Matouk Bassiouny & Hennawy were the legal advisors for TSFE Infrastructure and Utilities Sub Fund (TSFE), for itself and acting on behalf of the New and Renewable Energy Authority (NREA), The Egyptian Electricity Transmission Company (EETC), and Suez Canal Economic Zone Authority (SCZONE).

With the Egyptian Prime Minister present, TSFE negotiated an agreement to develop various facilities including renewable energy power plants. This project is a significant step in promoting Egypt’s Green fuel market. The agreement was signed in the new administrative capital with the Minister of Electricity and Renewable Energy and the Minister of Planning and Economic Development present.

C2X, an affiliate of A.P. Møller Holding A/S and A.P. Møller – Mærsk A/S, aims to enable and accelerate large-scale production of green methanol in Egypt.

TSFE places infrastructure projects at the core of the Funds’ activities as they serve as a means of direct investment in Egypt’s development.

Matouk Bassiouny & Hennawy team, led by Mahmoud S. Bassiouny, provided legal advice to TSFE during this agreement.

Renewable energy sources such as solar, wind and hydropower are becoming increasingly popular, and businesses are now starting to embrace them as a way to reduce their carbon footprint, save money and generate revenue.

In this article, we will discuss the ways in which renewable energy can financially benefit businesses, including reducing energy costs, generating revenue and enhancing corporate social responsibility.

Renewables Asset Management

While renewable energy offers numerous financial benefits for businesses, it is essential to remember that these investments require careful management to ensure long-term financial viability. This is where renewables asset management comes in. Renewables asset management involves the strategic management of renewable energy assets to maximise financial returns and minimise risk. This includes managing the operational and financial performance of renewable energy assets, identifying and mitigating risks and developing and implementing strategies to optimise the value of the assets over time.

Renewables asset management is critical to the success of renewable energy investments, as it helps businesses maximize their returns and ensure the long-term financial viability of their investments. By partnering with a renewables asset management firm, businesses can benefit from the expertise and experience of professionals who specialise in managing renewable energy assets.

Reducing Energy Costs

One of the most significant benefits of renewable energy for businesses is the reduction in energy costs. By investing in solar panels, wind turbines (from developers such as Simple Power), or hydropower systems, businesses can generate their own energy and reduce their reliance on grid-supplied electricity. This can result in significant cost savings, as businesses are no longer subject to fluctuating energy prices and are not exposed to the risk of energy price increases.

Moreover, the UK government offers financial incentives to businesses that invest in renewable energy, such as the Feed-in Tariff and the Renewable Heat Incentive. These schemes provide businesses with a steady income stream by paying them for the energy they generate and feed back into the grid.

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Generating Revenue

Renewable energy can also provide businesses with a new revenue stream. By generating their own energy and feeding any surplus energy back into the grid, businesses can earn money through the Feed-in Tariff and other similar schemes. This can provide a steady income stream for businesses and the revenue generated can be reinvested into the company, further driving growth and profitability.

In addition, businesses can also generate revenue by selling renewable energy credits (RECs). RECs represent the environmental benefits of renewable energy and are bought and sold on the open market. By generating renewable energy, businesses can sell RECs to other companies that want to offset their carbon emissions and demonstrate their commitment to sustainability.

Enhancing Corporate Social Responsibility

Renewable energy can also help businesses enhance their corporate social responsibility (CSR) efforts. As consumers become more environmentally aware, they are increasingly demanding that companies operate sustainably and reduce their carbon footprint. By investing in renewable energy, businesses can demonstrate their commitment to sustainability and position themselves as socially responsible companies.

Moreover, businesses can use their investment in renewable energy as a marketing tool to attract environmentally conscious customers. By promoting their use of renewable energy, businesses can differentiate themselves from competitors and appeal to a growing segment of consumers who are willing to pay a premium for environmentally sustainable products and services.

At the same time, nothing stops you from retraining and pursuing a career in an industry that is beginning to take off. Emerging industries have always been a thing, and the new industries are often popular with existing and budding entrepreneurs alike.

Knowing what these industries are is the critical first step, and that is where we come into the picture. Below, you will find a list of some emerging industries that have dominated the business scene for the past few years and which look set to remain. 

Regardless of what industry you are looking to move from or into, read on to discover more about these industries, as well as a bit about what you can do to be successful in your upcoming career switch. 

What Is An Emerging Industry?

Before getting into the swing of things, let’s take it back to basics. For those who are unsure, Investopedia defines an emerging industry as when a product or idea is in the early stages of development, and numerous companies focus themselves on this idea. Generally speaking, this happens when a new form of technology is discovered or created, replacing an older counterpart. 

As you might have grasped following from this definition, there have been numerous emerging industries throughout the last few decades, running alongside the numerous technological advancements that we have seen. These include the following industries: 

1. Artificial Intelligence (AI)

AI is something that is becoming all the more commonplace but is a phenomenon that is still confusing a lot of people. The technology that is used for this emerging industry is continuing to develop and grow and is being used more in our day-to-day lives than ever before. While some might find this form of technology problematic, it has proven to be incredibly helpful to numerous industries. 

Various industries and businesses use this emerging technology; it is even used by some government departments here in the United States. There are numerous jobs available in this emerging industry, and they can be attained by learning the associated skills that often link closely with computer science as a field. 

2. Fintech

The running theme throughout this piece will be that most emerging industries relate to the likes of technology in some way or another. Fintech, also known as Financial Technology, is the process of competing with or replacing more traditional methods of delivering financial services with a form of technology. Much like other forms of technology, this is something that is continuing to grow and develop while also revolutionising the ways that we complete tasks. As a result, there is always something new to learn about this emerging industry. 

Fintech courses online allow interested parties to learn more about this form of technology while retaining their existing skills in the hope of moving into this as a career. Completing this fintech course from Harvard University Online in your own time ensures that you can make the switch into the industry at your own pace and when the timing is suitable for you. Financial services will always be required; there is no doubt this is an industry and form of technology that is here to stay. 

3. Renewable Energy

This is a term that we feel many people reading this and beyond are familiar with, for it is something we have grown accustomed to throughout recent decades. There has been a significant focus on renewable energy throughout the years, with this idea gaining more traction since the United States rejoined the Paris Climate Agreement. 

Clean energy is important to many people, not just those who are eco-conscious. The renewable energy industry is set to grow exponentially in the coming year, with analysis experts estimating that the growth could pose a threat to the traditional use of coal. 

Expanding into an industry like this is a lot easier than most people realise. Beginning your career change by volunteering in the sector to develop your passion is the best place to start. From here, you can learn more about the processes and establish whether there are more specific skills that you need to learn and develop before applying for a role. 

It goes without saying, but emerging industries provide a multitude of career and growth opportunities. Understanding what the first steps are and moving forward from there is sure to ensure you land a career you are happy with. No matter which emerging industry has caught your eye, go forth knowing you are making the right moves and will be working with the latest technologies in no time.

The greatest problem that is holding back innovation within the renewable energy sectors is access to project capital. To explain the ins and outs of project funding and financial backing, this month Finance Monthly hears from David Hullah, Finance Director at Allied Consultants, an international firm that specialises in strategic
financing.
Below David talks Finance Monthly through the complexities of project development, from financial matters to risk management.

Typically, within every major capital project or large asset acquisition, there are three principle risks; financing, commercial/market, and operational.

The project/asset financier takes the financing risk and is remunerated accordingly; likewise, the project sponsor/asset purchaser takes the commercial risk of there being a market for the output of the investment. However, what has caused issues and in many cases transactions to flounder, has been the debate on who should take the operational risk of any new project or asset acquisition. Allied Holdings and Investments Ltd have been working on this issue for the past 10 years and have solved it, with their due-diligence process which provides a funded solution- they call it Maintained Availability.

The Challenges for the Project Developer

The challenge for a project developer is in providing additional financial support, when their technology has limited or no track record. In most cases, if not all, this has not been possible and has led the project to fail to proceed.

The Challenges for the Investor

With over 1,800 investment funds, worldwide, there is no shortage of investment only a shortage of bankable projects; but what makes a bankable project? The bottom line is providing an investor with a robust mechanism that protects the projects’ ability to repay its debt and operational costs if the projects revenues fall below the projects breakeven point. Above this line, known downtime caused by scheduled maintenance can be built into the projects cashflows but what would happen if something unexpected caused by a non- physical damage event caused the revenues to fall below breakeven?

Allied Holdings and Investments Limited (“Allied”) in conjunction with Fidelis Underwriting Limited have developed a mechanism of due-diligence that is designed to assist in the financing of renewable technologies and is structured to provide extra financial support to a project where the technology does not have a relevant track record, and/or the project company does not have sufficient financial strength to provide security for finance.

The use of M.A allows funders to move further along the project risk curve, thereby increasing equity returns through increased dividends or enhanced asset values at exit.

Guaranteeing the consequences of the unexpected.

Understanding the process of availability in a business model is critical when it comes to assessing risk. Process availability is identified by known maintenance regimes and plant closures and this availability is used to calculate the projects minimum level of revenues that can repay the debt and cover operational expenses – Breakeven.

These events can be calculated where the technology has a proven track record, enforced by other risk mitigation procedures, but what if the technology is unproven with limited or no track record, and how can these technologies compete and bring their benefits to market? The Solution is Allied’s Maintained Availability.

What is Maintained Availability™

Maintained Availability provides an opportunity for a third party to ‘guarantee’ this operational risk.

Facility procedure

• Allied undertakes a high-level review of the project to confirm acceptability.
• Allied engages its technical advisor TWI to undertake the process due diligence.
• TWI produces a due diligence report and determines availability limits for the process over time.
• If the limits are deemed acceptable the report is passed to our broker who then negotiates the specific cover with Fidelis.
• Fidelis provides the process availability cover at a level of 25% of total debt requirement. The guarantee is based on 25% of the debt requirement capped at $50M per project. So, a $100M project with a debt / equity leverage of 60/40 would have a maximum cover of $15M.
• The cover is in place at financial close but does not become ‘live’ until full commercial handover.

Project delivery

The EPC contractor will have to provide the minimum availability that is proposed by TWI availability, or better.

TWI will ensure that the commissioning process is rigorous and that any problems diagnosed are rectified prior to final hand-over. The commissioning process will include a requirement for the plant to run for an agreed period at or above the minimum limit, set by TWI, before it is formally signed off and hand-over is agreed.

TWI, as part of the due process, will have provided an operations and maintenance schedule which will be monitored by their own bespoke software “RISKWISE”, which will be used for ongoing monitoring of the project. If there is an unexpected event which reduces process availability below the breakeven level, M.A will provide sufficient funds to ensure annual debt service and operating cost obligations are met for a period of up to 10 years.

Maintained Availability does not become effective until the plant is handed over and thereby already achieving the agreed minimum limit or better.

What M.A does not do

• Cover construction or commissioning risk
• Replace other usual project insurances.
• Continue to pay if the project is deemed uneconomic
• Continue to pay once the facility limit is reached.

Advantages of M.A to a funder

• Ability to fund a greater number of projects.
• Opportunity to move along the risk curve
• More diverse portfolio
• Increased returns
• Increased involvement in new technologies with potential to become a ‘go to’ funder.

What makes M.A different from other products on the market?

Other products are annually renewable, which can put the project at risk at the end of each year. A renewable policy can be changed, have a premium increase or even be cancelled. This type of policy is a concern for investors because of its lack of certainty.

M.A is a contract that provides an agreed sum of money in support of the projects’ net revenues for a period of ten years that can only be cancelled by the project owners with agreement of the investors. The money acts as a form of credit enhancement that can be drawn upon when the revenues are unable to fully support the debt. It is then repaid when the projects’ revenues recover. Historically, it has been shown, that if the process is to under-perform it will be in the early years of the project with full availability potential being attained by Year 5. M.A is there to protect the investors should this happen.

Allied’s due-diligence will look to mitigate such events in two stages:

The due-diligence process

When first approached by a potential client, Allied will undertake a vigorous desktop review of the project. Should the project be accepted, and after consultation with the client, Allied will commence two detailed due-diligence reports with their independent consultant partners. Should the client have already engaged the services of a consultant, then that consultant can be used. However, for purposes of underwriting the technology process, Allied’s independent technology consultant TWI must be engaged, and the two reports must be made available to Allied if they are subsequently engaged to source funding.

The Technology Process

Firstly, through a series of process due-diligence measures that looks at the plant from design, to manufacture, the installation capabilities of the proposed EPC contractor and the operations and maintenance procedures proposed by the O&M contractor; and

Secondly, an additional and complimentary process security to that already installed by the technology provider, is provided through TWI’s integrated RiskWISE® interrogation software that provides additional risk based protection to the funders, and ensures that the process is optimised at all times.

Whilst each M.A contract of insurance is project-specific, Allied believes that their due-diligence process is also important for technology suppliers and innovators to consider as a standalone pre-qualification towards commercialisation.

Technology manufacturers will benefit from having an M.A approval and being able offer their buyers a technology that has the M.A stamp of acceptance. This would provide the project developers with all the added financial benefits described.

For companies developing innovative technologies having M.A due-diligence involved from the design stage can help evolve the technology from design to becoming fully commercialised with the benefits of M.A support.

Who Are TWI

TWI Ltd, are one of the world's foremost independent research and technology organisations. Based at Great Abington near Cambridge since 1946. TWI is a non-profit distributing, membership-based company of which Allied are industrial members. Its Members total around 3,500 from 60 countries around the world – including the likes of Boeing, Thales, ABB, Honda, Mercedes, BMW, US Army, US Navy, Royal Military College of Science, Rolls Royce, BP, Kuwait Oil Co, Shell, etc.

What is RISKWISE™, what does it do and how?

RISKWISE™ is risk-based inspection/maintenance (RBI) planning software that has become accepted by legislative bodies as a means of risk management consistent with safety requirements. It has been driven by regulators as well as the economic needs of plant operators/owners. The application of RBI software minimises the risk of failures or forced outages. It also enables intervals between inspection/maintenance to be optimised (often extended) and inspection/overhaul resources to be risk focused during outages. The overall economic benefit to operators is to reduce plant downtime. Guidelines and standards for RBI have been produced by ASME (American Society of Mechanical Engineers) and other bodies over recent years. RISKWISE™ is fully compliant with current RBI standards.

Example of Maintained Availability working in practice

It is assumed that the design availability is 100%, and the agreed minimum availability by TWI was set at 80% with a breakeven percentage calculated at 66%, then our solution would involve Maintained Availability™ taking a mezzanine slice of risk from 66% to an agreed lower limit.

This means that the project sponsor takes a first loss above 66% and the M.A take the risk that the plant meets availability of between 66% and the lower limit (this being the percentage level of the design availability below which the plant is considered uneconomic).

Speeding up the funding process – connecting vetted projects with the right investment partner.

Allied are currently looking at the creation of an online project finance platform. The platform will match the requirements of Allied’s clients including those after Allied’s due-diligence process who have Maintained Availability. The platform will speed up connecting clients with the right capital, and investors with access to mid-market projects which can offer with attractive returns which currently would be rejected or considered not worth assessing if they have limited track record.

About Allied

Allied Holdings and Consultants Ltd are a team of experts, based in the UK and the US with representative offices in Asia and the Middle East. We have represented, developed, leased and funded technology. Our clients benefit from the direct involvement and attention of our team with their extensive knowledge in providing professional advice and assistance in strategic financing and are commitment to building long term relationships. Additional information can be found at www.AlliedConsultants.co.uk

“Members of the Allied team, have worked for over 10 years to bring this product to the market. When it was first conceived we believed then, that this product had a place in the market, to support innovation and promote technologies that can make a difference to the environment. Today 10 years later, the importance to support innovative technologies and the renewable energy markets are even greater.” - Roger Willmott, Business Development Director.

About Fidelis Insurance

Fidelis Insurance Holdings Limited is a privately-owned Bermuda-based holding company, which, through its wholly-owned subsidiaries, is a global provider of bespoke and specialty insurance and reinsurance products. Fidelis’ Bermudian platform focuses on catastrophe reinsurance, whereas Fidelis Underwriting Limited - the group’s London platform - focuses on the design and execution of large bespoke deals in areas such as: Aviation Finance, Forestry, Mortgage Indemnity, Political Risks, Structured Credit, Title and Surety, and in more traditional specialty, catastrophe reinsurance, and niche products via its MGA platform, Pine Walk. Fidelis is rated A- (Excellent) by A.M. Best Company, Inc. Additional information regarding Fidelis may be found at www.fidelisinsurance.com.

“Designing and delivering new innovative bespoke insurance products is a cornerstone of Fidelis’ business model. As such we are very excited about the launch of this insurance product within the Maintained Availability process –assisting the development of sustainable and green energy.” - Richard Coulson, FUL Chief Underwriting Officer.

David Hullah
Finance Director at Allied Consultants
Telephone: +44 (0) 203 195 3949 | Mobile: +44 (0) 7772 794320
Website: www.AlliedConsultants.co.uk; www.MaintainedAvailability.com
Email: enquiries@alliedconsultants.co.uk

PNE Wind is a leading onshore and offshore wind farm developer, with projects in Europe, North America and South Africa. The company offers commercial and technical management services and currently manages 1,400 MW of wind farms. To date, PNE Wind have released over 2,400 MW onshore projects and have sold 7 large offshore projects.  By covering the entire value chain, the firm is able to offer complete services spanning from origination to turn-key operations. PNE Wind’s customers include insurance companies, infrastructure funds, utilities and communities. Here to tell us more about the company and its achievements is PNE Wind’s CEO - Markus Lesser, who has a 25-year career in the international energy sector.

The energy industry has expanded exponentially in the past few years – what are currently the hottest topics being discussed in the sector in Germany?

 The German government has committed itself to increasing the amount of renewables from approximately 32% today to 55-60% by 2035 and the future of further investments remains positive. In Germany, we’ve just had new legislation coming into force in the beginning of January 2017, which will see the market transitioning from a fixed feed-in tariff regime to a tender process. Tenders represent an additional step in the development process and add a certain amount of new uncertainty in the market. For projects to be released in the future, they will first need to be successful in a competitive bidding process, where the lowest bids are most likely to be awarded. This will force all market participants to think about how they can reduce costs and bring the best projects to market. While this transition will likely be a bit rocky, in the long term, lower energy prices are necessary for continued public support. As an international project developer, we have participated and also won in tender processes so we also see opportunities to leverage our strong position in the market and thereby, continue to benefit from global investments in wind energy.

What is the current state of overall investment in the energy sector in Germany?

The only new capacity which is being brought online today is either wind or solar. Of the 70 GW of new power capacity added to the German grid over the past ten years, this has essentially all come from renewables. Wind energy has proven itself to be a reliable and very secure form of power generation and investor demand for new projects is high. The German grid is however becoming increasing saturated with power and each new MW of power generation essentially pushes the more expensive generation capacity from the grid. So in this regard, there is a natural tension between the various power suppliers as traditional utilities with coal, gas and nuclear generation capacity fight to keep market share.  The problem with many of these technologies is that they come with a huge social cost, the effects of which we are just beginning to understand. Fortunately, the world’s governments have come together with the signing of the Paris Climate Agreement and a coordinated global action to reduce CO2 emissions is now underway.

Germany is the world’s third largest market for renewable energy investment–-what is the legislative framework supporting investors across all renewable energy segments in Germany and how favourable is it when compared to other leading markets in the global energy industry?

The German government has been supporting the development of renewables for the past two decades and this initial support acted as the catalyst to get the industry started. Without this strong German regulatory support, renewables would not have reached the necessary scale needed to drive innovation and investments. As the technology matured, the government was reviewing the regulations on regular intervals with the goal of eventually having wind and solar compete on a non-subsidised basis. At this point, the price wind farms receive for power represents only a fraction to the amount the end consumer pays for his or her utility. Germany is an attractive market for renewables, not because the support mechanism alone is high or low, but rather because investors are confident that the government will continue to honour its obligations. Certain emerging markets offer substantially higher subsidies for wind than Germany, however investment levels there remain low, since investors believe that there is too much regulatory risk.

You have more than 25 years of experience in the international energy sector – what motivates you about operating within the sector?

I was able to see how the sector changed from being slow and steady to becoming very dynamic. Energy is the most important precondition to increase the wealth of countries and reducing the impact of climate change, so to work on the technical and financial solutions for low-cost energy, while also working towards reducing the impact of climate change with such an entrepreneurial approach is my biggest motivation.

How did your career path lead you to your current position?

When I started my career, I was a Quality Engineer and later on I was the Head of Sales of wind turbines of Nordex AG. My beginnings in the field included non-structural engineering work, which taught me how to sell and deal with different mentalities – something that has helped me a lot in recent years in the business and in project development.

You were appointed as PNE Wind’s new CEO in April 2016 – what have been your major accomplishments since then?

Project development is a multi-year process which involves interacting with a number of stakeholders. At the beginning of the process, we work closely with land owners and local governments to secure the needed land for development.  As the project progresses, we actively engage with the planning permission bodies to secure the necessary building permits. As these processes are accomplished one by one, we arrange the project financing, secure the turbines and ultimately build the turn-key project for our customers. Behind each step are hundreds of man-hours and preparation. What I am trying to illustrate here is that there are many steps along the way that need to be followed before the final project can be released.  While my major accomplishments may be summarised by the number of projects completed this year, which is over 100 MW, there were thousands of backstage victories along the way, which are just as valuable for us.

How has your work in the past 6 months impacted PNE Wind’s overall performance in 2016?

In 2016, we managed to finalise the sale of the 142 MW wind farm portfolio, which is the largest wind farm sale in PNE Wind’s corporate history. To get this done in time and in the cost expectations we had was definitely our biggest achievement in the past six months.

What are some of the challenges of being the CEO of one of the leading German wind farm developers?

First of all, I would like to point out that our presence is not only limited to Germany, since we’re also operating onshore. The main challenges that I am faced with are the constant market changes – which means that we have to steadily improve all of our processes and the way project development processes work at all times. We have to be clear, in respect to finding new models of financing and collaboration, in order to end up with high-quality projects, which will be attractive to the market.

Looking into 2017, what trends do you predict for the wind power sector in Germany and globally?

Prices have been decreasing, which means that we’ll have to be keep aiming at being more and more effective – better machines, lower pricing in the whole value chain, etc.  In believe that the emerging markets will become more important in the global wind power sector because renewable energy becomes more and more competitive, which will definitely result in change in regulations.

2017 will continue to be mainly focused on lowering emissions, which means that there is a good perspective for Germany, since it still is the biggest market for renewable energy in Europe.

What does 2017 hold for you and PNE Wind?

As I mentioned, we expect a decrease in pricing, so in order to continue being successful, we’ll have to be faster in the project development processes. We have already been working towards this goal by developing our Smart Development system, as well as an optimized package, which will help us optimize our wind farming services.