UNFCCC African Regional Workshop

on preparing TT Projects for Financing

THE CLIMATE TECHNOLOGY INITIATIVE’S

PRIVATE FINANCING ADVISORY NETWORK

(CTI PFAN)

Peter StoreyGaborone, 4th September 2009

CTI PFAN NETWORK MEMBERS

CTI PFAN’S FUNDING PARTNERS

FE CLEAN ENERGY GROUP

INC.

Management

Consultant

Regulatory

Economics &

Finance

3

CONTENTS

Background & Introduction

� Introduction to PPL & CTI

� CTI PFAN - What it is & How it works

Review of the Pilot Phase

Overview of Current PFAN Coverage & Expansion Activities

� Global PFAN

� Investor Fora

� PFAN in Africa

Added Value of PFAN

Project & Selection Criteria

Summary

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INTRODUCTION TO PPL

Financing Arranger / Advisor

� Structured Finance / Project Finance

� Structured Trade Finance

� Fund Management (dedicated closed-end investment funds)

Exclusively for Developing Countries & Transition Economies

Special Focus on Clean / Renewable Energy Projects

� other areas of know how (Infrastructure)

Privately Owned / Independent

� Holding Co & Headquarters in Cyprus

� Companies / Offices in Vienna, Kiev, Johannesburg

Involvement with CTI / UNFCCC since 2004

� Founder Member & Global Coordinator of PFAN

More Info @ www.ppl-int.com

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INTRODUCTION TO CTI

Implementing Agreement under the IEA in support of UNFCCC Objectives. Currently 11 Member Countries:� Austria, Australia, Canada, Finland, Germany, Japan, Norway,

South Korea, Sweden, UK & US (Chair)

To promote more rapid development and diffusion of climate friendly and environmentally sound technologies through multilateral and international cooperation between the public and private sectors and between OECD Countries and Non-OECD Countries

CTI works with� Governments� IEA & UNFCCC Secretariats� Export Group on Technology Transfer (EGTT / UNFCCC)� International Organisations ( WB / UNDP / UNEP / UNIDO)� Business & Financial Sectors

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HOW DID CTI PFAN COME ABOUT?

Recurring Findings of CTI Work & Experience� Absence of sufficient public monies to make a meaningful impact

on technology needs of developing countries� Importance of Partnerships� Need for targeted capacity building to create enabling environment � Essential role of Private Sector

Workshops on Innovative Financing of Technology Transfer in Montreal (2004) and Bonn (2005) with UNFCCC / EGTT� Large supply of money seeking good investment opportunities� Investment Gap � Shortage of good project / financing proposals that meet the

standards & criteria of private sector financing communities

A tool was needed to help project developers create bankable financing proposals and bridge the development gap to the money���� PFAN

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WHAT IS CTI PFAN?

A Multilateral Initiative organised under the umbrella of CTI

� Funding from CTI Countries, USAID, APP, ICETT & REEEP

� Leverage Contributions from the Private Sector Members

Informal Network of Financing Professionals

� Private Sector Companies / Individuals

� Investors / Private Equity Funds / Banks

� Financing Consultants & Technical Advisors

� Commmon interest in providing finance & financing services to

climate friendly projects to support technology transfer

Aims:

� To mobilise private sector finance for climate friendly projects in

developing countries

� support UNFCCC objectives on Technolgy Transfer

� Capacity Building: financing skills & know how transfer

� Get more CE / RE / EE projects to financial close

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WHAT SERVICES DOES

PFAN OFFER?

Offers a free consulting & coaching service to project sponsors &

developers to help them raise pivate sector finance

� Project Development

� Support & Advice on Project, Financing & Technical Structuring

� Support & Advice on Sourcing Finance

� Support & Advice on preparation of financing proposals &

investment memoranda

Technical Assistance

� Contributions to the cost of technical studies etc

Matchmaking Service: Contact Broking & Introductions

Money / Financing – directly from PFAN Members & their

Networks

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HOW DOES IT WORK?

2 Project Identification & Selection Streams

� Unsolicited Submission through Network / UNFCCC / CTI etc

� RFP in connection with an Investor Forum

Induction Review

� Rigourous but non-bureaucratic

� PFAN Member assigned to project as dedicated coach / mentor

3 Further Reviews to guide project to Bankability & Financial Close

� Written report to developer at the end of Each Phase

� Recommendation / decision to continue or terminate support

� PFAN support can be terminated if financing thought unachievable

� Virtual Consultancy / Some hands-on ability during 4th Phase

Investor Forum Projects brought into pipeline after each Forum

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PFAN REVIEW PROCESS

Ind

uctio

n

1st Review

Developer / Sponsor

PFAN Network

1st ProjectProposal

UpdatedProposal

UpdatedProposal

UpdatedProposal

FinancialClosing

2nd Review 3rd Review 4th Review

Contact Broking Advice $

TechnicalCashflows

CPsGeneral

Comm / Fin

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HOW DOES IT WORK?

(Cost & Resource Allocation)

PFAN Services are provided free to the project developer / sponsor

� Subject to acceptance into pipeline & agreement of the conditions

Cost of providing the PFAN Services is absorbed by the Funding

Partners (CTI / USAID / APP / ICETT / REEEP etc).

� Fee paid to the PFAN Members / Consultants according to an

agreed discounted fee schedule

Provision of services subsidised by the PFAN Members

� Trade-off: access to the project pipeline for business development

� Right of First Offer to provide services / financing (non-binding &

fully competitive terms)

Success Fee on Financial Closing

� Shared between PFAN and the involved PFAN Consultant

according to an agreed schedule

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PFAN STATUS

Review of the Pilot Phase

Pilot Phase successfully completed (2006 – Mid 2008)

Initial Network Establishment / Proving the Concept

Ongoing support of UNFCCC, EGTT & CTI Capacity Building

Activities

Endorsement in Bali COP 13 Decisions (4 / CP.13)

New Funding from USAID, APP & CTI confirmed 30.09.08 / and

from REEEP 31.05.09

� To establish PFAN as a Global Programme

� Establish Regional Networks – also in Africa

� Dedicated Country Networks in selected countries

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PROJECT DEVELOPMENT IN THE

PILOT PHASE

Ca 65 Projects underwent Initial Review / Pre-Review

10 Projects formally inducted into development pipeline

� A further 10 – 15 projects would have been suitable for pipeline

induction had more resources been available

2 Projects brought to financial close (July 07 / Oct 08)

� Small Hydroelectric Power Station in Mexico (8,5 MW / USD 17 mio)

� Bio-Diesel Refinery in Brazil (66.000 tpa / USD 18 mio)

� Total of USD 35 million financing leveraged

3rd Project from the Pilot closed in Jan 09

� USD 1 miillion for Biomass Pelletisation Facility in RSA

� Up to USD 5 million for international project roll out

5 Projects at various stages of development carried over into full

scale operation

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OVERVIEW OF GLOBAL PFAN

Latin America & Caribbean� Longest standing best positioned network� Coverage in Brazil, Chile, Columbia, Mexico� Caribbean SIDS in preparation� Investor Forum planned for Q1 2010� 8 projects in development pipeline / USD 132 million of investment

Asia� Launched late 2008 – Q1 2009 / fast expanding� Investor Fora in Singapore (for ASEAN), Philippines & Indonesia � Dedicated Networks in China, India, Indonesia, Philippines� 25 projects in development pipeline / USD 1,2 billion of investment

CIS / Eastern Europe � Regional Coordinator & some coverage in place� Formal launch planned for H2 2009� 1 project in pipeline / USD 5 million investment

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INVESTOR FORA

Format � RFP / Selection of Projects (Finalists & Semi-Finalists)� Intensive PD & Financing Coaching for Finalists� Project Development Workshops for Finalists & Semi-Finalists� Investor Pitches / Showcasing of Finalists to investors� Awards for “best” proposals (independent panel of judges)

AFCEF-1 (Singapore, March 2009) � 11 Finalists / 10 Semi-finalists� USD 70 million investment requested / 2 - 3 million tpa CO2 red.� 100 investors at forum

Philippines (Manila, June 2009) � 6 Finalists / 4 Semi-finalists � USD 532 million total aggregate investment / 908.000 tpa CO2 red.� 20 Investors

Indonesia (Jakarkta, June 2009)� 7 Finalists / 3 Semi-finalists� USD 354 million total aggregate investment / 991.000 tpa CO2 red.� 15 Investors

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PFAN IN AFRICA

Regional Network under construction & development� Local & International Advisors & Investors� PPL International as Regional Coordinator in Johannesburg� One project already closed� 2 Projects in pipeline / 2 under review

Project Handling Capacity � 30 - 40 projects over 3 years� Target: USD 38 million – 94 million of financing leveraged

Dedicated Country Networks in Uganda & Mozambique� Roll-Out from August / September 2009

Investor Forum planned for April 2010 � Applications from any African country will be eligible� Venue probably Johannesburg� RFP due for publication at end of September

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EXAMPLE PROJECTS

USD 1 Mio for SA Energy Densification Technology (Bio-mass)

� SA Developer & Investor

� Transfer of Technology to China via PFAN Network in China

� Project Roll-Out in SA and Internationally

Sunlabob - Solar Rural Electrification & Lighting Project

� Innovative Financing & Delivery Model based on rental of

charging stations & lanterns financed by intermediary

� Transfer of successful from Laos to Uganda

� (Potential replication in Mozambique & Togo & others)

Solar Pumping, Irrigation & Power Supply for development of

small scale sustainable agricultural activity in Mozambique

� Transfer of successful Brazilian Project Model

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ADDED VALUE OF PFAN

Early stage development funds / tools like PFAN are scarce and vitally important

Resource Optimisation� Sorts the good from the bad, enabling developers & investors to

concentrate on projects with investment potential

Access to Deal Pipeline for Investors

Direct Access to Investors for Developers

Symbiotic Network Effect� Promotion of alliances & relationships between developers /

investors / advisors in the Network� Exchange of Projects & Project Development Ideas

Risk Reduction through targeting of key risk points

Accelerated Development Progress

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[TNAs / NAPAs / NAMAs] etc

[TNAs / NAPAs / NAMAs] etc

Projects & Initiatives

PRIVATE SECTOR

PRIVATE SECTOR

Project Development drivenby Private Sector Champion

Financing with Private Sector Capital

Project Development driven by Public Sector Champion

Financing with Public Sector / Donor Resources

PUBLICSECTOR

PUBLICSECTOR

PFAN

FilterProcess

PFAN

FilterProcess

• Commercial Projects & Businesses

• Good Returns• Well defined & self-contained

Cash Flows

• Policy Initiatives & Projects• Low Returns

• Social & Developmental Benefits

• Little identifiable Cash Flow

PPPsPPPs

PFAN’S Potential Filter Role -UNFCCC Process

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PROJECT CRITERIA

Target Project Size: USD 1 – 50 million total investment volume

� Smaller & larger projects possible

� Ca 15% of portfolio for Micro-Projects (< USD 1 million)

Typical Project Type: CE / RE mitigation projects for generation of

power or production of biofuels

� Wind, Solar, Geothermal, Biomass, Biofuels, Small Hydro

� PFAN is technology neutral; but it needs to be proven

Also open for Energy Efficiency & Adaptation Projects & Proposals

from Upstream Businesses

� Manufacture & Development of CE / RE / EE technologies

Projects can go beyond pure CE / RE and combine other aspects

and components (water / agriculture)

Commitment of Developer to implement PFAN advice

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What does the Ideal PFAN

Project look like?

Commercially & technically experienced Project Champion (Who?)� Financially committed: Equity stake

Proven Technology: can still be new / state of art (What?)

Reasonable Plan for Implementation (How?)� Risk Sharing & Diversification (consortia / suppliers / contractors)� Integrated project approaches & linkage

Consistent regulatory, legal & commercial framework (Where?)� Ability to quantify, manage, mitigate and price risk

Repayment Ability (What if?)� Strong Cash Flows & Cover Ratios under worst case conditions

Adequate Return (unique to each project) (Why?)� Also in consideration of all hard & soft factors and accruing

socio-economic benefits: Tripple Bottom Line approach� Reduction in GHG Emissions

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HOW DO I GET SELECTED?

Informal Unsollicited Free Form Initial Proposal

� Answers to the What? Where? Who? How? Why? & What if?

Must be able to demonstrate Back of Matchbox Technical &

Commercial Feasibility (based on current available information)

� Positive Initial Feasibility (technical & commercial)

� Adequate Return on Investment / Financing capable of repayment

GHG Reduction Potential

PFAN targets developers / sponsors that do not have the resources

to pay for professional project development & financing advice

Cyclical Calls for proposals for the Investor Fora

� RFP for Africa Investor Forum scheduled for End September

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FUTURE DEVELOPMENTS

Launch of a new activity to test whether the PFAN methodology

can be applied to deal with Adaptation, Forestry & Early Stage

Technology Development Projects

� Investigatory Workshops in early 2010

� Programme design & testing

� Pilot Programme from end 2010

Launch of stand-alone website

� By end of 2009

� Searchable database of all projects and activities

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CLOSING SUMMARY

CTI PFAN is proving to be a succesful & worthwhile / valuable tool

� First project closures

� Considerable Financial Leverage: small input ���� big result

CTI PFAN is open for business & expansion in Africa:

� Programme will run 2009 – to end 2012

� Scaling-Up plans being implemented

� Dedicated African Networks under development

� Actively seeking new Projects in Africa

CTI PFAN would be delighted to help workshop participants

develop and structure their projects

� Please send any enquiries and project proposals to

Peter Storey, Global Co-ordinator (peter.storey@ppl-int.com)

CTI PFAN NETWORK MEMBERS

CTI PFAN’S FUNDING PARTNERS

FE CLEAN ENERGY GROUP

INC.

Management

Consultant

Regulatory

Economics &

Finance