12. financing geothermal projects

Transcription

Proceedings from World Bank’s GeoFund – IGA International Geothermal Workshop
February 16-19, 2009 - Istanbul, Turkey
12. FINANCING GEOTHERMAL PROJECTS
12.2. FINANCING GEOTHERMAL DEVELOPMENT,
Robert Banack,
Dundee Securities
Copyright © IGA 2008 – 2009
Download Workshop Proceedings at:
http://iga.igg.cnr.it/
http://www.partnership-international.com/
WB/IGA Workshop on Geothermal Energy
in ECA Region Countries
Financing Geothermal
Development
Robert Banack, Dundee Securities Corporation
© IGA
Education
© WB/IA Geothermal Workshop
Robert Banack, Dundee Securities Corp.,
2009
1
2009
2
Objective / Agenda
 Capital is available
 Why are we here??

Geothermal insights
 The Challenge
 The Solution
© IGA
Education
Financing Geothermal Development:
Capital is Available
$32,040,000
$17,700,000
$22,000,000
$25,000,000
$5,000,000
Polaris Geothermal
Common &
Pref erred Shares
Lead Underwriter
Nevada Geothermal
Western GeoPower
Corp.
Common Equity
Lead Underwriter
U.S. Geothermal Inc.
AIM PowerGen Corp.
Common Equity
Lead Underwriter
Common Equity
Lead Underwriter
Common Equity
Lead Manager
$17,500,000
$142,887,000
$172,500,500
$77,000,000
US$34,000,000
Plasco Energy Group
Ormat Technologies
Inc.
Common Equity
Co-Lead Manager
Canadian Hydro
Developers
Common Equity
Co-Lead Manager
Skypower Corp.
U.S. Geothermal Inc.
LP Units
Co-Lead Manager
Project Equity
Lead Manager
Common Equity
Lead Underwriter
Source: Dundee Securities Corp.
© IGA
Education
2009
3
Dundee helps geothermal developers finance
projects by matching them with the resources
they require to grow their businesses.
© IGA
Education
2009
4
Why Are We All Here??
Electricity From Geothermal Resources is a Low-Cost, Base Load
Source of Renewable Energy.
Levelised Cost of Power Generation Technologies
Cents / kWh
Capacity Factors for Generation Technologies
%
Biomass - Landfill Gas
Conventional Simple Cycle
Geothermal - Binary
7.37 cents / kWh
Solar - Photovoltaic (Single Axis)
7.58 cents / kWh
Solar - Concentrating PV
Wind - Class 5
Solar - Stirling Dish
Advanced Combined Cycle
Solar - Parabolic Trough
Biomass - WWTP
Wind - Class 5
Conventional Combined Cycle
Hydro - Small Scale
Fuel Cell - Molten Carbonate
IGCC**
Biomass Combustion***
Advanced Combined Cycle
Advanced Nuclear
Conventional Combined Cycle (CC)
IGCC**
Biomass - AD Food
Hydro - Small Scale
Biomass - WWTP
Advanced Simple Cycle
Biomass - Landfill Gas
Solar - Parabolic Trough
Advanced Nuclear
Solar - Concentrating PV
Biomass Combustion***
Solar - Stirling Dish
Fuel Cell - Molten Carbonate
Conventional Simple Cycle
93%
95%
Geothermal - Dual Flash
Geothermal - Binary
Solar - PV (Single Axis)
0
Source: Dundee Securities Corp., CEC
© IGA
Education
%
Advanced Simple Cycle
Biomass - AD Food
Geothermal - Dual Flash
10
20
30
40
50
60
70
0%
20%
40%
60%
80%
100%
Cost per kWh (US Cents/kWh)
2009
5
The Challenge: Accessing Capital
Geothermal developers who wish to access capital
must meet several investor requirements:
 Strong geothermal resource prospects
 They need to understanding the developer’s “Game Plan” to gain comfort
with risks
 Investors demand experience, which is rare in this nascent industry
Dundee Matches the Right Capital with
Each Phase of Development.
© IGA
Education
2009
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The Solution: Match the Developer
with Neccesary Resources
Exploration Stage
 Equity is expensive at this stage because of the risk profile – need to tap
the right sources:
 “Low Cost” capital can be found with government sources (DOE), family &
friends, public equity offerings
 More costly capital is private equity, but it is often accompanied by expertise
 Public equity offerings are likely unavailable as an investment option until
equity markets recover.
Exploration Stage:
Project
Inception
 High Project Risk
 Capital is scarce and costly
© IGA
Education
2009
7
Confirmation Stage
 Equity is still the primary source of capital for developers. Again, need to
tap the right sources
 Public equity offers…. Shorter fundraising timeframe, liquidity / tangible
rewards for milestone achievements
 Private equity offers… Smart, experienced investor, financial discipline
Exploration Stage:
Project
Inception
 Capital is scarce and
costly
© IGA
Education
Confirmation Stage:
 Medium Risk
 Capital is available but
limited
2009
8
Construction Stage
 Risk is almost entirely eliminated, so developers tap into project finance
(debt / tax equity)
 Construction to Term Financing: Construction financing which converts
to term once project is completed. Power/infrastructure financiers active at
this stage
 Options Available: Standard debt available, also (in US) PTC tax equity,
monetization of accelerated depreciation to raise funding
Exploration Stage:
Project
Inception
 Capital is scarce and costly
© IGA
Education
Confirmation Stage:
Construction Stage:
 Medium Risk
 Very Low Risk
 Capital is available but
limited
 Capital plentiful and
inexpensive
2009
9
 When a developer has not yet satisfied investor requirements, we
connect them with the appropriate:
 Seed Capital
 Resource Professionals
 Project Development Team
Dundee Provides Developers with the Right
Resources – Including Seed Capital.
© IGA
Education
2009
10
 Uniquely qualified to connect developers and investors thanks to
our:
 Unparalleled relationships with and access to institutional investors
focused on geothermal financing
 Industry expertise
 History of success in leading financings
Dundee Draws on its Unique Market Experience
When Working with Geothermal Developers.
© IGA
Education
2009
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The Solution: Dundee Matches
Developers with Resources
Our firm has the necessary scale and assets to structure financings:
Dundee
78%
100%
58%
51%
16%
21%
• Market Cap - $1.5 Billion
12%
24%
•
•
•
•
Investment Banking
Research
Institutional Sales and Trading
Retail Distribution
• $37 billion AUA
© IGA
Education
• $29 billion AUM
2009
12
The Solution: Dundee Matches
Developers with Resources
 Our firm has the necessary scale and assets to structure
financings:
 Parent Company: Current market capitalization is approx. $750 million
 2005 – 2007: Dundee has been the lead underwriter for over $250
million and a syndicate member for in excess of $1.1 billion in capital
transactions within the Renewable Energy sector
 Dundee has a focused mandate to provide aftermarket support for its
Renewable Energy universe
Bottom line: $150 million of capital raised for
geothermal power project developers.
© IGA
Education
2009
13
Dundee is uniquely positioned to help geothermal
developers gain access to capital.
© IGA
Education
2009
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Photo courtesy of NREL - Renner, Joel
Photo courtesy of CANWEA
Dundee Securities Renewable Energy Team:
Bob Banack
E-mail:
[email protected]
Phone: (416) 365-2869
Ian Tharp
Cleantech and Renewable Energy Research
E-mail: [email protected]
Phone: (416) 350-5015
Thank you !
© IGA
Education
2009
15
Disclaimer
Disclosures & Disclaimers
Dundee Securities Corporation is an af f iliate of Dundee Corporation, DundeeWealth Inc., and Goodman & Company , Inv estment Counsel Ltd.
Research Analy st Certif ication: Each Research Analy st inv olv ed in the preparation of this Research Report hereby certif ies that: (1) the v iews and
recommendations expressed herein accurately ref lect his/her personal v iews about any and all of the securities or issuers that are the subject matter of
this Research Report; and (2) his/her compensation is not and will not be directly or indirectly related to the specif ic recommendations or v iews expressed
by the Research Analy st in this Research Report.
U.S. Residents: Dundee Securities Inc. is a U.S. registered broker-dealer and an af f iliate of Dundee Securities Corporation. Dundee Securities Inc.
accepts responsibility f or the contents of this Research Report, subject to the terms and limitations as set out abov e. U.S. residents seeking to ef f ect a
transaction in any security discussed herein should contact Dundee Securities Inc. directly .
This Research Report is not an of f er to sell or the solicitation of an of f er to buy any of the securities discussed herein. The inf ormation contained in this
Research Report is prepared f rom sources believ ed to be reliable but Dundee Securities Corporation makes no representations or warranties with respect
to the accuracy , correctness or completeness of such inf ormation. Dundee Securities Corporation accepts no liability whatsoev er f or any loss arising
f rom any use or reliance on this Research Report or the inf ormation contained herein. Any reproduction in whole or in part of this Research Report without
permission is prohibited.
Dundee Securities Research is distributed by email, website or hard copy . Dissemination of initial reports and any subsequent reports is made
simultaneously to a pre-determined list of Dundee Securities' Institutional Sales and Trading representativ e clients and Retail Priv ate Client of f ices. The
policy of Dundee Securities with respect to Research reports is av ailable on the Internet at www.dundeewealth.com.
The compensation of each Research Analy st/Associate inv olv ed in the preparation of this Research Report is based upon, among other things, the
ov erall prof itability of Dundee Securities Corporation, which includes the ov erall prof itability of the Inv estment Banking Department.
© Dundee Securities Corporation
Note 1: All historical data including f inancial and operating data on the issuer(s) mentioned in this report come f rom publicly av ailable documents including
statutory f ilings of these issuer(s). Data may also be sourced f rom Bloomberg, Baseline, Thomson ONE.
Dundee Securities Corporation has prov ided inv estment banking serv ices to Nev ada Geothermal Power Inc. in the past 12 months.
Dundee Securities Corporation is a market maker in the securities of Polaris Geothermal Inc.
Explanation of Recommendations and Risk Ratings
Valuation methodologies used in determining the target price(s) f or the issuer(s) mentioned in this report are contained in current and/or prior research.
Target Price N/A: a target price is not av ailable if the analy st deems there are limited f inancial metrics upon which to base a reasonable v aluation.
BUY : total returns expected to be materially better than the ov erall market with higher return expectations needed f or more risky securities. NEUTRAL:
total returns expected to be in line with the ov erall market. SELL: total returns expected to be materially lower than the ov erall market. TENDER: the
analy st recommends tendering shares to a f ormal tender of f er.
(continued…)
© IGA
Education
2009
16
Disclaimer
*Risk Ratings: risk assessment is def ined as Medium, High, Speculativ e or Venture. Medium: securities with reasonable liquidity and v olatility similar
to the market. High: securities with poor liquidity or high v olatility . Speculativ e: where the company 's business or f inancial risk is high and is dif f icult
to v alue. Venture: an early stage company where the business or f inancial risk is high, and there are limited f inancial metrics upon which to base a
reasonable v aluation.
Medium and High Risk Ratings Methodology : Medium and High risk ratings are deriv ed using a predetermined methodology based on liquidity and
v olatility . Analy sts will hav e the discretion to raise the risk rating if it is determined a higher risk rating is warranted. Securities with poor liquidity or high
v olatility are considered to be High risk. Liquidity and v olatility are measured using the f ollowing methodology : a) Price Test: All securities with a price
<= $3.00 per share are considered high risk f or the purpose of this test. b) Liquidity Test: This is a two-tiered calculation that looks at the market
capitalization and trading v olumes of a company . Smaller capitalization stocks (<$300MM) are assumed to hav e less liquidity , and are, theref ore, more
subject to price v olatility . In order to av oid discriminating against smaller cap equities that hav e higher trading v olumes, the risk rating will consider 12
month av erage trading v olumes and if a company has traded >70% of its total shares outstanding it will be considered a liquid stock f or the purpose of
this test. c) Volatility Test: In this two step process, a stock’s v olatility and beta are compared against the div ersif ied equity benchmark. Canadian
equities are compared against the TSX while U.S. equities are compared against the S&P 500. Generally , if the v olatility of a stock is 20% greater than
its benchmark and the beta of the stock is higher than its sector beta, then the security will be considered a high risk security . Otherwise, the security
will be deemed to be a medium risk security . Periodically , the equity risk ratings will be compared to downside risk metrics such as Value at Risk and
Semi-Variance and appropriate adjustments may be made. All models used f or assessing risk incorporate some element of subjectiv ity . Risk in
relation to f orecasted price v olatility is only one method of assessing the risk of a security and actual risk ratings could dif f er.
SECURITY ABBREVIATIONS: NVS (non-v oting shares); RVS (restricted v oting shares); RS (restricted shares); SVS (subordinate v oting shares).
Ideas of Interest
Dundee Securities Corporation f rom time to time publishes reports on securities f or which it does not and may not choose to prov ide continuous
research cov erage. Such reports are published
as Ideas of Interest.
77%
% of companies covered by Dundee Securities
Corporation in each rating category
66%
66%
55%
44%
33%
22%
20%
25%
23%
12%
% of companies within each rating category for
which Dundee Securities Corporation or its
affiliates have provided investment banking
services for a fee in the past 12 months.
11%
11%
0%
Buy
Neutral
Sell
Dundee Securities Equity Research Ratings
As at December 31, 2008
Source: Dundee Securities Corp.
© IGA
Education
2009
17

12. financing geothermal projects

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