Post on 24-Apr-2020
Show me the Money
Rabobank International
Marc Schmitz – RabobankDecember 20th 2011
-How viable is the offshore wind sector?
The history of onshore and offshore wind
• Started in 1985 with first onshore
Onshore windOnshore wind Offshore windOffshore wind• Started only a few years ago (Horns
wind farms (250KW)
• To date turbine size 2-3 MW/turbine
y y g (Ref, Prinses Amalia Windfarm and C-power 10)
To date turbine size 2 3 MW/turbine
• Onshore wind is already a commodity with 200GW installed
• Turbine size started with 2/3 MW, increasing to 5-7 MW
commodity with 200GW installed world wide
• From 1985-1995 strong decline in
• Only 3GW installed until now. Forecast: 36 GW in 2020
From 1985 1995 strong decline in O&M costs and later on still improvements, but smaller
• Strong learning curve coming years
Levelised cost of selected power technologies Levelised cost of selected power technologies (EUR/MWh)
Wind - offshore
STEG-Tower & Heliostat 184.18
159.82
Biomass - anaerobic digestion
PV - c-Si 143.45
106.80
Wind - onshore
Biomass - incineration 79.63
54.68
l
Natural Gas CCGT
Coal fired 54.94
43.03
0 50 100 150 200 250
Electricity prices 53.64
LCOEBNEF 2011 EU-ETS EUA forecastBNEF 2011 EU ETS EUA forecastCentral scenario
Rabobank’s view on lowering cost of offshore Rabobank s view on lowering cost of offshore wind energy: A calculation exercise
Assumptions
• Medium sized wind farm (200 MW), 3300 full load hours 660GWh per
Potential improvements
• Scale
• Pl i3300 full load hours, 660GWh per annum
• Capex EUR 4 mln/MW (EUR 800 mln)
• Planning
• Equipment
• Operation and maintenancemln)
• Construction two years, FiT tenor 15 years (EUR 150 MWh)
• Financing
• Debt/equity: 65/35, ROE 10-12%
According to Bloomberg and Rabobank the investment costs and O&M According to Bloomberg and Rabobank the investment costs and O&M g gcosts could decrease in 2022 up to 30%!
g gcosts could decrease in 2022 up to 30%!
Influence of cost reduction
Results
O ti d i t tOperation and maintenance cost
Investment cost/MWh 0 -15% -30%
0 150 145.5 141
-15% 132 127.5 123
Pl h O&M i h i d d d f EUR 50 MWh
-30% 114 109.5 105
• Please note that O&M costs in onshore wind decreased from EUR 50 per MWhto EUR 15 per MWh in the period from 1985 – 1995
Market price electricity
160
180
120
140
80
100 Electricity Price
40
60 Offshore LCOE
0
20
2012 2014 2016 2018 2020 2022 2024 2026 2028 20302012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Investment volumes
• Total investments in Europe of EUR 130bn (2012 – 2020)coming from 3GW in 2010 to 36GW in 2020
• EUR 15bn/yearEUR 15bn/year
4%
40%
23%Turbine
FoundationFoundation
Electrical
Installation
14%Project
19%
Funding example (400MW wind farm)
Financing EUR 1.5bn
Equity1 EUR 500m
Public financing institutions2 EUR 700m
Commercial loan3 EUR 300m
Example
1. Utilities (Eneco, EDF, RWE, Dong), Project developers (C-power, Belwind, PNE)Private 1. Utilities (Eneco, EDF, RWE, Dong), Project developers (C power, Belwind, PNE)Private equity (Blackstone), Turbine suppliers (Siemens, Vestas), Pension funds (PGGM, Pension Denmark), Rabobank. Rabobank has as well provided subordinated debt
2. Kfw, European Investment Bank, Green Investment Bank, Export Credit Agencies
3. Rabobank, Unicredit, BNP, BOTM, ASN, ING, etc.
Financing Offshore Wind to date
• Approximately 1 GW of Offshore Wind has been financed on a non-recourse
Non-recourse FinancingsNon-recourse Financingspp y
basis until now
• Other 2 GW financed on balance sheet by utilities like Centrica RWE Eneco • Other 2 GW financed on balance sheet by utilities like Centrica, RWE, Eneco, Stadtwerken in Germany, Dong, EON, etc
• Until now approximately 25 commercial banks have been involved in the off-shore market
• Before 2011 maximum 2 non recourse financings/year. In 2011, 5 non-recourse financing have been done (Borkum West, Global Tech 1, Lincs, Meerwind and Baltic I), of which two were financed by Rabobank
Offshore Wind – Non-recourse Financings
In Operation
Portfolio Rabobank: 1.4GW – EUR 6 bnPortfolio Rabobank: 1.4GW – EUR 6 bn
2006 Prinses Amalia 120 MW Netherlands
2007 C-Power I 30 MW Belgium00 C o e 30 e g u
2009 Belwind 165MW Belgium
2010 GLID 194 MW UK2010 GLID 194 MW UK
Under Construction
2010 C-Power II, III 325 MW Belgium2010 C Power II, III 325 MW Belgium
2011 Borkum West 200 MW Germany
l b l h2011 Global Tech I 400 MW Germany
Lessons learned…
• Complex projects require good communication
• Most projects are based on multi contracting, so strong project management is required required
• Cable damages could arise, but issues are solved adequately
• Issues in design of the foundations and turbines (grouting issue) strongly i dimproved
• Cost overruns during construction are within contingency levels
• Project completion is mostly on time
All projects are performing to (and slightly above) expectations, even All projects are performing to (and slightly above) expectations, even p j p g ( g y ) pwith the issues mentioned above
p j p g ( g y ) pwith the issues mentioned above
Financing requirements
• Stable subsidy schemes (stable income), fixed price PPA, consistent governmental support
• Proven/reliable technology. In case of new technologies strong guarantees are Proven/reliable technology. In case of new technologies strong guarantees are even more important (Areva)
• Solid, creditworthy and reliable partners
• St • Strong sponsor
• Long term operation and maintenance contracts (5 15 years today)
• Good insurance package
• Last but not least: Strong project management
How can we reach our common goal to How can we reach our common goal to increase Offshore Wind?
• Stable support from governments
• Innovative technologies• Innovative technologies
− Lower costs, more efficient (larger capacities for example)
• Mobilizing new providers of funding
− Institutional investors
Public Financing institutions − Public Financing institutions
− Export Credit Agencies
− More commercial banks
− Project bonds
− More advanced project finance structures (Shorter tenors and/or hard refinancing triggers)refinancing triggers)
PdW1
Slide 14
PdW1 Een hoofdconclusie trekken; maar gericht naar de drie typen stakeholders: constructie, regulatie en financiële institutiesWaardP; 4-3-2011
Conclusions
• In 10-15 years off shore wind can compete with other sources of sustainable energyenergy
• Political support for sustainable energy has increased after Fukushima
• Teething problems off shore mainly solved, however a lot of room for cost reductions
• Promising off shore wind market, good returns compared to the risks
PdW2
Slide 15
PdW2 Een hoofdconclusie trekken; maar gericht naar de drie typen stakeholders: constructie, regulatie en financiële institutiesWaardP; 4-3-2011
Questions?Questions?
Rabobank InternationalRabobank International
Marc Schmitz
Telep ho ne: + 31 (0)30 7 12 3351E-mail: Marc.Schmitz@rabobank.com