Financing RE in South Africa: 2 October 2009
An Intro to Inspired
Evolution and our
Evolution One Fund…
Slide 2 of 21
Inspired Evolution - leading cleantech investments
ZAR 1 billion
ZAR 10 million
ZAR 150 million (15% cap)
*
51%*
10 years, 2008-2018
* Indicative equity participation numbers
Cleantech is way broader a theme than just energy
Typically
Ubiquitous
Global
Applications
ENERGY: Includes Energy
Generation, Energy Storage,
Energy Infrastructure and Energy
Efficiency .
MATERIALS: Includes
environmental friendly nano, bio,
chemical materials, etc.
Slide 4 of 21
TRANSPORTATION: Includes
vehicles design, fuels and logistics
MANUFACTURING/INDUSTRY
: Includes monitoring/control
appliance and smart production
industries.
Doing more with
less
WATER: Includes filtration,
purification, water conservation and
wastewater treatment, etc.
AIR & ENVIRONMENT:
Includes remediation, emission
control, trading and offsets,
etc.
AGRICULTURE: Includes land
management, natural pesticides,
natural fertilizers, etc.
RECYCLING & WASTE:
Includes various recycling
services and waste treatment
services.
Inspired Evolution - leading cleantech investments
Eight prominent high-growth investment sectors/sub-sectors:
New Energy:
1.
Cleaner energy generation, energy storage, smart grid/transmission, and
energy efficiency
Environment:
Slide 5 of 21
2.
Cleaner production
3.
Air quality and emissions control
4.
Water quality and management
5.
Waste management
6.
Agribusiness and forestry
7.
Natural products, organics and natural health
8.
Environmental real estate & sustainable buildings
Inspired Evolution - leading cleantech investments
We offer an experienced global team that has
sourced more than 650 Proprietary Deals
The team has created a database of reviewed clean technology and infrastructure deals
that they continually monitor to determine if investment at a later date is merited.
650 (Origination)*
Consensus Dealflow Analysis 06-08 - Total:650
100
500 (Preliminary
Analysis – 2 pager)
Number of Deals
90
80
150
70
(Preliminary DD –
PIM or Term
Sheet)
50 (Investment
Committee/
Formal DD)
60
50
40
30
20
10
Hy
dro
tion
ibu
Mi n
i-
Sm
art
Di s
tr
n
erm
al
Hy
d ro
ge
nC
oal
Cl e
a
Ge
o th
P ow
er
S
to r
ag e
stri
a
l
ne
Ma
nu
fac
tur
ing
&I
ndu
u re
Ma
ri
s
cu l
t
Ag
ri
Ma
rke
t
Ca
rbo
n
cy
van
ce d
/B
u il d
in g
Ma
teri
al s
n
ati o
Eff
i ci e
n
por
t
ati o
n
Ge
n er
24
(Closed
Deals)
Ad
nm
ent
Tra
ns
Cel
ls
i ro
Fu e
l
Env
Ai r
&
r ol
as t
e
&W
&C
ont
icie
n cy
Wa
ter
E ff
rg y
E ne
Wa
ter
nd
ar
Wi
Sol
e
/W
a st
i on
c at
as i
fi
Bi o
ma
ss
Re c
y
c l in
g&
Wa
s te
/G
Bio
fu e
ls
0
Cleantech Sectors
…and deployed >$300m into direct investments and >$200m into funds
*This graphic shows representative deal flow processed from 2006 to 2008
Slide 6 of 21
Inspired Evolution - leading cleantech investments
A Team with Global Deal Execution Experience
Europlasma SA
(Waste to
Energy)
Solyanda,
Inc (Solar)
$20m
- France
- California
Solarparc
(Concentrate
d
Solar PV)
Enertech
Environmental
(Waste Water)
Green Gas (Coal
Mine Methane)
- Russia/Kazakhstan
- Germany
- California
G.A.S
(Landfill
Gas)
- Germany
Chrysalix Energy fund
(Solar, Hydrogen)
$70m
- Canada
Renewable Energy
Holdings (Wind)
Dynamotive
(Biomass)
- Ukraine/
Switzerland
Germany/Hungary
Proton Power
(Energy
Fuel Cells)
HTC
Hydrogen
(CCS)
- Germany
Impax New Energy
(Environmental
Infrastructure)
€125m
- Canada
Dynamotive
(Energy&
BioOil)
- EU/Nth America
Enhanced Bio Fuel
Technologies
Climate Exchange
(Carbon Exchange)
- Canada
HaloSource, Inc
(Water
Treatment)
- Ukraine/India
- EU/ETS/Chicago
- Seattle
Solargenix
(Solar)
$20m
Ethanol
Capital
China Harvest Fund
$540m
Mistral
Windfarm
s
- China
- France
Green Gas (Coal Mine
Methane)
- USA
- Nevada
- China
Expansion Capital
(Clean technologies)
$80m
CERT IP Fund
(CBG/CERT)
$200m
Pelamis
(OPD)
(Wave
Energy)
- New York/San Francisco
Heliovolt
Corporation (Solar)
-UAE
- Portugal
- USA East Coast
Nanogram
(Solar)
California
- China
- Abu Dhabi
- Texas
Reactive
NanoTechnologie
s
Camco International
plc (Coal Mine
Methane)
Masdar Cleantech
(Solar/Water/
Sustainability)
$250m
Envirotrade
(Plan Vivo Forestry)
CSR
Econergy
(Wind)
- Mozambique
- Mexico/Brazil
Aloe Private Equity
(Environmental Fund)
£100m
Sindicatum Carbon
Capital (Carbon Fund)
£100m
- India/China
China/Malaysia/Indonesi
a
Radicle Projects
New Forest
Dynamotive
Energy
(BioOil &
Biomass)
Madagascar/South
Africa
- Argentina
Econergy
(Landfill
Gas)
- Argentina
Econergy (Hydro)
Brazil/Chile/Peru
Inspire Climate Fund
(Environmental
Goods & Services)
R1bn
- South Africa
(Agronomy)
- Uganda/
Madagascar
D1 Oils (Jatropha)
YorkCo
(Forestry)
- South Africa
- Australia
Renewable Energy
Holdings plc - CETO
(Wave Energy)
- Australia
Xanita
(Paper
Recycling)
- South Africa
Slide 7 of 21
Inspired Evolution - leading cleantech investments
And Strong Relationships with other VC’s
Investment in Funds / Advisory Board
Strategic Committee
Slide 8 of 21
Co-investment / Joint Leads
Inspired Evolution - leading cleantech investments
Slide 9 of 21
Inspired Evolution - leading cleantech investments
Sector knowledge
Investment &
technology trends
Market sizing
Slide 10 of 21
Inspired Evolution - leading cleantech investments
Financing RE in South
Africa…
Slide 11 of 21
Inspired Evolution - leading cleantech investments
Prospects for RE & EE investments
•
•
•
•
•
•
Destruction of demand has temporarily postponed power
crunch
Real danger of complacency with little commitment to
actually contract IPPs
Contradictory policies and regulations also frustrate entry
of renewables
But prices will rise sharply and RE and EE investments will
become more viable
Demand might rebound and power shortages may reoccur
in from 2010/11 onwards
New REFIT guidelines finalised & soon to be promulgated
Although we face a much more difficult investment climate, there are
growing RE & EE opportunities!!!
Inspired Evolution - leading cleantech investments
Slide 12 of 21
Steep electricity prices increases now inevitable
100.00
90.00
80.00
70.00
60.00
50.00
40.00
30.00
20.00
• Current Gx electricity prices less than a third of the cost of new baseload Gx plant
• 31% increase last year; ~60% this year
• Sharp price increases expected in next 2 years
• Prices could more than treble in 3 years
• Surest way of inducing electricity savings
• In long run creates a more certain environment for cogen, IPP, RE &
EE investments
10.00
20
07
20
08
20
09
20
10
20
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20
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20
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20
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20
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20
25
0.00
Slide 13 of 21
Inspired Evolution - leading cleantech investments
Value Chain
R50k-R400k /MW (wind)
R20m /MW (wind)
R100k+ /MW (CSP)
R40m-R50m /MW (CSP)
Source: Econergy, 25 Jun 2008
Slide 14 of 21
Inspired Evolution - leading cleantech investments
RE Project Life Cycle
Slide 15 of 21
Inspired Evolution - leading cleantech investments
RE Investment Fundamentals
Fund Criteria
Deal Description
Business Model
Compelling business case
Value Proposition
Unique selling proposition
Market Size & Growth
What is the macro opportunity/scalability?
Legislation
Favourable investment climate
Industry Dynamics
Barriers to Entry
Competitors
Competitive advantage
Supply chain
Are we investing in the right space?
Risk mitigation
Feedstock, Off take, Debt provider, etc
Technology/IP
Patents
Financial Model
Conventionally formatted model in Excel
Management
Experience
Co-investors
Experience
Slide 16 of 21
Inspired Evolution - leading cleantech investments
Options for financing RE projects:
• Bank loans secured against developer’s assets
(“on balance sheet/asset-backed finance”)
• Bank loans secured against future cash flows
(“limited recourse project finance”)
• Co-development of a project with a financially strong JV
partner
Slide 17 of 21
Inspired Evolution - leading cleantech investments
On Balance Sheet:
• Small capital projects
• May benefit from “co-development” with financially
strong partner or experienced development partner
• E.g. A sugar refinery looking to finance a co-generation
project
Slide 18 of 21
Inspired Evolution - leading cleantech investments
Limited Recourse Project Finance:
• Large capital projects
• Signed contracts (REFIT PPA, EPCC, Feedstock
supply, Land leases, etc)
• E.g. Renewable Energy projects that qualify for REFIT
Slide 19 of 21
Inspired Evolution - leading cleantech investments
Co-Development:
• Small/inexperience RE developers
• Co-development with experienced and credible partners
improves ability to raise additonal equity and debt
• E.g. Small wind project developers in SA
Slide 20 of 21
Inspired Evolution - leading cleantech investments
Risks & risk-adjusted returns under REFIT:
• Technology – RE category preferences
• Market size estimated to be ?? MW for installed RE by 2013
(RE target vs NIRP vs MYPD vs End User)
• Untested process in SA
• NERSA final approvals and process (regs) - exact allocation
for subsequent REFIT tranches and timing thereof
• Treasury cost recovery approvals – Eskom
• Affordability (RE Tranche #1 = 8% premium)
• Eskom SBO conflict & delays in procurement
• Final REFIT PPA terms & risk allocation
• Project execution risks (EPCC / EPCM / O&M)
Slide 21 of 21
Inspired Evolution - leading cleantech investments
thank you…
Slide 22 of 21
Inspired Evolution - leading cleantech investments