19. DEWA IV Solar IPP

Host Country: UAE Industry/Sector: Energy           Sponsor: Dubai Electricity and Water Authority (DEWA), ACWA Power, and Silk Road Fund (SRF).         Borrower: Noor Energy 1 P.S.C.           Total Investment: USD 1.9bln Debt Amount: USD 2.4bln Financing Terms:Soft mini-perm financing           Purpose of Financing:     Financing the Project     Guarantee Structure:     Standard Project finance security structure     Participating Banks and Roles:     Documentation Bank Standard Chartered Bank Mandated Lead Arrangers 1. Agricultural Bank of China (DIFC Branch) 2. Bank of China Limited (acting through Bank of China Limited Shanghai Branch for that branch and other branches) 3. China Everbright Bank Company Limited, Shanghai Branch 4. Industrial and Commercial Bank of China Limited 5. Natixis 6. Standard Chartered Bank 7. Union National Bank PJSC Mezzanine Mandated Lead Arrangers 1. China Minsheng Banking Corp. Ltd. Shanghai Pilot Free Trade Zone Branch 2. Commercial Bank International P.S.C. 3. Commercial Bank of Dubai P.S.C. Intercreditor Agent/Offshore Security Trustee/Offshore Account Bank Standard Chartered Bank Onshore Security Agent / Onshore Account Bank Union National Bank PJSC     Overview and Highlight of Project:     In 2017, Dubai Electricity and Water Authority (“DEWA” or the “Offtaker”) had issued a Request for Proposals inviting bids for the development, financing, construction, operation, and maintenance of a 200MW Concentrated Solar Power (“CSP”) plant based on the Concentrated Tower (“CT”)’ technology with a minimum of 8h full load storage. The ACWA Power led consortium submitted an enhanced alternative bid for a 700MW CSP project (along with the base bid), which utilizes both CT and Parabolic Trough (“PT”) technology with thermal storage of up to 15 hours (the “Project”). The consortium was declared successful based on its alternative bid in September 2017 at a levelized cost of electricity (“LCOE”) of US$ 7.3cents/KWh, which is currently the lowest globally for a CSP project. More recently, 250MW of photovoltaic capacity has also been added to the project to take the overall capacity to 950MW. The Project will be delivered in three phases with the overall completion of the project expected to take place in 2022. Once completed, the Project will be the largest single site CSP project in the world that will provide clean energy to over 270,000 residences in Dubai, reducing 1.4 million tons of carbon emissions a year. Noor Energy 1 P.S.C is a Special Purpose Vehicle (“SPV”) established for the development of the Project, which is owned by DEWA, ACWA Power, and Silk Road Fund (“SRF”). The Project will be developed on a Build, Own and Operate (“BOO”) basis and its entire capacity will be sold to DEWA under a 35-year Power PurchaseAgreement (“PPA”) post Commercial Operation Date. Highlights •Belt and Road model transaction: The transaction is a model transaction for the Belt and Road initiative given the involvement of Chinese entities as Sponsors (SRF), EPC contractors (Shanghai Electric), and as lenders (ICBC, BOC, and ABC). •Lowest LCOE for CSP plants globally: The Project was awarded the bid at a LCOE of US$ 7.3 cents/KWh, which is currently the lowest globally for a CSP project. •Largest CSP Plant Globally and the premier CSP plant in the GCC Region: - The project is to be developed over a site with a total area of 43 square kilometers and once constructed will be the largest single site CSP project in the world. At a total investment of ~US 4.3 billion, it is not only the largest project to utilize limited recourse project financing in the Emirate of Dubai but also represents the largest regional investment into the renewable sector for a single project. The Project will be the first of the planned CSP projects and the fourth phase of the Mohammed bin Rashid Al Maktoum Solar Park. •State of the art Technology: The Project utilises the state-of-the-art combination of central tower (100MW) and parabolic trough (600MW) technologies to collect energy from the sun, store it in molten salt and produce steam as required to generate electricity during the day and throughout the night. In addition, 250MW of photovoltaic capacity has also been added to the project to optimize the overall land usage, at a cost of 2.4 US cents per kilowatt hour - in line with the most competitive PV tariff globally. The CSP leg of the project features the world’s tallest solar tower measuring 260 meters and the world’s highest thermal energy storage capacity (15-hours). •Highly Strategic Project for the Government of Dubai: The Project is part of the Dubai Integrated Energy Strategy 2030 which seeks to secure a sustainable supply of energy by diversifying energy supply sources. Dubai aims to reduce its reliance on imported natural gas by achieving 7% of installed capacity from solar energy by 2020, 25% by 2030, and 75% by 2050. Click to learn more     Awards or Public Evaluation:     N/A     Other Information:     Deal structure •The senior debt has been structured on a long-term mini perm basis whereby if the debt is not refinanced by a target refinancing date, a cash sweep mechanism kicks in to reduce the tenor of the senior facilities in the base case. Our response and Market Impact •SCB in its role as Documentation Bank led the banking group in structuring the transaction right from the pre-bid stage. All through the financing process SCB closely cooperated with the Sponsors in structuring the financing package and negotiating key terms with the simultaneous objectives of: (i) achieving a competitive bid tariff, (ii) optimizing shareholder returns, and (iii) optimizing financing structure while simultaneously ensuring the Project’s overall bankability and robust risk allocation. •Standard Chartered leveraged its experience in the MENA IWPP and IWP sector, our structuring and documentation expertise and our country knowledge of the United Arab Emirates to assist the Sponsor towards a successful close of this vital transaction.