Introduction

Many emerging economies have an excellent solar resource, and have adopted policies to encourage
the development of the solar industry to realize the benefits that expanded use of PV technology can
have on their economies and on improving energy security, as well as on the local and global
environmental. This presents a major incentive in rapidly-growing, emerging markets with a high unmet
demand and urgent need for power. Assuming that PV technology prices continue to fall relative to
competing sources of electricity, the market penetration rate of utility-scale solar power projects can be
expected to continue growing rapidly, including in emerging markets. . As of May 2015, IFC has made
over 350 investments in power in more than 65 countries. IFC has invested in more than 55 solar
projects, representing about 1,400 MW of capacity, with key transactions in Thailand, the Philippines,
India, China, Jordan, Mexico, South Africa, Honduras, and Chile. The objective of the project
implementation process is to complete the project on schedule and within the allocated budget, with a
PV power plant that operates efficiently and reliably, and generates the expected volumes of energy and
revenue. In order to achieve this objective, a number of key activities need to be completed successfully.
Developing a PV project is a process involving many stages and requires a multidisciplinary team of
experts. The project developer starts by identifying a power market that offers adequate risk-reward
opportunities, then identifies a promising site and secures the land-use rights for this site, carries out
two separate rounds of technical-financial assessments (prefeasibility study and feasibility study),
obtains all required permits and licenses, secures power purchase and interconnection agreements,
arranges financing, and selects a team to design and construct the project (often an EPC contractor),
supervises plant construction, and carries out testing and start-up. As the project moves from one stage
to the next, the technical-financial assessments become more detailed until a final design is developed
and construction starts. It is important to emphasize the back-to-back nature of many project contracts
and documents; a PPA is needed in order for financing to be completed. However, this must be
preceded by a grid connection agreement, construction and site access permits, land lease agreement,
etc. Throughout this process, technical, commercial, and legal/regulatory experts are involved, working
in parallel on distinct yet interdependent activities. While clear responsibilities can be identified for each
expert, most project activities are related and the work of one expert influences the work of other
experts; hence close coordination is needed. It is crucial to emphasize this latter point.
Risk Management

The risks associated with the project should be identified, assessed and managed throughout the
construction process. The hazards need to be incorporated in the planning and scheduling of the
project. Each aspect of the project should be assessed for likelihood and impact of potential risks. The
next step is to develop a suitable action plan to mitigate identified risks. If a particular risk could affect
the delivery of the whole project, alternatives for contingency (in terms of time and budget) should be
included. Risk items may include timing delays, weather risk, grid connection delays, staff and
equipment availability, transportation, ground conditions and environmental or health and safety
incidents. Many of these risks is mitigated during the planning and design stage, for example, by
completing studies and plant design. Some risks will remain until the equipment is on site: lost
equipment or equipment damaged in transport, for example. This risk is reduced by selecting an
experienced supplier with suitable transport equipment. Insurance will cover the cost associated with
sourcing replacement equipment, however if a key component such as the grid transformer is lost, then
insurance will not compensate for the time delays and loss of generation associated with the
component not being available. Such risks should be considered when drafting the EPC contract terms.