EBRD investments in renewable energy in Kazakhstan June, 2019
OFFICIAL USE 1. Introduction to the EBRD 2. EBRD Kazakhstan Track Record 3. EBRD Investments in renewables
OFFICIAL USE Who we are
Introduction to EBRD EBRD Kazakhstan Track Record EBRD Investments in renewables
EBRD Promotes Cumulative Business Volume (excluding Guarantees) transition to market
economies whilst fostering Debt (LHS) Equity (LHS) Net Cumulative ABV (RHS) sustainable development 12 120 105 and inclusive growth. 10 90 8 75
and bn) bn) 67 countries ABV or volume 6 60
two EU bodies. 45 (EUR (EUR 4 30 2 EUR >130bn 15
0 0 volume business cumulative Net
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 invested since 1991 business Annual >5,000 projects since 1991 Country Group Portfolio Distribution Shareholding Structure
Cyprus & EUR 9.5bn across Russia EBRD non- Central Asia Greece 4% 3% EU, 8% 395 projects , 79% private 10% South Eastern Europe sector and 91% debt in 20% Japan, 9% Southern & 2018. Eastern Mediterranean USA, 10% 12% Eastern China became the Europe & Caucasus EU 28 shareholder of the Bank in 18% countries + Others Central Europe EIB + EC 11% 2016 and India in 2018 & Baltics Turkey 63% 13% 16%
3 OFFICIAL USE Benefits of working with EBRD
Introduction to EBRD EBRD Kazakhstan Track Record EBRD Investments in renewables
Capital Mobilisation A catalyst for equity, debt and trade Capital Policy finance, EBRD works closely with other providers of capital to fill Mobilisation Dialogue “market gaps”.
Label of Quality High corporate governance and Environmental Preferred Local Creditor Presence & Social standards. Status
Long Tenors The investment horizon of EBRD’s financing typically extends beyond the market. Long Term Partner Local Presence Extensive knowledge of the local economy, business environment and practices and close relationship with governments and key stakeholders. Risk Label of Mitigation Quality Business partner Shares risks (including political) supported by EBRD’s unique mandate and shareholder structure. Deep Financial Capital Flexibility Base AAA rating EUR 30bn capital base and Preferred Creditor Status.
OFFICIAL USE 4 A key investor outside extractive industries sector
Introduction to EBRD EBRD Kazakhstan Track Record EBRD Investments in renewables
253 Signed business volume Operating assets by instrument equity and debt projects Equity, 5% 1,200 EUR 7.7bn 1,000 investment since 1991 800 600
EUR 2.4bn million EUR 400 Debt, 95% debt and equity portfolio 200
0 2011 2012 2013 2014 2015 2016 2017 2018 Energy Eurasia team 30+ bankers in London, Operating assets by sub-sector Energy Portfolio as of December 31, 2018 Istanbul, Nur-Sultan, Almaty, Moscow, Tbilisi, Tashkent, Power Ulaanbaatar. In-house Energy Generation engineering expertise. 27% Power 36% Fin. Institutions 34% Distribution Key Sectors 50% Power Ind., Com. & Transmission o Natural Gas Agrib. 6% o Renewables RES Infrastructure o Power Generation 10% 4% 3% o Power Distribution 30% NatGas o Power Transmission Transportation
OFFICIAL USE 5 Green Economy Transition Approach (GET)
Introduction to EBRD EBRD Kazakhstan Track Record EBRD Investments in renewables
• The EBRD has been engaged in sustainable The EBRD’s engagement in the context of its energy finance since its establishment. countries of operations: • In 2006, the EBRD launched the Sustainable • high share of heavy industry Energy Initiative to address the twin • ageing infrastructure challenges of energy efficiency and climate change. • high energy intensity • The EBRD was the first MDB with a dedicated pool • a lack of market-based pricing for energy of technical experts in-house. GET Investments in Kazakhstan • In 2009, the EBRD became the first MDB to set itself a carbon emissions target. €2.072 billion • In 2013, the Sustainable Resource GET finance since 2006 Initiative was launched which expands the 97 projects focus from energy to include water and materials. GET projects since 2006 • In 2015, the Green Economy Transition approach was launched under which the EBRD’s 7,343 ktonnes / year green financing is to reach 40% of total annual Total CO2 emissions reductions business volume by 2020.
OFFICIAL USE 6 Central Asia
Introduction to EBRD EBRD Kazakhstan Track Record EBRD Investments in renewables
What we do: EBRD Investments in Central Asia Starting point ▪ As of end of 2018, EBRD power & energy portfolio in Central ▪ Exceptional resource potential (especially wind, solar, hydro) Asia is €948 million and includes 35 projects for developing renewables ▪ More than 72% of the portfolio consists of private sector ▪ Aged existing infrastructure projects ▪ Strong but pragmatic political will ▪ In 2018, the team invested in projects worth over €266 million ▪ Strong support from international financial institutions and ▪ A wide array of sponsors from the UK, France, China, and other donors Germany were attracted ▪ Developing legislative and regulatory regimes Supporting sustainable energy in the region Opportunities ▪ The EBRD is the pioneer in supporting sustainable energy ▪ Attracting reputable foreign and local investors projects in the Region ▪ Attracting “know-how” and the best available technology on ▪ Through investments, the Bank aims to support sector reforms the market that increase competition and liberalization of the market, ▪ Diversification of the economy relevant for the energy sector strengthen frameworks for regionalization and energy security, ▪ Carbon footprint and emission reduction prioritize energy efficiency and use of renewable energy ▪ Supply of carbon credits to the carbon credit market What is required to unlock the potential? currently being launched (Kazakhstan) ▪ The region needs stronger macroeconomic policies and clear, Challenges independent and predictable sector regulation ▪ Intermittent and unpredictable nature of wind and solar ▪ Long term regulatory certainty/predictability is key power, seasonality of hydro ▪ Bankable transactions attracting other lenders and third party ▪ Growing competitiveness of technologies finance ▪ Impact of large power volumes interfering with system ▪ Reliable, financially stable shareholders (sponsors) stability because of priority of dispatch (no balancing market) ▪ Strong Power Purchase Agreement / creditworthy off-taker ▪ Low existing tariffs / affordability issue
OFFICIAL USE 7 Promoting Green Economy Transition in Kazakhstan
Introduction to EBRD EBRD Kazakhstan Track Record EBRD Investments in renewables
LEGISLATION POLICY DIALOGUE ACTIVITIES •Introduction of feed-in tariff system with uniform ▪ Assisting for drafting of secondary legislation implementing the 2009 structure renewable energy law (2009)
•Launch of operational legal framework with a set ▪ Advice to the Government of Kazakhstan on Developing FiTs for of rules and norms on renewable energy Renewable Energy Sources (2010) •Introduction of (i) fixed feed-in tariffs, (ii) ▪ Advising on improvement renewable energy primary legislation 2011- development of the Financial Settlement Centre 2013 off-taking energy via (iii) development of Power (2011) Purchase Agreements agreement ▪ Advising on a renewable energy sources allocation (2013)
•Introduction Law on supporting the use of ▪ Modelling the social impact of renewable energy feed-in tariffs 2013 Renewable Energy (2013)
•Introduction of full indexation of feed-in tariffs ▪ Assisting in the final stage of developing renewable energy 2014 against inflation legislation (2014)
▪ Assisting Ministry of Energy on establishing a bankable regulatory •Introduction of the Green Economy Law which and legal framework (2015-2016) 2015- provides further supports to the development 2016 and operation of renewable energy projects ▪ Strategic Environmental Review (SER) of RES development in Kazakhstan (2015-2016) •Introduction of auction scheme for RES development. ▪ Assisting in the review of the PPA bankability (2018) 2018 •858MW of solar, wind, hydro and biomass capacity was auctioned.
OFFICIAL USE 8 GCF – EBRD Kazakhstan Renewables Framework
Introduction to EBRD EBRD Kazakhstan Track Record EBRD Investments in renewables
GCF – EBRD Kazakhstan Renewables Framework Supporting the construction of 8 to 11 renewable energy projects in Kazakhstan, with a total capacity of 330 MW. Helping Kazakhstan to achieve ~18% of its 2020 renewable energy goals.
Framework Components 1. Scaling up renewable energy investments, by blending EBRD and GCF financing and leveraging additional debt financing from international and Financial Structure development financial institutions and in the Total finance US$557 million future from commercial banks, as well as GCF Funds US$110 million private sector investments of which grant US$4 million concessional loan US$106 million 2. Enhancing renewable energy integration, EBRD loan US$214 million policies and planning through a EBRD grant US$3 million comprehensive technical assistance and Other lenders US$93 million policy dialogue Sponsors equity US$137 million
OFFICIAL USE 9 2014 – 2019
Introduction to EBRD EBRD Kazakhstan Track Record EBRD Investments in renewables
Burnoye 1 & 2 SPP Risen SPP Chulakkurgan SPP Salkhit Wind Park 100 MW solar 40 MW solar 63 MW solar 50 MW wind EBRD: USD 124m EBRD: USD 22m EBRD: USD 45m EBRD: USD 43m TPV: USD 204m TPV: USD 45m TPV: USD 77m TPV: USD 115m
Nomad SPP Saran SPP Zhangiz SPP Tseitsii Windfarm 28 MW solar 100 MW solar 30 MW solar 50 MW wind EBRD: USD 26m EBRD: USD 54m EBRD: USD 12m EBRD: USD 25m TPV: USD 35m TPV: USD 105m TPV: USD 25m TPV: USD 127m
Baikonur SPP 50 MW solar EBRD: USD 30m TPV: USD 72m
Shardara Hydro Power Zadarya SPP 100 MW hydro 14 MW solar EBRD: USD 121m EBRD: USD 9m TPV: USD 147m TPV: USD 19m M-KAT Green SPP Sainshad Wind 100 MW solar 55 MW wind ✓ 16 projects EBRD: USD 58m EBRD: USD 30m TPV: USD 122m TPV: USD 120m ✓ 936 MW of renewable capacity Qairokkum Hydro Power Desert SPP ✓ USD 684 million of EBRD investment 126 MW hydro 30 MW solar ✓ USD 1466million total project value EBRD: USD 88m EBRD: USD 10m TPV: USD 205m TPV: USD 48m
OFFICIAL USE 10 Yerlan Ramazanov Associate Director Energy Eurasia Sustainable Infrastructure Group Tel: +7 717 2554263 Email: [email protected]
EBRD, Nur-Sultan Resident Office 2 Dostyk str, SAAD Business Center, Nur-Sultan, Kazakhstan www.ebrd.com
OFFICIAL USE 11