Financing Renewable Energy Projects

Belgrade, May 2015

IFC Overview Focus on Investment Services

Infrastructure and Natural Resources

Power Utilities Transport Infrastructure

Transport Services

Natural Resources

• Generation, thermal and renewable

• Transmission

• Distribution

• Integrated Utilities

• Water, Waste

• Privatized Public Services

• Airports

• Ports

• Roads

• Railroads

• Logistics

• Shipping

• Airlines

• Rolling Stock

• Oil & Gas

• Gas Distribution

• Mining

• Pipelines

• LNG

Investing Across Infrastructure & Natural Resources

Current portfolio: $14.8bn

FY14 investments: $5.7bn, including $2.4bn in mobilizations

Local presence in key markets

Extended team covering both global giants and local leaders

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Infrastructure and Natural Resources

Globally, IFC’s Infrastructure and Natural Resources committed portfolio totals to US$14.8bn; 29% of IFC’s global portfolio. (As of June 2014)

The Latin American and Caribbean region represents Infrastructure & NR’s largest exposure at 28%, followed by Africa and Central and Eastern Europe, at 19% and 16%

Power represents the largest exposure, accounting for 38%, followed by Transport at 20%.

Infrastructure Portfolio Breakdown by Departments –Committed Portfolio –

June 2014

Infrastructure and Natural Resources Overview

Europe & Central

Asia16%

Global1%

Latin America & The

Carribean28%

South Asia13%

East Asia & the Pacific11%

Sub-Saha-ran

Africa19%

Middle East & North Africa12%

Broad Product Range in Investment Services

Loans

Equity

Trade Finance

Syndications

Structured Finance

Risk Management

Blended Finance

Project and corporate financing

On-lending through intermediary institutions

Direct equity investments (up to 20% of company’s equity)

Private equity funds

Guarantee of trade-related payment obligations of approved financial institutions

Capital mobilization to serve developmental needs

Over 60 co-financiers: commercial banks, fund, and DFIs

Products including credit guarantees, liquidity facilities, portfolio risk transfer, securitizations, and Islamic finance

Derivative products to hedge interest rate, currency, or commodity-price exposures of IFC clients

Combination of concessional funds with IFC resources to finance initiatives & achieve impact that would otherwise be unattainable

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PowerOverview

IFC is a Leading Investor in Emerging Markets Power

• > 347 power investments in over 65 countries since 1967

• We invest in: Generation – 35,000+ MWs to date Transmission – on a select basis Distribution – reaching > 160 million customers Early stage start ups in the renewable energy space Financial intermediaries (banks, PE funds) who reach smaller

assets/companies Platforms, HoldCos and sub-sovereign entities with regional or global

footprint.

• We are comfortable in markets under reform, with first-in-kind projects.

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Current Committed Power Portfolio

(As of September 30, 2014)

IFC Own-Account Portfolio – IFC is active in all Regions and all Power Subsectors

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Current Committed Power Portfolio(As of September 30, 2014)

Total = US$ 6.3 billion

Robust and Growing Renewable Energy Business

IFC Renewable Energy Commitments

Note: FY15* assumes H1 investments are doubled by end of FY15.

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IFC’s Value-Add in Power Transactions

From Patient Equity to Long Term Debt

Sector Expertise

Country Risk Mitigation

Environmental & Social Risk Management

Advisory Services

EQUITY

Up to 20% in project or company

On selective basis, start-up equity/co-developer under Joint Development Agreement

SUB-DEBT

Terms tailored to meet project needs

DEBT

Long Maturities Tailored to Project Needs

Fixed/Floating Rates, Local Currencies

Flexible Amortization Profile

Syndication/Mobilization

Deep sector knowledge gained from experience

In-house Engineers: can offer technical advice and consider new technologies

In-house Market Expertise: Can assess and structure for Merchant Risk

In-house Regulatory Expertise: Can assess and structure for Regulatory Risk

Government Relations

Neutral broker Role

World Bank Synergies

PCG

MIGA

Coordinated approach across WBG services

• MIGA PRI

• IDA PCG

Advice on Environmental and Social Best Practices

Equator Principles Modeled after IFC Standards

Governance

Private sector perspective to governments

Introductions + matchmaking

Cross-border support + Sector knowledge

Access to Donor Funding/Con-cessionary Support Coordination/Car-bon Finance

Programs to assist client, including: Local Supplier Development, Corporate Governance, Community Development Funding

Diverse Clients Trust IFC as a Power Sector Partner

• Global clients are half our business

We have long-term partnerships with key clients

We have been partnering with renewable energy companies expanding into emerging markets

We help clients access capital at project, holdco and corporate levels and via capital markets

• “Local” clients are becoming regional / global

Local power companies invest in their own country

Local power companies expand into other emerging markets

Local industrials expand into the power sector

Our local clients are becoming a larger share of our business as market reform increases opportunities for private investment in the power sector

• We work with emerging renewable energy companies

We have supported newly started local renewable energy firms, as they begin to build their first projects

• We work with sub-sovereign entities and governments to create vehicles for private participation

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IFC Can Efficiently Bring Additional Capital to the Table to Complete a

Financial Plan• IFC can bring the entire financing

package to the table

• Between 2008-2014, we have mobilized over US$ 5.9 billion for power investments from commercial lenders and DFIs

Equity: Asset Management Company:

Can match IFCs own account equity into LP’s, US$ 6.3 billion AUM as of June 2014

Debt: MCPP: US$ 3 billion, can co-

lend up to 75% of IFC investment

Syndication: Parallel or B Loans

• IFC was lead arranger for landmark power transactions, including:

– ChinaWindpower (China) – Wind project finance. US$95 million mobilized in 2010; first wind power deal financed entirely by an international banks in China.

– Eurus (Mexico): Greenfield wind power. US$375 million from 10 lenders committed 2010; first debt-financed private wind project in Mexico. Committed in 2010.

– Enel Wind Brazil (Brazil): US$300 million senior debt package for Enel Green Power’s Brazilian subsidiary, with financing directed at 340MW wind capex program. Committed in 2014.

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IFC Can Bring Concessional Financing

• IFC can mobilize concessional funds from donors to support clean energy/renewable energy projects that cannot proceed on fully commercial terms but could help move markets towards commercial viability in the medium term

• Concessional funds are always invested alongside IFC’s own funds and can provide financing on softer terms by offering lower pricing, longer tenor, lower rank or security, depending on project needs

• Since 2010 IFC has provided ~US$150 million in

concessional financing to support power projects such as

CSP in South Africa and Morocco; wind in Mexico; solar

PV in Thailand, Chile and Honduras; and hydro power in

Nepal.

• In deploying concessional finance, IFC seeks to ensure

that the implied subsidy offered through concessional

finance is minimized to reduce market distortion and

prevent windfall returns for all project participants –

sponsors, lenders, contractors, etc.

Lower risk commercial activities

(Commercial investors)

Higher risk commercial activities (DFIs)

Not fully commercial Gap: In need of

temporary subsidy

Not fully commercial Gap: Needs long-term

subsidy

Permanent Subsidy (Government/NGOs)

Fully

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IFC as Project Co-Developer: IFC InfraVentures

• IFC InfraVentures is a US$150 million fund to provide development capital to infrastructure projects in IDA (low-income) countries (*) and selectively in Middle Income countries, complementing IFC’s efforts to increase the pipeline of bankable infrastructure projects in those countries

• IFC InfraVentures can bring up to US$8 million in cash and “sweat” for projects in early stages of development, in return for an equity option at financial close and the right to arrange the project debt

• IFC InfraVentures will act as co-developer for such projects, adding value by:

experienced staff working proactively alongside the sponsor to bring the project to financial close

supporting the project via its global presence and knowledge of local environments

helping structure the project so that its risks are reduced and it is made bankable, increasing the likelihood that banks and equity investors will invest in the project

• Examples in the wind power sector include:

Development of a 100 MW wind project in Kipeto, Kenya

Development of a 103 MW wind power plant in Serbia

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IFC View of Local Regulatory Frameworks

• In many energy projects regulation is often the key risk• Countries can offer various incentives (feed-in tariffs, tax credits, etc), establish

renewable targets or create legislation (import duties, local content rules) to encourage the growth of a local renewable industry

• Assessment of stability and predictability of a country’s regulatory framework is a key aspect of project appraisal

• IFC supports competition and fair market access; however, we understand that in the renewables sector, governments play a key role in influencing the market

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PowerWind

IFC is a Leading Investor in Emerging Markets Wind

IFC Experience:• >38 investments, 2,600+ MW of capacity• Key transactions in Brazil, Mexico, Bulgaria,

Turkey, Romania, Croatia, China, Sri Lanka, and India

• Projects in new markets/regulatory regimes• Experience with both equity and debt financingIFC Approach:

• Products that optimize leverage, e.g. deferrable subordinated debt that take more wind risk layered on top of senior debt

• Can mobilize concessional financing where appropriate• We understand new regulatory support mechanisms• We can assess and structure for regulatory support risk

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Why Renewables: Fueling Growth and Combating Climate Change

• Developing countries have a clear need to power economic growth and to improve the quality of life of their citizens (e.g. access to lighting and communications)

• Need to diversify generating sources and where possible, deploy indigenous power rather than using foreign exchange to import fuel

• Climate change and environmental concerns given diminishing resources or reserves of coal, gas and even water

• Wind and other forms of renewable energy pose great opportunities for private investors in emerging markets – if capital can be raised and risks overcome.

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Key Elements for Successful RE Financing

• Committed and experienced investor/operator/developer Sufficient equity at risk Transparent procurement

• Clear regulatory / contractual framework providing for adequate mechanism of tariff adjustment and/or strong LT PPA from creditworthy utility/client

• Competitiveness of power generation (merit order): key for merchant projects also critical when PPA, to avoid risk of eventual PPA

renegotiation/distribution losses• Confirmation of renewable resource - wind• Construction risk mitigated• Upfront risks assessment by reputable independent parties

(feasibility study/least cost option study, E&S)

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Working Across the Value Chain

• IFC finances projects across the value chain (e.g. wind) from upstream equipment manufacturers to downstream power projects

• IFC has expertise in clean tech, manufacturing, services and power investments

• In addition to its investment teams, it has in-house industry experts, as well as Environment & Social and legal staff expertise

TURBINES

(produced by OEMs)

COMPONENTS

(e.g. blades, gearboxes, etc)

ASSOCIATED MACHINERY & ANCILLARY SERVICES

(e.g. software used to control and monitor wind

turbines)

WIND FARMS

(captive or

utilities)

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IFC Investments in Wind PowerProject Subsector Region Country

IFC Investment

($ million)

Power Share

($ million)

Mobilization

amount

($ million)

Total Power

Share and

Mobilization

($ million)

Infrastructure

Project CountMW IDA

Debt, Equity

or Both

Rudine WPP Wind Europe and Central Asia Croatia 24.9 24.9 31.1 56.0 1.0 34.2 – Debt

Penonome Wind Wind Latin America and the Caribbean Panama 99.0 99.0 - 99.0 1.0 215.0 - Debt

FY15 Subtotal 123.9 123.9 31.1 155.0 2.0 249.2 -

Tafila Rate Swap Wind Middle East and North Africa J ordan 2.7 2.7 – 2.7 1.0 – – Debt

Tafila Wind Wind Middle East and North Africa J ordan 69.1 69.1 151.7 220.8 1.0 117.0 – Debt

Metro Power Wind Middle East and North Africa Pakistan 25.8 25.8 – 25.8 1.0 50.0 1.0 Both

InfraV-Indo Wind Wind East Asia and Pacific Indonesia 2.0 2.0 – 2.0 1.0 – – Debt

InfraV-Ivicom Wind Europe and Central Asia Serbia 3.5 3.5 – 3.5 1.0 – – Debt

Enel Wind Brazil Wind Latin America and the Caribbean Brazil 200.0 200.0 100.0 300.0 1.0 342.3 – Debt

DJ Energy Wind South Asia India 27.5 27.5 – 27.5 1.0 85.0 1.0 Debt

J ath Power (NSL) Wind South Asia India 12.0 12.0 – 12.0 1.0 40.0 1.0 Debt

Uttar Urja Wind Wind South Asia India 22.2 22.2 – 22.2 1.0 85.0 1.0 Debt

FY14 Subtotal 364.8 364.8 251.7 616.5 9.0 719.3 4.0

Bhilwara Captive Wind South Asia India 7.5 7.5 – 7.5 1.0 20 1.0 Debt

Bhilwara R'ts 3 Wind South Asia India 1.0 1.0 – 1.0 1.0 – 1.0 EquityInfraV-Lamuwind Wind Sub-Saharan Africa Kenya 3.0 3.0 – 3.0 1.0 – 1.0 DebtInfraV-Singida Wind Sub-Saharan Africa Tanzania 4.0 4.0 – 4.0 1.0 – 1.0 Debt

Inox Rajasthan Wind South Asia India 50.0 50.0 – 50.0 1.0 100 1.0 Debt

NSL Wind Wind South Asia India 18.4 18.4 – 18.4 1.0 75 1.0 Debt

NSL Power Wind South Asia India 5.0 5.0 – 5.0 – – – Debt

Amakhala Wind Wind Sub-Saharan Africa South Africa 70.7 70.7 – 70.7 1.0 134 – Debt

Amakhala Swap Wind Sub-Saharan Africa South Africa 2.8 2.8 – 2.8 1.0 – – Debt

InfraV-Kipeto Wind Sub-Saharan Africa Kenya 2.0 2.0 – 2.0 1.0 – 1.0 Debt

J elinak Wind Europe and Central Asia Croatia 20.1 20.1 30.4 50.5 1.0 30 – Debt

FY13 Subtotal 184.5 184.5 30.4 214.9 10.0 359.4 7.0 Bhilwara Wind Wind South Asia India 14.0 14.0 – 14.0 1.0 50 1.0 DebtNSL Power Wind South Asia India 20.0 20.0 – 20.0 1.0 28 1.0 Equity Pestera Power Wind Europe and Central Asia Romania 39.0 39.0 14.1 53.1 1.0 90 – DebtZorlu Pakistan Wind Middle East and North Africa Pakistan 38.1 38.1 – 38.1 1.0 56 1.0 DebtTechno Wind Wind South Asia India 4.7 4.7 – 4.7 – – – DebtInfraV-Renovatio Wind Europe and Central Asia Moldova 3.0 3.0 – 3.0 1.0 – 1.0 DebtSibenik WPP Wind Europe and Central Asia Croatia 24.8 24.8 43.4 68.2 1.0 44 – DebtCernavoda Power Wind Europe and Central Asia Romania – – 22.1 22.1 – – – Debt

FY12 Subtotal 143.6 143.6 79.6 223.2 6.0 267.3 4.0

Cernavoda Power Wind Europe and Central Asia Romania 60.8 60.8 – 60.8 1.0 138 – Debt

EDF La Ventosa Wind Latin America and the Caribbean Mexico 28.9 28.9 102.5 131.5 1.0 68 – Debt

Senok WindEnergy Wind South Asia Sri Lanka 1.9 1.9 – 1.9 1.0 10 1.0 Equity

Senok WindResour Wind South Asia Sri Lanka 1.9 1.9 – 1.9 1.0 10 1.0 Equity

Techno Wind Wind South Asia India 35.0 35.0 – 35.0 1.0 127 1.0 Both

Enerj isa-II 1 Wind Europe and Central Asia Turkey 27.6 27.6 165.6 193.2 0.2 119 – Debt

China WindPower Wind East Asia and Pacific China – – 95.0 95.0 – – – Debt

FY11 Subtotal 156.1 156.1 363.1 519.2 5.2 471.4 3.0

Grand Total 972.8 972.8 756.0 1,728.8 32.2 2,066.6 18.0

Note: 2015 figures as of December 18, 2014.