FINANCING OF SOLAR PV POWER PROJECTS

Presentation by K.S.Popli Indian Renewable Energy Development Agency 25th January 2011

Agenda
Mission Objectives Current status of schemes Issues in financing Solar Projects Sensitivity analysis Existing Solar PV projects in India Actual Generation data

Mission Objectives

Mission Objectives
Jawaharlal Nehru National Solar Mission has been launched under the National action Plan on Climate Change with the objective :

To achieve grid parity by 2022 and parity with coal based thermal power by 2030.

To achieve JNNSM targets in 3-phases from 2010 to 2022.

Mission Targets
A 3- phase approach has been formulated Application Segment Phase - I 2010-13 Utility grid power Off- grid Applications Solar Thermal Collectors Area Manufacturing Base Solar Lighting Systems Solar RPO 1,000-2,000 MW 200 MW 7 million Sqm --0.25% Phase-II 2013-17 4000-10,000 MW 1,000 MW 15 million Sqm ---Phase- III 2017-22 20,000 MW 2,000 MW 20 million Sqm 4,000-5,000 MW 20 million 3%

Current status of schemes

NVVN Grid connected plants- Current Status Migration Projects

84 MW capacity projects (54 PV & 30 Thermal) allocated

under Migration part of 1000 MW capacity.

Total 16 projects selected under Migration scheme PPA signed on 15th October 2010. Financial closure was to be achieved by 15th January 2011.

The deadline has been extended to 15th February 2011.

One project of 2 MW already commissioned.

NVVN Grid connected plants- Current Status Migration Projects

As per information, around 5-6 projects of approximately 21 MW capacity has tied-up for debt financing.

(Mahagenco sanctioned by IREDA) Azure power of 2 MW already commissioned and part capacity of Acme is in advanced stages of commissioning.

NVVN Grid connected plants- Current Status New projects

PPA for first batch already signed. 150 MW SPV (30 projects) 470 MW Solar Thermal (7 projects) Allocation of approx. 300 MW SPV to be done in second

batch (2011-12)

The highest discount offered on CERC tariff for 150 MW of

Solar PV is Rs.6.26 / unit which translates to a price per unit of (17.91 - 6.96) = Rs.10.95

The highest discount offered on CERC tariff for 500 MW of

Solar Thermal is Rs. 4.26 / unit which translates to a price / unit of (15.31 - 4.82) = Rs.10.49

IREDA- Rooftop and other Small Solar Projects Current Status

78 projects aggregating to 98.05 MW selected in 12 states. PAs for all the projects signed with state utilities in August, 2010. P

n these projects no separate deadline for financial closure. I

rojects to be implemented within 12 months of issuance of Registration P

Certificate. Further, grace period of 6 months has been provided with penalties.
Tariff ranges between Rs 15.32/kWh (Rajasthan) to 18.45/ kWh (Tamil

Nadu) in various states for PV.

REDA received status report of around 40 projects I ebt tie-up done : D 7 projects PC contractor finalized: E 13 projects ommissioning anticipated by June 2011: C 18 projects

Issues in Financing Solar Projects

Issues in Financing Solar Projects

Main concern of developers was allocation of projects. After allocation few developers have approached FIs before completing

due diligence Without finalizing project cost : Some project developers have indicated CERC determined project cost. Without finalizing EPC contractor.
EPC contracts and O & M contracts Warranties/ Guarantees from the contractors Experience of EPC/ O&M contractors. Financial Strength of contractors. LDs for delay in implementation Generation guarantee during O&M period

Issues in Financing Solar Projects

Module Suppliers Installed capacity of module supplier Production capacity of module supplier. Performance track record of modules/cells. Limited degradation warranties. Compliance to relevant IEC Standards. Site specific data Irradiance data Maximum wind velocity data Temperature Mounting Structures for modules Evacuation arrangement

Issues in Financing Solar Projects

Other Issues: Partial Commissioning not allowed in NVVN and delay in meeting

commissioning timelines increases lenders risk.

Large number of experienced EPC contractors shall be required to

implement projects in time.

Inadequate Operation and Maintenance experience- Long term

O&M contracts.

Sensitivity Analysis

Sensitivity for Migration Scheme

Interest Rate (% per annum) 10.50 11.00 11.50 12.00 12.50 Equity IRR (post- tax) 13.81 13.47 13.14 12.81 12.5 Average DSCR 1.48 1.46 1.44 1.43 1.41

ASSUMPTIONS Project Cost Tariff Repayment Period Rs 14 crores /MW Rs 17.91/ unit 10 years

Sensitivity for NVVN new projects

Tariff (Rs. Per unit) 10.90 11.25 11.50 11.75 12.00 12.25 12.50 12.75 13.00 Equity IRR (post- tax) 3.24 3.74 4.10 4.46 4.82 5.18 5.55 5.91 6.28 Average DSCR 0.93 0.95 0.97 0.99 1.00 1.02 1.04 1.06 1.08

ASSUMPTIONS Project Cost Cost of Debt Repayment Period Rs 13.5 crores /MW 12% per annum 10 years

Existing Solar PV Projects in India

Existing Solar PV Projects

Plant* Location Size Finance Cost Tech

Asansol Azure KPCL KPCL Moser Baer MahaGenco Reliance NDPL

WB Amritsar Kolar Belgaum Sivaganga Chandrapur Jodhpur Delhi

2 MW 2 MW 3 MW 3 MW 5 MW 1 MW 5 MW 1 MW

PFC IFC + FDI Self Self IDBI + IFC Self

35 Cr 58 Cr 70 Cr 12.5 Cr

Crystalline Crystalline Crystalline Crystalline Thin Film Thin Film Crystalline Crystalline

These plants are eligible for GBI from MNRE

* Illustrative List

FIs/ banks active in financing solar projects

Power Finance Corporation Rural Electric Corporation IREDA State Bank of India Yes Bank Asian Development Bank IOB

Actual Generation Data

Actual Generation from Commissioned Projects

1 MW Azure Solar PV Plant at Amritsar, Punjab Technology Mono- Crystalline

Month Dec 2009 Jan 2010 Feb 2010 Mar 2010 Apr 2010 May 2010 Jun 2010 Jul 2010 Aug 2010

Estimate as per DPR (kWh) 180000 160000 160000 185000 185000 200000 190000 170000 160000 Projected CUF 24.27%

Actual Generation 96975 60795 118890 152715 149265 132780 144975 128970 116190 Actual CUF 16.76%

Actual Generation from Commissioned Projects

Analysis of 1.1 MW WBGEDCL SPV Plant at Asansol, West Bengal Technology Poly- Crystalline Month Nov 2011 Dec 2011 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 June 2011 July 2011 August 2011 September 2011 October 2011 Actual Generation 92400 85000 109400 101300 116600 101300 98600 88600 87000 84900 82700 90600 Actual CUF- 11.81%

Actual Generation from Commissioned Projects

Analysis of 1 MW MAHAGENCO Plant at Chandrapur, Maharashtra Technology Thin Film Month June 2010 July 2010 Aug 2010 Sept 2010 Oct 2010 Nov 2010 Dec 2010 Actual Generation 106860.00 96550.00 105890.00 100390.00 114770.00 105660.00 112570.00 Actual CUF- 14.53%

Thank You