Sunshine MiddleEast - March 2015 - Market Entry...

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SUNSHINE MIDDLE EAST

Sunshine Middle East – All rights reserved 2

SUNSHINE MIDDLE EAST is the reference Solar PV advisory services and engineering company in the Kingdom of Saudi Arabia.

SUNSHINE MIDDLE EAST is a joint initiative of Al-Hadiyah Law Firm, Sunshine Energy Advisors and Ingenia Solar Energy with a vision to create a local company provider of expert engineering and independent advisory services to institutions and companies interested in developing solar PV opportunities in the Kingdom of Saudi Arabia and the GCC.

As part of the flourishing solar PV opportunity in the region from the beginning, SUNSHINE MIDDLE EAST brings together the expertise in the markets and the solar PV industry to contribute to a long lasting and sustainable renewable energy frame work.

Al Hadyah Law Firm brings over three decades of experience in the practice of law in the Kingdom of Saudi Arabia. It combines the know-how of a multidisciplinary team of outstanding reputation in the industry and in the Saudi local law and regulations, with international western experts with previous experience in the country. Experience in international markets, being the reference firm of foreign companies established in the Kingdom, providing custom made services. Sunshine Energy Advisors is an independent solar photovoltaic consultancy firm based in Spain with a group of professionals with over 300MW of experience in the solar PV business. Among the areas of expertise, Sunshine Energy Advisors brings to its partners over fifteen years of experience in the PV markets, regulation, market entry strategy, strategic partnerships and business development.

PARTNERS


Ingenia Solar Energy is a recognized engineering and consultancy services company specialized in PV projects with an experience of over 400MW` across different regions. Ingenia has extensive experience as independent technical advisor to both developers, EPC contractors and financial institutions. Provider of PV module quality control, on-site support, inspections and performance tests of PV plants with own laboratory facilities. Equipped with state-of-the-art instrumentation.

Fernando Herrerias brings over twenty-five years of experience preforming executive positions in the telecom and renewable energy sectors across Europe, the USA, South America and the Middle East. Fernando spend over a decade working at Alcatel-Lucent before joining Sunpower as General Manager for Utility and Power Plants where he deployed over 300MW. In 2012, he founded Sunshine Energy Advisors, a solar PV consultancy firm actively serving US firms to enter the EMEA market. As co-founder of Sunshine Middle East, he is proud to be one of the few who lived the great expansion of solar PV across Europe. Fernando holds a BS in Electrical Engineering with honors from the University of Tulsa (Oklahoma, USA) and a Executive Program from IESE Business School in Madrid.

PARTNERS


Juan Redondo is a lawyer and economist with great experience in Saudi Arabia. He begun his professional career at Deloitte Netherlands and Spain before moving to the Spanish Embassy Economic Affairs office in Riyadh. He leaded the first solar energy Trade Delegation organized by the Spanish Government to the country. He then co-founded Al Hadiyah, the first law firm with a Spanish partner in the Kingdom of Saudi Arabia, providing legal services to multinational companies establishing in the region. With a wide experience in legal, cultural and business fields in the country, Juan is the director of Sunshine Middle East in Saudi Arabia and head of our Riyadh office.

Enrique Serrano is an electrical engineer and has a Master in Operational Management and Industrial Quality, a Senior Management Program degree from Instituto de Empresa. He currently manages is responsible at Ingenia, towards full sun dispatch able power plants. He most recently was founder of Sun to Market Solutions, a business with proprietary engineering optimization software in solar and renewable energy integration, consulting often to the World Bank, and member of the IEC Committees. He previously worked in the petrochemical and energy industries for Repsol, Praxair and as an independent consultant for financial institutions for four years.

Ali Al Ghamdi has a degree in Law and legal sciences from King Saud University, specialized in labor and commercial law. Ali has over ten years of practicing experience in Saudi Arabia. Before joining Al Hadiyah Law Firm, he was a partner of Al Wafa Law Firm responsible of joint venture contracts, labor law and commercial agreements. During that time, he had the opportunity to collaborate as attorney with other law firms in UAE and Bahrain. He also played a role as legal consultant in the Saudi Ministry of Foreign Affairs.

PARTNERS


Ahmed Al Hout obtained a Bachelor’s degree in Sharia from Imam Mohammed university and a Master degree from The Higher Judicial Institute. Ahmed has held executive roles at Riyadh Dry Port, King Khalid International Airport, Ministry of Culture and Information, um Al-Qura (Official State Gazette), General Directorate of Publications within others. He was the Head of the committee of the violations of the law of Press and Publications, Member of the committee monitoring the implementation of recommendations on human rights education in the Kingdom of Saudi Arabia, Member of the media committee by Royal Decree and Chief Editor of houqoq magazine issue by the Commission on Human Rights in Saudi.

Saad Al Ghamdi is a experienced attorney specialized in sharia (Islamic law) and commercial law. In his more than thirty years of experience practicing law in the Kingdom, he was Legal Director of VIP cases in the private office of the Governor of Riyadh and worked in the Municipality of Riyadh for twenty years. He was legal advisor of HRH Crown Prince Salman Bin Abdulaziz during some of his time as Governor of Riyadh, providing legal assistance and consulting for two decades as Director of the Legal Department. He founded Al Wafa Law Firm and was managing director for twelve years. Among his references, he has worked for the Saudi Royal Family and a wide range of Ministries and Public Organizations together with reference private companies such as Google KSA, Al Osais (partner of Inabensa in KSA), Redico, AMC within others.

WHAT WE DO


MARKET ENTRY STRATEGY

PROJECT DEVELOPMENT

ENGINEERING

EPC MANAGEMENT

CONSTRUCTION

WHAT WE DO


Mar

ket

Asse

ssm

ent Saudi Arabia general and

sectorial market analysis Value added products and services to the country Identification of potential business areas Identification and selection of potential added value partners and customers Business agenda to Saudi Arabia M

arke

t Ent

ry S

trat

egy Strategic plan for the

Saudi Arabia market SWOT analysis Product and service local adaptation Partnership closure assistance Business model in the country

Mar

ket E

xecu

titio

n Prequalification process in selected private and governmental entities Execution of selected business opportunities New opportunity identification Assistance in tender preparation, submission and follow up Professional dedicated resources in the country including office environment and services Company representation in the country

… for international companies entering in the KSA market

Country report including legal entry requirements, corporate establishment, official bodies to register, foreigner investor licenses, company laws, taxation, etc.

Energy and Renewable Energy sector market sizing, attractiveness and projection. Main government institutions and public tender process.

Detailed analysis of financial

MARKET ASSESSMENT


content, current regulation and treats.

Identification of market segment opportunities and potential.

22 Realising the promise of solar industry development in MENA

Rising electricity demand is further driven by the subsidisation of energy prices in most MENA countries. The region, which is highly dependent on energy intensive desalination, is also the most water-stressed geography in the world.

Therefore, it is perhaps unsurprising that total MENA electricity demand is expected to increase fi vefold between now and 2050 and that power generation capacity in the GCC countries alone is expected to rise by at least 60GW in the next fi ve years, requiring investments in excess of US$40b, according to the Emirates Solar Industry Association. Yet, today, renewable energy comprises less than 4% of MENA‘s primary energy balance. Making the most of renewable resources across the region has only recently been accorded priority — a sharp contrast with the rest of the world, where renewable energy accounts for nearly 17% of global energy consumption, as reported in the REN21 Renewables 2012 Global Status Report.

The technical and economic potential of renewable energy sources for power generation purposes is vast across the MENA region, yet it differs widely among countries, with the exception of solar irradiance, which is by far the biggest resource in MENA. The region encompasses the world’s best solar resources with average irradiation being almost double that in Germany. The World Bank estimates that between 22% and 26% of the total solar energy striking the earth‘s land mass falls in the MENA region, where the

Global solar market attractiveness and ease of doing business

potential energy from solar radiation per square kilometre per year is 1 million to 2 million barrels of oil. MENA’s solar energy has a potential 1,000 times larger than its other renewable sources combined and is several orders of magnitude larger than the current total world electricity demand.

This abundant resource can be used both in distributed PV systems and in large Concentrating Solar Thermal Power (CSP) stations that can generate heat and electricity. CSP technology allows electrical power to be stored and retrieved in the form of heat with very high effi ciency — a key advantage over other renewable energy technologies such as PV and wind — and can hence supply base-load power. The chart below, a graphic illustration of EY’s November 2012 Renewable Energy Country Attractiveness Indices, applied to solar technologies, highlights the appeal of Saudi Arabia and the UAE as solar investment destinations. It also refl ects the increased importance of the MENA region to the global renewables market.

0

0

20

40

60

80

100

120

140

160

105 15 20 25 30 35 40

IndiaBrazil

Ukraine

Egypt

RomaniaTurkey

Mexico

Tunisia

SouthAfrica

Austria

Israel

Spain

UAE

Portugal

SaudiArabiaSouth Korea

France

Japan

Australia

Germany

United States

Poland

Bulgaria

ChileNetherlands

Taiwan

Belgium

SwedenCanada

DenmarkUnitedKingdom

GreeceMoroccoChina

Italy

Ease

of d

oing

bus

ines

s ra

nk

Ernst & Young Renewable Energy Country Attractiveness Indices — solar ranking

ƒ Size of bubble represents the size of the solar PV market (until 2016).

ƒ Solar attractiveness ranks are from EY's Country Attractiveness Indices (November 2012); the top 35 ranks are considered.

ƒ Ease of doing business ranks are based on 2012 Doing Business Report — The World Bank.

MARKET ASSESSMENT

22 Realising the promise of solar industry development in MENA

Rising electricity demand is further driven by the subsidisation of energy prices in most MENA countries. The region, which is highly dependent on energy intensive desalination, is also the most water-stressed geography in the world.

Therefore, it is perhaps unsurprising that total MENA electricity demand is expected to increase fi vefold between now and 2050 and that power generation capacity in the GCC countries alone is expected to rise by at least 60GW in the next fi ve years, requiring investments in excess of US$40b, according to the Emirates Solar Industry Association. Yet, today, renewable energy comprises less than 4% of MENA‘s primary energy balance. Making the most of renewable resources across the region has only recently been accorded priority — a sharp contrast with the rest of the world, where renewable energy accounts for nearly 17% of global energy consumption, as reported in the REN21 Renewables 2012 Global Status Report.

The technical and economic potential of renewable energy sources for power generation purposes is vast across the MENA region, yet it differs widely among countries, with the exception of solar irradiance, which is by far the biggest resource in MENA. The region encompasses the world’s best solar resources with average irradiation being almost double that in Germany. The World Bank estimates that between 22% and 26% of the total solar energy striking the earth‘s land mass falls in the MENA region, where the

Global solar market attractiveness and ease of doing business

potential energy from solar radiation per square kilometre per year is 1 million to 2 million barrels of oil. MENA’s solar energy has a potential 1,000 times larger than its other renewable sources combined and is several orders of magnitude larger than the current total world electricity demand.

This abundant resource can be used both in distributed PV systems and in large Concentrating Solar Thermal Power (CSP) stations that can generate heat and electricity. CSP technology allows electrical power to be stored and retrieved in the form of heat with very high effi ciency — a key advantage over other renewable energy technologies such as PV and wind — and can hence supply base-load power. The chart below, a graphic illustration of EY’s November 2012 Renewable Energy Country Attractiveness Indices, applied to solar technologies, highlights the appeal of Saudi Arabia and the UAE as solar investment destinations. It also refl ects the increased importance of the MENA region to the global renewables market.

0

0

20

40

60

80

100

120

140

160

105 15 20 25 30 35 40

IndiaBrazil

Ukraine

Egypt

RomaniaTurkey

Mexico

Tunisia

SouthAfrica

Austria

Israel

Spain

UAE

Portugal

SaudiArabiaSouth Korea

France

Japan

Australia

Germany

United States

Poland

Bulgaria

ChileNetherlands

Taiwan

Belgium

SwedenCanada

DenmarkUnitedKingdom

GreeceMoroccoChina

Italy

Ease

of d

oing

bus

ines

s ra

nk

Ernst & Young Renewable Energy Country Attractiveness Indices — solar ranking

ƒ Size of bubble represents the size of the solar PV market (until 2016).

ƒ Solar attractiveness ranks are from EY's Country Attractiveness Indices (November 2012); the top 35 ranks are considered.

ƒ Ease of doing business ranks are based on 2012 Doing Business Report — The World Bank.Sunshine Middle East – All rights reserved 9

  Company added value to the KSA market.

  Product and services market updatability.

  Competition analysis.

  Identification and selection of potential added value local partners and customers.

  Agenda of meetings for the company commercial visit to Saudi Arabia: sponsorship, invitation letter and visa required to enter the country.

  Follow up of the action points identified during the visit to the country.


Strategic development

Partnership Identification

Business Development

Establishment and implementation in the region

Legal Services

Joint venture agreements



  SWOT analysis.

  Identification and definition of growth opportunities.

  Value analysis per opportunity.

  Requirements analysis per opportunity.

  Prioritization criteria development and decision facilitation.

  Analysis of vendor pre-qualification process and local content requirement compliance.




  Business model in the country: local agency, solely establishment, local component, etc.

  Country and company specific requirements.

  Partnership closure assistance.

  Action timeline.

MARKET EXECUTION


  Prequalification process in selected private and government institutions: Saudi Electricity Company, Saudi Aramco, K.A.CARE, etc.

  Execution of selected business opportunities.

  Assistance in tender preparation.

  Tender submission and follow up.

  Opportunity follow up.

  New opportunity identification.

MARKET EXECUTION

  Full time dedication of professional resources including office environment and services in Saudi Arabia.

  Company representation in the country with the possibility to act as the company’s own delegate with direct reporting to the company.

  Enlarge the company’s presence in the country through available office environment including secretary, meeting room and services.

  Monitoring of local representative.


LEGAL SERVICES

Company establishment in KSA.

Legal due diligence.

Registration procedure in the local administrations.

Expertise in commercial law for JV, subcontracting and supplier. contracts


Expertise in labor law for local work permitting, health safety and contracting.

Expertise in real state legal advice for purchasing and rental agreements.

PROJECT DEVELOPMENT

Site assessment

Weather data station validation

Solar resource analysis Correlated analysis considering existing databases, installed weather stations, satellite, …

Energy yield assessment Selected technology, solar resource, PV GIS, over 400MW experience and own simulator

Pre/Feasibility studies Production estimates adding financial metrics

Optimized grid integration and grid code services

Technical & Financial due diligence recognized by main financial institutions including World Bank

Financial modeling

Guaranteed performance models


ENGINEERING

  Conceptual design

  Plant layout

  Grid modelling (PSSE, DigSilent)

  Grid integration design

  Basic engineering design (BED)

  Front end engineering (FEED)

  Detail engineering

  Lenders engineering/technical due diligence


  Lenders advisory services

  Design review

  Owners engineering

  Owners advisory services

EPC MANAGEMENT

TENDERING

RFP preparation Bid evaluation Review EPC/EPCM tender package

PROCUREMENT

Designs by basic Bill of quantities (BOQ) Design and advise EPC/EPCM contract

IMPLEMENTATION

Vendor inspections Bankability reports


CONSTRUCTION MANAGEMENT

Construction surveillance

EPC supervision

Project Management

Quality inspections

Commissioning

Provisional and final acceptance tests and certifications


Advanced laboratory Visual inspection for major defects

Thermo-graphic inspection for hot spots or cell cracks

Insulation resistance test to check there is sufficient protection between the electrical circuit and the frame so that there are no health and safety risks during handling and operation

Peak power determination ie: the maximum power generated by the module under standard test conditions

Inspection service provided also includes a review of the equipment certificates and documentation

QUALITY CONTROL


Includes a Remote Operations Centre (ROC) which controls and monitors the performance of the PV systems all year long. It is capable of testing 200 modules per week. The lab is equipped with state-of-the-art instrumentation:

AAA solar simulator used to measure the max power of PV modules (according to international standard IEC 60904) Thermo-graphic cameras to detect resistive hot-spots I-V Curve tracer to check electrical strings of PV Modules on-site

LABORATORY


  Remote monitoring & control   Analyse the energy production and yield, and detect potential

failures.   On-site inspections & periodic checks of PV installations   Preventive maintenance of main equipment (PV modules,

inverters, transformers, support structures and trackers) according to manufacturers’ recommendations and industry standards.

  PV plant failures attendance and corrective maintenance.

OPERATION & MAINTENANCE


SOLAR PV PLANT DIAGRAM


UNCERTAINTIES IN SOLAR PV


Solar Resource Uncertainity (5-‐20%)

Energy Simula;ons and Plant loses (5-‐15%)

Transposi;on to POA (0-‐5%)

Anual Degrada;on (0,5-‐2%)

Use real tested data: 0,5%

Calculate the actual radiaKon to plane of array (POA) using the

real components: 0%

Use real data: shadows, AC/DC losses, mismatch, soiling, etc: 5%

Carry out the solar resource using satellite & numerical model data:

GHI 2%, DNI 5%

MAJOR RISKS IN PV


RISK Probability Cost Mi;ga;on

Solar Resource High 5 to 10% Proj. Develop.

Grid Integra;on HIgh Undefined Engineering

Performance High Up to 15% Construct. Support

Interest Rate and exchange rate

High Undefined Financial Agreement

UnrealisKc guarantee values

Medium Undefined Proj. Develop.

Availability Medium Up to 5% EPC mgmt. & O&M

Construc;on Medium From 1 to 20% Construct. Support

EPC extra cost Medium Undefined EPC Mgmt.

Start up delay Medium Undefined EPC Mgmt.

Licenses & Permits Medium Undefined Proj. Develop.

Technology life Kme Medium Undefined Engineering

Development and Solar Resource –  Investment institution recognized resource and yield calculation studies –  PVSys provides results with ± 10% accuracy, our own tested model based

in our experience provides ± 2% results

Engineering –  Design for Performance (construction management, supplier selection,

plant performance) –  International standard technical compliance –  Experienced team of 15-20 engineers –  Experience in the design and operation of over 0,5GW, 150 projects and 4

continents by end of 2015

Grid Integration –  Grid code design –  Optimized grid connection –  Reactive power flow management –  Dynamic studies (PSSE, DIgSilent) –  Utility Compliance SCADA

OUR ADDED VALUE


Quality Control –  Advanced laboratory installations in Almeria (Spain) for module

testing (IV curves, flash tests, thermo, …) –  Recognized module certification –  PV Plant performance analysis

EPC Management –  Experience in design and operation of over 0,5GW –  Dedicated team of 20 field engineers with international field

experience

Operation and Maintenance –  Power plant performance analysis and optimization –  SCADA –  Maintenance processes and optimization tools

OUR ADDED VALUE


OUR TEAM REFERENCES


PROJECTS


Aguafria – Honduras with 50MW is the largest PV plant in Central America. In construction since Jan 2015

•  Plant Capacity: 59MWp

•  In Operation: 2015

•  Modules – BYD 315 W (China)

•  Inverters – ABB (Germany)

•  Fix Structures – PV Hardware (USA)

Our team´s Scope: BED, FEED, BOQ and Detailed Design, Construction Supervision & Commissioning and O&M Service

PROJECTS


Letsatsi – Soutdrift with 75MW is the largest PV plant in South Africa. In commercial operation since May 2014


•  In Operation: H1 2014 •  Modules - Hanwha 270 W (China)

•  Inverters – Siemens PVS2000 (Germany)



PROJECTS


Lesedi – Humansrus with 75MW is the largest PV plant in South Africa. In commercial operation since May 2014


•  In Operation: H1 2014

•  Modules - Hanwha 270 W (China)

•  Inverters – Siemens PVS2000 (Germany)



PROJECTS


Sibo Plant is the first utility-scale PV plant in Guatemala. The plant is in commercial operation since May 2014


•  In Operation: H1 2014

•  Modules - Hanwha 300 W (China)

•  Inverters – Ingeteam Ingecon Sun 1000 (Spain)

•  Axone (1-Axis) Structures – PV Hardware (USA)


PROJECTS


Complete package of engineering services to leading local construction companies in Puglia, Italy

•  Plant Capacity: 5.6 MWp

•  In Operation: 2010 •  Modules - Trina 230 W, Aide 185 W,

Sharp 185 W

•  Inverters – SIEMENS 1000 MS TL

Our team´s Scope: BED, FEED, BOQ and Detailed Design, Construction Supervision & Commissioning

GLOBAL TRACK RECORD


Spain: 35 MW Italy: 27MW S. Africa: 238 MW Chile: 25 MW Bulgaria: 5 MW Portugal: 18 MW

sunshinemiddleeast.com

Saudi Arabia Prince Mohammed Bin Abdulaziz Road (Al Tahliya Street) Al Dogaither Building, Office 111 P.O. BOX 360074 Riyadh Tel.: (+966) 562886301 Spain Ctra. De Humera 87, 15 Pozuelo de Alarcón 28224 Madrid Tel.: (+34) 625 109 332

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Sunshine MiddleEast - March 2015 - Market Entry...

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