the solar future de - matt cheney "a new large-scale solar initiative"
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Matt Cheney; former CEO of Renewable Ventures, a wholly-owned subsidiary of Fotowatio, a global solar Independent Power Producer that is one of the largest companies of its kind worldwideTRANSCRIPT
CleanPath Ventures
Solar Future II – Vision and Strategy Conference
Munich June 2010
June 2010
The Solar Industry in 2013
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Renewable Ventures Experience and Expertise
Accomplishments include:
• Financed, owned, and operated over $300 MM in solar energy assets
• Syndicated the first solar tax equity fund in the U.S.
• Raised and managed 5 solar tax equity funds in the past four years
• In 2007, financed and built the largest solar photovoltaic power plant in North America (largest up to Q4 2009)
• Introduced the Power Purchase Agreement (PPA) to the U.S. solar retail market in 2001
• First to finance amorphous, CIGS, CadTel thin film silicon projects in the North America with leveraged partnership structure, non-recourse
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Reference to Experience – Nellis
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The Solar PV Industry in 2010���
The European Market Today: Current Trends in the Europe:
Greece, Spain, Portugal, Hungary, Ireland – who’s next?
Copenhagen was a flop, and the carbon markets are stagnating
$430+ BN allocated to green worldwide -- most left unspent (>10%)
Economic pressures will impact PV incentive policies forward and back, with the oldest richest incentives being reviewed and potentially recalc’d
Revalued currencies in EU and China may improve EU companies that haven’t yet moved manufacturing offshore – most have moved already
PV Parity has arrived at certain areas in the US, so why not in some of Europe now, much less by 2013? Excessive value stripped out?
Reserve capacities are tightening in 2009, and energy pricing rising, particularly due to RPS drivers – will continue beyond super FITs
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The Solar PV Industry in 2010���
The U.S. Market Today:
World of losses – so much for tax incentives
Stimulus programs not working, or on track for failure – Federal Loan Guarantee Programs have orphaned the commercial PV space
Even the most qualified can’t predict tax or public policy as administered by the IRS and OMB, etc.
Energy Bill can help and is needed more than ever, lots of clean-up req’d, key extensions needed (Fed Cash Grant & Depreciation)
Pricing has improved such that parity in sight with stable incentives
Transmission (lack thereof) is major constraint – 300,000 MWs of wind in interconnection in queue
Lack of carbon policy is causing confusion leading to delay/waiting
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The Solar PV Industry in 2013
General feel is R&D in U.S./Europe and OEM in Asia
Still, consolidation (by 2013) will likely produce long-term winners who will focus on market share, customer relationships, and full service and integrated offerings
Commercialized new PV tech can change game if we can bridge technology to capital markets, while managing risks along the way
Insurance will have emerged to convert balance sheet coverage (self insurance) to actuarial methods – it may cost more, but trustworthy – insurance today (Munich RE, etc.) is not seen as enough, but a start
Policy will impact manufacturing strategies – local content requirements to dominate (jobs, jobs, jobs)
Firm power, with dispatchability and power conditioning capacities, will be in demand and will demand a premium to complement a smarter grid
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The Solar PV Industry in 2013 cont.
U.S. Carbon policy by 2013 – renewable + nuclear win big
U.S. Power pools will begin to re-organize in favor of big regional markets, most likely as a point of national security – who needs 120+ balancing authorities anyway!
U.S. – 3,250 electric utilities will begin to consolidate, and will all be customers of solar
Solar Industry now seen as a threat to conventional power interests which is now using lobbying resources to shape the discussion – AB 32 example
2013 Markets, include India, where they are around 10% deficit at peak & baseload. China market is larger. Asia and South America also interesting.
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Bottom Line – Demand is On the Rise
Increased Demand
Public Concern
Energy Security
Policy and Regulation
Long term Fuel Price
Risk
Macro trends are increasing demand for Renewable Energy:
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Supply Constrained By Capital Intensity Barrier
Capital New projects slow or stop due to lack “last mile” dev & construction financing
Expertise
Capital constraints drive out experienced personnel
leaving less development and technology expertise
Technology
Without experts or capital, new tech that reduce costs - increase performance remain “risky” and are not deployed
Project development is often caught in a counter productive cycle of capital intensity – frustrates demand
Constrained Supply
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Emerging Business Strategy ���
Problem: Capital Intensity Wall or Trap at Late Stage Solar Development
Demand is rising, late-stage capital is constrained, while early stage developers focus resources on expanding their portfolios – no capacity to carry thru to COD
Solution: Mezzanine Capital and Expertise
New sources of capital managed by development experts can break the cycle of constraints that is hold the industry back – every project is seen as a distressed asset, requiring a boost to COD
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A New Large Scale Solar Initiative – Cont.���
What We Are Doing: CleanPath Ventures Manages The Workout:
Founded by pioneers of PPA model in US with over 150 MW of solar completed and 1 GW+ pipeline – the team close and built over 50 commercial and large scale projects in the last 2 years
How We Are Doing it: Six Key Strategies
Roll up “distressed” assets facing a capital intensity barrier to COD Place “last mile” financing & expertise to mid-to-late stage projects Workout to COD – bridge and warehouse for long-term owners Steer project development to emerging and underserved markets Add commercialization of new technologies – upstream advisory
services to downstream placement to fields of proven tech Manage risks throughout
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Fund invests development equity before projects are construction ready. Some projects are sold at NTP, or before construction.
If not sold at NAT – Fund arranges construction financing and invests equity
Projects are sold at COD to Asset Investor class – Option: May hold asset thru tax credit recapture as a paid service
Balance of Plant and
Installation
Equipment Procurement Power & REC
Sales Agreement
Interconnection and Transmission
Agreements
Permits
Resource Assessment
Site Control
Long Term Debt
Tax Equity
Sponsor/ Developer Equity
Stage 1: Development Funding 2: Construction
~ 30 Year Owner ~ 12 to 36 Months (CleanPath)
3: Operations
Project Development Cycle
Project Value
~ Development Company
Projects eligible for roll-up/JV Fund adds dev $$ & expertise
NTP COD
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CleanPath Ventures will Break the Cycle
Finance Provide mezzanine and “last mile” capital for stuck projects (otherwise
essentially distressed assets)
Develop Work viable projects to NTP or COD
and sell to owner-operators (may hold thru tax credit recapture period)
Commercialize Manage risks preventing the
implementation of new technologies, and reduce overall system costs
CleanPath has the skilled developers and project financiers to break the cycle of constraints through:
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Research & Development
Early Stage Venture Capital
>X%
Manufacturing
Late Stage VC or Private Equity
>X%
Commercial-ization
Project Development/ Construction
Project Ownership and O&M
Tax Equity Fund
7-12%
Phase
CleanPath Ventures primarily focuses on the Technology Commercialization and Project Development/Construction Phases of the Value Chain, drawing on
its vast experience in the Project Ownership & Operation phase
CleanPath in the Renewables Value Chain
Risk and Reward Diminish Moving Down the Chain
CleanPath Ventures
>X%
Capital
Projected IRR
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Matt Cheney, Managing Director CleanPath Ventures LLC
[email protected] 415-244-6787���
Contact Information
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