the brazilian pv market cela final · solar pv module&factory8 17pv& component&...

About CELA

CELA – Clean Energy Latin America is a Brazil-based financialadvisory and consulting firm supporting renewable energy companiesinterested in investing in Latin America with:

- Equity fundraising,- Project finance structuring,- Mergers & Acquisitions,- Advisory for participating in energy auctions,- Investment and strategy consulting, and- Financial due diligence of projects.

We are specialists in solar PV, wind, bioenergy and small hydro

CELA Clients

Recent Track Record in PV (selected)

Clean Energy Solutions CenterFinance Expert

2015

DG Solar PV Business PlanConsultant

2015

BRL 1,777,192,717PV Auction

Financial Advisor

2015

Latin America DG Solar PV Strategy

Consultant

2015

BRL 869,743,453Wind AuctionFinancial Advisor

2014

Brazil Solar PV Market StudyConsultant

2014

Latin America PV Solar Business Plan

Consultant

2013

M&AFinancial Advisor170 MW PV

2015


2016

UTILITYConfidential


2015/16

M&AFinancial AdvisorCurrent mandate

2016

M&AFinancial AdvisorCurrent mandate

2016

Agenda

• The Brazilian Renewable Energy Market

• Utility-Scale PV

• Distributed Generation (DG)

4

Brazil power market at a glance: large market, even larger growth potential

5

Indicator

GDP (2015) US$ 1.77 trillion

Population (2012) 202,401,584

Installed capacity (2015) 140,272 MW

PV installed capacity 25 MW

Consumption (2015) 522,832 GWh

Residential tariff (2015)¹ R$579.78/MWh (US$ 166/MWh)²

Commercial tariff (2015)¹ R$567.80/MWh (US$162/MWh)²

Center West (CO)

South (S)

North (N)

North East (NE)South East (SE)

North

Population 8.5%

Consumption 6.8%

Average tariff (BRL 2015) 482.00

Average tariff (USD 2015) 137.71

Center West

Population 7.6%

Consumption 7.2%


Average tariff (USD 2015) 155.75South East

Population 42.2%

Consumption 51.1%



South

Population 14.4%

Consumption 17.8%



North East

Population 27.9%

Consumption 17.0%



Source: ANEEL, 2015.¹ Prices include taxes, distributuion / transmission fees² Considered BRL3.50/USD

Brazilian power matrix shift: from hydro to PV

6

90.8, 65%12.6, 9%

1511%

8.9, 6%

5.94.4%

32%

21%

0.0210%

00%

Hydro

Gas

Biomass

Oil

Wind

Coal

Nuclear

Solar

Flexible Capacity

12532%

11729%

4812%

4411%

369%

205%

41%

41%

10%

Source: BNEF, 2016.

140 GW 400 GW

Capacity mix, 2040Capacity mix, 2015

The Brazilian solar resource is exceptional;; its lowest irradiation is better than most of Europe’s highest• The annual mean of daily

horizontal global solarirradiation in any region ofBrazil higher than 1,500kWh/m2, much greater thanthose for the majority of theEuropean countries

• The maximum solarirradiation value is 2,372kWh/m2;; it occurs in thenorthern part of Bahia state

• The lowest global solarirradiation – 1,550 kWh/m2 –occurs on the North shore ofSanta Catarina

7 Source: ABINEE.

Brazil average annual irradiation (kWh/m2/day)

How will PV get from a few MW to 14GW in 2026 and 125GW in 2040?

8

CLIENT

UTILITY

Solar.Company CLIENT Solar.Company

Rent /&Leasing&of PV&system Financed Sale of PV&system

Installation,.maintenance.and.monitoring

Monthly.payment

UTILITY

Installation,.maintenance.and.monitoring

Operation.Agreement.vs..Net.Metering

Operation.Agreement.vs..Net.Metering

Purchase.in.installments

New Business models for DG

Rising Power Tariffs

Fall$in$module$prices$4%CAGR$from$2015$to$2040$

-

20

40

60

80

100

120

140

160

180

200

Cen

ts U

SD/W

ProjectionHistorical

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

0.00

0.50

1.00

1.50

2.00

2.50

2015 2020 2025 2030 2035 2040

PV S

yste

m C

apex

(R$/

kWp)

Pow

er C

ost (

R$/

kWh)

Grid Parity Analysis - Residential Segment(Total Power Cost¹ vs. Solar DG Production Cost)

PV System Capex (R$/kWp) Power Cost - Bandeirante (R$/kWh)

Solar DG Production Cost (R$/kWh) Power Cost - CEMIG (R$/kWh)

Falling PV Costs Large Market / Growth

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

Number of consumers per state/region, 2014

Commercial

Industrial

Residential

Center WestNorth North East South East South

New Products for DG

Pernambuco LER.2014 1º.LER.2015 2º LER.2015

Date Dez/2013 Out/2014 Ago/2015 Nov/2016

Registered 37;proj /;1,0GW 400;proj/10,7GW 382;proj /12,5GW 649;proj/ 21GW

Sold 5;proj /;92 MW 31;proj /;890 MW 30;proj/;834 MW 33;proj/ 929.MW

Ceiling Price R$250,00/MWh R$262,00/MWh R$359,00/MWh R$381,00/MWh

Avera.;Price R$242,66/MWh R$215,12/MWh R$301,79/MWh R$297,37/MWh

COD Jan/17 Out/17 Ago/17 Nov/18

Investment R$0,6 billion R$4,5.billion R$4,5.billion R$4,4.billion

Product

Contract+between+NewCo and+client:3 Rental3 Leasing+/+BOT3 Financed+sale,+

etc.


etc.


etc.

Location+of+net+metering+energy+

use

House+/+land+must+be+owned+or+leased+by+the+clientOther+locations+owned+by+the+client+but+within+same+concession+area

Condominium+areaApartments+/+houses+/+offices+owned+by+condominium+members+as+per+quotas

Apartments+/+houses+/+offices+owned+by+condominium+members+but+within+same+concession+area

PV+System

Equipment+may+be+owned+by+NewCo



Consumer+/+Client+(UC)

Client+(residence+/commerce/industry is+the+owner+of+the+project+UC+(power+bill)

The+condominiumis+the+UC+and+client

Need+to+prove+condominium+and++allotment

Consortium/Cooperative+is+the+UC+and+client

Clients+must+own+quota+in+the+consortium

Virtual(net(

metering

Self/

consum

ption

Condom

inium

Location+of+energy+generation

House+/+land+must+be+owned+or+leased+by+the+client

Generation+at+location+of+consumption

Condominium+area

Remote+area+allowed

Owner+of+UC+must+own+or+lease+land+where+generation+is+located

Business+Model

14

Regular / Annual PV Auctions

Advancement of PV Sector in Brazil: net metering, tax incentives and PV auctions

2011-2012- ANEEL’s 1st PV R&D- RN 482: net metering

2013- Pernambuco1st PV auction in Brazil, 92MW in PPAs - Solar stadiums

2014- BNDES 1st PV financing line- 1st federal PV auction contracts ~1GWp in PPAs- Cumulativeinstalled PV capacity: 15MW

2015- RN 687: virtual net metering- 2,000 DG installations - 2 PV auctions contract ~2GWp- Convênio ICMS 16/2015 : tax breaks - Other tax incentives such as PIS/Cofins Law 13.169/15- Cumulativeinstalled PV capacity: 40MW

2016- 2 PV auctions:July 2016 and October 2016- Canadian Solar PV module factory -17 PV component manufacturers present in Brazil - Cumulativeinstalled PV capacity: 150MW3GWp underconstruction

9

Agenda




10

Pernambuco LER 2014 1º LER 2015 2º LER 2015

Date Dez/2013 Out/2014 Ago/2015 Nov/2016

Registered 37 proj / 1,0GW 400 proj/10,7GW 382 proj /12,5GW 649 proj/ 21GW

Sold 5 proj / 92 MW 31 proj / 890 MW 30 proj/ 834 MW 33 proj/ 929 MW

Aver. Price R$242,66/MWh R$215,12/MWh R$301,79/MWh R$297,37/MWh

Aver. Price USD69/MWh USD61/MWh USD86/MWh USD85/MWh

COD Jan/17 Out/17 Ago/17 Nov/18

Investment R$0,6 billion R$4,5 billion R$4,5 billion R$4,4 billion

Investment~R$14 billion

~3GW have PPAs from the Brazil PV auctions

• 2 PV auctions announced in 2016: July (~12 GW registered) and October• A further 1 to 2GW of PPAs are expected to be contracted via auction everyyear

11 Source: CCEE, 2016.

The main winners of the PV auctions in Brazil: global PV players

630MW

557MW

330MW279MW

270MW200MW

150MW

149MW90MW

90MW

29#

53#

10#

30#

150#

270#

100#

90#

40#

210#

30#

60#

150#

184#

410#

30#

90#

120#

200#

119#

90#

280#

Rio#Alto#EnergiaSteelcon

Kroma/ExitoFRV

SolairedirectCobra

SunedisonERenovaCanadian#Solar

Outros#(<90MW)Enel#Green#Power

Pernambuco LER#2014 1º#LER#2015 2º#LER#2015

12Source: CCEE, 2016.

Agenda




13

Total Brazilian PV Installed Capacity May Reach 110 GW by 2040;; 75% in DG

Source: PDE 2024, PCE 2050, ANEEL, 2015 e Bloomberg, 2015.

• Brazil’s PV installed capacity will grow 4,059times between 2015 and 2040 (Bloomberg)

• PV DG growth:• 80% CAGR until 2023 (Ministry of Mines

and Energy)• 39% CAGR until 2040 (Bloomberg)• 13GW of new DG PV capacity added in the

next 10 years

14

28,000

82,000

Brazil PV Installed Capacity, 2040

25% utilityscale75% DG

TOTAL= 110.000 MW

37 56 79 148 350 793 1,649

2,977

4,901

7,351

10,319

13,729

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Brazil DG PV installations (MW)

Annual

Cumulative

Brazil has 66MM residences, 5.6MM commerce and 0.57MM industries that use power from the grid today;; SE region is the largest market

15Source: ANEEL, 2015.

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

Number of consumers per state/region, 2014

Commercial

Industrial

Residential

Center WestNorth North East South East South

Current local regulation (RN 687) allows the following business models:

Product

Contract between NewCo and client:- Rental- Leasing / BOT- Financed sale,

etc.


etc.


etc.

Location of net metering energy

use

House / land must be owned or leased by the clientOther locations owned by the client but within same concession area

Condominium areaApartments / houses / offices owned by condominium members as per quotas

Apartments / houses / offices owned by condominium members but within same concession area

PV System

Equipment may be owned by NewCo



Consumer / Client (UC)

Client (residence /commerce/industry is the owner of the project UC (power bill)

The condominiumis the UC and client

Need to prove condominium and allotment

Consortium/Cooperative is the UC and client

Clients must own quota in the consortium

Virtual net

metering

Self-

consum

ption

Condom

inium

Location of energy generation

House / land must be owned or leased by the client

Generation at location of consumption

Condominium area

Remote area allowed

Owner of UC must own or lease land where generation is located

Business Model

16

Such expansion will require USD 90 billion in investments in DG PV projects in Brazil by 2040

Source: PDE 2024, PCE 2050, ANEEL, 2015 e Bloomberg, 2015.Exchange rate used in this slide is different from the other slides = R$3.1/USD.

17

• Investment of BRL$950 Bn inelectricity in Brazil (PCE 2050)

- BRL138 Bn or 14,5% of investmentin PV in Brazil (PCE 2050)

• USD90 Bn of investment in DG PVin Brazil by 2040 (Bloomberg)

-

2

4

6

8

10

2015 2020 2025 2030 2035 2040

Annual investment in DG PV in Brazil (USD Bn)

US

$ bi

llion

Av. Cidade Jardim 400, 7º. e 20º andaresSão Paulo, 01454-000

+55 11 3818 0998www.celaexperts.com

[email protected]

18

the brazilian pv market cela final · solar pv module&factory8 17pv& component&...

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