knol.google.com/k/-/-/1g0rrsoesmjko/dk53jz/sunniest-places-in-the-world2.jpg


About Sojitz1. Global & European REN/PV Growth2. Focus on German PV3. Current Market Situation: Europe, USA, Asia4. Shift in value chain towards local suppliers5. Price history of PV modules and outlook6. Strategic options post-nuclear era for European utilities and

shift in investment focus7. Difficulties in obtaining leveraged finance in certain markets8. Geographic and strategic opportunities:

1. Off-grid PV generation2. Strategic partnerships (Morocco, South Africa, India,

Malaysia)

Presentation Overview


2006 New Stage 2008 medium-term management plan announced

2009 Shine 2011 medium-term management plan

announced

Nissho Company1902 Suzuki & Co., Ltd. established

Iwai Sangyo Company1896 Iwai & Co., Ltd. established

Nichimen Corporation1892 Japan Cotton Trading Co., Ltd.

established

Nissho Iwai Corporation1968 Nissho Company and Iwai

Sangyo Company merged

2003 Nissho Iwai-Nichimen Holdings Corporation established through the transfer of shares by Nichimen Corporation and Nissho Iwai Corporation, which become its subsidiaries

1982 Company name changed to

Nichimen Corporation

2004 Subsidiaries Nichimen Corporation and Nissho Iwai Corporation merged to form Sojitz CorporationName of holding company changed to Sojitz Holdings Corporation

2005 Sojitz Holdings Corporation merged with subsidiary Sojitz Corporation and company name changed to Sojitz Corporation

The History of Sojitz Group


Company Name Sojitz Corporation

Established April 1, 2003

Capitalization 160,339 million yen

President & CEO Yutaka Kase

Head Office1-20, Akasaka 6-chome, Minato-ku,

Tokyo 107-8655, Japan

TEL +81-3-5520-5000

FAX +81-3-5520-2390

URL http://www.sojitz.com/en

Corporate

Governance ModelBoard of Corporate Auditors

Stock Exchange Listings Tokyo, Osaka

(As of July 1, 2011)

Corporate Data

http://www.sojitz.com/

http://www.sojitz.com/


Consolidated Financial Highlights

(Year ended March 31, 2011) (As of March 31, 2011)

Net sales \4,014.6 billion

Ordinary income \45.3 billion

Net income \16.0 billion

Total assets \2,117.0 billion

Net assets \355.5 billion

Equity ratio 15.6%

Net interest-bearing debt \700.6 billion

Net DER 2.1 times

Financial Information


Number of Branches & Offices

Domestic: 7Overseas: 91

Number of Subsidiaries & Affiliates

Domestic: 143Overseas: 358

Number of Employees

Non-consolidated: 2,313Consolidated: 16,270

(As of June 30, 2011)

The Sojitz Group is a general trading company with a worldwide

network comprising over 500 group companies and operations in some

50 countries.

Sojitz Group's Global Network


Japan China Asia & Oceania The Americas Europe, Russia & NIS Middle East & Africa

Mach

inery

Div

isio

n

Smart city development

Export of automobiles

Industrial machinery

Commercial aircraft sales representative

Sales and brokerage of ships, ship chartering, sale of ship equipment

Sales of IT and related equipment; solutions and service; data centers


Water business

Automobile dealerships


Plants


Water business

Transportation infrastructure

Automobile assembly, sales, and distribution


Plants and IPP

Business jets

Transportation infrastructure

Solar power

Automobile assembly, sales and distribution; automobile dealerships


IT infrastructure and service

IPP

Automobile distribution


Plants

Newbuilding orders, ship chartering

Solar power

Solar power

Water business

Automobile dealerships

Plants and IPP

En

erg

y &

Meta

l D

ivis

ion

Sales of various types of energy (LNG, petroleum products, coal, etc.)

Service station and tank storage operation

Sales of steel-making materials (iron ore, coal, etc.)

Sales of various rare metals and industrial minerals

Steel products

Sales of coal

Sales of industrial minerals

Sales of various rare metals

Sales of iron ore

Coal mines and coal trading

LNG

Trading of petroleum products

Rare metals (nickel, cobalt)

Nonferrous metals (alumina)

Development of iron mines and iron ore trading

Oil and gas, including unconventional oil and gas

Production of bioethanol; biopower generation

Nonferrous metals (copper)

Rare metals (molybdenum, niobium)

Iron ore trading

Oil and gas

Nuclear fuel enrichment

Sales of biofuel

Rare metals (tungsten)

Oil and gas

LNG

Rare metals (vanadium, ferrochrome)

Ch

em

icals

&

Fu

nctio

nal

Mate

rials

Div

isio

n

Sales and import of rare earths, lithium compounds and industrial salt

Sales of solvents and thinners

Plastic resins

Sales of electronic materials

Sales of cellulose

Sales of cosmetics

Procurement of rare earths

Sales of organic chemicals

Sale of resin compounds

Manufacture and sales of methanol

Rare earth mines

Manufacture and sales of marine chemicals (potash, industrial salt)

Sales of flat-panel display materials

Sales of plastic resins

Manufacture and sales ofdicyclopentadiene

Manufacture and sales of Metton® resins

Sales of butadiene

Manufacture and sales of packaging materials

Manufacture and sale of packaging materials

Sales of solvents

Sales of industrial films

Sales of plastic resins

Co

nsu

mer L

ifesty

le

Bu

sin

ess D

ivis

ion

Sales of various foodstuffs and food materials

Sales of grain and feed Sales of processed seafood Fish farming Tobacco Import of brand sundries Airport retail OEM textiles Apparel brands Condominium development Import and sale in Japan of

timber, plywood, etc.

Foodstuff logistics

Manufacture and sales of apparel

Sales of lumber

Chemical fertilizers Wholesaling of foodstuffs Flour mills, port silos Feed Fish farming Woodchips and afforestation Industrial park development Sales of grain Bread production Rice bran oil

Agriculture

Meat processing and packing

Shoe purchasing

Production of ingredients for bread

Consolidation and sales of specialized grain

Grain Woodchips

Sojitz Group Snapshot


Vietnam

Phu My 3 (Gas/740MW）Sojitz 6.7%

•BP, SembCorp, Kyushu

Mexico

Merida 3 （Gas/484MW）Sojitz 25%

* AES

Rosalito 3（Gas/541MW）Sojitz 50%

Monterrey 2（Gas/484MW）Sojitz 50%

Sri Lanka

Asia Power（Diesel/51MW）Sojitz 48.5%

Japan

Sawada (Diesel/14MW)

Sojitz 99%

China

Tiansi （Coal/50MW）Sojitz 12%

Shajao C （Coal/1,980MW）Sojitz 3%

Trinidad Tobago

Trinity （Gas/225MW）Sojitz18%

In Operation

Vietnam

Nghi Son 2

（Coal/1200MW）Sojitz 16%

* IP, Kyushu, Kansai

Oman

Barka 3 （Gas/750MW）Sohar 2（Gas/ 750MW)

Sojitz 11%

* GDF Suez / Yonden

Saudi Arabia

Riyadh PP11（Gas/1730MW）Sojitz 15%

* GDF Suez

Under Bid Preparation

Awarded/ Under Development

Indonesia

Coal Fired Power

(200MW）

* Main Partner/s

Egypt

Gas Fired Power

(1500-2250MW）

Vietnam

•Gas Fired Power

（2,000MW ）

Sojitz Corporation IPP Experiences (Conventional)


Betzweiler Solar 3MW (100%)

Eco Energy Japan 1.25MW (75.5%)

Hayama Wind 20MW (51%)

Hirokawa Wind 16MW (49%)

On Wind Energy 4.2MW (50%)

East Winds 4.2MW (50%)

Wind Power

Mixdorf Ground-mounted

24MW (100%)

Solar Power

Waste-to-Energy

ETH Bioenergia 600MW+Steam (25%)

Biomass

Namibia – Luderitz 44MW

- under development

Sojitz Corporation IPP Experiences (Renewable)


ClientPetrobras

Petróleo Brasileiro SA

DescriptionREFAP HDT/RFCC/Coker/UtilityE&P Contract Amount U$311MM

Sojitz FunctionECA Finance Arrangement

Year of Award2001

CountryBrazil

ClientPetrobras


DescriptionUltra Deep Ocean ExplorationPlatforms P-18/25/26

Sojitz FunctionLease Financier (total U$650MMl)

Year of Award1991~1994

CountryBrazil

SOJITZ CREDENTIALS ~ Oil and Gas

ClientPetrobras


DescriptionFrade Oil Field Development

Sojitz FunctionInvestment through FJPL, 18.26% stake holder

Year of Award2001

CountryBrazil

ClientRasgas company ltd.

DescriptionLNG production

Sojitz FunctionInvestor

Year of Award1998

CountryQatar

ClientMobil Producing Nigeria

DescriptionNGL recovering

Sojitz FunctionU$200MM Project funding

Year of Award1995

CountryNigeria

ClientPetrobras


DescriptionAlbacora Oil Field Development

Sojitz FunctionU$170MM Equity Investment +ECA Finance Arrangement

Year of Award2000

CountryBrazil

ClientPetrobras


Description

Ultra Deep Ocean ExplorationFPSO P-31/37

Sojitz FunctionLease Financier (total U$450MM)

Year of Award1995~1997

CountryBrazil

ClientTangghu LNG Project

DescriptionLNG production

Sojitz FunctionInvestor, EPC funding arrangement

Year of Award2001

CountryIndonesia

Strictly Confidential

http://images.google.co.jp/imgres?imgurl=http://www.crwflags.com/fotw/images/u/us~exmob.gif&imgrefurl=http://www.crwflags.com/fotw/Flags/us~hfexx.html&h=216&w=360&sz=7&hl=ja&start=4&tbnid=IVOpTVWwcC-sgM:&tbnh=73&tbnw=121&prev=/images?q=exxon+mobil&gbv=2&hl=ja

http://www.rasgas.com/rg/


ClientCFE

Comisión Federal de Electricidad

DescriptionMerida-III 484MW Combined Cycle Power Plant BOO Project

Sojitz FunctionEquity Investment (25%) &ECA Finance Arrangement

Year of Award1998

CountryMexico

ClientEVN

Electricity of VietNam

DescriptionPhu My 3 717MW Combined Cycle Power Plant BOO Project

Sojitz FunctionEquity Investment (1/3 under consortium with Japanese Utility) & ECA Finance Arrangement

Year of Award2001

CountryVietnam

ClientSCECO-SAUIDI ELECTRICITY COMPANY- Western Region

DescriptionShoaiba 1 & 2 380kV SubstationEPC Contract

Sojitz FunctionEPC Coordination & Contract Management

Year of Award1999 & 2004

CountrySaudi Arabia

ClientCFE


DescriptionMonterrey-II 484MW Combined Cycle Power Plant BLT Project

Sojitz FunctionEquity Investment (50%), Project Development & Sponsor Loan

Year of Award1998

CountryMexico

ClientCFE


DescriptionRosarito-III 541MW Combined Cycle Power Plant BLT Project

Sojitz FunctionEquity Investment (50%), Project Development & Sponsor Loan

Year of Award1999

CountryMexico

ClientALBA

Aluminium Bahrain B.S.C

DescriptionPot Line No.5 Rectifier Transformer & Substation EPC Contract


Year of Award2004

CountryBahrain

ClientPowerGrid

Description400kV Oil Filled Cable Underground Transmission Line Project



CountrySingapore

Strictly Confidential

SOJITZ CREDENTIALS ~ POWER

ClientCEB

Ceylon Electricity Board

DescriptionAsia Power (Private) Ltd.51MW Diesel Generating Power Plant BOO Project

Sojitz FunctionEquity Investment (38.4%), Finance Guarantee &Lubrication Oil Supply Agent


CountrySri Lanka

http://www.cfe.gob.mx/es/




Place Sunshine Hours/Year Sunshine Hours/Day

Yuma, Arizona, USA 4015 11

Phoenix, USA 3872 10.6

Asswan, Egypt 3863 10.6

Las Vegas, USA 3825 10.5

Dongola, Sudan 3814 10.4

Tucson, USA 3806 10.4

Faya-Largeau, Chad 3792 10.4

Kharga, Egypt 3791 10.4

Abu Hamed, Sudan 3763 10.3

El Paso, USA 3763 10.3

Source: CurrentResults.com

http://www.currentresults.com/Weather-Extremes/sunniest-places-countries-world.php


Yuma, Arizona, USA

Source: THE GEORGIA MINERAL SOCIETY, INC. Source: Rah Tours

http://gamineral.org/

http://rahtours.com/


Phoenix, USA

Source: blog.flickr.net/en/2011/07/08/phoenix-haboob/


Source: CENTER FOR GLOBAL DEVELOPMENT

http://www.cgdev.org/userfiles/image/blog/solar radiation.jpg


1.1 Global PV Capacity

179 590

2,930

1,861 3,521

1,402 1,923

3,238

5,396 13,108

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2007 2008 2009 2010

Annual Newly Installed Global PV Capacity (MWp)

Large-scale PV power plants (>500 kWp)

Small scale PV power plants (<500 kWp)

Source: Renewables Insight – Energy Industry Guides, Denis Lenardic, pvresources.com/EPIA


1.2 Comparative Growth Rates of REN in Europe

Annual average growth rates in renewable energy consumption (%), EU-27

Data source: Eurostat. Energy statistics: Supply, transformation, consumption• all products - annual data.• renewables and wastes (total, solar heat, biomass, geothermal, wastes) - annual data.• renewables (hydro, wind, photovoltaic) -annual data.

http://www.eea.europa.eu/data-and-maps/indicators/renewable-primary-energy-consumption/renewable-primary-energy-consumption-assessment-6


1.3 REN Contribution to Energy Consumption in Europe

Contribution of renewable energy sources to primary energy consumption in the EU-27

Note: The contribution of renewable energy sources to gross energy inland consumption (GEIC) increased in the EU-27 from 4.4 % in 1990 to 8.4 % in 2008. For the EU-15, the share of renewables in total gross inland consumption accounted for 8.6%, in 2008, falling substantially short of the indicative target set in the White Paper on renewable energy (COM(97) 599 final) of 12 % by 2010 Data source: Eurostat 2010. Energy statistics: Supply, transformation, consumption, annual data:• All products• Renewables and wastes (total, solar heat, biomass, geothermal, wastes)• Rrenewables (hydro, wind, photovoltaic)• Renewables (hydro, wind, photovoltaic)

http://www.eea.europa.eu/data-and-maps/indicators/renewable-primary-energy-consumption/renewable-primary-energy-consumption-assessment-6


1.4 Germany’s PV Market Remains Buoyant

7,400

3,000

0 2000 4000 6000 8000

2010

2011

New Installed Capacity (MW)

Year

German Solar Market 2010 vs. 2011

7,50040%

Source: Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen


1.5 Analyzing the German PV “Juggernaut”

cap on newly installed German PV parks

Oct‟11-April „12

• Registered added capacity used to determine FiTapplicable 1.7.2012

• Oct-Dec ‟11: 4,150 MW capacity added

Q4 2011

• Current results (details available @March ‟12) => degression of -12% as of 1.7.2012

• PV installation costs dropping more rapidly vs. FiTs

Jan-April‟12

• Added capacity >= 225 MW => -15% FiT

• If current growth maintained, 2022 target reached end of 2015

German Economy Minister Philipp Roesler


1.2 Current Market Situation - Europe



2012?

Reverse bidding

Grid parity

European markets reaching maturity

Reduction in EPC costs

Fierce price competition

(e.g. Chinese)

Credit crunch / Higher

Lending Costs

Legal Insecurity

(retroactivity)

Political pressures

FiT cutbacks


1.7 Current Market Situation - USA

2012?

Budgetarycutbacks

Fierce price competition

(e.g. Chinese)

Import duties?

Election YearPolitical

pressures

Situation varies from

State to State


1.8 Current Market Situation - Asia

2012?

Off-grid


2.1 Shift in value chain towards local suppliers

-

1,000

2,000

3,000

4,000

5,000

6,000

(€/k

Wp

)

EPC Price Germany - BSW-Solar Rooftop PV Price Index

Average Residential Customer Price for completely installed rooftop PV modules up to 100 kWp (excl. VAT)Source: BSW-Solar 8/2011

http://www.bswsolar.com/fileadmin/content_files/201105_BSW_Solar_Faktenblatt_PV.pdf





2.2 Price Performance of PV Modules and Outlook

0

0.5

1

1.5

2

2.5

3M

ay-0

9

Jul-09

Sep-0

9

Nov-0

9

Jan-1

0

Mar-

10

May-1

0

Jul-10

Sep-1

0

Nov-1

0

Jan-1

1

Mar-

11

May-1

1

Jul-11

Sep-1

1

Nov-1

1

Jan-1

2

Mar-

12

May-1

2

Jul-12

€/ W

p

Pricing of Different PV module types, according to Origin

Crystalline Germany (up to Jan. '11 Europe)Crystalline ChinaCrystalline JapanThin film CdS/CdTeThin film a-SiThin film a-Si/µ-Si

Source: www.solarserver.com, www.pvXchange.com

Explanatory notes: 1) Only prices for PV modules are published. 2) No prices for end customers listed. For an average turnkey solar PV power system, the price for crystalline modules must be multiplied by approx. 1.5 - 1.9, the price for thin film PV modules by 1.8 – 2.5. 3) The listed prices represent the average quotations in the international PV spot market.


2.3 German FiT on a Diet

€ 0.1500

€ 0.2000

€ 0.2500

€ 0.3000

€ 0.3500

€ 0.4000

€ 0.4500

€ 0.5000

FiT

German Feed-in-Tariff (FiT) Evolution for Installed Capacity of >100kW

Ground-Mounted Conversion & Sealed Sites

All other Ground-mounted Sites

Source: German Renewable Energy Law (“EEG”)


2.4 The German PV “Fest” is Over

Source: Abendblatt

FiT for electricity fed into the grid from PV plants with an installed capacity <=30kW as a function of operation start-up year

Reduction of FiTthrough successive REN Law Amendments

Cents / kWh

http://www.abendblatt.de/multimedia/archive/01041/Solarfo_rderung_1041291a.jpg


2.5 Strategic options post-nuclear era for European utilities and shift in investment focus

Change in nuclear policy

• Plant Shut-Downs

• New energy sources required

• Renewables

New Generating Capacity

• Flexible operation & rapid start-up (e.g. pumped-storage hydro, coal, gas…)

• Construction Time

• Delays in coal and lignite plant construction (T24 steel alloy =>cracks in boiler casings)

Challenges faced

• Electricity transmission: wind energy (north) to consumption (south)

• Price mismatch: gas purchase (oil-price-indexed procurement) & sales contracts (declining spot prices)

• Growing intermittent generation

Pan-European Energy Strategy Required – Germany Spearheading


2.6 Difficulties in obtaining leveraged finance in certain markets:

Alternative Financing Options

Pension funds

(e.g. European,

North American…)

Sovereign funds

(e.g. oil exporting nations, BRIC, Asian)

State-sponsored

Entities

(e.g. ECAs, Overseas Private Investment

Corporation (OPIC), Netherlands

Development Finance Company (FMO),

Institution Financière de Développement (PROPARCO), KfWEntwicklungsbank,

Japan Bank for International

Cooperation (JBIC)…)

Multilateral Lending Entities

(e.g. European Investment Bank, Asian

Development Bank, IFC,Inter-American Development Bank,

African Development Bank, regional

renewable energy funds…)


3.1 Opportunities in Off-grid PV Generation

• Advances offer new viable solutions

• "Plug-N-Play“- solar modules & storage solutionsTechnology

• No need for state-sponsored FiTs

• PPA (Diesel Parity of PV energy)Legal Framework

• Good fit between electricity generation & peak consumption (e.g. air conditioning, water heating…)

• Electricity fed into grid or consumed directly by clientApplications

• Financing in emerging markets

• Local regulation

• Lack of experience with PV (need for special LT PPAs: 20-25 years): need technology/EPC partners

• Environment (e.g. temperatures, salt, seawater…)

Challenges

• Ideally close to the equator (LatAm, SE Asia…)

• Maldives: PV project slashed electricity price from US$ 0.35 – 0.77/kWh (diesel generators with far greater capacity than necessary=> costly!) to US$0.25/kWh. Amortization: 5-6 years

Projects


3.2 Delivering Strategic Partnerships

• Identify suitable projects

• Liaison to local authorities (accelerate licensing/permitting process)

Project Developers

• Much experience in mature markets

• How to hedge risks in new geographies (e.g. local subsidiary, domestic contractors…)

EPC Contractors

• Commercial banks, multilateral lending entities, state-owned banks (e.g. German KfW, Japanese JBIC), ECAs (e.g. Japanese NEXI, Hermes…),

Financial Entities

• Electricity boards/commissions

• State-owned utilities, grid operators, e.g. Masdar, Morocco’s MASEN

Governments

• “Door openers” to their home markets, promote government policies, co-invest outside domestic market

Sovereign Funds

• Banks, pension funds, insurance companies, family offices, trading companies, high net-worth individuals, strategic partners (utility companies), renewable energy funds, trading companies

Co-Investors

• Ready supply, favorable procurement conditions, access to newest technologyTechnology Suppliers


2,000 MW

2,000 MW

2,000 MW

Kingdom of Morocco’s Solar Program introduced Nov. 2009 - Moroccan Agency for Solar ENergy (MASEN)

2020

3.3 Strategic partnerships - Morocco

42%

58%

Renewable Energy

Conventional Energy

http://www.masen.org.ma/upload/projets/aai/Pr-43-lang-en-ai-1-12.pdf



ONEKingdom of

Morocco

Moroccan

Law 57/09

MASEN

SPV

PPA 1

Interconnection agreement

PPA 2*

PPA 2* = PPA 1 – SPV tariff

R&D

Training

Local Industry

25%

http://www.one.org.ma/

http://www.masen.org.ma/upload/projets/aai/Pr-43-lang-en-ai-1-12.pdf



MASEN invited interested parties to competitive tender process for the Design, Construction, Operation, Maintenance and Financing Any solar technology is acceptable

Target COD: March 2015

500 MW



1st PPA for MASEN

• Current PPAs in Morocco drafted by ONE

• Hope that MASEN PPA will be similar to ONE PPA (bankable)

ONE PPA Snapshot

• Bidder is responsible on long-run basis for design, financing, construction, O&M

• Financial closing risk assumed by bidder. In case of failing to close by X date, loss of development security & PPA termination, perhaps also compensation payments to ONE.

• Retroactive changes risk in PPA model assumed by offtaker

• PPA termination provisions in case of SPV default: if ONE exercises right to terminate PPA following SPV default (after construction completion) => termination payment obligation. Will MASEN maintain policy?

• Project commercial operation date: ownership of plant will transfer from SPV => ONE => grants SPV “right of quiet enjoyment” on plant => SPV operates asset. Lenders do not enjoy physical asset security, although accepted by market on other Moroccan power projects.

• MASEN has already “secured” the site.

• SPV normally owned by successful bidders, however ONE reserves right to participate in equity. “Instructions for Pre-Qualification” state MASEN‟s right “to participate in the financing” of SPVs (whether debt or equity is unclear). If equity, perhaps requirement to shareholder agreement in RFP.

http://www.one.org.ma/



• invested in 2 infrastructure projects in <= 10 years + total amount of equity & debt >= US$800m

• a net worth >= $200m.

• Consortium bid: the lead member must satisfy criteria.

Financial Requirements - Bidder must demonstrate:

• demonstrated development of thermal power plants Σ accumulated capacity >= 500MW <= 10 years, minimum 1 thermal power plant (>= 100 MW, <=7 years)

• operated & managed thermal power plants Σ accumulated capacity >= 500MW, minimum 1 thermal power plant (>= 100 MW, 1 plant operating >= 3 years)

• Consortium bid: the lead member must satisfy criteria.

Technical Requirements - Bidder must:


3.4 Strategic partnerships - India

Jawaharlal Nehru National Solar Mission – part of Climate Change effortsCountry endowed with 4-7 kWh/m2/day

Proposed Roadmap

Application segment Target for

Phase I (2010-

13)

Target for

Phase 2

(2013-17)

Target for

Phase 3

(2017-22)

Solar collectors 7 million m2 15 million m2 20 million m2

Off grid solar

applications

200 MW 1000 MW 2000 MW

Utility grid power,

including roof top

1,000-2000

MW

4000-10,000

MW

20,000 MW

Source: Central Electricity Regulatory Commission

http://www.cercind.gov.in/



Source: Central Electricity Regulatory Commission

• Effective as of 1.4.2012 & remain in force for 5 years commencement date

• PV / Solar thermal Tariff Period = 25 years.

Central Electricity Regulatory Commission (Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2012

• (a) Return on equity; (20% p.a. first 10 yrs, 24% p.a. 11th year onwards)

• (b) Interest on loan capital; (loan tenure 12 yrs, 70% Debt/30% Equity)

• (c) Depreciation;

• (d) Interest on working capital;

• (e) Operation and maintenance expenses;

• Normative capital cost of PV projects: ` 1000Lakh/MW for FY 2012-13; Commission has right to deviate from norm => project specific tariff determination

Capacity utilization factor PV project => 19%

O&M Expenses:` 11 Lakhs/MW for 1st operating year, escalated at the rate of 5.72% p.a.

Single part tariff comprising following fixed cost components:

http://www.cercind.gov.in/



2nd auction: state-owned power trading company (NTPC Vidyut Vyapar Nigam) set price of solar-generated electricity for national grid

• Average winning bid = 8.77 rupees (US$0.165/kWh) => ≈ 2x price of coal-generated power, ≈ -27% compared to winning bids at 1st action (1 year ago)

• Germany pays ≈ € 0.1794 (≈ US$ 0.23/kWh)

Gujarat – India’s Largest Solar Program (so far 186 MW of 933 MW PV plants by 1/28/12 built)

• Electricity regulator pledges to pay 15 rupees (US$ 0.28/kWh for 12 yrs), ≈ 3 x wholesale electricity market rate, PV plants meeting deadline.

• Promotes solar parks promising supply of: sites, distribution infrastructure, quick approval to projects built in designated areas.

• Developers of projects under construction in India’s largest solar program granted extension until Jan. 28, 2012 to complete plants without losing their premium rates (completion failure = loss of FiT).

• Deposit of 5 mill. rupees (€ 75k)/MW of awarded capacity, forfeited if investors failed to build plants on time.

• Investors asked for extension due to delays land acquisition, heavy rains blocking access to sites. One company’s PV park location was changed three times by authorities, delaying shipment of components due to lack of LoC (required secured land)

• GMR Energy Ltd. announced commissioning of first 25-MW solar power plant Gujarat’s Patandistrict.

• Following 28/1/12 deadline: Gujarat plans rate ≈ - 30%, based on draft proposal



• 2011 PV capacity x 20 => 356 MW (target @1,233) due to transmission infrastructure problems, rains, and delays in financial closure

Dec. 2010: India‟s PV capacity 17.8 MW

• 60% of rural households in India do not have access to electricity

PV energy in India: generating employment opportunities, preventing more rapid urbanization

• Rajasthan‟s advnatages: abundant land availability, solar radiation of 6-7 kWh/m2, raw material availability (e.g. zinc, molten salt, solar glass)

Rajasthan awarded 873 MW of PV under National Solar Mission phase: Jodhpur, Jaisalmer, Bikaner, Barmer


3.5 Strategic partnerships - South Africa

• IPP PP targets: 2016=3,725 MW, 2030=17,800 MW

• Socio-economic & environmentally sustainable growth,

• Kick-start & stimulate the renewable industry in South Africa.

• Eligible technologies: onshore wind, concentrated solar thermal, solar PV, biomass solid, biogas, landfill gas, small hydro

• Department of Energy, Republic of South Africa

Renewable Energy

generation in IRP 2010-2030

• Bid on tariff (bid > price cap = disqualified) + identified socio-economic development objectives of Energy Department

• Tariff payable by Buyer pursuant to PPA between Buyer & Project Company of a Preferred Bidder.

• Generation capacity allocated to each Technology

• Max tariff that Bidders may bid based on IPP Procurement Programme (IPP PP)=>RFP.

• Facility procured required to achieve commercial operation by dates set out in RFP.

• Intention to introduce separate ‘Small Projects IPP PP’ for electricity generation projects <5MW

Characteristics

• Pay non-refundable fee R15 000 / Bidder, complete the registration form.

RFP Access

http://www.ipp-renewables.co.za/








• Evaluated based on: price & economic development.

• Price => formula to calculate “equivalent annual tariff” for submitted MWh price => Points awarded based on 2nd formula

• Economic development: bidders must state their commitment to economic development requirements

Accepted Bids

• Job creation, local content (special focus on local manufacturing), rural community development, skills development and education, business development, socio-economic development, inclusion of historically marginalized

• Price / Economic Development point allocation: 70 / 30

• Preferred Bidders = ranked highest, best placed bidders to satisfy maximum allocation MW/technology.

• Selected Preferred Bidder: regularly reporting required on compliance “price/economic development”, as stated in their bid, during project life

• Non-compliance: could result in eventual cancellation of PPA.

Evaluation Criteria

• Draft PPA, Implementation Agreement, Direct Agreement & Connection Agreements = non-negotiable

• DoE reserves right=> revise draft agreements during IPP PP

• Bids must be accompanied by bid guarantee (R100,000/MW submitted in bid) issued by 1st class South African bank

Agreements



3,725 MW IPP

Procurement Programme

Onshore

1850 MW

PC: 1,150

Concentrated Solar Thermal

200 MW

PC: 2,850

PV

1450 MW

PC: 2,850

Biomass

12.5 MW

PC: 1,070

Biogas

12.5 MW

PC: 800Landfill Gas

25 MW

PC: 600

Small Hydro

75 MW

PC: 1,030

Small Projects

100 MW

Source: Department of Energy, Republic of South Africa

Price cap (PC) in R/MWhEskom Holdings SOC Ltd. supplies ≈95% S.A.’s electricity. Owns total capacity 41,200 MW ≈ 85% coal-fired power stations.

http://www.ipp-renewables.co.za/?page_id=524



1st Phase Allocation

≈ 632 MW

(818 MW pending)

150 MW

(50 MW pending)

634 MW

((1216 MW pending)

Pending Allocation in Remaining Phases: 2,209MW

4 Phases Pending

Σ 1,416 MW submitted by preferred bidders

Close financing: June ‘12 Construction Start: June ‘12

Dec. 7, 2011

28 bidders renewable energy tender Diversify away from coal





First Bid

First Bid Submission Date 4-Nov-11

Selection of Preferred Bidders in respect of First Bid Submission Date 25-Nov-11

Signing and effective date of PPAs, Direct Agreements, Implementation Agreements, and Connection Agreements and Financial Close

19-Jun-12

Second Bid

Notification by the Department of Second Bid Submission Date in accordance with clause 9.5 of Part A of the RFP

25-Nov-12

Second Bid Submission Date 5-Mar-12

Signing and effective date of PPAs, Direct Agreements, Implementation Agreements and Connection Agreements and Financial Close

13-Dec-12





Third Bid Submission

Notification by the Department of the Third Bid Submission Date in accordance with clause 9.5 of Part A of the RFP

14-May-12

Bidders to notify the Department of the information required pursuant toclause 9.7 of Part A of the RFP if submitting a Bid Response in respect ofThird, Fourth or Fifth Bid Submission Dates

14-Jun-12

Third Bid Submission Date 20-Aug-12

Signing and effective date of PPAs, Direct Agreements, ImplementationAgreements and Connection Agreements and Financial Close

31-May-13





Fifth Bid Submission

Notification by the Department of the Fifth Bid Submission Date in accordance with clause 9.5 of Part A of the RFP

13-May-13

Fifth Bid Submission Date 13-Aug-13

Signing and effective date of PPAs, Direct Agreements,Implementation Agreements and Connection Agreements and FinancialClose

26-May-14


Fourth Bid Submission

Notification by the Department of the Fourth Bid Submission Date in accordance with clause 9.5 of Part A of the RFP

29-Oct-12

Second Bidders Conference 3-Dec-12

Fourth Bid Submission Date 4-Mar-13

Signing and effective date of PPAs, Direct Agreements, ImplementationAgreements and Connection Agreements and Financial Close

13-Dec-13



3.6 Strategic partnerships - Malaysia

• Dec. 2011 Malaysian government passes law installing PV tariff system

• PV FiTs (in EUR/kWh): 0.1807 (large PV) to 0.30895 (small PV)

• Duration: 21 years from Commencement Date

• Commencement Date: date installation is completed, grid connected & ready to produce energy for commercial sale

• Max Size: 30 MW (Ministerial exceptions)

• Additional Bonus FiT => Criteria!

• Future FiT rates will subject to annual degression rates (similar to Germany), applicable only to new installations as of 2013+. FiT will not be reduced retroactively, but are valid over 21-years.

• Degression rate: costs expected to drop as technologies advance.

Legal Framework

• Sustainable Energy Development Authority Malaysia (SEDA)

• Evaluates projects & assigns FiTRegulatory Authority

• 1400 - 1900 kWh/m² p.a.

• Germany: 1000 kWh/m², Spain: 1800 - 2300 kWh/m²

Average Global

Irradiation

http://seda.gov.my/



Description of Qualifying Renewable Energy Installation FiT Rates (RM per kWh) (a) Basic FiT rates having installed capacity of :

2012 2013 2014

(i) <= 4kW 1.2300 1.1316 1.0411

(ii) >4kW <= 24kW 1.2000 1.1040 1.0157

(iii) >24kW <= 72kW 1.1800 1.0856 0.9988

(iv) >72kW <= 1MW 1.1400 1.0488 0.9649

(v) >1MW <= 10MW 0.9500 0.8740 0.8041

(vi) >10MW <= 30MW 0.8500 0.7820 0.7194



Description of Qualifying Renewable Energy Installation FiT Rates (RM / kWh) (b) Bonus FiT rates having the following criteria (one or more):

2012 2013 2014

(i) use as installation in buildings or building structures

+0.2600 +0.2392 +0.2201

(ii) use as building materials +0.2500 +0.2300 +0.2116

(iii) use of locally manufactured or assembled solar PV modules

+0.0300 +0.0276 +0.0254

(iv) use of locally manufactured or assembled solar inverters

+0.0100 +0.0092 +0.0085



Category Rules for Solar PV (FiA) application

Category 1 : Individual (≤ 12 kW) maximum 12 kW per application; normally for residential / households (rooftop). Multiple FiA applications on same installed site prohibited.

Category 2 : Non-individual (≤ 500 kW) maximum 500 kW per application

Category 3 : Non-individual (> 1 MW ≤ 5 MW) maximum 5 MW per application

• Ensures fair competition & transparency in implementation of FiT system as stipulated under

Section 3 of Renewable Energy Act 2011• Provide opportunity for many players to secure

share of limited PV energy quota

Professional Investors – 2 Rules:1) Applicants may apply for max. 500 kW/application for small PV system, or

2) Max. 5 MW for larger PV systems.


Thank you

Mr. Masayoshi Hirose

Deputy General Manager, Assistant to Division General

Manager Machinery Division of Europe, Russia & NIS

[email protected]

+49 (0) 211 3551 ext. 131

Mr. Thomas Riess

Sales Manager

[email protected]

+49 (0) 211 3551 ext. 128

Mr. Martin Supancic

External Financial Advisor

[email protected]

+49 (0) 211 3551 ext. 190, Mobile: +49 (0) 173 671 8698

Environment & Infrastructure Dept.

Machinery Division of Europe, Russia & NIS

Sojitz Europe plc, Düsseldorf Branch

Am Wehrhahn 33, 40211 Düsseldorf

Germany

+49-(0) 211-3551-0

mailto:[email protected]



challenges and opportunities in the photovoltaic (pv)

Documents

sales of manufacture

sale of sales

billionnet sales

sojitz holdings corporation

sales of iron oreetc

sojitz corporationname

sales ofchemicals earths

ipp solar power sales