Tiêu đề EE Project Financing.pdf ✅

Competency Course on Energy Audit 6/29/22 MPA/Eugene Araullo 1 Understanding Company/Banks’ Needs for Evaluating Technical and Economic Feasibility of your Projects Financing the IEE Projects Eugene Araullo, PEE, ACPE, PMP, EnMS National Expert, CEAI Energy Research & Program Dev Director, MPA Technology Adviser, Spectrum Board of Trustee, PIEMPI 1 Our Sources and References Studies, surveys, collaborations and capacity building with UNIDO National Experts in cooperation with: PIEEP – Enhancement of Financing Capacity in Industrial Energy Efficiency Sectors in the Philippines 2
Competency Course on Energy Audit 6/29/22 MPA/Eugene Araullo 2 Presentation Outline • Asset-based vs. project financing • Bankers’ perspectives § Difficulties is collateralizing project assets § Small project size - high transaction costs § Relatively high project development costs (“soft costs”) § Lack of well-established payment security mechanisms § Limited appraisal experience § Poor creditworthiness of borrowers § No standard contracts/agreements § Detail of cost and savings estimates § Credibility of savings estimates § Cash flow may be already pledged to differentbank • Requirements of banks in the Philippines 3 Asset-Based vs. Project Financing • Asset-based Finance § Borrower pledges assets such as land, buildings, or other fixedassets § Borrower has a strong balance sheet § Generally used for working capital financing • Project Finance § Financing is secured by project assets alone § Borrower does not pledge his other non-project-related assets § Used when project consists of large fixed assets (such as, for example,a PV or wind energy project) 4
Competency Course on Energy Audit 6/29/22 MPA/Eugene Araullo 3 EE Equipment as Collateral • Most IEE equipment has low collateral value § Equipment typically accounts to 60-70% total project cost § Equipment generally uneconomical to remove & use elsewhere – therefore low value § Finance security needs to be based mainly on end-user credit, not asset value of equipment • Positive Credit Features of EE Project equipment § Equipment represents “essential use”, increases willingness topay § EE projects reduce operating costs, increase ability topay § EE projects generate savings and improve bottomline 5 Small Project Size – High Transaction Costs • IEE projects are generally smaller (in terms of loan size) than traditional projects financed by banks • Costs of project appraisal and due diligence are similar for large and small projects • Therefore, EE project assessment requires relatively high costs for bankers – making them less attractive 6