Financing Renewable Energy

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Financing Renewable Energy

• Alexandra McCann
• Office of Renewable Energy Environmental
  Exports

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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 ECAS by providing
  loans, guaranties and export credit insurance

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Total Authorizations in Billions
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Authorizations by Economic Sectors(In Billions)
Aircraft
Manufacturing
Oil Gas
Financial Services
Power Projects
CGF
0.3
0.3
0.3
0.5
1
0.5
Wholesale/Retail Goods
1.3
Telecommunications
3.8
1.6
Services
Public Administration
Miscellaneous
1.8
1.8
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Environmental Exports Program

• Ex-Im Banks 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

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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

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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.

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Support for Environmental Exports

• With Ex-Im Banks 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.

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Financing Support
Pre-Export Financing
Post-Export Financing
InsuranceGuaranteesDirect Loans
Working Capital Guarantee
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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

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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 buyers
  own funds.

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Direct Loan or Guarantee Process

• 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.
• 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 years financial
  statement is older than 1 year.
• Note audited statements required for credits
  over 1MM
• Copy of the export contract.
• Ex-Im Banks Loan Officer analyzes the
  application and makes a decision on the amount of
  credit to be supported.

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Utilization Procedures

• 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).
• Credit Agreement, Utilization Procedures, sets
  out the procedure for disbursement of funds.

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Utilization Required Documents

• Required disbursement documentation
• Invoice
• Exporters Certificate
• Evidence of Payment
• Shipping Documents

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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.

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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).

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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
• Based strictly on the balance sheet of the
  borrower or a guarantor
• As limited recourse project finance with a
  special purpose company borrower and project cash
  flows as the source of repayment
• Or, as a structured finance transaction with the
  borrowers 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.

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Structured Financing Korea Solar

• Ex-Im Banks Loan Guarantee to City National Bank
  supported its 15-year, 7.8MM financing of the
  1MW solar power project in Gwangju, Korea.
• Ex-Im Banks 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

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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.
• SolarWorlds 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

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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 PNOCs 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.

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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.

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Working Capital Support for EEP
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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.
  

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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_at_exim.gov
• Internet http//www.exim.gov