Industrial Development Corporation’s approach
in developing Green Industries
August 2013
Focussing on Renewable Energy especially CSP
Rentia van Tonder
Head: Green Industries
Content
1
IDC background
2
Green SBU: Focus, Portfolio & Strategies
3
IDC & Renewable Energy
4
IDC’s role in CSP
5
Funding RE
6
Conclusion
2
Introducing IDC
o Established: 1940
o Type of organisation: Development Finance Institution (DFI)
o Ownership: State owned company, 100% owned by the SA government
o Total assets: R115 billion (30 September 2012 - group)
o Total liabilities: R24 billion (30 September 2012 - group)
o Funding status: Self financing, pays dividends and income tax
o Credit rating: Baa1 (Moody’s) in line with sovereign rating
o Main business area: Industry development through the provision of funding
resulting in job creation
o Geographic activities: South Africa and the rest of Africa
o Products: Custom financial products to suit a project’s needs
including debt, equity, guarantees or a combination of these
o Stage of investment: Project identification and development, feasibility,
commercialisation, expansion, modernisation
o Number of employees: 804 (December 2012)
3
Vision
The IDC is self-financing national development finance institution whose primary objectives are to contribute to
the generation of balanced, sustainable economic growth in Africa and to the economic empowerment of the
South African population, thereby promoting the economic prosperity of all citizens. The IDC achieves this by
promoting entrepreneurship through the building of competitive industries and enterprises based on sound
business principles.
Values
Outcomes
Objective
To be “the primary driving force of commercially sustainable industrial development and innovation to the
benefit of South Africa and the rest of the African continent”
Mission
Vision, mission, objective and values
Lead industrial capacity development
Primary: Facilitate sustainable direct and indirect employment
Secondary:
• Improving regional equity, including the development of South African rural areas, poorer provinces and industrialisation in
the rest of Africa;
• Growing the entrepreneurial and SME sectors
• Transformational impact on communities and growing black industrialists
• Environmentally sustainable growth
• Growing sectoral diversity and increased localisation of production
Passion
Professionalism
Partnership
4
Positioning
Greater importance on social and developmental objectives
Greater importance on financial objectives
Government / NGOs
• Non-commercial focus
• Fiscal transfers and grants
• Development objectives (social)
DFIs
Commercial Financiers
• Commercial and development
focus
• High commercial focus
• Sharing risk
• Financial objectives
• Internally generated funds,
government funds, loans
• Industrial Development Corporation
(IDC)
• Development Bank of Southern Africa
(DBSA)
• sefa
• National Empowerment Fund (NEF)
• Etc.
• Private sector capital
• Known risks
•
•
•
•
•
ABSA
Standard Bank
First National Bank
Nedbank
Etc.
IDC does not directly compete with other institutions, but encourages cooperation with a variety of these institutions
to achieve its goals
5
Green Industries SBU:
Focus
Renewable Energy: Non-Fuel Power
Wind Power
Generation
Concentrated
Solar Power
Solar Photo
Voltaic Power
Hydro
Energy efficiency
Heat,
Electricity
& building
efficiency
Cleaner
production /
Industrial
Efficiency
Transport
Efficiency
Local
manufacturing
related to
renewable
energy & energy
efficiency
Fuel Based Energy
Waste to Energy
Co-generation
Emission and pollution mitigation
Air pollution
control
Waste
Management/
Recycling
Services related
to renewable
energy & energy
efficiency
Clean
stoves
Bio Fuels
Bio Ethanol
Bio Diesel
Green Industries SBU:
Portfolio
3 Projects
Exposure R193m
16 Projects
Exposure R620m
Biofuels 8%
R1.4b
Fuel Based
Energy
12%
R1.1bn
R422m
Green
Portfolio
R10,4 bn
Renewable
Energy 76%
R7.5 bn
20 Projects
Exposure R1.5bn
Energy
Efficiency
4%
20 Projects
Exposure R185m
Renewable Energy:
IDC’s participation
6%
SOLAR PV
IDC
8%
94%
WIND
92%
Total Investment –
R34bn
IDC
Total Round
1&2
Investment
R74.7bn
Total Investment –
R24bn
IDC
22%
CSP
IDC
78%
Total Investment –
R16bn
32%
68%
Total Investment R631m
HYDRO
Renewable Energy:
Portfolio analysis
Wind
25%
PV
28%
• 8 Projects, 213MW,
R2.1bn
• 2 Projects, 150MW,
R3.5bn
IDC Total
Investment
R7.7bn
CSP
44%
No Small IPPs (1-5MW)
• RfP released 20 Aug’13
• IDC reviewed & commented
on draft
• 7 Projects, 452MW,
R1.9bn
Hydro
3%
• 1 Projects, 10MW,
R204M
Renewable Energy:
Current reality…
20
Cumulative Capacity per 3 main Technologies
Determination
announced up to
2020: 6 900MW
18
16
14
12
By 2030
18 000MW
R500bn
By June 2012
2 500MW
R75bn
Key
considerations:
•
•
•
10
GW
8
•
6
•
4
2
0
Nov June 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
2011 2012
Wind
CSP
PV
•
Grid availability
Grid Intermittency
& stability
Number of “Large”
scale PV & wind
projects
Lack of smart grid
in SA
Load factor
compared to coal
based energy
Cost per kwh of RE
Renewable Energy:
Current reality…
Research conducted to date on localisation
potential:
Avg Jobs
700
90%
78%
694
80%
70%
600
60%
500
400
50%
38%
300
100
36%
31%
200
147
139
40%
30%
20%
80
10%
0
0%
PV
Wind
Avg jobs per Project
• CSP has the
highest potential
for job creation
Hydro
Avg Local Content %
CSP
Local content %
800
SAPVIA: Rooftop study; Localisation Study with DTI
SAWEA: Local content workshops & engagement
SASTELA: Localisation study: Ernest&Young, GIZ, DTI
CSIR: Solar Roadmap Study & Workshops
DTI: Sets hurdle Local content for RE Projects
• CSP Highest
capital per MW
• Local content
targets expected
to increase
gradually with
every bidding
round
• Indirect impact
on rural
upliftment and
job creation
Renewable Energy:
CSP tariff roadmap
CSP Tariff
• Minister of Energy has
made a further
3.2
R 3.14
determination in
3.1
December 2012 of 400
MW CSP allocation.
3
2.9
• The industry is still
R /kWh
R 2.85
2.8
2.7
Oct 2010 : SASTELA
co-founded by IDC
to promote CSP
waiting for a formal
announcement
R 2.69
regarding the CSP
2.6
R 2.52
allocation for Mar’14
2.5
• Preference towards CSP
2.4
with storage.
Oct 2009
NERSA REFIT PROPOSAL
Aug 2011
Release of RfP by DoE: CAP
Nov 2011
150 MW MW: Round 1
May 2012
50 MW : Round 2
Renewable Energy:
Regional development & integration – SED and ED
More opportunities for regional integration and development …
Rustenburg: Rustmo
Solar PV: 7MW
Full Time Equiv. Jobs: 48
Upington: Khi
Concentrated Solar : 50MW
Jobs: 727
IDC funded 17 projects
Sishen: Aveng
Solar PV: 75 MW
Jobs: 142
Kenhardt: Aries
Solar PV: 10MW
Full Time Equiv. Jobs: 60
Prieska: Mulilo
Solar PV: 20MW
Kakamas: Kakamas
Jobs: 71
Hydro10 MW
Jobs: 139
Pofadder: KaXu
Concentrated Solar : 100MW
Jobs: 660
Malmesbury: Swartland
Solar PV: 6MW
Jobs: 27
De Aar: Mulilo
Solar PV: 10MW
Jobs: 35
Pofadder: Konkoonsies
Solar PV: 10MW
Jobs: 85
Molteno: Dorper
Wind: 100MW
Jobs: 147
Grahamstown: Innowind
Waainek
Wind: 24MW
Jobs: 107
Former Ciskei: Innowind Chaba
Wind: 21MW
Jobs: 96
Caledon: Klipheuwel
Wind: 27MW
Jobs: 47
Gouda: Aveng
Wind: 138MW
Jobs: 124
Oyster Bay: Redcap
Wind: 80MW
Jobs: 275
Port Elizabeth: Innowind
Grassridge
Wind: 60MW
Jobs: 230
13
Renewable Energy:
Opportunities for regional development & integration – SED and ED
• Northern Cape (2% of population) got
52% of Investment = R39bn
• Revenue streams to communities (2 CSPs):
– Trust dividends
– 0.1% of total revenue on ED
– 1.0% of total revenue on SED
– 30% on preferential procurement
Initiated a workshop and task team2 between Green
SBU, Strategy and R&I with CSIR to develop
social impact assessment tool
52%
% Population
% Investment
IDC’s role in CSP
• Key role through project development and funding of PFS and
BFS;
• Potential to provide base load electricity;
• Steep learning curve
• New industry development and risk taker
• Total potential exposure to CSP could be more than R7bn
(round 1 to 3);
• Support to develop industry and drive cost down.
• Potential to source funding to reduce cost, specifically for CSP
• Importance to position industry as strategically important for
future electricity supply.
IDC involvement in Concentrated Solar Power (CSP)
Location
Community
IDC
XaXu (Abengoa)
100MW Trough
Pofadder
!KaXu
20%
29%
!Khi (Abengoa)
50MW Tower
Keimoes
!Khi
20%
29%
Sol Africa
50MW Trough
Upington
5%
25%
iLangalethu
100MW Trough
UpingtonKaroshoek
5%
20%
Xina (Abengoa)
100MW Trough
Pofadder
!Xina
20%
20%
Total
IDC Exp
Total potential exposure: R7,3bn
Name
Size
Technology
Status
Under
construction
Under
construction
Round 2 (IDC only
a development
partner)
Bid Round 3
Bid Round 3
Financing CSP
Financing CSP in South Africa
• New industry – riskier compared to PV and Wind;
• Financing of Trough technology easier than
Tower;
• Requirements from commercial banks – risk
averse;
• Importance of EPC and O&M experience and
strength of partners;
• Long term investment approach;
IDC Funding possibilities for RE projects
• Project development through participation and
cost sharing of bankable feasibility studies
• Equity participation
– Minimum: Meaningful 10% with minority protection
– Maximum: Not majority, 30%
• BEE and BBBEE funding
Ownership and IDC funding
Community
Trust
Community
“HoldCo-C”
– Lending to Community Trust or BEE shareholder to
invest in project
IDC
– Repayment with dividends
– Will allow 10-25% cash (trickle dividend) for community
trust / BEE shareholders
– Favours community trust concept
Project
Company
BEE#
“HoldCo-B”
• Debt participation
BEE#
– Senior debt with tenure of 15 years post commercial
operation date (COD)
Strategic
Equity
Partners
IDC Funding with Preference Shares
– Interest capitalisation during construction
– Construction loan
Developer
Ordinary shareholding
#
This could also be a BBBEE or NPO
Renewable Energy:
Project Structure for a REIPP Power Project in SA
1.
2.
2.
3.
Developer
Strategic
Institutional
IDC
85%
BBBEE & BEE
Shareholders
Agreement &
Shareholder Loan
Agreement
15%
IDC
Facility
Agreements
CTA & Senior
debt
Commercial
Banks
75%
Debt
Security
Agreements
& Indemnity
Security SPV
25% Equity
Long-term Land
Lease Agreement
RE IPP Project
Wind / Solar/ CSP/ Hydro
Independent Power
Producer (IPP)
Fixed price
LSTK Contract
EPC
Contractor
Debt Guarantor
Agreement
RSA
Balance of Plant
Supplier
International
Turbine/PV
Manufacturer
RSA
Electrical
Contractor
10-Year
Operation
& Maintenance
Turbine
supplier
20-Year
Take-or-pay
Power Purchase
Eskom
Construction
Permit & ROD
Main Sub-contractors
Land
Owner
Environmental
Authorities
Generation
Licence
NERSA
RSA
Civil
Contractor
Direct
Agreements
Conclusion
Khi tower Aug , 2013
at 173m height
Conclusion
Thanks
The Industrial Development Corporation
19 Fredman Drive, Sandown
PO Box 784055, Sandton, 2146
South Africa
Telephone (011) 269 3000
Facsimile (011) 269 2116
E-mail callcentre@idc.co.za