1 Renewable Energy Purpose of the Power Purchase Agreement (PPA) Nebojsa Arsenijevic, BREP Manager

2 IBRD International Bank for Reconstruction and Development IDA International Development Association IFC International Finance Corporation MIGA Multilateral Investment and Guarantee Agency To promote institutional, legal and regulatory reform Governments of poorest countries with per capita income of less than $1,025 - Technical assistance - Interest Free Loans - Policy Advice To promote private sector development Private companies in 184 member countries - Equity/Quasi-Equity - Long-term Loans - Risk Management - Advisory Services To reduce political investment risk Foreign investors in member countries - Political Risk Insurance Est. 1945Est. 1960Est. 1956Est Role: Clients: Products: To promote institutional, legal and regulatory reform Governments of member countries with per capita income between $1,025 and $6, Technical assistance - Loans - Policy Advice Shared Mission: To Promote Economic Development and Reduce Poverty IFC – World Bank Group

3 Advisory Services (AS)Investment Services (IS) IFC Provides Advice, Including to: Businesses Public-Private Partnerships Supporting the Private Sector IFC Investing Solutions Include: Loans Syndicated Loans Equity Finance Structured Finance Risk Management Products Local Currency Financing Private Equity & Invest. Funds Trade Finance IFC – Internal Structure

4 Balkan Renewable Energy Program ComponentActivities C1Regulatory framework improvements C2Support to renewable energy sponsors (Market and company level) C3Support to financial institutions (Market and bank level) B2B workshops, Support to Associations, Knowledge sharing Promotion of new technologies Designs cross-check, Business plan preparation, Finance modelling CDM projects registration Training material development Integration of Regulatory/ Budgeting/ Engineering and Risk in the Finance Manual Country Level Workshops In-depth Training for SHPPs and PF Support in First SHPP Assessment Portfolio Analysis and Recommendation ( in the second year) Align national regulation with EU; Fulfill obligations in accordance to EC Treaty of SEE; Design appropriate incentive mechanisms; Increase transparency of concessions granting procedure (credibility); Design investment promotion tools and mechanisms for SHPPs; Increase “bankability” of projects and decrease collateral requirements; Make predictable cash flow analysis and conditions for project financing.

5 Potential IFC’s support to Biomass Projects Advisory Services: Private stakeholders Public stakeholders for public investment Public stakeholders for PPP Investment Services: Privately owned project Publicly owned project (sub-national)

6 AS: Private - Hartija DOO Kočani Role of IFC: LEAD ADVISOR TECHNICAL ADVISOR overall management of consultants Financial Analysis Internal promotion of the project (IS) Marketing to Investors and financiers Technical Consultant: Review of technical data to inform the bidders Drafting of feasibility study in accordance with local requirements (including licenses) Goals: To support pilot project in Macedonia (utilization of biomass) for heat and power Comply with national Waste Management Plan, national Law on WM, and EU Directives Use waste as a resource First-of-its-kind WM plan approved in Serbia, innovative in terms of scale and technology

7 AS/IS: Public - Botosani DH Project Client: Municipality of Botosani DH Company: Modern Calor (heat sales 140,000 Gcal) IFC financing €7.6 million Total project cost is €45.7 million (co- financing from EU ROS) Cooperation w JASPERS on tech DD Botosani DH Rehabilitation Construction of a new cogeneration plant and Heat-only Boilers 2 x 4MWe gas-engines 2 x 52MWth Heat-only boilers Upgrade of the heating T&D network Installation of ~25 km of T&D- network and rehab of 15 GHS Re-connection of 21 large consumers EE in Buildings Pilot Technical details

8 AS: Public for PPP – Belgrade Waste Role of IFC: LEAD ADVISOR FINANCIAL ADVISOR overall management of consultants Financial Analysis PPP structuring Marketing to Investors and financiers Technical Consultant: Review of technical data to inform the bidders Drafting of technical sections of tender documents COUNSEL: Review of regulatory framework Drafting of documents according to approved structure and regulation Long term goals: Raise living standards, protect the environment, optimize municipal land use Comply with national Waste Management Plan, national Law on WM, and EU Directives Use waste as a resource First-of-its-kind WM plan approved in Serbia, innovative in terms of scale and technology

9 IS: Private – Wind Farm Rudine (Croatia) Project details: 34.2 MW Rudine wind farm 32 kilometers northwest of Dubrovnik RP Global (Austria) 78,000 tons of CO2-equivalent each year 2 nd project financed by IFC (Sibenik) Role of IFC: Arranged up to EUR 42.5 MM in financing IFC provided a EUR 18.9 MM loan IFC mobilized an additional EUR 23.6 MM from UniCredit Bank Austria through syndicated loan

10 Conclusion AS: Pros Global experience Internal capacity Importance of E&S sust. Respect of local frmwrk AS: Limitation Expected client contribution IS: Pros Project finance Tenor Syndication Loan/Equity/QE IS: Limitation Size of the project Commercial approach (no subsidies and grants)

THANK YOU VERY MUCH Nebojša Arsenijević 11

12 Senior Debt Equity Mezzanine / Subordinated Debt Any number of structures/flavors of subordination Subordinated loans, income participating loans, convertible loans Any number of structures/flavors of subordination Subordinated loans, income participating loans, convertible loans Senior Debt (corporate finance, project finance) Fixed/floating rates, USD, EUR and local currencies available Long maturities: 8-20 years, appropriate grace periods Range of security packages suited to project/country Mobilization of funds from other lenders and investors Senior Debt (corporate finance, project finance) Fixed/floating rates, USD, EUR and local currencies available Long maturities: 8-20 years, appropriate grace periods Range of security packages suited to project/country Mobilization of funds from other lenders and investors Corporate JV (early equity investments, Infraventures) Typically up to Typically up to 20% shareholding Long-term investor, typically 6-8 year holding period Corporate JV (early equity investments, Infraventures) Typically up to Typically up to 20% shareholding Long-term investor, typically 6-8 year holding period Investment options