Armstrong South East Asia Clean Energy Fund LP
Solar Energy South East Asia
Financing Small Power Projects
26th November 2014
Fund Executive Summary
2
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Armstrong Fund
Fund Size $164 m
Investors: IFC, AMC, EIB, DEG, FMO, Proparco, Asian Corporate, Unigestion & Obviam
Clean energy assets, using commercially proven technologyInvestment Size – US$ 5 – 25 million
Expansion capital - at least 90% investment in post-permitting projectsMajority control by investor syndicate - minority only if influential
SE Asian renewable energy & resource efficiency
Growing energy demand in SE Asia • Increasing need for clean & sustainable energy •Opportunity for greater resource efficiency • Region underserved by private capital •
Armstrong Fund established to meet this clear market opportunity
Fund Overview Investors
3
Solar SE Asia Investment Activity
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Country Reasons for Delay in 2013/14 What Has Changed in 2014
Thailand
Policy: No issuance of FiT allocation for solar
• New FiT rate agreed (Aug 2014)• Approval committee formed for FiT allocation
Development: Rooftop hosts waiting for proof of concept
• Announced plans for significant PPA issuance.• Agreements being signed / tender processes
starting.
Philippines
Policy: Limited solar allocation, “First Come First Served” rule and funding mechanism for FiT not established
• FiT-ALL Fund & implementing regulations near finalization
• Announcement that Solar FiT quota to be increased to 450MW; formal increase and applicable tariff rate expected to be issued soon
Development: Off-takers slow to execute bilateral PPAs pending proof of concept
• First bilateral solar PV project with Socoteco I due to commence construction shortly
Indonesia Policy: Proposed increase to hydro FiT rate• New FiT rate and new implementation rules issued• Standard PPA to be issued to further streamline
process
� Increasing cost competitiveness & key policy commitments in Thailand and the Philippines now underpinning a base for strong growth inSoutheast Asia.
Solar Policy & Growth
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Source: Thailand Dept. of Alt. Energy (DEDE), Indonesia Ministry of Energy, Philippines Dept. of Energy and AAM estimates.
� Policy implementation …slow but progressing;
� Energy security concerns & cost competitiveness driving sharp rise in announced PPA issuance over next 12 months;
� Government sponsored FiT rates reflecting move to unsubsidized energy – Thailand (Fixed 17.6c /kWh 20 yrs), Philippines (~Fixed 20c/kWh 20 yrs);
� Grid parity allowing expansion into higher potential bilateral DG and industrial/commercial rooftop segments (13.0c/kWh + PPI);
Solar Tariffs & Competitiveness
� General power prices in all SEA markets forecast to rise >> CPI reflecting increasing cost of fuel mix (LNG & diesel) and need to reduce subsidies.
� Reductions in system costs and costs of financing continue.
� Solar PV power now possible @ $0.13/kWh (20% reduction YoY) driving growth at all scales – both public & private.
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Source: AAM estimates.
Sector Focused Funds Offer:
�Development funding;
�Contracted equity funding against clear milestones supports developer with flexible & responsive financing;
�Specialized financial & execution support.
Sector Focused Funds Seek:
�Experience + initial pipeline with clear entry and exit terms;
�Alignment & compatibility;
�Opportunity to build execution capacity and capability. Financial
ClosureFeasibility
Confirmed
PPA
Approval
• EPC
• Debt
• Legal
• Surveys
• Engineering
• Equity
financing
• Permits
• Licenses
• Site ID
• TeamR
isk / W
AC
C
Entry point
for Sector
Focused
Investors
More typical
entry point
for Investors
Financing Solar Matching Needs
For Investors
�Price competitiveness – move to growth potential of unsubsidized opportunities;
�Market maturing – increased knowledge of risks & opportunities;
�Price discovery shortening development timelines.
For Developers
�Financing increasingly flexible & available;
� Opportunity to build capacity – platform.
Combined
�Positive feedback of scale - lower costs, lower risks, lower financing costs, lower tariffs, increased demand.
Financing Solar Summary
Q&A
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