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DEVELOPMENTDEVELOPMENT OFOF LARGELARGE SCALESCALE SOLARSOLAR ENERGYENERGY PROJECTSPROJECTS SeethapathySeethapathy

DEVELOPMENTDEVELOPMENT OFOF LARGELARGE SCALESCALE SOLARSOLAR ENERGYENERGY PROJECTSPROJECTS

SeethapathySeethapathy ChanderChander Chair,Chair, EnergyEnergy CommitteeCommittee AsianAsian DevelopmentDevelopment BankBank

ChanderChander Chair,Chair, EnergyEnergy CommitteeCommittee AsianAsian DevelopmentDevelopment BankBank

CONTEXTCONTEXT OFOF SOLARSOLAR ENERGYENERGY DEVELOPMENTDEVELOPMENT ININ ASIAASIA

• ENERGYENERGY DEMANDDEMAND –– NewNew DemandDemand vsvs SubstitutionSubstitution •• ACCESSACCESS TOTO ENERGYENERGY –– SuSuppppllyy toto RemoteRemote LocationsLocations •• ENERGYENERGY SECURITYSECURITY –– RelativeRelative CostsCosts ofof GridGrid ConnectedConnected EnergyEnergy –– AccessAccess toto HydrocarbonsHydrocarbons •• LOADLOAD DEMANDDEMAND CHARACTERISTICSCHARACTERISTICS –– IncreasingIncreasing CoolingCooling andand ChargingCharging LoadsLoads DueDue toto IncreasingIncreasing AffluenceAffluence andand IndustrializationIndustrialization

ChargingCharging LoadsLoads DueDue toto IncreasingIncreasing AffluenceAffluence andand IndustrializationIndustrialization
ChargingCharging LoadsLoads DueDue toto IncreasingIncreasing AffluenceAffluence andand IndustrializationIndustrialization

RISKRISK MITIGATIONMITIGATION

•• LANDLAND ACQUISITIONACQUISITION

MITIGATIONMITIGATION •• LANDLAND ACQUISITIONACQUISITION – – BestBest donedone byby GovernmentsGovernments –

– BestBest donedone byby GovernmentsGovernments – EnsuresEnsures SpecificitySpecificity ofof PurposePurpose –– GreaterGreater AcceptibilityAcceptibility byby PublicPublic – SavesSaves TimeTime

•• OFFTAKEOFFTAKE ARRANGEMENTSARRANGEMENTS

– CanCan bebe DoneDone byby Sponsor,Sponsor, ButBut MoreMore EfficientEfficient ifif DoneDone byby Government/Government/ PurchasingPurchasing UtilityUtility

ButBut MoreMore EfficientEfficient ifif DoneDone byby Government/Government/ PurchasingPurchasing UtilityUtility

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CONTENTSCONTENTS

CONTENTSCONTENTS •• CONTEXTCONTEXT OFOF SOLARSOLAR ENERGYENERGY DEVELOPMENTDEVELOPMENT •• RISKSRISKS ••

•• CONTEXTCONTEXT OFOF SOLARSOLAR ENERGYENERGY DEVELOPMENTDEVELOPMENT •• RISKSRISKS •• RISKRISK MITIGATIONMITIGATION •• ADB’SADB’S POSSIBLEPOSSIBLE ROLESROLES ANDAND ASSISTANCEASSISTANCE

•• RISKRISK MITIGATIONMITIGATION •• ADB’SADB’S POSSIBLEPOSSIBLE ROLESROLES ANDAND ASSISTANCEASSISTANCE

RISKSRISKS

•• RISKSRISKS

– SponsorSponsor RisksRisks

•• RISKSRISKS – – SponsorSponsor RisksRisks •• LandLand Acquisition,Acquisition, OfftakeOfftake

•• LandLand Acquisition,Acquisition, OfftakeOfftake ArrangementsArrangements • OfftakeOfftake CreditworthinessCreditworthiness •• RegulatoryRegulatory •• SpecificationSpecification RisksRisks

– GovernmentGovernment RisksRisks

•• PublicPublic AcceptabilityAcceptability –– Costs,Costs, ProcurementProcurement Method,Method, SubsidiesSubsidies

•• Land,Land, Transmission,Transmission, WaterWater UseUse

Land,Land, Transmission,Transmission, WaterWater UseUse – – FinancierFinancier RisksRisks •• OverallOverall

– FinancierFinancier RisksRisks

•• OverallOverall ProjectProject

RISKRISK MITIGATIONMITIGATION

•• SPECIFICATIONSPECIFICATION RISKSRISKS

•• SPECIFICATIONSPECIFICATION RISKSRISKS •• NeedNeed toto SpecifySpecify InsolationInsolation

•• NeedNeed toto SpecifySpecify InsolationInsolation LevelsLevels toto OptimizeOptimize SiteSite andand ObtainObtain CompetitiveCompetitive ProposalsProposals •• However,However, LongLong TermTerm QualityQuality SurveySurvey DataData NotNot AvailableAvailable inin DMCsDMCs •• CrucialCrucial forfor ProjectProject Economics,Economics, EspeciallyEspecially DuringDuring thethe FirstFirst FewFew YearsYears •• CouldCould bebe MitigatedMitigated ThroughThrough aa GuaranteeGuarantee ThatThat PaysPays SponsorSponsor thethe DifferenceDifference BetweenBetween SpecifiedSpecified andand ActualActual ForFor (say)(say) FirstFirst FiveFive YearsYears ofof

CommercialCommercial OperationsOperations •• GuarantorGuarantor CouldCould BeBe GovernmentGovernment oror IndependentIndependent EntityEntity

•• GuarantorGuarantor CouldCould BeBe GovernmentGovernment oror IndependentIndependent EntityEntity

RISKRISK MITIGATIONMITIGATION

RISKRISK MITIGATIONMITIGATION •• PUBLICPUBLIC ACCEPTIBILITYACCEPTIBILITY – – CurrentCurrent HigherHigher

•• PUBLICPUBLIC ACCEPTIBILITYACCEPTIBILITY

– CurrentCurrent HigherHigher CostsCosts NeedNeed toto bebe ExplainedExplained inin TermsTerms ofof LowerLower FutureFuture CostsCosts –– EnergyEnergy SecuritySecurity – SharingSharing ofof BurdenBurden BetweenBetween Regions,Regions, CountriesCountries – CompetitiveCompetitive andand TransparentTransparent ProcurementProcurement – Subsidies/Subsidies/ GrantsGrants needneed toto bebe TimeTime Based,Based, TargetedTargeted andand ExplicitExplicit

– Subsidies/Subsidies/ GrantsGrants needneed toto bebe TimeTime Based,Based, TargetedTargeted andand ExplicitExplicit

POSSIBLEPOSSIBLE ADBADB SUPPORTSUPPORT

•• PRIVATEPRIVATE SECTORSECTOR

ADBADB SUPPORTSUPPORT •• PRIVATEPRIVATE SECTORSECTOR – – Small Small Equity Equity – – LongLong TermTerm

– SmallSmall EquityEquity – LongLong TermTerm DebtDebt –– SpecificationSpecification RiskRisk GuaranteeGuarantee – PoliticalPolitical RiskRisk GuaranteeGuarantee

–– SpecificationSpecification RiskRisk GuaranteeGuarantee – – PoliticalPolitical RiskRisk GuaranteeGuarantee

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POSSIBLEPOSSIBLE ADBADB SUPPORTSUPPORT

POSSIBLEPOSSIBLE ADBADB SUPPORTSUPPORT •• PUBLICPUBLIC SECTOR/SECTOR/ GOVERNMENTGOVERNMENT – –

•• PUBLICPUBLIC SECTOR/SECTOR/ GOVERNMENTGOVERNMENT

– PreparatoryPreparatory ActivitiesActivities – BidBid DocumentationDocumentation –– OfftakeOfftake ArrangementsArrangements – AssistanceAssistance forfor RegulatoryRegulatory ReformsReforms – EvaluationEvaluation ofof ProposalsProposals – ContractContract NegotiationsNegotiations

ReformsReforms – – EvaluationEvaluation ofof ProposalsProposals – – ContractContract NegotiationsNegotiations
THANKTHANK YOUYOU

THANKTHANK YOUYOU

THANKTHANK YOUYOU