Vector Cuatro is now Vector Renewables
Vector Renewables is the name that will replace Vector Cuatro after 15 years in operation, and with which the company will strive forward to meet its objectives over the coming years.
Following the steps of its parent company, Falck Renewables, and all the companies of the group, Vector Renewables welcomes this new identity as a step towards modernization without losing sight of its most valuable asset: its clients.
The name change is united with a new graphic identity, whereby they are looking to reinforce values such as innovation, professional development, and well-being, three of the main pillars that govern the day-to-day running of the companies of Falck Renewables.
They have preserved the word “Vector” in their new venture, maintaining the identity which has served the company well during its accomplishment in taking the lead as a reference advisor in the green energy sector.
Thanks to the work of more than 200 professionals in 10 international offices, Vector Renewables will continue to adapt to the constant change in the sector in which it operates, offering services based on the trends and needs demanded by the renewable market.
As to date, Vector Renewables has provided services in more than 40 countries, holding more than 2.9GW under management, over 60 GW of technical advisory services completed, and approximately 4.6GW in M&A and Financial Advisory.
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Extraordinary complex situation, challenges us to be more supportive with our clients and look toward the future
COVID-19 has rapidly spread, affecting almost all countries worldwide. Latest economic consensus have shown a general and significant GDP drop, especially relevant in those markets highly dependent on external demand and/or labor-intensive sectors, like the Spanish market. As a result of the health crisis, Government has declared the alarm status, which has a wide variety of implications, many of them impacting the power sector:
• Economy lockdown has led to a relevant decrease in power demand. Combined with the commodities low-trend price observed during the weeks previous to COVID-19 crash, have resulted in historical wholesale electricity low prices.
• Pool and future markets low-price scenario are putting a lot of pressure on off-takers, who are showing a downward trend in PPA prices.
• Delay in the administrative procedures. This has an immediate impact on the development process and construction schedules for renewable energy projects affecting economic projections.
• Financing of renewable energy projects is going through an uncertainty situation which may postpone financial close but also might force financial institutions to revisit their terms and conditions.
• Renewable energy operating projects may face working capital stress situations driven by current retribution parameters as they were calculated considering a complete different pool price scenario compared to existing one.
All the above shows an extraordinary complex situation which challenges renewable energy stakeholders to move fast in order to enhance their business strategy. From Vector Cuatro, we have performed a deep dive on key drivers to provide our clients with a continuous support. Our closeness to the market through a strong network together with our wide in-house expertise, allows us to have 360 picture and enable us to become a reliable partner in the renewable energy industry.
Our M&A and Financial Advisory team is continuously monitoring market updates, factoring any input to adapt opportunity assessment. We are especially active in M&A transactions, on the sell-side helping our clients in maximizing asset value and on the buy-side advising on valuation and structuring to optimize return to shareholders.
Do not hesitate to get in touch with our team requiring any kind of support. Our M&A and Financial Advisory team would be more than happy to support you whatever your concern may be.
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Wind keeps blowing, sun does not stop rising and at Vector Cuatro, we do not stop!
Firstly, we would like to remind all coronavirus victims and transmitting our best support to their relatives and all the society.
Thanks to smart working politics and work flexibility we implemented two years ago, we can now develop a seamless transition to face COVID-19 crisis and we keep doing our best from home, in order to help our clients with their renewables projects all around the world.
We have agreed protocols and procedures with our clients to allow plants visits and construction supervision. Particularly in Spain we resumed these sorts of services on April 13th with the mobility permission to “non essentials” works
Without forgetting our top priority nowadays, which is the health of our employees as well as the rest of the population, we limit as much as possible the actions that could lead to more contagious, even though we continue to work to keep renewable sector growing.
Our COVID-19 internal committees (both in Spain and countries where we have presence) are in touch with authorities and associations to adapt protocols to the changing circumstances of each geographical area.
We take the opportunity to send our applause to all the healthcare staff, police officers, military, carriers and shippers, etc. that take care of us to overcome this situation as soon as possible. BIG THANK YOU!
We #DoNotStop
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Vector Cuatro, advisor of Galp in the largest Iberian solar power portfolio acquisition
Vector Cuatro has acted as advisor for the energy division of the Portuguese gas company, Galp Energía, in the acquisition of ACS’ solar PV assets. The portfolio includes operating PV plants with an installed generation capacity of 900 MW plus a further 2.9 GW under development.
During the acquisition process, Vector Cuatro has supported Galp as advisor through its three business lines (technical, legal and financial advisory), providing full technical advisory services on the due diligence process, legal advisory on the negotiation of the EPC and O&M contracts and commercial advisory related to the transaction both on operational and under development projects. For the provision of such services Vector Cuatro has fully leveraged on its internal resources.
Portfolio includes photovoltaic power plants under operation with an installed capacity of 900 MW. It also comprises projects under development with sum up a total installed generating capacity to 2.9 GW by 2023, enough to supply the average consumption of 1.8 million households. They will also contribute to avoid the emission of an equivalent 87 million tons of CO2. With this new acquisition, Galp becomes the largest solar energy company on the Iberian peninsula
With such new services, Vector Cuatro reaches a track record of more than 65 GW in technical services in over 40 countries, besides its current portfolio of 2.6 GW under management and 4.6 GW in M&A and Financial Advisory. To date, the company has been involved in more than 2000 projects, which has allowed Vector Cuatro to position itself as one of the most relevant companies in the renewable energy industry worldwide.
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Introduction of a new generation side Wheeling Charge on the early certified solar projects is being discussed by METI
Purpose of the new charge
This measure has the purpose of sharing a portion of the grid cost between electricity end users and generators. Under the current system, the wheeking charge is generally born by retailers and then passed on to end customers.
Application and potential adjustment measures
The new generation side Wheeling Charge proposed by the Ministry of Economy, Trade and Industry (“METI”) on an interim report on 20th August 2019 and currently under discussion, would be applied to all types of generation projects (except for residential solar projects <10kW).
The charge proposes no adjustment measures for the early certified solar projects (FIT of 40, 36, 32 and 29 JPY/kWh), while potential adjustment measures are being considered by METI for projects with FIT under 27 JPY/kWh.
Expected impact
Although the charge is not yet fully defined, current information suggests that this cost will be applied as a fixed rate on a kW basis, with estimations placing it at 150 JPY/kW per month (or 1,800 JPY/kW per year). Based on average solar panel efficiency, an estimated 1.3 JPY/kWh on solar power projects, according to the Japan Photovoltaic Energy Association (“JPEA”).
The measure is considered to have a significant impact. On the one hand, retrospectively in operating projects since projects that supply electricity under the FIT scheme (fixed PPA structure) do not have the ability to pass this cost on to their utility customers. On the other hand, in future investments since the introduction of this cost will as well reduce certainty and expected profitability of renewable energy projects.
Timeline
METI expects to fully define this new generation side Wheeling Charge during the next years, while the practical and effective law enforcement would take place around 2023, given the time required to coordinate with other reforms and to develop systems to charge the costs.
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Windfor, a company of Vector Cuatro, LTA in the refinancing of three wind farms in Italy with first green loan
Windfor, wholly-owned subsidiary of Vector Cuatro, has acted as Lenders’ Technical Advisor in the refinancing of three wind farms in Italy with first green loan. The three projects, owned by Cubico Sustainable Investment, total more than 99 MW.
As Lender’s Technical Advisor, Windfor provided Technical Due Diligence services including permitting, grid connection and regulatory fulfilment assessment, land leases assessment, equator principles assessment, energy assessment, contracts assessment, engineering assessment, tariff assessment and OPEX assessment.
The green loan complies with the Green Loan Principles and has been supported by infrastructure firm AECOM.
The 99MW portfolio comprises three operational projects located in Campania, Apulia and Basilicata (Italy), ranging from 17.5MW to 54.4MW.
The total amount of the project finance was around EUR 173 million, in which Banco Bilbao Vizcaya Argentaria (BBVA), Crédit Agricole Corporate and Investment Bank (Crédit Agricole CIB), Siemens Financial Services and Société Générale acted as structuring mandated lead arrangers. Credit Agricole CIB also acted as agent of the financing and issuing bank, with Credit Agricole Italia as account bank.
Currently, Windfor and Vector Cuatro counts on a considerable track record in the Italian market and embraces experience of more than 18 GW as Technical advisor, providing a wide range of services that include owner’s engineering services, on-site technical audits, technical due diligences, vendor due diligences or O&M tenders, among others.
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Colombia’s first solar and wind power auction: 1298GW awarded to 3 solar farms and 5 onshore wind plants
After almost two years of planning and one failed attempt, Colombia has successfully had its first renewables auction with long-term PPAs secured. Considering Colombia’s market with great potential, many international players, such as Acciona, Canadian Solar, Enel Green Power, EDFR, Solarpack and Trina Solar all showed interest in participating.
In this auction, seven electricity generators secured 15-year PPAs for 1298 MW of new wind and solar capacity spread over three solar and five onshore wind projects, which are planned to be commissioned by January 1, 2022.
Awarded projects in the auction
Trina Solar – San Felipe PV (90MW)
Trina Solar – Cartago PV (99MW)
Trina Solar – El Campano PV (N/A)
EDPR – Alpha wind farm (212MW)
EDPR – Beta Wind Farm (280MW)
JEMEIWAA KA’I – Casa Electrica wind farm (180MW)
Empresa de Energia del Pacifico (Celsia) – Eolico Camelia & Eolico Acacia 2 (N/A)
The average price of the contracts turned out to be COP 95.65/kWh (0.025 €/kWh), about COP 50/kWh (0.013 €/ kWh) cheaper that the usual price for bilateral supply contracts in Colombia. It also came in far lower than the maximum average tariffs allowed by the authority, namely COP 160/ kWh (0.04 €/kWh).
Out of 23 off-takers that bided in this renewable auction, 22 were picked to buy the generated power at prices far lower than the market rate
22 off-takers selected in the auction:
Electrificadora del Huila
Codensa
Ruitoque
Electrificadora del Caribe
Centrales Eléctricas de Narino
Electrificadora del Caqueta
Empresa de Energía del Putumayo
Empresas Municipales de Cali E.I.C.E.
Empresas Públicas de Medellin
Electrificadora de Santander
Empresa de Energía del Quindio
Empresa de Energía de Pereira
Centrales Eléctricas del Norte de Santander
Empresa de Energía de Boyaca
Electrificadora del Meta
Profesionales en Energía
Central Hidroeléctrica de Caldas
Celsia Tolima
Empresa de Energía del Pacífico
Compañía de Electricidad de Tulua
Ecopetrol Energía
Vatia
This auction represents a significant step in Colombia’s plan to diversify its power supply. It aims to enable the country to increase its installed renewable energy capacity from around 50 MW currently to 2.2 GW in 2022, for Colombia to have an increasingly clean, modern, sustainable and environmentally responsible matrix.
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Investing in Mexico
Mexico is among the top 10 most attractive countries in the world with the highest investment in renewable energy.
Currently, Mexico is in a situation of uncertainty and risk because the new Government of López Obrador has positioned itself against renewable energy auctions. In turn, the president of CFE (Federal Commission of Electricity) has requested the three previous auctions project contracts to be renegotiated.
So far, in Mexico, three auctions have been carried out in the years 2015, 2016 and 2017, and a fourth was planned for 2018, however, last January, the last clean energy auction was cancelled.
Despite this, the situation also represents an opportunity to obtain high returns for those willing to assume this risk. The abundance of solar resources, the high prices of energy, the decrease in technology costs and the growing need for diversification of resources combine to place Mexico among the world leaders for photovoltaic development.
The Mexican economy is growing at a good pace. The Secretaría de Energía (SENER) expects energy demand to grow at 3% during the period 2018-2032, as well as retirement of nearly 12 GW of existing capacity in the same period.
SENER is implementing a Clean Energy Certificates market, based on the obligation of large consumers to have a minimum level of consumption from clean energy, from 5% in 2018 to 13.9% in 2022.
Also, price of electric power in Mexico is very high: in nominal terms, it is 73% higher than in the United States. Citizens do not realize this because 95% of households obtain an electric subsidy that covers up to 90% of their receipt. Even after the subsidy and adjusting for purchasing power, electric power in Mexico is still 25% more expensive than in the United States. Mexico spends 0.75% of its GDP subsidizing electricity tariffs.
Despite the negative impact of the cancellation of the 4th auction, the current uncertainty, and the multiple challenges that await it, solar energy in Mexico is still in very good shape. Bilateral PPAs viability is already a fact in Mexico and the expansion of this segment could lead to a more sustainable market. It is worth mentioning as recent success stories of long-term PPAs the one of the French Engie with the steel producer Gerdau Corsa for a photovoltaic installation of 130 MW and a Balam Fund’s 35 MW photovoltaic plant that supplies Farmacias del Ahorro.
According to a report published by Bloomberg New Energy Finance, worldwide, the volume of energy consumed by companies that have decided to be supplied by clean energy and specifically through the bilateral market reached a record of 13.4 GW in 2018. Mexico is part of this global trend and between 2008 and 2017 PPAs were signed for a total of 3.4 GW, mostly from wind projects. Main sectors that have led this trend are: cement, malls, financial, mining, steel, consumer and automotive godos.
Vector Cuatro M&A and Financial Advisory business line provides its clients with tailor-made market reports covering, inter alia, country and sector analysis, development and connection process description, market price hedging (PPA and auction) description, tax memo, asset valuation analysis including expected returns and comparable transactions in the market, financing structures definition.
In addition, Vector Cuatro M&A and Financial Advisory business line is well experienced on the valuation of PV and wind projects through the preparation of financial models covering development, construction and operations.
Finally, Vector Cuatro provides potential investors with local investment opportunities according to the specific investor requirements and intermediates between large consumers and project owners in order to negotiate bilateral PPA agreements.
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Investing in Spain
Spanish Feed-in-Tariff (FiT) scheme was abolished for new renewable energy projects back in 2014 (retroactive effect from July 2013); whilst for existing installations FiT scheme was replaced with a retribution regime aimed at granting to all operating assets a Reasonable Return (“Rentabilidad Razonable”) through a double incentive: (i) Return on Investment (to recover the initial investment) and; (ii) Return on Operation (to cover operating expenses). However, Government is entitled to call for auctions that may result in the granting of specific subsidies under the same scheme of operating assets for new developments, as done in 2016 and 2017.
Spain intends to go beyond EU objectives, so that post-auction period will represent an important challenge for the sector. The main difference between nowadays and years ago is that grid parity has now been reached, which means that by selling energy at market prices it is possible to cover costs and achieve profitability.
From route-to-market standpoint, as a result of having reached grid parity, there are three types of renewables energies (RE) projects now being delivered into the market: (I) auction projects, (II) PPA projects and (III) full-merchant projects.
Onshore wind and Solar PV grid parity have taken renewable energy industry to new paradigm, where investment structures had become more complex, but investment opportunities have grown considerably. Additionally, Spain offers very good resource and low renewable energy penetration, compared to real deployment capabilities. All these combined makes Spain one of the most attractive OECD markets.
Spain is the second European country with the largest installed wind capacity and the fifth in the world, only behind China, the United States, Germany and India. The country is widely committed to comply with the 2020 target, for that purpose, a boost on the share of renewables is taking place and will continue increasing over the following years, since Spain will need to double its renewable capacity by 2030 to comply with European renewable energy targets.
Spanish Government, led by Teresa Ribera, Minister for Transición Ecológica proposed through “Anteproyecto de ley de cambio climático y transición energética” an increased target of 35% of Spanish energy consumption coming from renewable energy. To that end, the following roadmap is proposed:
-Period 2020 – 2030 auctions shall be carried out to develop a minimum of 3GW of annual capacity.
-Every 5 years, specific measures will be carried out to define the share amount needed to achieve the targets (the period may be modified to 2.5 years).
-A new legal framework for renewables simplifying administrative procedures and burdens will be stablished.
-Renewable energy generation plants shall be given priority to access distribution and transport network.
Key drivers and risks on an investment in a RE project in Spain:
–Connection points vs. Land: capacity of current substations has become a problem when entering the market. Bonds (40.000€/MW) to be granted without visibility of the available capacity and the risks of finding lands in the nearby considering the bubble in the market as a consequence of so many developers requesting capacity, have resulted on speculation and difficulties to have a project.
–PPA: Since Spanish renewable energy market was reactivated mainly driven by auctions launched in 2016-2017, PPA structures had become a reality when assessing renewable energy investments in Spain. Reasons why PPA are growing in popularity are simple: (i) limited subsidy-scheme projects; (ii) aversion to regulatory risk and; (iii) non-recourse financing requirements. Variety of PPA structures is wide: financial or physical contracts, fixed-price, floor, collar, upside sharing, market indexed, etc. PPA improves visibility on energy prices and therefore predictable cash flows which is instrumental to access non-recourse financing.
–Auctions: tight deadline to meet the deadlines of 31/12/2019 COD.
–Increasing prices: as a consequence of the lack of real opportunities and the liquidity of the market, which tend to reduce returns and therefore a misallocation with the assumed risks.
Vector Cuatro M&A and Financial Advisory business line provides its clients with tailor-made market reports covering, inter alia, country and sector analysis, development and connection process description, market price hedging (PPA and auction) description, tax memo, asset valuation analysis including expected returns and comparable transactions in the market, financing structures definition.
In addition, Vector Cuatro M&A and Financial Advisory business line is well experienced on the valuation of PV and wind projects through the preparation of financial models covering development, construction and operations.
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Vector Cuatro Japan surpasses the 450 MW mark of assets under management
The company has recently closed two agreements for the management of 17 more solar PV projects totaling 35 MW. With these contracts, Vector Cuatro increases its portfolio of assets under management in Japan to a total of 470 MW.
In November 2015, Vector Cuatro announced the beginning of its activity as an asset manager in Japan for a 3.5 MW solar PV plant, owned by one of the most important companies in the Pacific energy sector. Three years later, the Spanish consultancy surpasses the 450 MW mark, already taking care of the asset management for 28 projects in Japan.
Since 2007, when the company began to operate in the Renewable Energy Industry, Vector Cuatro has been able to increase its portfolio of assets under management to 2,5 GW for operational projects and plants under construction.
Currently, the company manages solar PV and wind power plants in America, Europe and Asia, with Japan being one of its core markets. Vector Cuatro entered the renewable energy markets in Asia first in 2012 as a Technical Advisor and providing support in transaction services for solar PV plants. Since then, the Nippon delegation has grown up positioning itself as a key reference in the local renewable industry with an international client portfolio to which belong the most active banks and companies in Japan.
Besides providing asset management services and support in transactions, the company has also rendered feasibility studies, technical due diligences and consulting services in Japan for projects that total more than 10 GW.
Vector Cuatro Japan アセットマネージメント450MWを超える
最近、Vector Cuatro Japanは、17の太陽光発電プロジェクト、合計35 MWのアセットマネージメントに関する2つの契約を締結した。これらの契約により、日本の運用資産ポートフォリオを合計470MWに拡大した。
2015年11月、Vector Cuatro Japanは、太平洋エネルギー分野で最も重要な企業の1社が所有する3.5 MWの太陽光発電所の資産運用会社としての活動開始を発表した。 3年後、このスペインのコンサルタント会社は450MWを超え、すでに日本国内の28のプロジェクトの資産管理を担当している。
Vector Cuatroは、再生可能エネルギー業界で事業を開始した2007年以来、運用プロジェクトおよび建設中のプラントのアセットマネージメントのグローバルポートフォリオを2.5 GWに増やすことができた。
現在、同社はアメリカ、ヨーロッパ、アジアの太陽光発電所と風力発電所を管理しており、日本は中核市場の1つである。 Vector Cuatroは、2012年にテクニカルアドバイザーとしてアジアの再生可能エネルギー市場に参入し、太陽光発電所の取引サービスを支援した。 それ以来、日本現地法人は、国内の最も活発な銀行や企業に属する国際的な顧客ポートフォリオを持つ地元の再生可能エネルギー業界における重要なコンサルタントとしての地位を確立してきた。
アセットマネージメントサービスを提供するだけでなく、日本国内で合計10GWを超えるプロジェクトのフィジビリティースタディー、テクニカルデュ－デリジェンス、およびコンサルティングサービスも提供している。
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