Barbados Project

Private Placement

This investment is a ‘private placement’. There is no public market for the shares in the LLC or any other of its securities, and no such market will develop as a result of this offering. The shares have not been registered under the Securities Act of 1933 and are being offered and sold in reliance of exemptions from the registering requirements of this law. These securities have not been approved nor disapproved by the Securities and Exchange Commission or any state regulatory authority nor has the Commission or any state regulatory authority passed upon or endorsed the merits of the offering or the accuracy or adequacy of this private placement memorandum. Any representation to the contrary is unlawful.

Summary

Energy Engineering Corporation (EEC) announces a new, low-risk, high-return investment opportunity in solar power production. This project, slated to begin construction in 2015, will take advantage of high feed-in tariff in the target market and lower costs of solar panels because of a current manufacturing oversupply. EEC is proposing to install kilowatt scale (kW) solar power on Barbados. This island is powered by Barbados Light & Power (BL&P). Generated power will be sold to BL&P under a 20-year power purchase agreement (PPA) at a variable rate of 180% of fuel surcharge. On August 2011 the fuel surcharge is US$0.22/kWh and the feed-in tariff is US$0.39/kWh.

The Renewable Energy Rider

BL&P is offering the Renewable Energy Rider (this “Rider”) is available as a pilot program for a period of two (2) years to customers who qualify for the Domestic Service (DS), Employee (EMP), General Service (GS), Secondary Voltage Power (SVP), Large Power (LP) and Time-of-Use (TOU) tariffs. All of the provisions of the applicable DS, EMP, GS, SVP, LP and TOU tariffs will apply except as amended by this Rider. This Rider is specific to customers with renewable resource generation facilities (hereinafter collectively referred to as “customer-generators” and each as a “customer-generator”) utilizing a wind turbine, solar photovoltaic or hybrid (wind/solar) power source located on the customer’s owned or rented premises.

This program is limited at 1600kW, 5KW for residential and 50kW for commercial.

Barbados Light & Power website:

http://www.blpc.com.bb/newfront/home.cfm?CFID=280646&CFTOKEN=10010000

EEC and the “Rider”

This project will implement solar power panels on rooftops of residential and commercial buildings under long-term leases, escaping the issues of land use and environmental concerns and easing connections to the power grid. EEC will also benefit from what photovoltaic industry analysts predict will be the low cost of solar panels through 2014-2015 because of overproduction.

Photovoltaic power installations have greatly increased in the past decade due to demand and concerns over fossil and nuclear fuels. By partnering with local solar power companies and working with the programs of local government, EEC stands in a unique position to undertake this energy project. This opportunity has the following advantages:

  1. Solar technology is proven and entails no significant operating risks.
  2. The power will be sold under a long term PPA to BL&P, a state-power generator and distributor in Barbados.
  3. The completion period of this project is comparatively short as solar panels are readily available and are easy to install.
  4. To avoid any unnecessary delay due to environmental issues, the solar panels will be installed on rooftops of residential and commercial buildings near major centers.
  5. The strength of the long term PPA will provide the project with an attractive capital structure that will maximize the return on equity (ROE)
  6. The feed-in tariff offered by BL&P is linked to the fuel surcharge. See below a graphic of the fuel surcharge from 2009 – 2011.
  7. There is presently an oversupply of solar panels which has lowered their prices.

EEC will secure rooftop sites required to meet targeted project solar power and subsequently will provide administrative services. Caribbean companies working in solar power industry have been retained. These companies, in association with EEC will be responsible for the installation and maintenance of the solar facilities. These partners have already implemented several MWs of rooftop projects in other islands (Martinique, Guadeloupe & Reunion), greatly reducing installation risks and allow the project to move ahead rapidly once the financing is in place. These rooftop spaces will be leased under long-term agreements matching the length of the PPA. Multiple kW scale solar projects will be grid-connected using power inverters.

Investment Structure

EEC is proposing project by project investment structure. A cluster of rooftops can be adapted for individual investment. EEC can also assist gathering of investors looking to establish US based LLC for the sole purpose of owning a solar energy company in Barbados in a general/limited partnerships structure. Under such scenario this company (OPCO Barbados) will purchase, install and operate solar energy installations in Barbados and investors will share the profits in a US based LLC general/limited partnerships structure.

Investment Strategy

Investments in solar energy will be made exclusively in Barbados with a long term 20-year Power Purchase Agreement (PPA) offered by BL&P. There is a possibility to dispose the assets from year 3 of operations, subject to prevailing market conditions at that time.

Minimum Investment

A minimum of $30,000 is required from single investor. BL&P has limited to 1600 kW this first phase of solar projects and 200kW of projects have been taken already. US$50,000 investment will implement 100kW of solar panels in 15% equity/debt ratio.

Possibility of Exit Strategy

After 3 years of operation, the income stream remaining on 17 years of an indexed PPA with BL&P will be attractive for a number of acquirers (Insurance companies, other developers, or financial investors) which should generate maximum value. In addition, there may be some value to the attached green credits as this market matures over the next few years.

PRO FORMA PROJECTION

Pro forma projections are available on request tailored to your parameters. Please forward following information:

  1. Equity investment amount.
  2. Predicted interest loan from your bank (or Barbados) and equity / debt ratio expected. For example, a $50,000 investment can obtain $280,000 loan on 15% equity / debt ratio.

Here are samples of information and comments that will be available in the financial pro forma:

  1. Costs of rooftop leased spaces for the solar panels based on approximately US$0.05/kWh, maintenance, insurance and management are included in the net income for each year of operation.
  2. For a $48,750 investment with an 8%/15-year loan and 5% escalation rate. If these parameters can be achieved with your bank (or Barbados bank), such investment will generate an IRR of 26% for the first 10 years and 32% for 20 years. Depreciation of the asset (US$310,000 / 20 years = $15,500) can be used with proper general / limited partnership structure in USA.
  3. Each investor should contact a CPA for establishing proper approach for transferring profits in US.

Launching the project

Once the investor agrees, EEC will start negotiations with local rooftops’ owners, suppliers and installers. A first installment will be required for identifying rooftops’ owner (or landowner for ground-mounted if required), sign renting agreement near US$0.05/kWh, sign a document transferring the property of the solar panels to the investor and identify local bank if required. In this first phase EEC will select local civil engineer confirming that the roof’s owner will support solar panels load. No permit is required for this project but local electrician and roofer will be hired for implementing the solar panels, inverters and connection to utility grid.

Timetable

Assuming that the financing is completed by June 2014, the project will start generating electricity by last quater of 2014.

Conclusion

This investment offers a ‘low risk high return’ opportunity. It is supported by a long term PPA with BL&P which has good credit ratings. The technology is proven and suppliers offer a firm price supply contract and a long-term performance guarantee which provides a downside risk protection to the investor. The project completion period is comparably short. Finally, the project can be scaled upwards with additional capacity and similar feed-in-tariff in Cayman, Guadeloupe, Martinique and Guyana. The BL&P obligation to provide attractive long term PPA is confirmed by government decree.

More detailed information can be made available upon execution of a Confidentiality Agreement.

Energy Engineering Corp,
Contact click here

BL&P fuel surcharge from 2009 – 2011 in Barbados dollars (1$BD = US$0.50). Feed-in tariff is 1.8 times the fuel surcharge.

 

 

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