# Presentation: 546039

## Financing Environmental Exports

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**“****Sharing Risk, Opening Opportunities: Ex-Im Bank’s Environmental Exports Program”**
***September 29, 2005***

**Craig O’Connor**
***Director – Environmental Exports Business Development***

## Overview

**Introduction to Ex-Im Bank**
**Ex-Im Bank’s Environmental Exports Program**
**Industry/Market Analysis**
**Ex-Im Products**
**Conclusion**

## Ex-Im Bank Introduction

- Independent agency of the U.S. government.
- Established in 1934 to finance the export sales of goods and        services produced in the U.S.
***Since 1934 -  supported over $450 billion in exports. ***
- Supports short, medium, and long-term financing to _**credit worthy**_ international customers both public- and private-sector; working capital guarantees to U.S. exporters.
- Products include Direct Loans, Guarantees, Export Credit Insurance, Working Capital Guarantees, Tied Aid Fund
- No minimum nor maximum project size.
- Special initiatives for environmental exports, small business, and lending directly to municipalities.
- Ex-Im Bank provides Loan Guarantees for Euros, other currencies

## Environmental Exports Program

*	**Support for environmentally-beneficial exports included in our Charter. *
*	**Environmental Exports Program Consists of *_*pro-active*_* business development and enhancements to existing Ex-Im Bank programs.*
*	**	**Director Conlin formed new  Environmental Exports Team*
*	**Environmental projects are offered enhancements:*
**Maximum OECD repayment term  for Long-Term Loans and Guarantees of 10-15 years after project completion.**
**Capitalization of interest during construction.**
**Up to 15% local cost support within the U.S. scope of supply. **
_**Repayment terms of 15-years allowed OECD as of July 1, 2005!**_
**PEFCO funding available for extended loan terms**
**Use of structured finance approach to support smaller projects**
*	**RESULTS: Transactions approved under the Program grew from *
*       **13 in FY 1994, to 71 FY 2004, totaling over $2 billion.*
*	*

## Qualifying Renewable Energy Sectors

_*Special Terms approved by the OECD for 2-year trial period include:*_
*	**RENEWABLE ENERGY*
**Wind energy**
**Geothermal energy**
**Solar photovoltaic power**
**Solar thermal energy**
**Tidal and tidal steam power; wave power; ocean thermal energy**
**Bio-energy: sustainable biomass, landfill gas, sewage plant gas, biogas. **
**Hydropower – subject to further OECD discussions Nov. 2005**
**WATER SUPPLY & TREATMENT:**
**Projects related to the supply of water for human use and wastewater treatment facilities; collection and treatment of household and industrial wastewater and sewage, including water recycling and treatment of sludge **

## US Environmental Industry Trade Balance 2003(in $billions) Source: Environmental Business International, Inc.

## Renewable Energy Market Overview

*	**Value of world’s power generated from renewable energy estimated at $7 billion, up from $1 billion in 1990; projections for $82 billion by 2010.*
*	**Renewable energy exports grew from $758MM in ’02 to $1.04 billion in ‘04 *
*	*_*Leading Export Sectors:*_
*	**Since 1998, wind energy fastest growing new source of electricity;  30% average per year growth, total market now at $4 billion.*
**Danish turbines account for 60% of current U.S. capacity, U.S. firms have 30% small wind market share.**
**Top 5 markets: Germany, Spain, U.S., Denmark, India**
*	**Solar photovoltaics total market now at $2.5 billion.*
**Cost of solar power fell 65% from 1990 to 2000, to 40 cents/kw;    est. that cost will fall to 10 cents/kw by 2010.**
**In 1996, U.S. the world leader in photovoltaics with 40% global market share, Japan now world’s leader with 45%.**
**U.S. exports 60% of its total production**
**Top markets for U.S. exports: Germany (50%), Hong Kong, Spain, Japan, Mexico**

## Ex-Im Bank Financing Products

***A wide variety of products to meet a diverse range of environmental deals***
***	******pre-export finance – working capital guarantee program***
***	******short term financing – insurance***
***	******medium term financing – insurance & loan guarantees***
***	******long term financing – loan guarantees***

## Insurance Policies

***Short-Term (Payments up to 180 days, exceptionally 360 days)***
- Multi-buyer
- Single-buyer
- Small Business Multi-Buyer Policies:
- New-To-Export, Environmental
***Bank***
- Letter of Credit
- Financial Institution Buyer Credit
- Financial Institution Supplier Credit
***Leasing***
- Operating
- Financing
***Medium-Term (1-5 year payments,  exceptionally 7 years)***
- Single buyer

## Southwest Windpower, Inc.

*	**Southwest Windpower, Inc., a small business in Flagstaff, Arizona that exports battery-charging wind turbines to more than 50 countries.*
*	**Southwest Windpower generates more than 50% of its revenues from export sales.*
*	**Challenge:*_* *_*Southwest Windpower needs to offer credit terms to a number of small distributors in diverse foreign markets.*
*	**Solution: Ex-Im Bank’s Environmental Small Business Multi-buyer Credit Insurance enables Southwest Windpower to offer “open account” credit terms to its distributors that enables them to place larger orders, and in turn offer credit to local customers.*
*	**Southwest Windpower turbines likely qualify for longer terms*

## Loan Guarantee Program

_*Guaranteed Loans*_* made by commercial banks (U.S. or foreign) to a foreign buyer with a 100% unconditional repayment guarantee from Ex-Im Bank *
**Guarantee covers 85% of the U.S. content of the transaction.**
**Negotiated interest rates, usually a floating rate based on spread over 6-month U.S. dollar LIBOR rate**
**Loan fully transferable, can be securitized**
**Banks often finance the 15% required cash payment**
**Guarantee available in Euros, other currencies**

## Working Capital Guarantee

*	**Ex-Im Bank provides 90-100% repayment Guarantee for working capital loans, revolving or transaction based, made by commercial lenders to small businesses to finance export sales.*
*	**The Working Capital Guarantee serves as the collateral to the commercial lender by mitigating the risk inherent when the source of repayment for the loan is an overseas contract.*
*	**Enables exporters to finance materials, labor, and overhead to produce goods/services for export.*
*	**Enables exporters to cover standby letters of credit for bid and performance bonds, or payment guarantees.*
*	**Enables the exporters to finance foreign sales receivables.*
*	**Most Working Capital Guarantees provided by Delegated Authority Lenders without prior Ex-Im Bank approval.*

## Case Study: PowerLight Corp.

*	**PowerLight of Berkeley, CA received a $5 million working capital loan made possible through Ex-Im Bank’s Working Capital Guarantee Program (“WCGP”).*
*	**PowerLight is using the working capital line of to finance the $50+ million export sale of  solar tracking technology to Bavaria Solarpark, the world's largest solar electric project! *
*	**The project will generate 10 megawatts of electricity, enough to power 9,000 homes in the region, supported by a 20-year power purchase from the German government. . *
*	*_*[Union Bank of California](http://www.exim.gov/cftools/intercept.cfm?http://www.uboc.com)*_*, an Ex-Im Bank delegated authority lender, provided the loan and will receive Ex-Im Bank's Guarantee when the loan is processed.*
*	**PowerLight is using the working capital line in part to post a 10% performance bond as required by Bavaria Solar.*

## Conclusion

*We have the right product to meet your export needs*
*	**Ex-Im can finance any size deal*
*Focused on increasing environmental exports – using resources throughout the bank*
*New 15 year terms**	*
*Ex-Im Bank supports short, medium, and long-term financing to creditworthy international customers, and working capital guarantees to U.S. exporters.*
*Ex-Im Bank is focused on increasing its support for environmental exports.*
*New 15-year repayment terms offer a strong enhancement for renewable energy and water technologies exports.*
*         **BRING US A DEAL!**	*
*	**Internet**	*_*[http://www.](http://www.exim.gov/)*__*[exim](http://www.exim.gov/)*__*[.](http://www.exim.gov/)*__*[gov](http://www.exim.gov/)*_
*	**e-mail   craig.oconnor@exim.gov*