Financing Renewable Energy by cio18038

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									     Financing Renewable Energy
                Alexandra McCann
Office of Renewable Energy & Environmental Exports
        Export Import Bank ?

Official Export Credit Agency (ECA) of U.S.
 Government
Established in 1934
Headquarters in Washington DC , 8 Regional
 Offices
Mission – Promote and finance exports from
 U.S. and compete with other country ECA’S
 by providing loans, guaranties and export
 credit insurance
Total Authorizations in $ Billions
     10                                             10.4
                                9.3
                      8.5                     8.9           Loans
                    7.8
     8      7.4                        8.1
                                                            Guarantees

                                                            Insurance
     6

                            4.6
                              4.4
     4                                  3.9           3.6
                    2.7                       3.5
              2.4
     2

          0.3 0.05 0.2
                            0                       0.3
     0                                0.05    0
           '02 '03 '04 '05 '06 '07 '08
      Authorizations by Economic Sectors
                                        (In Billions)
                                                              Aircraft
                                                              Manufacturing
                                                              Oil & Gas
                                                              Financial Services
                                                              Power Projects
                         0.3 0.3 0.3                          CGF
             0.5   0.5                      1
      1.3
                                                              Wholesale/Retail Goods
                                                              Telecommunications
1.6                                                     3.8
                                                              Services
                                                               Public Administration
                                                              Miscellaneous
            1.8
                                  1.8
Environmental Exports Program
 Ex-Im Bank’s support for renewable energy and environmental
  exports mandated by Congressional Charter since 1992;
  Environmental Exports Program created in 1994


 Created the Office of Renewable Energy & Environmental
  Exports in 2008


 FY2008, the Bank authorized $226.9 million in financing to
  support an export value of $434.2 million in environmentally
  beneficial goods and services


 Provides Loan Guarantees, Export Credit Insurance, Working
  Capital Guarantees, and Direct Loans
Environmental Exports Program

Environmental Exports Program offers enhancements:


    Terms of up to 18-years for renewable energy, and
     water treatment projects


    Up to 30% local cost support within the U.S. scope of
     supply.


    Capitalization of interest during construction


    Indirect Exports under the Working Capital Program
     Support for Environmental
              Exports

 Supported over $3 billion in environmentally
  beneficial exports since 1994


 Export value of nearly $400 million in renewable
  energy exports supported


 Growing pipeline of projects in renewable energy,
  including solar, wind, geothermal


 Ex-Im Bank often plays a critical early-stage role in
  helping small clean tech companies finance their
  operations.
  Support for Environmental Exports

 With Ex-Im Bank’s early-stage intervention companies
  can grow their international business, increase
  profitability, and ultimately attract significant equity
  investment.


 Powerlight, GT Solar, Evergreen Solar, and Sunwize are
  examples of companies that received early-stage financial
  support from Ex-Im Bank, and who went on to attract
  substantial equity investment.


 Ex-Im Bank support as a source for financing exports
  leverages equity capital, and preserves existing bank lines
  for clean tech exporters.
      Financing Support


Pre-Export            Post-Export
Financing              Financing


 Working              Insurance
 Capital             Guarantees
Guarantee            Direct Loans
     Loan & Guarantee Program
 Guaranteed Loans made by commercial banks (U.S. or foreign)
  to a foreign buyer with a 100% unconditional repayment
  guarantee from Ex-Im Bank


    Guarantee covers 85% of the U.S. and eligible foreign
     content of the transaction.


    Negotiated interest rates, usually a floating rate based on
     spread over 6-month U.S. dollar LIBOR rate


    Loan fully transferable, can be securitized


    Banks often finance the 15% required cash payment


    Guarantee available in major foreign currencies
        Direct Loan Program

 Direct Loans made by Ex-Im Bank to a foreign buyer


 Fixed interest rate, currently about 3.81% for long-term


 If the contract has been awarded, only the international
  borrower may submit the final commitment (AP)
  application.


 Ex-Im Bank requires the buyer to make a cash payment to
  the exporter equal to at least 15% of the U.S. supply
  contract.


     15% cash payment can either be borrowed from a lender
      or the exporter, or be from the buyer’s own funds.
     Direct Loan or Guarantee Process
1.    The international borrower in the case of a Direct Loan, or guaranteed lender
      bank in case of a Loan Guarantee, submits the application for Final Commitment
      to Ex-Im Bank along with the required information to establish the credit limit
      for the foreign customer.


2.    The information requirements from the borrower are as follows:


         A current credit report.


         A current commercial bank reference.


         Latest 3 years financial statements; interim statements if the latest year’s
          financial statement is older than 1 year.


         Note: audited statements required for credits over $1MM


         Copy of the export contract.


3.    Ex-Im Bank’s Loan Officer analyzes the application and makes a decision on the
      amount of credit to be supported.
          Utilization Procedures

1.   2 methods of Disbursement

        Letter of Credit – U.S. exporter is beneficiary – most common
         method


        Reimbursement – U.S. exporter has been paid by Korean
         purchaser or Kexim who is seeking funding against the payment(s).


2.   Credit Agreement, Utilization Procedures, sets out the
     procedure for disbursement of funds.
  Utilization – Required Documents

 Required disbursement documentation


     Invoice


     Exporter’s Certificate


     Evidence of Payment


     Shipping Documents
  Ex-Im Bank – Local Cost Policy
 Ex-Im Bank can support up to 30% of the value of the U.S
  exports for locally originated and/or manufactured goods and
  services


 For limited recourse project finance transactions, the local costs
  may or may not be related to the U.S. exporter's scope of work.


 For those local costs not related to the U.S. exporter's scope of
  work, the local costs must be:


     Beneficial to the project;


     Detailed in the Acquisition List; and


     Originated/manufactured in the host country. Services must
      be provided by individuals and/or business entities that are
      residents of the host country.
                      Calculating Support

 U.S. Supply Contract                                                                $150,000,000
 U.S. Content                                                                        $ 70,000,000
 Eligible Foreign Content                                                            $ 10,000,000
 Net Contract Price (70mm + 10mm)                                                     $ 80,000,000
 Cash Payment (15% of $80mm)                                                         $12,000,000
 Amount of Net Contract Price financed                                               $68,000,000
    Amount of local cost in the Supply Contract:                                      $50,000,000
 Amount of local cost financed (30% of $80mm)                                        $24,000,000
 Total Ex-Im Bank Financing support                                                  $92,000,000


 The Net Contract Price includes US content and eligible foreign content (and excludes ineligible foreign content
     and local costs). This amount consists of 85% of the Net Contract Price (maximum support) plus 30% of the
                                Net Contract Price (maximum support for local costs).
     What Can Ex-Im do for “Small”
              Projects?
    Ex-Im Bank can make a credit decision about a potential
     project in one of three ways:

    1.   Based strictly on the balance sheet of the borrower or a
         guarantor;


    2.   As limited recourse project finance with a special purpose
         company borrower and project cash flows as the source of
         repayment;


    3.   Or, as a structured finance transaction with the borrower’s
         balance sheet enhanced by special features.


    Many projects are too large to be feasible strictly on a
     balance sheet… but too small to merit the time and expense
     associated with project finance transactions.


    “Structured” finance may be an alternative.
     Structured Financing: Korea Solar
   Ex-Im Bank’s Loan Guarantee to City National Bank supported its 15-year, $7.8MM
    financing of the 1MW solar power project in Gwangju, Korea.
      Ex-Im Bank’s first 15-year deal under the OECD terms.


   Powerlight, Berkely, CA, developed the solar power plant, located at the Kim Dae
    Jung Convention Center.


   Ex-Im Bank used the “structured finance” approach to create a reasonable
    assurance of repayment and support the project.
      No outside financial advisors, limited legal fees


   Structure of the deal included:
      15-year guaranteed tariff rate for power sales
      Corporate guarantees of two relatively small private-sector companies as
       project sponsors
      Mortgage on the solar panels
      Debt service reserve account
      Financial covenants
    Project Finance: Gochang Solar
   Ex-Im Bank provided $61 million in Loan Guarantees to finance the exports of
    photovoltaic solar modules by SolarWorld Industries America to Gochang Solar
    Park Co. Ltd. of Seoul, Korea.


   SolarWorld’s modules will be used in 5 solar power projects totaling 15MW.


   Financing for the five projects was arranged by TSI Renewable Ventures (TSI-RV)
    of Pasadena, Calif., a developer of renewable-energy projects.


   Ex-Im Bank Loan Guarantees are supporting loans provided by the Private Export
    Funding Corp. (PEFCO).
      Ex-Im Bank's financing also covers $10.2 million of local costs for installation.
       The repayment term for each of the loans is 13.5 years.


   Ex-Im Bank used the “structured finance” approach to create a reasonable
    assurance of repayment and support the project.
      No outside financial advisors, limited legal fees


   Structure of the deal included:
      15-year guaranteed tariff rate for power sales
      Mortgage on the solar panels
      Debt service reserve account
   Project Finance: Ormat Leyte
 Direct Loan of $49.7 million to sponsor Ormat Leyte Co. Ltd., to
  build, own and operate four geothermal plants.
 Philippine Natl. Oil Company (PNOC) signed a contract with
  Ormat to purchase the power under a long-term Power Purchase
  Agreement (PPA).
 Ormat provided 25% in equity totaling $16.7 million with Ex-Im
  Bank supporting the remaining 75% as the sole senior lender.


 Project has a number of important strengths:
     Government backing for PNOC’s contractual obligations toward the
      project.
     Reliable performance and operations from Ormat.
     The engineering evaluation showed the geothermal fields to be a
      reliable power source, generating a high capacity of steam.
                Working Capital
 Ex-Im Bank provides 90% repayment Guarantee; revolving or
  transaction based, made by commercial lenders to small
  businesses to finance export sales.


 The Working Capital Guarantee serves as the collateral to the
  commercial lender by mitigating the risk inherent when the
  source of repayment for the loan is an overseas contract.


 Enables exporters to finance materials, labor, and overhead to
  produce goods/services for export.


 Enables exporters to cover standby letters of credit for bid and
  performance bonds, or payment guarantees.


 Enables the exporters to finance foreign sales receivables.


 Most Working Capital Guarantees provided by Delegated
  Authority Lenders (see www.exim.gov for a list) without prior
  Ex-Im Bank approval.
Working Capital Support for EEP

                         Working Capital Guarantee
                   Environmentally Beneficial Transactions
                           in Aggregate Loan $

    $140,000,000
    $120,000,000
    $100,000,000
     $80,000,000
     $60,000,000
     $40,000,000
     $20,000,000
             $0
                      02



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                                                        06



                                                                07



                                                                        08
                   20



                           20



                                   20



                                             20



                                                     20



                                                             20



                                                                     20
                                           Fiscal-Year-End
Working Capital Guarantee Support

The two largest WCGP Environmentally Beneficial
Transactions for FY 2008 were for Aquatech
International Corporation and United Solar Systems
Corporation.
  The Aquatech transaction consisted of two multi-year loans
   totaling $43.2 million in authorizations supporting in excess of
   $149 million in export sales of zero discharge waste water
   systems for the oil and power industries.

  The United Solar transaction was a $22.5 million authorization
   supporting approximately $100 million in solar laminates for
   power generation.
                        Conclusion
 Ex-Im Bank: top priority to support renewable energy &
  environmental exports


 Ex-Im Bank supports short, medium, and long-term financing to
  creditworthy international customers, and working capital
  guarantees to U.S. exporters


 Ex-Im Bank is interested in any size project


 We will work with you to create “bankable” projects


 We welcome your projects and your ideas!


 Alexandra.mccann@exim.gov


 Internet       http://www.exim.gov

								
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