The Crucial Role of Guarantees and

Equity in Clean Energy Finance

EU-India Clean Energy and Climate Partnership
EU-India Clean Energy Investment Platform
New Delhi
Sagar Gubbi,
Managing Partner, Ecoforge Advisors
Bangalore, India

08th March 2018

Publishers/sources /owners of all images, data, logos and graphs in this presentation have been referenced and acknowledged;
These are used solely for the purpose of this presentation and no copyright or intellectual property infringement is intended; data
accuracy as per owners/sources; no representation by Ecoforge Advisors of any of the organizations mentioned is intended.
 Utility-scale, Decentralized, Off-grid Solar
in India – Deployment Scale
• Nearly 90% of installed solar
power capacity in India is utility-
scale; just 10% is decentralized –
most of it as rooftop solar in on-
grid areas

• But NITI Aayog’s Draft National

Energy Policy (July 2017) predicts
30-35% RE capacity in India by
2040 to be decentralized/off-grid!

Sources:Bridge to India (June 2017), NITI Aayog Draft NEP (July 2017), MNRE 2016, GOGLA 2017, Climate Group 2015,
MIA/Allotrope Partners 2017, Ecoforge Estimates 2017
 Utility-scale, Decentralized, Off-grid Solar
in India – Typical Financial Instruments

Purpose Utility-scale Decentralized

Startup, Business Setup, Equity Equity
Proof of Concept
HQ Costs, Staffing, Internal Equity Equity
Technology and Overheads
Product Development, Equity Equity
Systems, Refinement
Business Development, Equity Equity
Sales
Inventory/Sales Working Capital (Debt) Working Capital (Debt) or
Cycle/Receivables Finance Equity in startup phase
Asset Finance/Project Debt and Equity (70:30 or Customer Equity (down
Finance 80:20 or…….) payment) + Debt; in startup
phase Customer Equity and
Developer’s Equity

Sources: Ecoforge Research

 Decentralized Solar: Typical Asset Finance
Progression

Sources: Ecoforge Advisors, 2018

 Global Off-grid Solar Finance: Progression

Sources: Dalberg, World Bank, GOGLA Report, 2018

Off-grid Solar Finance in India: Lack of Capital

Sources: CLEAN Network, 2017

Financial Instruments and Risk Mitigation Measures
to Increase Decentralized RE Project Bankability in
Asia

Sources: Climate Policy Initiative India, 2014

 Warehousing Line Facility for Clean Energy

Sources: World Bank/IFC, 2016

Credit Guarantees, Blended Finance and Off-
balance Sheet Structures

Parent ESCO

Firs loss guarantee

100% subsidiary Equity portion of capital

Special Purpose Vehicle (SPV)

Commercial Bank (or Non- for developing a group of mini-grid
Banking Financial Institution) Debt portion of capital
assets

Second loss credit

guarantee USAID DCA, Multilateral and
Bilateral Dev Agencies etc

Sources: Ecoforge Advisors 2017

 Asset Backed Securitization (ABS) for Off-
grid Solar in India?

Sources: Ecoforge Advisors 2017

 Off-grid/Decentralized Solar Finance in
India – Key Players and Issues
Sub-sector Key Players Equity Debt

Investors Issues Investors Issues

Solar Home Simpa Energy, ADB General OPIC Not enough

Systems, Onergy, ENGIE lack of ADB debt from
Solar Lamps Greenlight Planet, Apis Partners equity RBL Bank local
(PAYG or D.Light Design, EA Ventures financing YES Bank commercial
Cash) Orb Energy, Omidyar Oikocredit banks and
SELCO ERM LCEF SunFunder small
E-Hands ElectriFI ResponsAbilit finance
y banks

Micro and OMC Power, ENGIE Equity Rockefeller Debt

Mini-grids Mera Gao Power, Insitor Fund funding is Foundation funding is
Boond Solar, Mitsui very ADB practically
Gram Oorja Opes Fund limited IntelleGrow unavailable,
Husk Power IFC neither from
Shell DFIs nor
Foundation local banks

Sources: News Articles, Ecoforge Research 2017

Questions?