Phu Lac Wind Farm

Experience from Binh Thuan Province

Tim-Patrick Meyer, Senior Project Manager

Ho Chi Minh City, October 30, 2012

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KfW Entwicklungsbank - Overview

● Germany’s development bank

● We finance, advise and accompany development projects and programmes around the world

● Our aim: reduce poverty, protect the climate, secure peace and shape globalisation in a manner that benefits people in poorer regions of the world

● 650 employees, 190 in local offices in partner countries

● We carry out 1.900 programmes and projects in 100 countries

● Clients:

Federal Ministry of Economic Cooperation and Development

Other German ministries

European Commission

Governments of other countries

3

Locations:KfW Entwicklungsbank and DEG

São Paulo(incl. DEG)

Yaounde

Mexico City(KfW & DEG)

Guatemala City

Managua

Lima(incl. DEG)

Bogota

Quito

La Paz Brasilia

Tegucigalpa

Windhoek

Johannesburg(DEG)

Maputo

Pretoria (KfW)

LusakaLilongwe

Dar es Salaam

Kigali

KinshasaBujumbura

Nairobi(incl. DEG)

Kampala

JubaAddis Ababa

Dakar

Rabat

Cairo

Sana‘a

Cotonou

Bamako

Accra(incl. DEG)

OuagadougouNiamey

Tunis

VientianeHanoi

Manila

Singapore(DEG)

Phnom Phen

Bangkok(DEG)

Jakarta(incl. DEG)

Kathmandu

DhakaNew Delhi(incl. DEG)

Beijing(incl. DEG)

Ulaanbaatar

IslamabadKabul

Kunduz

Brussels

Mazar-è-Sharif

Dushanbe

BishkekTaschkent

Moscow(incl. DEG)

KievFrankfurt

Berlin

AmmanDamascus

Al-Bireh

AnkaraIstanbul (DEG) Yerevan

Baku

TbilisiSkopjePristina

Belgrade

PodgoricaTirana

Sarajewo

Sites of KfW Entwicklungsbank and/or DEG (03/2012)FC partner countries (03/2012)

44

FC Commitments: Energy & Total KfW

284

245

3002

635

363

3648

240

292

3482

1068

726

4452

921

391

4532

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Mio €

2007 2008 2009 2010 2011

Renewable Energy (incl. FS) Total KfW Energy Efficiency (incl. FS)

528

999

533

1794

1312

5

Commitments Wind Energy Projects since 2000(without credit lines)

Country Project YearLoan (D)Grant (Z)

Commitment (Mio. EUR)

Wind Park Zafarana II 2001 D 15,3Wind Park Zafarana II 2001 Z 5,1Wind Park Zafarana III 2003 D 15,3Wind Park Zafarana III 2003 Z 5,1Wind Park Zafarana IV 2005 D 74,9Renewable Energies Program (VF) 2010 D 104,0Großwindpark Gulf of el Zayt 2010 D 87,5Renewable Energies Program - Wind Farm Gulf of el Zayt (NIF) 2011 10,0

Subtotal 317,3Parc Eolien de Essaouira 2004 D 50,0Parc Eolien de Tanger II 2006 D 50,0

Subtotal 100,0Wind Farm Mesihovina (CM) 2010 Z 1,0Wind Farm Mesihovina 2010 D 71,0

Subtotal 72,0Macedonia Energy Efficiency/Renewable Energies II 2011 D 32,9Subtotal 32,9

Windpark III (Inner Mongolia) 2001 D 3,5Wind Energy Programme 2008 D 20,5

Subtotal 23,9Total 546,1

Egypt

Bosnia-Herzegovina

China

Morrocco

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Financing Wind Energy

● Professional project preparation required: wind measurements, land acquisition and compensation, feasibility studies, social and environmental studies, licenses …

● Analysis of risks: during construction phase, cost-increases, timing-risks, risks during operation, debt-service and interest coverage

● Policy matters: clear market rules and regulations needed (strong institutions, PPAs, support mechanisms, etc.) including licensing and approval mechanisms

● With larger volumes, financing consortiums become common

more complex financing engineering (EU, EIB, EBRD, Regional Development Banks, World Bank, CTF, …)

7

Wind Farm Phu Lac

● First phase: 16 x 1,5 MW = 24 MW (financing through KfW)

● Second phase: 17 x 1,5 MW = 25,5 MW

● Total investment for phase 1: USD 52 million

● KfW loan: approx. USD 43 million equity only about 16 %

● 110 kV-line goes right by the wind farm area

● Project will sell electricity to EVN at a rate of 7,8 US-c/kWh

● It is planned to generate additional income through sale of CER in the scope of the CDM

Wind Farm Phu Lac

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Wind Data and Energy Yield

● Wind data is available for one year from a 60 m tower located about 1 km south of the project site

● No documentation of wind measurement (setup, maintenance) available

● Wind speed of 6,9 m/s at hub-height (85 m), but high uncertainty of wind data

KfW contracted a Wind Resource and Energy Yield Study

Net annual energy yield:

P50 = 58.652 MWh (CF = 27,9 %) uncertainty 26 %

P70 = 50.682 MWh (CF = 24,1 %)

P90 = 39.176 MWh (CF = 18,6 %)

We did our own financial analyses based on P70

9

Environmental and Social Impact

● An Environmental Impact Assessment Study had been carried out by the Ho Chi Minh City University

● Study was missing some important aspects and did not meet international financing standards

● Compensation of land-owners?● Potential social impacts?● Documentation of public consultation?● Baseline analysis of birdlife?● Noise analysis?● Etc.

KfW contracted a new ESIA Study including public consultation procedure

no significant impacts identified

10

Next Steps

● Sign loan agreement with Ministry of Finance who will pass on the loan to the investor

● Hire an implementation consultant who will help the investor in carrying out a tender for the wind farm and supervising construction

EPC-contract shall include extended guarantee-period of up to five years during which O&M is done by the supplier and O&M-training is carried out

● Sign PPA with EVN

● Construction in 2014

Thank you!