1. Thailand’s Green Financing Model and Landscape
Kasikornbank Public Co., Ltd
Bangkok, Thailand
Ittiporn Intravisit
Aug 19, 2016

3. Alternative Energy (Self consumption)
Green Financing Scope
Demand Side
Supply Side
Energy Efficiency
Alternative Energy (Self consumption)
Renewable Energy
Solar PV Farm
Wind Farm
Biomass
Biogas

4. Energy Efficiency Financing

5. Energy Efficiency Financing Model (1/2)
ESCO
Bank
ESCO or Suppliers
Lending
up to 100%
Energy-saving guaranteed
Consultancy Firms that
offer integrated services
Loan or Leasing/
Hire Purchase
Customers
Program Feature: K-Energy Saving Guarantee Program
The K-Energy Saving Guarantee Program features equipment leasing/hire purchase financing and/or long-term loan aimed primarily at energy efficiency projects under management of an Energy Service Company (ESCO).
The energy savings generated by the project will be source of loan repayment (a self-financing project).
ESCOs are consultancy firms that offer integrated services for the implementation of energy efficiency projects and provide a guarantee for energy saving.
Up to 100% loan amount of contract value
Self-Financing Project

6. Energy Saving Guarantee Financing Model (2/2)
Actual Performance
Baseline
Guarantee
1. Shortfall
Scenario
2. Surplus
Scenario
ESCO will
guarantee saving = 30%
100% 5%
ESCO will pay (Penalty) for the gap of 5 % 5%
Bonus will be depended upon the agreement of customer and ESCOs.
Post Retrofit
Energy Cost
Post Retrofit
Energy Cost
Post Retrofit
Energy Cost

7. Cash Flow Profile of EE Financing
Electricity expense Energy Efficiency (EE) Measure
5% Free cash flow
30% Free cash flow
Saving Energy from EE Measure
25% (Loan repayment)
70%
70%
Electricity Expense after Energy Efficiency (EE) Measure
100%
Year 1 – Year 5
> 5 Years onward

8. Why Energy Efficiency Financing: Banks’ perspective
Expand Product/business coverage
Low risk financing due to certainty on source of repayment and credit structure
Customer acquisition tool/ Improve customer relationship
Access to low cost funding from various sources
Promote Bank’s CSR

9. Project coverage Factory/Building Retrofit Renewable Energy
US$ 85 Million
Energy Saving Guaranteed Program
Lighting (LED)
US$ 128 Million
(thru 8 banks) Ministry of Energy – Soft loan for Energy Saving Project
Euro 20 Million
Green Building Program by
Agencies France De Development

10. Opportunities for Energy Efficiency Financing
Government Support/Other international agencies through low interest financing
Established ESCO’s infrastructure
Growing awareness of energy efficiency and renewable energy
Lower implementation and equipment cost/ faster pay back

11. Challenges of Energy Efficiency Financing
Low energy prices (Oil and electricity)
Confidence of end-users on energy efficiency investment.
Business priority/disruption
Collateral structure

12. Renewable Energy Financing

13. Kasikornbank’s Energy Financing Landscape
43 Proj
(3 SPP 40 VSPP)
2 Proj
(2 SPP)
4 Proj
(4 IPP)
(2 IPP)
42 Proj
(3 IPP 39 SPP)
(2 VSPP)

14. Thailand’s RE Landscape
Project Type
Capacity
Installed 2016
(MW)
Target 2036
(MW)
Solar
Wind
Hydro (small scale)
Biomass
Biogas
Waste
Hydro (Large scale)
1,679
256
190
2,949
375
187
2,906
6,000
3,002
376
5,570
1,280
550
2,906
Total
Total Power Capacity
% of Renewable Energy
8,543
46,947
18.2%
19,684
70,335
28.0%
Source: Ministry of Energy

15. Thailand’s RE Financing Outlook
Project type
New
capacity
New
Investment
Financing Arrangement
Participation
Target MW
US$ million
Solar
Wind
Hydro (small scale)
Biomass
Biogas
Waste
Hydro (Large scale)
Total
4,321
2,746
186
2,621
905
363 -
11,141
6,173
5,492
318
4,492
1,551
1,141 -
19,168
4,630
4,119
223
3,145
1,086
799 -
14,001
High
Low
Moderate

16. RE Financing Project Model
Experience / Technology / Financial strength
Contract terms/ Liquidated damages
Insurance and Warranty (performance guarantee)
Independent engineer required
Contract terms
Reliable customers
Competition
Financial soundness
Relationship with communities
Experience with renewable project
EPC / Supplier
Main Product Offtakers
Shareholder Undertaking
EPC/ O&M Contract
Sponsors
Project
Offtake Agreement
Debt Financing
Credit Facility Agreement
Land Purchase Agreement
CERs Offtakers
Profitability ratio
Leverage ratio
Debt service ability ratio
Feedstock Supply / Land Site
CERs pricing stability
Terms of contracts
Credit worthiness of offtakers
Secure Feedstock (captive)
Reliable data source for optimum Energy Yield
Nearby Grid Connection
Independent engineer required

17. Key Perception of Risks and Mitigations (Example for Solar) 1/2
Issues
Mitigation
Guideline
Construction
Balance of Plant
Panel/Inverter Synchronization
Cost Controls and Completion
Fixed price, turn key construction contract
Guarantee completion date
Select experienced contractor
Liquidated damage terms
Acceptable performance guarantee
Strong status of EPC
Reliability and Durability
Environmental Suitability
Project Economics
Technology and performance records reviews
Lab testing and Certificates
Supplier Reviews
Service/Maintenance program
Proven technology with reasonable track records
Proper Manufacturing test&warranty
Reputable Supplier
Reachable manufacturer/supplier
Technology and Components
Irradiation
and
Production
Site and Location Suitability
Climate Impact
Geographic Limitation
Historical climate/season review
On site survey and verification
Yield Analysis
Location clear of surrounding future development, flooding, shadows, smog and smoke
Technical Advisor with formulated yield analysis approach

18. Key Perception of Risks and Mitigations (2/2)
Issues
Mitigation
Guideline
Contractual
Continuity of the Power Purchase Agreement
Terms and enforceability of contracts and warranty
Understand PPA characteristic (PPA to renew every 5 years)
Legal due diligence
Legal counsel to review warranty, LD terms
Legal counsel to review contract enforceability under Thai Laws
Environmental
Impact and effect to surrounding environment
Local community acceptance
Potential environment pollutions assessments
Local community communication
Social responsibility program
Technical/Environmental Advisor to perform review and study
Local road show and education
CSR program
Job creation

19. Credit Structure Enhancement
Financial Guarantors such as, Guaranteed Bond and Standby Letter of Credit (SBLC)
Export Credit Agencies (ECA) Financing & Support through Partial Risk Guarantee
Development Banks – IFIs’ Financing & through Partial Risk Guarantee
Insurance Brokers
Back-leveraged structure through Standby Letter of Credit (SBLC) or Corporate Guarantee in case of highly acceptable credit standings to the bank (A+ Rating and above from rating agency)
Example:
IFC as a shareholder in Solar Power Co. Ltd. enhancing the more relaxing terms & conditions to the project
ADB as a lender in early stage of Solar Farm development resulting to the longest tenor of 18 years
Strong supplier’s guarantee such as life-time performance warranty reflected through improved credit acceptance

20. Opportunities for Renewable Energy Financing
Geographical suitability for certain types of energy sources e.g. Solar PV (high and stable radiance) and Biomass
Government policy direction which support investment (mostly private) in renewable energy under Power Development Plan
Participation from other agencies on credit structure enhancement
Lower implementation cost.

21. Challenges of Renewable Energy Financing
Low electricity price environment ($0.11/kwh)
Some government scheme is unclear and leave certain issues open.
The market is more competitive leaving smaller margin to investors.
High concentration on Solar PV. Other types of renewable energy (Wind, Biomass, Biogas) are still unproven or unstable.