POWER April 2015 - 100

COMMENTARY
The Export-Import Bank's
Role in Supporting
Renewable Energy
Uduak Essien
R
enewable energy is on the rise, and the Export-Import
Bank of the United States (Ex-Im Bank) is playing its part
to support American renewable exporters in the global
marketplace.
Global installed capacity of renewable electricity over the
last 10 years has increased by over 100%, to 1,560 GW, and
now accounts for 23% of all electricity generation worldwide,
with wind and solar being the dominant drivers of this growth.
China, Canada, Germany, Brazil, and the U.S. are at the forefront
in terms of installed capacity; however, smaller countries
are breaking through on the renewables front and providing
significant opportunities for exports supported by international
financing.
Win-Win Financing
For more than 20 years, the Ex-Im Bank has been specifically
mandated by Congress to support U.S. exporters competing
globally for renewable energy transactions. Since 2009, it has
financed nearly $2 billion in American-made renewable energy
products and services, and in 2014 it authorized $336 million
to support environmentally beneficial exports. Of this amount, a
total of $151 million flowed to three wind farms in Latin America
located in Uruguay and Peru, smaller markets that are up and
coming. These projects benefit from the commercially reasonable
terms of Ex-Im Bank financing for renewables, which include
repayment periods of up to 18 years, fixed interest rates, capitalization
of interest during construction, and various options
for payment of the risk premium. Furthermore, the Ex-Im Bank
brings in-house technical expertise to ensure that projects can
operate to specification during the life of the loan, making it a
win-win situation for all involved.
The Peruvian market, for example, recently developed a plan
to encourage the development of renewable projects. This market
is not a traditional power market, where borrowers as well
as lenders are enticed by a standard power purchase agreement
with a government utility that shares the same credit standing
as the sovereign in many cases. In existence for the last 30
years, the Peruvian market is a decentralized wholesale market
in which numerous buyers and sellers clear payments with each
other directly, and the process is overseen by a government regulator.
In the life of this system, buyers and sellers have always
provided on-time payment, as the proper incentives are in place
to motivate the participants to stand behind their obligations in
a timely fashion.
In support of Siemens wind turbines built in and shipped from
the U.S., the Ex-Im Bank was able to provide financing for the
projects operating in this complex but historically reliable power
market. These transactions represent the bank's first power proj100
ect
financing in the Peruvian market, as well as Siemens Wind's
first sale in Peru. With a strong assurance of repayment, the bank
will support U.S. exporters of renewable products in new markets
to expand the reach of U.S. goods and services-thereby supporting
good-paying U.S. jobs.
Opportunities in India
Another example of how the Ex-Im Bank supports the confluence
of U.S. jobs, exports, and renewable technology in international
markets is its role in India's National Solar Mission
(NSM). India is one of the fastest growing renewable markets,
and the Ex-Im Bank was one of the first international lenders
to show support in the early phases of the NSM, ultimately
financing nine projects and over $350 million in the Indian
market. The bank's involvement ushered in additional capital
and debt in the Indian solar market and created more opportunities
for U.S. exporters.
As India increases its renewable targets in an ambitious quest
to achieve a renewable mix for 16% of its total portfolio, it will
need the deliberate and meaningful engagement of stakeholders
of all types. Opportunities abound for U.S. exporters, who can
partner with India to scale up in such a dramatic fashion.
India's focus on renewable energy is happening at an auspicious
time, as the cost of photovoltaic (PV) solar panels has
fallen dramatically and tariffs in India are near grid parity. According
to First Solar, one of America's leading solar PV manufacturers,
the cost of panels has fallen significantly, to $1 per
watt in the last few years. Even with the lower cost of oil, solar
is generally expected to remain competitive.
Small Markets, Big Opportunities
The Export-Import Bank of the U.S. continues to seek ways to
support the sale of proven renewable technologies abroad. Many
countries in the Middle East, including Egypt and Jordan, have
recently developed programs to facilitate renewable projects.
Latin America has already demonstrated a strong pipeline in renewables,
but some countries are just taking off and therefore
creating even brighter prospects for clean technology exports
from the U.S. These small markets create big opportunities for
U.S. exporters to continue the strong growth of renewable electricity
relative to electricity produced by fossil fuels. When there
is reliable technology, the Ex-Im Bank can find a structure that
works in the larger markets as well as the smaller ones.
To learn more about export solutions for your business, visit www.
exim.gov. You can also visit http://grow.exim.gov/contact-exim to
receive your free trade finance guide. ■
-Uduak Essien is managing director, alternative energy of the
Export-Import Bank of the United States.
www.powermag.com
POWER | April 2015
http://www.exim.gov http://grow.exim.gov/contact-exim http://www.powermag.com
POWER April 2015

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