Slide title 70 pt CAPITALS Slide subtitle minimum 30 pt P OWER P RODUCTION & P URCHASING – A N E NTERPRISE O UTLOOK P ACIFIC E NERGY A DVISORY G ROUP N.

POWER PRODUCTION & PURCHASING – AN ENTERPRISE OUTLOOK

PACIFIC ENERGY ADVISORY GROUPNOVEMBER 2015

JONATHAN KAHN - SUNERGISE

Sunergise | 16-November-15 | Page 2

Financing Solar Growth

Utility/Bank Financed Utility Operated

Donor Financed Entity/Utility Operated

Enterprise/IPP Financed Enterprise/IPP Operated

Source: H. Wade


• System (“capex”) Sale – Customer (e.g. consumer, enterprise, utility) purchases the system – hardware, software, services–One-time major expense. Subsequent energy is “free”

• PPA (Power Purchase Agreement) – Customer purchases the energy from the system–Payments monthly based on a fixed $/kWh for solar power

produced.

Solar Commercial Models


Scope in Solar Deployment

Analyze Load

Design Supply Install Operate Maintain Insure

System Sale Energy Sale

Capex Purchase

PPA


• Payments monthly based on an agreed $/kWh for solar power produced.

• Enterprise buys power at a fixed rate that is typically lower than the prevailing utility rate

• Contract periods are 10-20 years. Customer commits to prioritized purchase of generated power

• Developer is responsible for financing, permitting, design, installation, operation, maintenance and insurance

• Enterprise commits to the long term access and use of the property (grounds, roof, etc.

Enterprise PPA Attributes


Enterprise Benefits of PPA

1. No / Minimal upfront capital costs2. Predictable energy rates (fixed contractually)3. Technology risk mitigated4. Limited risk

A. MaintenanceB. Performance

5. Expertise outsourced6. Green marketing7. Community / Staff pride8. Enhanced property value


Enterprise PPA Obligations

1. Site development – prepare for solar2. 10-20 year of asset commitment (land,

roof space)3. Impact on asset transferability4. Committed forward cash flow5. Lower savings than self-owned6. Risk that other energy sources may be

cheaper – e.g. fall in diesel price


• System Lease/Rent–Ownership remains with 3rd party company–Enterprise leases or rents system (or system output) from

owner–Fixed price lease, or monthly lease tied to energy production–Obligations may shift – e.g. insurance

• Utility as intermediary–Production sold to utility, who re-sells to Enterprise

Related Frameworks


• Production Guarantees & Purchasing Obligations– Production – guaranteed minimum,

nominal, maximum– Enterprise obligation to buy power

produced with priority over other resources

• Fitness of design– Network integration– Meter accuracy, utility grade– Fitness of premise – cyclone

certification, shading, etc.• Tax credits and incentives

• KWH rate– Incentivize businesses relative to utility– Recover project costs– Address long term O&M expenses

› Monitoring, maintenance, replacements as needed

› Insurance– Cost of capital– Fixed, escalation, ramp down of KWH

price• Project Term

– Typically 10-20 years– Fast industry evolution – 10-15 years,

renewable

PPA Key Terms


Market Focus

Source: SPC - PIDF

Cook Isla

nds Fiji

FSMKirib

atiNau

ruNiue

Palau

PNGRM

I

Samoa

Solomon

Tonga

Tuvalu

Vanuatu

Ave.13 PICs

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

Average Electricity Tariff in PICs (2009)

$US/

kWh


Solar Analysis – Energy Use

Office Energy Profile Manufacturer Profile


• How many kilowatt of panels can fit?

• Is the orientation good (north facing, not too steep a roof)?

• Is there shading?• Is roof cyclone-rated?• Sunny Nadi or Cloudy Suva?

Solar Analysis – Roof Space

Brewery, New Zealand

Inputs to savingsbusiness case


Environmental Impact5 KW Residential System

Diesel Offset

Green Energy Consumed: 5700 KWH/year

Diesel Avoided: 1,700 liters

Car KM Avoided: 15,000

Carbon Offset

Carbon Offset: 3,900 KG

Equivalent to Planting: 101 trees


Recently LaunchedRadisson Blu, Denerau, Fiji

420 KW Roof mounted system

Fly by at: https://www.youtube.com/watch?v=_VmEN_ZVGEI

https://www.youtube.com/watch?v=_VmEN_ZVGEI




Largest Solar Array in FijiRooster Poultry, Ba, Fiji

515 KW Roof mounted system


CentrePoint Supermarket

135 KW System – third RB Patel supermarket to go solar


©

Apparel ManufacturingMark One, Suva, Fiji

257 KW Roof mounted system – powering sewing and apparel printing


• Clarity on regulation & IPP framework– IPP licensing entities–Framework – buyers/sellers, qualifications, obligations

regarding network impact

• Stable feed-in tariff structure; clarity on process• Renewable energy duty/tax incentives• Information exchange – renewable energy initiatives

towards top consumers, smart meter histories, etc.• Competent & accredited workforce

Policy Support

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