Download - ROOFTOP SOLAR PV AND THE C&I SECTOR
Strictly Confidential
Strategic Advisory
Mergers & Acquisitions
Project FinanceROOFTOP SOLAR PV AND THE C&I SECTOR
IN THE UAE & GCC COUNTRIES
3rd December 2018
Kuwait Solar Workshop
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 2
SUMMARY
1. INTRODUCTION TO FINERGREEN
2. ROOFTOP SOLAR – TECHNICAL OVERVIEW
3. STRUCTURE TYPES
4. PREVALENT BUSINESS MODELS
5. CASE STUDY – SHAMS DUBAI PROGRAM
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 3
FINERGREEN - OUR MISSION
WE ARE A TEAM DEDICATED TO FINANCING THE ENERGY TRANSITION. THANKS TO A UNIQUE POSITIONING IN THE
MARKET, WE OFFER A TRIPLE EXPERTISE TO SUPPORT OUR CLIENTS.
PROJECT FINANCEA renewable energy project is highly capital intensive. Its financing requires the establishment of long term finance agreements with banking institutions. FINERGREEN has deep expertise in such contracts, which enables us to determine the most suitable legal and financial structure for each of
these transactions.
MERGERS & ACQUISITIONSFINERGREEN is a specialist in
the bid management of acquisition processes , both for
buy-side and sell-side transactions. Our project team
(either on greenfield or brownfield assets) also
operates on equity financing operations, which are key steps
in the growth journey of companies operating in this
sector.
STRATEGIC ADVISORYWhether public or private, clients who make the energy transition happen are constantly evolving.
We help these clients adapt to market changes, which often requires changing their business models.Additionaly, we also execute high value-added missions such as independent valuations, financial
audits, etc
Project Finance
Mergers & Acquisitions
Strategic Advisory
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 4
PRESENCE ACROSS THREE CONTINENTS THROUGH OFFICES IN
PARIS, ABIDJAN, DUBAI AND SINGAPORE
2013 2016 2017
FINERGREEN32 rue de Paradis
75010 ParisFrance
FINERGREEN AFRICA2 Plateaux, Rue des Jardins
Cocody, Abidjan Ivory Coast
FINERGREEN ASIA541 Orchard Road #09-01 Liat Towers Singapore 238881
1 306PLANTS
PROJECTSFINANCED
520MW
TOTAL CAPACITY
800M€
COMPLETED TRANSACTIONS
2018
FINERGREEN MENAReef Tower - JLTP.O. Box 931 033
Dubai - UAE
OUR PRESENCE
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 5
SUMMARY
1. INTRODUCTION TO FINERGREEN
2. ROOFTOP SOLAR – TECHNICAL OVERVIEW
3. STRUCTURE TYPES
4. PREVALENT BUSINESS MODELS
5. CASE STUDY – SHAMS DUBAI PROGRAM
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 6
ROOFTOP SOLAR OVERVIEW
ROOFTOP SOLAR TECHNOLOGY forms an important part of Distributed Energy Resources. It allows homeowners, businesses, and communities to take advantage of the abundant solar resource to achieve reliability and self sufficiency in their energy supply.
MAIN DRIVERS
Falling prices of PV technology
Supporting Financing Structures
Hedging against electricity prices
Reducing operating costs
Improving reliability
Focus on Sustainability and energy efficiency
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1 – load, from grid 2 – solar power produced
in the day 3 – excess solar power
available to export
hours
Po
wer
(kW
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Source Consumption*
Existing Buildings 150-200 kWh/m2/year
Factory (with no AC) 2.5 GWh/year
Factory with heavy machinery
>7 GWh/year
Installing PV could produce up to 1.7 GWh/MWp/ year
* Estimated figures in UAE
Typical Load Profile in a day
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 7
ROOFTOP SOLAR – A DEVELOPING MARKETROOFTOP SOLAR IN THE GCC – POTENTIAL MARKET TO DEVELOP IN THE UPCOMING YEARS
Dubai :• Market of 60 – 70 MW in 2018, double digit
growth• Plan to install rooftop PV on every building by
2030Abu Dhabi:• Recently introduced net metering regulation up
to 5MW capacity in one premise
Oman :• Residential PV estimated to be at 1.4 GW - 450 MW can
be produced in Muscat alone• The rooftop solar program, called “Sahim” is already
operational – it aims to deploy 1 GW of rooftop PV power and to install solar PV arrays on 30% of the Sultanate’s residential buildings over the next years.
Saudi Arabia :• Regulation for small scale solar
generation up to 2 MW, but for Net Metering not yet released.
• For residential, rooftop solar is not considered very viable as it is not enough to cover the AC loads
• For C&I, rooftop solar could be a possible solution to hedge against electricity prices
Kuwait :• Small scale (<100 kWp) residential & commercial
projects have already been executed• Net metering regulation absent
Bahrain :• Net metering regulation in place and is
operational in some households and commercial buildings.
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 8
SUMMARY
1. INTRODUCTION TO FINERGREEN
2. ROOFTOP SOLAR – TECHNICAL OVERVIEW
3. STRUCTURE TYPES
a) NET METERING (ON GRID)
b) MINI GRID (OFF GRID)
4. PREVALENT BUSINESS MODELS
5. CASE STUDY – SHAMS DUBAI PROGRAM
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 9
1 – PV modules on the rooftop produce electricity 2 – The PV Inverter converts the PV Direct Current into
Alternating Current 3 – The power used for self consumption is connected to
loads inside the house/facility 4 – The excess electricity is exported to the grid operator 5 – Deficit power is imported from the grid A bidirectional energy meter bills the net energy units
consumed each month, and the Client only pays the netconsumption bill
If there is excess export, then it is adjusted in the form ofa credit in the next billing cycle.
NET METERING
Rooftop System
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KEY POINTS
Excess energy sent to grid can be compensated either as credit or cash
Maximum size of Rooftop PV must not exceed self consumption limit.
Net Metering is a metering and billing arrangement designed to compensate distributed energy generation system owners for any generation that is exported to the utility grid. It allows utility customers with on-site distributed generation to offset the electricity they draw from the grid throughout the billing cycle (e.g., one month). The utility customer pays for the net energy consumed from the utility grid.
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 10
MICRO GRIDSA microgrid is a group of interconnected loads and distributed energy resources that acts as a single controllable entity with respect to the grid. It can connect and disconnect from the grid to operate in grid-connected or island mode. Microgrids can improve customer reliability and resilience to grid disturbances.
1 – PV and wind together can be used to design amicrogrid. Often in community microgrids, rooftop PVplants are installed to save ground space
2 – A diesel generator is normally used as a backup or torun at night
3 – The loads are powered through a hybrid operation ofrenewables + diesel genset
4 – Excess energy produced is stored in a battery system,to provide load shifting
5 – the microgrid may or may not be connected to thegrid, as determined by the operation philosophy
Microgrid System
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KEY POINTS
A microgrid can be composed of 100% renewables with proper sizing and storage
Microgrid controller is the brain of the system and dictates the smooth operationof the setup
Such microgrids are vital for offgrid areas or small island nations
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 11
SUMMARY
1. INTRODUCTION TO FINERGREEN
2. ROOFTOP SOLAR – TECHNICAL OVERVIEW
3. STRUCTURE TYPES
4. PREVALENT BUSINESS MODELS
a) LEASE-TO-OWN MODEL
b) PURCHASE MODEL
5. CASE STUDY – SHAMS DUBAI PROGRAM
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 12
How it works: 1 – Leasing company installs, operates and maintains the
rooftop PV plant 2 – Power produced by PV plant is used by client, excess
injected to the grid 3 – Client pays a leasing fee to the leasing company
LEASE TO OWN MODELINNOVATIVE FINANCING HELPS RAMP UP THE ADOPTION OF SOLAR ROOFTOP PROJECTS
Solar Leasing is a system whereby the Leasing Company isresponsible for the complete engineering, procurement, installation,permitting, operation & maintenance and financing of the solarrooftop plant and the Client just has to pay amonthly/quarterly/annual fee to the company.
The leasing service agreement is signed for a specific period untilwhich the plant is guaranteed to produce pre-determined units ofenergy, and the fee is paid according to this production.
Client Benefits: Lock in dependable predictable energy rates Long term savings Self sufficiency No expertise in solar needed
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For the Client: No upfront Investment No operational obligations Pay a fee proportional to the power produced, no
excess payments Can purchase the system after a lock-in period Owns the PV system at the end of the lease
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 13
FULLY OWN THE PV SYSTEM – FULL OPERATIONAL CONTROL
For the Client: Full upfront Investment Complete operational responsibility Common when client wants to develop inhouse
capabilities to operate a PV Plant, and replicate inother scenarios
How it works: 1 – EPC company constructs and commissions the PV plant 2 – Power produced by PV plant is used by client, excess is
injected to grid 3 – Client takes care of the O&M of the plant, EPC
contractor only liable for warranty issues
PURCHASE MODEL
In the Purchase Model, the client offers to procure a rooftop PVsystem from a Solar EPC company.
Client takes over control once the plant is commissioned The Client has full operational control, and can obtain the most cost
effective solution Typical payback period of 5-7 years (in UAE)
Client Benefits: Electricity produced is essentially free after payback
period Long term savings Self sufficiency
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FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 14
1.SUBSIDIZED BANK LOANS
OTHER OPTIONSGCC CAN TAKE INSPIRATION FROM OTHER MODELS FOLLOWED IN DIFFERENT COUNTRIES
2. PROJECT FINANCE
3. PROJECT PLATFORM
In Jordan, The Jordan Renewable Energy and Energy EfficiencyFund (JREEEF) was established to help invest in various sources ofrenewable energy . As a part of this USD 25 mn fund, several localbanks have formed an alliance to disburse loans to individuals,commerces and SME’s to reduce their electricity bill by installingsolar PV panels and using solar heaters.
In UAE, to benefit from the net metering program, many industrialgiants are looking to develop rooftop plants of sizes 5MW+ usingtraditional debt financing. Local banks are well poised to supportthese projects as rooftop technology is now mature and DEWA hasexcellent creditworthiness.
In India, to meet the ambitious target of the government to have40GW of rooftop solar by 2022, equity investors are being broughtin to create a “platform” which can fund a portfolio of rooftopassets, rather than just one single project. The portfolio is thenfinanced using debt financing. The sizeable portfolio thus allows toachieve good financial conditions.
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 15
SUMMARY
1. INTRODUCTION TO FINERGREEN
2. ROOFTOP SOLAR – TECHNICAL OVERVIEW
3. STRUCTURE TYPES
4. PREVALENT BUSINESS MODELS
5. CASE STUDY – SHAMS DUBAI PROGRAM
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 16
DUBAI LEADS THE WAY AS A FRONTRUNNER IN DECARBONIZATION OF THE ENERGY SYSTEM IN THE UAE
2020 - 7% electricity from solar
2030 -25% electricity from solar
2050 -75% electricity from solar
SHAMS DUBAI - BACKGROUND
IRENA,2015
Dubai’s ambitious clean energy targets
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Slab tariff introduction
Slab tariff increase
Fuel surcharge introduction
Commercial
Industrial
>9% annual tariff increase over the last 10+ years
As of today, only 2% of Dubai’s power, or 210 MW is generated fromsolar, while the rest is from diesel (30%) and gas (70%)
Demand in Dubai has increased by 5% from 2016 to 2017, and isexpected to increase year on year
Tariff evolution over the last 10+ years has been steep, and can beexpected to be volatile in the upcoming years
Dubai has ambitious targets to incorporate renewables in the energy mix,including plans to have solar power on every rooftop in the emirate by2030, an addressable market of almost 1.5GW
The rooftop market in Dubai is expected to be around 60−70 MW in 2018 Under the Shams Dubai program, clients can achieve up to a 30%
reduction of electricity tariffs by installing PV systems in their premises. As of 2015, using rooftop solar PV was already cheaper than the highest
DEWA tariff, usually the case for high consuming C&I sector.
AED
/kW
h
Solar PV tariff
DEWA Tariff Evolution
Category Tariff, 2018 (excl fuel surcharge)
Residential 23 to 38 fils/kWh
Commercial 23 to 38 fils/kWh
Industrial23 fils/kWh for < 10,000 kWh/month
38 fils/kWh for > 10,000 kWh/month or above
DEWA Slab Tariff 2018
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 17
DEWA PIONEERS THE UPTAKE OF SOLAR ROOFTOP
SHAMS DUBAI – RESULTS SO FAR
The initiative encourages household and building owners toinstall PV panels to generate electricity and connect them toDEWA’s grid. The electricity is used on site and the surplus isexported to DEWA’s network
Ultimate aim is to have solar power on every rooftop by 2030 Installed capacity till date is roughly 50 MW, with double digit
growth expected in upcoming years 1,126 buildings have been connected so far, out of which 5MW
are residential villas and the remaining are government,commercial and industrial buildings
Additionally, rooftop solar creates new business opportunities,including:
o Job and technology creationo Localization of component manufacturing like structures,
cables and panelso Local capacity building and knowledge transfer for
established electrical and mechanical contractors.o 446 solar photovoltaic experts, with 96 companies - 85
contractors and 11 consultants - are currently enrolled withDEWA
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 18
SHAMS DUBAI – A TYPICAL PROJECTINDICATIVE FIGURES OF A PROJECT
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AED
/kW
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Solar lease tariff
DEWA tariff
Price difference %
is always steady
Parameter Value
Size 1 MWp, on approx. 10,000 m2 of roof area
PV Yield 1,650 kWh/kWp/year
Demand 2.4 GWh/year
Solar energy 1.65 GWh/year (70% of demand)
DEWA Tariff 44.5 fils/kWh
Lease tariff 30 - 40% lower than DEWA tariff
Approx. Savings AED 27,000/month*
At any time of day, if demand is lower than production or onweekends/holidays, the surplus can be fed to grid
Savings are evident from 1st month of operations Cumulative savings are enough to reinvest into operations, rather
than spend on electricity Valuation of property/ warehouse is increased Can meet sustainability guidelines/accreditations
Solar lease or EPC?
In Dubai, experts say Solar Lease is better than full EPC for rooftopprojects because :• No hassle for client to manage project stakeholders (DEWA,
consultants, contractors etc)• Invest time and money in operating businesses rather than
electricity supply• Avoid treatment of transaction on balance sheet• No need of inhouse expertise to own and operate a PV plant
ADVANTAGES?
FINERGREEN | NEW ENERGY FINANCIAL ADVISORS 19
CONCLUSION & CONTACTS
Finergreen MENA DMCCPO Box 931 033
Dubai – United Arab EmiratesCO
NTA
CTS
Antoine POUSSARDManaging Partner MENA
Mobile: +971 50 774 8042
Raka SARKARAnalyst
Mobile: +971 55 614 7680
#1
Unique momentum with Commercial & Industrial clients looking to be sustainable while saving money
FINERGREEN is your partner of choice to make your deals happen.
Simple technology but with potential to incorporate complex microgrid schemes, storage options and achieve 100% renewables run off-grid systems – upcoming concepts for sustainability
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