Financing of Wind Energy Projects- Lender´s Expectations

Financing of Wind Energy Projects- Lender´s Expectations

1. Technical due diligence and feasibility reports

i) Verified and reliable measures confirmed by an indenpendent consultant

ii) Min. 1-2 years data collection and correlation study covering 10 years for Wind Farm

iii) Energy Assessment Reports (P90, P75, P50 values)

2. Mitigation of completion risk

i) Signing a lump-sum, date certain, turnkey EPC Contract with a reputable and experienced contractor/turbine supplier

ii) The sponsors providing a project completion guarantee, if a turnkey contract is costly or not practical

3. Consulting Services during the investment period

i) Monitoring the project budget

ii) Tracking financial and physical progress of the project

iii) Periodical project reports

4. Equipment Supply

i) Basic features of equpment (performance, warranty, technology)

ii) Proven track record

iii) Existance of a satisfactory supply contract

iv) Performance and Delay Liquidated Damages

v) Performance Bonds

vi) Warranty Period

5. License and Permits

i) Generation License (EMRA)

ii) Environmental Impact Assessment Report

iii) Construction Permits, Zoning Plan

iv) Tranmission System Usage Agreement (TEIAS)

v) Land Ownership / Usage Agreement

6. Insurance

i) Construction All-Risk and Commercial Risk Insurance Policies

ii) Insurance Report (Coverage, terms, exceptions, amount etc.)

7. Contracts

i) Signing O&M Conract with turbine supplier until the maturity date of the facility

ii) Power Purchase Agreements

iii) Carbon Credit Sales

8. Equity Contribution

i) In average 30% of the total investment Costs

ii) Equity depends upon on the project´s cash flow and how much debt can be repaid

-Capacity Factor

- Electricity Price

- Loan Maturity

-DSCR

iii)Part of the equity should be paid upfront prior to the first drawdown of the loan,

remaining should be injected pro rata with the facility drawdowns.

iv) Cost over runs during the investment period should be funded by equity

9. Security Structure

i) Main Principal: it should cover all the project assets and the cash flow

Prior to first utilization:

- Pledge over the shares of the project company

- Morgage over the project assets (including servitude rights)

- Pledge over the project company´s bank accounts

- Assignment of receivables under the insurance policies

- Projeect Completion guarantee of the sponsors during the investment period

- Assignment of EPC Contract

Past Completion

- Commercial enterprise pledge

- Assignment of project revenues

Reference: Garanti Bank, Turkey