For wind power project financing workshops

Abstract: In the energy situation is worsening, increasing depletion of traditional energy sources, environmental pollution is increasingly serious cases, to develop renewable clean energy, wind power has an important economic and social significance, but with the rapid Development of wind power projects, financing difficult, high cost of financing the Development of wind power has become a constraint problem. In this paper, wind power Development status and prospects of analyzing the analysis of the current wind power is currently used in financing and the problems presented to optimize the financing structure for the promotion of wind the importance of power Development.

Keywords: wind power financing

First, wind power Development status and prospects
Energy is an important foundation for national economic development, human production and protection of basic material necessities of life. With the rapid development and continuous improvement of living standards, demand for energy is rising. For a long time, China's power rely mainly on thermal power supply. "15" period, China made a strategic adjustment of energy structure, and actively promote nuclear power, wind power and other clean energy supply, coal-dependent changes in the transition energy situation. wind energy is a renewable clean energy, wind power and compared to thermal power, not only energy and water pollution, but also good for protecting the ecological environment in China by .2005 <<Renewable Energy Law ", China's wind power industry welcomed the period of accelerated development of China's total wind .2008 installed capacity of 12.153 million kilowatts in 2009, capacity of 22 million kilowatts, according to the current pace of development of wind power installed capacity in 2010 is expected to reach 30 million kilowatts, ranking the world's No. 2. 2020, China's wind power installed capacity will reach 100 million kilowatts. then, wind power will become the thermal power, hydro power beyond China's third largest source, while China will become the world's wind energy superpower.

Second, the wind power project financing and current problems
(A high cost of wind power financing
Financing costs of wind power is mainly interest on loans. Because wind power a larger proportion of investment in fixed assets, operating funds a longer period, usually 6-10 years, resulting in wind power projects completed high financial costs, the formation of a higher loan interest for the business development has brought heavy debt burden.

(B preferential credit of wind power production of the lack of policy support, financing more difficult to
Although the state encourages the development of wind power is a new industry, but still a competitive field of general fixed asset investment loan interest rate, loan period is relatively short, and the lack of preferential credit policies to support financial institutions lending requirements for wind power projects must first tripartite joint and several liability guarantee, so wind power enterprise financing more difficult.

(Three single wind power financing, financing high-risk
Wind power project by at least 80% of the capital debt financing, capital of only 20% of the debt financing of large-scale wind power not only led to high rates of corporate assets and liabilities, excessive concentration of loans, capital chain is very fragile, and increase their financial risk, but also affect the re-financing capacity, reduce capital turnover rate, increased operating costs of enterprises, so the optimization of financing, expand financing channels have been imperative.

Third, financing wind power projects to optimize
(A mode of BOT project financing
BOT is the English Build (construction), Operate (operations), Transfer (transfer) the acronym represents a complete concept of project finance. Project financing is the rise of the 1970s for infrastructure, energy, utilities, oil and mineral exploitation and medium-sized project funding is an important means of which the credit is not to project owners or project the value of tangible assets as collateral to obtain loans, relying instead on the project itself is a good business conditions and completion of the project, put into use cash flow as debt financing. will the project's assets, rather than owners of other assets as collateral to borrow funds the project financing is "by project financing "rather than" for project financing. "
1.BOT project financing model features. BOT project financing with traditional lending, has the following two characteristics: First, project financing in the project sponsors for projects are generally set up a dedicated company, only invest part of their assets and property separate from other assets of the project, the project company is an independent financial company lenders (creditors) only focus on the benefits of the project loan to the project, rather than a loan to the project sponsors. two is project finance lenders rely on the project put into operation only after the gains and assets of the project as a source of repayment, even if the project's future revenue enough to pay off the loan, the project sponsors do not assume all the assets and proceeds from repayment of All loan obligations. In short, the most important feature of project financing, is the project sponsors should bear the original debt obligations, part of the body transferred to the project, will be borne by the borrower originally part of the risk transferred.

2.BOT advantages and disadvantages of project finance model. Advantages: First, expand the borrowing capacity of the project the main building's ability to repay loans as a project is not a major consideration, whether the loans to the project's expected return decision to borrow money not The main building's balance sheet reflects the main borrowed credit will not be affected. The second is to reduce construction costs, and ensure the project's economic benefits. Third, take advantage of the flexibility of project financial earnings, reduce capital spending to achieve " small investment big project "or" the chickens to lay eggs. "Fourth, to broaden the sources of project funding, to reduce the debt burden of the borrower, transfer risk to the lenders specific (limited recourse), minimizing the financial risk of the project sponsors Cons: The project sponsor, the high cost of infrastructure financing, amount of investment, financing a long period, earnings have some uncertainty, the contract documents numerous, complex, and sometimes a lack of financial leverage, the parent company still need to take part of the risk (limited recourse).

(B) ABS asset securitization financing
ABS (Asset-Backed Securitization, which means asset securitization) is a new way of project financing. ABS financing is originator of its specific assets generated, the next time a stable and predictable income transfer to the special purpose company (SPV) , this part can be expected by the SPV income securities, in domestic and international stock market financing, the expected return to investors of a new type of project financing.

1. ABS asset securitization financing features. ABS asset securitization financing has two characteristics: First, the ABS financing is essentially a "type of company debt financing." As the ABS to the enterprise itself, in exchange for a lower credit rating of high credit level, compared with bank loans, not only saves the cost of financing and non-listed companies seeking to make capital market financing channels. Second, the ABS originator of the asset's expected sale revenue, rather than adding new debt, it will get a funds, without increasing the debt ratio, do not change the original shareholder structure.

2. ABS asset securitization financing advantages and disadvantages. Advantages: First, the threshold is low. Enterprise has clear property rights so long as the assets, the assets and can produce predictable and stable cash flow, cash flow history complete, the asset can be To support the issuance of asset-backed securities. The second is more efficient through bankruptcy-remote, asset securitization of credit assets into financing, asset-backed securities, or the sponsor's credit rating and credit SPV itself does not matter, only with relatively independent This part of the assets of the investors only part of the assets under this situation to the decision to invest or not, to avoid a large comprehensive enterprise management, financial analysis, investment decision-making easier, improved market efficiency. Third, content flexibility. Assets securitization can be done relatively flexible design: the financing of the period can be set according to need, interest rates can have more choice, even at issue, coupon rate range is given, with investors negotiation. Fourth, the relatively low cost. asset securitization, including funds used to charge the cost of capital (nominal interest rates and financing costs (based on the current standard estimates, the annual cost of about 1% of the two, as long as a certain size, these costs are significantly lower than the equity and loan financing, but also slightly lower in bond financing. Fifth time is even shorter. supported by the state of asset securitization, just approval of the SFC, the time requires only two months to six months, and required to bond the amount of Development and Reform Commission for approval, the Commission approved, long processing time up to nine months to a year. Sixth, unrestricted use of funds. assets into the securitization funds, no legal restrictions on the use, can be used to repay bank loans with higher interest rates this point and have very different bond financing . Seventh, do not change the ownership of the assets currently under the asset securitization model, the future sale of the business for some time the right to cash benefits, but does not change the ownership of physical assets. eight is to improve the capital structure of asset securitization is a sheet financing, funds into the company's liabilities but not the income, can reduce the debt ratio and improve the credit rating Disadvantages: As the credit rating of our imperfections and shortcomings of China's legal environment, may increase the asset securitization financing costs. turn affixed to the free download http://www.hi138.com (three using PPP financing models
PPP financing model, that "public-private partnership (public private partnership model," the government, for-profit businesses and non-profit enterprise formed based on a project in the form of mutual cooperation through this form of cooperation, cooperation in the party acting alone can achieve better than expected results. cooperators involved in a project, the Government is not the responsibility of all of the project transferred to the private sector, but the project supervisor and collaborators, with its emphasis on strengths , risk-sharing and benefit-sharing.

1.PPP financing features. PPP financing models means not only from the private sector financing, the main purpose for the taxpayer to achieve "value for money", or improve capital efficiency. PPP financing model has five main characteristics of . First, the private sector in the design, construction, operation and maintenance of a project is usually more efficient, on time and according to quality, innovation and more easily, and second partnership to the private and public sectors, director of the Division, Third usually associated with private sector partners to economy-related projects, in order to achieve economies of scale, the four are able to project accurately the real needs of its public services, the five investment funds due to private participants to ensure that the project economic effectiveness, the Government was to ensure that the interests of the public service.

2. PPP financing model advantages and disadvantages. Advantages: First, the PPP model can be effectively spread the risk by taking the PPP model, all participants have had to bear some risks, rather than the traditional infrastructure, like, the only risk government itself to bear. a new financing model, the various participants according to their size to take risks and enjoy the benefits of the other, to obtain the appropriate return, which is more in line with market economy mechanism. Second, the PPP, the introduction of new technologies can sometimes be project construction process of these private sector, mostly out of the development of the market after the strong survival of the fittest, they basically have their own advantages. Third, the government's position has changed in the traditional infrastructure construction, Government is often at the core of a dominant position, the government often are the project managers and owners, and private enterprises are always subordinate and the manager's status, therefore, the project construction process always seems inefficient, but the PPP model on the effectively changed all that, the government is no longer the sole project manager, the relationship between government and private management from the past and managed the relationship between cooperation and mutual assistance into Government departments and enterprises of mutual trust and mutual coordination. When faced with disagreement when the mutual exchange, mutual consultation. Fourth, the private sector and government cooperation, the government backed them, and their relative position will improve, so that when they lack funds, borrowing from commercial banks will be relatively easy, even sometimes given preferential treatment. Disadvantages: Although the PPP model in China in recent years made some progress, but the absence of a mature PPP theory and system of legal norms, the lack of professionals, lack of practical experience and operating procedures more complex, resulting in the application of PPP model in the design process also encountered a big problem, need to gradually improve.

Enterprises in the financing of choice should be based on self-construction and project management needs, considering the capital structure, financing costs, time value of money, benefits, and risks and other factors, comparative analysis, liberally select one or more financing, to ease the pressure on corporate finance.


References:
[1] Yang Junsheng other. BOT-effective way to finance college project [J]. The financial economy, 2008.

[2] Ma Jing. On PPP financing model [J]. Consumer Guide, 2009.

[3] Zhang Yang, etc. Asset Securitization - an effective way of financing power projects [J]. Tribune, 2007. Links to free download http://www.hi138.com