„Integration of wind energy project financing in a
bank's business model“
PEP Capacity Development Workshop, 29.10.2012
Dipl.-Ing. H. Eimannsberger
Wirtschaft
Immobilien
Kommunen
X:\541\Berichtswesen und Öffentlichkeitsarbeit\Vorträge\Hans Eimannsberger\
Zuschüsse
Agenda
 Investitionsbank Schleswig-Holstein and energy
agency
 Links to other fields of financing
 How can a bank build up structures and capacities into
wind energy project financing
 Which role do external consultants play for the
technical assessment of projects
 Summary
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Schleswig-Holstein within Europe and Germany
3
Investitionsbank Schleswig-Holstein (IB)
 The main development bank of the land
Schleswig-Holstein plays a key role in
providing financial support to foster regional
development and growth
 Balance sheet total 18,1 Mrd. €
 New business volume 2,1 Mrd. €
 494 employees
 Energy Agency
 Participation in financing of:
480 wind turbines (102 wind farms) with a total
installed capacity of approx. 585 mw; Investment
volume: 692 million €
76 PV-Systems with a total installed capacity of
approx. 95 mw; Investment volume: 248 million €
107 Biogas-Systems with a total installed capacity of
66 mw; Investment volume: 250 million €
4
Organization chart of RE financing
Vorstand (Board of Directors)
Erk Westermann-Lammers
(CEO)
corporate
development
(Unternehmensentwicklung)
5
Dr. Michael Adamska
real estate
financing
corporate
financing
public sector
financing
(Immobilienkunden)
(Firmenkunden)
(Kommunalkunden)
corporate financing
Consulting /
Financing
Firmenkunden
Beratung /
Finanzierung
corporate financing
financing
Firmenkunden
Finanzierung
corporate financing/
equity products
Firmenkunden
Eigenkapitalprodukte
promotion pilots
Förderlotsen
IB europe
IB.Europa
Federal Funding /
credit institutions
Bundesförderung
/ Kreditinstitute
european
territorial
cooperation
(Europäische Territoriale
Zusammenarbeit)
…
The Energy Agency: History

1991 Founding of the Energy Agency as part of the Investitionsbank
Schleswig-Holstein

Aims


Implementation of the energy concept of the Federal State

Improvement of Climate Protection

Rational and economical use of energy

Increasing the usage of renewable energy sources
Employees

15 Engineers with diverse specialisation, Agronoms, Geographers etc.
Notation
In Germany there are 28 energy agencies. Their main tasks are promotions
of the use of RE, energy saving or energy efficiency projects. They are
funded by the state, by projects or by banks.
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The Energy Agency: Scope of consulting
 Neutral Advice and Project management in the following areas:
 Energy management / Energy controlling
 Refurbishment of buildings (concept, selection of planner,realisation)
 Contracting / Financing
 Economic Energy production (Object-combined heat and power)
 Usage of renewable Energy (Wind, Biomass, Geothermia, Solar)
 Tendering for energy supply
 Energy efficiency for industry and SME
 Preparation of expertises for lenders, Project Financers and real
estate owners
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Links to other fields of financing
Financial structures of renewable energies (1)
Business finance
Project finance
 Financing base
 Financing Base
 credit quality of the borrower
 cash flow of the project
 full recourse to borrowers
 No / limited recourse to sponsors
 terms of financing
 terms of financing
 mid to long-term runtime*)
 long-term runtime
 credit worthiness dependent
margin
 project risk dependent margin
 standardised credit agreements
 usual credit assessment
*) long-term runtime: 15 till 20 years
 comprehensive documentations
(loan and collateral agreements)
 independent consultants
(technology, law, insurances)
Financial structures of renewable energies (2)
wind, technical, legal,
insurance consultants,
bank
interest and repayment
loans
Offtake Agmt.
project company
offtaker
various contracts
wind turbines
manufacturers
general
contractors
Equity
dividends
equity providers
regular / local
approvals
operator
Who are the investors ?
 Utility Companies as investors in RE
 not always “Early Birds”
 mainly corporate financed, increasing demands for project financing
 drift unit: rising indebtedness and pressure from rating agencies
 easy access to outside capital
 ROE expectations 12 - 15% p.a. +
 Independent developer / institutional investors/ partially manufacturers
 pacemakers in the market of RE
 “Copy and Pace” strategy for countries which begins with promotion of RE,
 project finance is mainly necessary
 ROE expectations for investors about 10%+/- if there is a stable project flow
Where do banks and financiers need to pay
attention?
 stable and secure conditions
 essential for investors, industry and financiers
 feed-in tariff law, promotion based on certificates, tax incentives, tenders
 national/ regional licensing procedure
 calculable / non-calculable;
 quick and transparent or bureaucratic
 local “technical” assumptions
 amongst others: wind speed, sunshine duration, sustainable access to biomass
etc.
 technology
 practically proven or new technology,

service- and maintenance costs p MWh
 credit worthiness / political stability of a country
 criterion also again in Europe
Main examination fields for banks and financiers
 analysis and interpretations of wind studies, verification through own data base
 examination of the federal immisson control act (BImSchG), especially economic
evaluations of operation restrictions (aspects of noise and shadows, animal
welfare)
 assessment of legal risks of contradiction and complaint procedures
 assessment of technical risks of wind turbine types ( issue of SDL-prototypes)
 assessment of long-term performance of project partners (e.g. full maintenance
contracts).
 completeness of licence agreements; suitable lease agreements
 grid connection concept; esp. feed in in a transformer station of third parties
 revenue distribution and revenue accounting;
 manpower requirement in start up phase: ca. 10 persons
Impact of changes
Essential examination fields to cover the capital service are:
effect
 locational energy revenue prognosis
+++
 feed in tariffs (e.g. SDL* )
+++
 exceeding of investment costs
++
 dynamic change of capital market rates
+
 dynamic in technical operating costs of power plants
+
 shadow / sound / fauna
+
Capital project risks are minimised from the perspective equity providers, but there are
always the risk of planning mistakes.
Schematic representation of project financing
processes
Identification and
feasibility
risk analysis
provisional capital
budgeting
project structuring
determining
financing options
financing structures
get in contact with
financing partners
Financing
structures
optimization of
financing and project
structures
contract structuring
Due Diligence
Financial Model /
Model Audit
sensitivity and
scenario analysis
tax planning
information
memorandum
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Financing
arrangements
Determination of
standards in
arrangement and
underwriting
optimization of
financing conditions
because of
competitive
environment
valuation of financing
commitment
Term Sheet
negotiation
Financial close
Coordination of Due
Diligence
final negotiations of
conditions and loan
agreements
accompanying of
project until the
achievement of pay
out conditions
refinancing
Which role do external consultants play for the
technical assessment of projects?
Legal Adviser
Legal Adviser
Project
Developers
Model
Auditor
Tax Adviser
arranging banks
Technical
Adviser
Independent
Engineer
Financial Adviser
consortium banks
Insurance
Adviser
Insurance
Adviser
Numerous external specialists are involved in structuring and arranging project
financing. In the area of the renewable energy this complexity acquires new
challenges which can be co-ordinated by the activation of a financial advisers who
arranges, coordinates and supervises the process.
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Worldwide investments in renewable energies
Bill. $
worldwide investments RE (Billion USD)
Source: UNEP/SEFI/New Energy Finance 2007
Summary
 The entrance in financing wind energy projects for banks is related
with risks.
 Banks have to build up their own know-how as quickly as possible
to be independent from external consultants and to be able to
read and understand necessary certificates.
 Independent consultants are always necessary because banks
cannot provide in particular technical know how.
 Nevertheless there is a strong increasing of wind energy projects
and this offers additional income for banks
 In Schleswig-Holstein there aren't any distressed engagements.
Thank you very much for your attention!
Hans Eimannsberger
Head of energy agency
Tel. (04 31) 99 05 - 36 60
hans.eimannsberger@ib-sh.de
Investitionsbank Schleswig-Holstein, Fleethörn 29 - 31, 24103 Kiel
Fax: (04 31) 9905 - 36 52, www.ib-sh.de
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