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Institutional Finance for Solar Projects
B.V. Rao GM,IREDA firstname.lastname@example.org
21st September 2010, Hotel Lalit, New Delhi
JNNSM- Mission Objectives
Jawaharlal Nehru National Solar Mission has been launched under the National action Plan on Climate Change with an objective: To establish India as a global leader in solar energy, by creating the policy conditions for its diffusion across the country.
Mission anticipates achieving grid parity by 2022 and parity will coal based thermal power by 2030. To adopt a 3-phase approach from 2010 to 2022.
Aim of the mission is to focus on setting up an enabling environment for solar technology both at centralized and decentralized level.
Mission Targets A 3.phase approach has been formulated Application Segment Phase .grid Applications Solar Thermal Collectors Area Manufacturing Base Solar Lighting Systems Solar RPO 200 MW 7 million Sqm --0.000 MW 15 million Sqm ---- 2.000 MW 20 million Sqm 4.III 2017-22 20.000-2.25% 1.000-5.000 MW Off.000 MW 20 million 3% .000 MW Utility grid power 1.I 2010-13 Phase-II 2013-17 4000-10.000 MW Phase.
To attract banks and financial institutions to provide necessary finance for setting up solar power projects for grid/ off-grid. To work closely with State governments. manufacturing.Mission Strategy To create necessary environment to attract industry and project developers for investment in power generation. power utilities and local self government bodies. regulators. To promote off-grid solar applications to meet light and power requirements of energy –poor by provision of low cost credit through re-finance facility from IREDA .
• Designated as nodal agency for entering into PPA with Solar Power Developers.Policy & Regulatory framework Solar Power Purchase Obligation Solar specific RE Certificates Incentivizing through NTPC Vidyut Vyapar Nigam Ltd. • Sale of power as per CERC regulations (to provide Generation Based incentive) Rooftop solar PV and other small power plants connected to LT/11 KV grid with a remunerative feed-in tariff ( routed through IREDA) . (NVVN) for setting up • of large solar power plants. • MoP allocating equivalent amount of MW to NVVN.
Fiscal Incentives Custom duties and excise duties concession/ exemptions on • Specific capital equipment • Critical materials components • Project imports .
high quality manufacturing facility for solar PV with the targets of 4-5 GW by 2020.Solar-Manufacturing To establish low cost. . To provide soft loans for technology up gradation and working capital through re-finance facility from IREDA. To provide incentives to establish SEZ for solar manufacturing parks.
Financing the Mission Activities Fund Sources • To provide budgetary support for the activities • To access International Funds under the UNFCCC framework Fund requirement for Phase II • Review of progress achieved at the end of 11th Plan • Analysis of the efficacy of the model adopted .
developing standards and specifications. Main tasks will be testing and certification. . networking among different research institutions.Research and Development To set up a solar research council to guide the overall technology development strategy To establish a national centre of excellence to implement the plans formulated by the council.
50000 crores 20 million meter square Rs.000 crores B Off-Grid Applications 200 MW Rs. 16500 crores 20.00. 5. 20. 3.000 crores C Solar Thermal collectors 7 million meter square Rs.100 MW Approximately Rs.Fund Requirements First stage Second Stage A Grid Connected Power Plants 1.000 crores 2. 7000 crores .000 MW Rs.000 MW Approximately Rs.
• GBI will be given to DISCOMs on reimbursement basis. . are finalized.Status of Grid Solar Power-I Small Power Plants up to 2 MW • Projects for 120 MW shortlisted. • Compliance to technical standards mandatory. • Projects up to 100 MW capacity where PPA signed and registered with IREDA.
.Status of Grid Solar Power-II Power Plants above 5 MW capacity • 1. • 84 MW capacity projects (54 PV & 30 Thermal) allocated under Migration • Selection of PV projects to be done in two batches.000 MW Capacity allocation between SPV and ST to be 50:50 by NVVN. • First Batch in 2010 and limited to 150 MWp. • Second batch next year of approximately 300 MWp • Solar Thermal : selection for 470 MW to be done in 2010.
Funding of Off-grid Solar Applications (SPV and ST) • 200 MW capacity in the first phase • Demand driven expansion • SPV 30% subsidy & loan @ 5% for individuals & non commercial 30% subsidy OR loan @ 5% for commercial • SPV 30% subsidy & loan @ 5% for individuals. non commercial & commercial • 90% subsidy for Government projects in special category States and in other remote and difficult areas .
Channelization of Funds for Off-grid Solar Applications • Funding under scheme – Project mode. FIs such as NABARD. Government agencies etc. IREDA etc. NHB. Financial Integrators. System Integrators. SIDBI. • Additional channels for supply and maintenance (RESCOs. NBFCs.) . MFIs. • Directly by MNRE (approved by PAC) • Scheduled commercial banks.
. NHB and Central Bank of India.Channelization of Funds for Off-grid Solar Applications • Accreditation • Performance Monitoring • Refinancing • MoU signed by IREDA with NABARD.
Sectors being financed: • • • • • • • Wind Small & Medium Hydro Biomass Power & Cogeneration Solar Waste to Energy EE & Conservation Bio Fuels/ Alternate Fuels Other Activities Intermediary for providing financing facilities for various MNRE Schemes.About IREDA Objective Extend financial support to Renewable Energy. Energy Efficiency & Conservation projects. Implementing Agency for GBI Scheme – Wind & Solar .
75% to 12.Upto 70% of Project Cost Rate of Interest .9.Financing Schemes Quantum of Assistance .Upto 13 Years .25% Repayment Period .
15% 11. 11.50% to 12.a.50% to 12.50% to 11.40% Maximum Repayment period (years) 10 15 10 10 10 Solar PV/ Solar Thermal Grid connected Power Projects Energy Conservation Energy Efficiency Projects Waste to Energy 10.15% 10.25% 10.25% 12.50% to 11.40% 10.50% to 11.25% to 12.75% to 11.40% 10.25% to 12.75% 10.25% 10 10 8 10 .Financing terms for different sectors Sector Small Hydro (up to 25 MW) Hydro above 25 MW Wind Energy Biomass Co-generation Biomass Power Generation Interest Rate range (%) p.
66440 Mn : 4378 MW : 2173 MW :1.3.3 M MTCR/Yr As on 31.2010 . 121794 Mn : Rs.Cumulative Performance • • • • • • No of Projects Sanctioned Total Loan Sanctions Loan Disbursements Sanctioned Power Capacity Commissioned Capacity Conventional Fuel Replacement : 1921 Projects : Rs.
grid applications Solar thermal sector.SWHS • Financing of Projects • Generation Based Incentive • Monitoring • Soft loans through banks by re-financing • Monitoring of the systems •Administration of Interest subsidy scheme through banks / financial institutions •Funding of projects •Funding through intermediaries •Soft loans •Working capital •Re-financing facility as per MNRE Solar Manufacturing .Role of IREDA under JNNSM Type of system Grid connected power projects Role of IREDA • Financing of Projects Small solar power projects and roof top systems Off.
Assurance of long term policy with greater accuracy and uncertainties in development of the solar sector. .Risk Factors perceived by FIs For Financing Solar Power Projects Regulatory Risk Technology Risk Implementation Risk Infrastructure Risk Repayment Risk Political Risk Policy Risk Fixing of the tariff and assurance on the power sale agreement Technology yet to be proven on the ground Uncertainties in the implementation of the project as per schedule Inadequate evacuation facility and clearances on land and other statutory clearances. Non assurance of repayment from the utilities may result in repayment risk to the developers/ FIs. Changes in fixing of unallocated power with respect to change in political system.
Risk Factors perceived by FIs For Financing Solar Power Projects Financial Risk •In time financial closure by the project developer. •Raising of equity Guarantee and Warranty Availability of long term guarantee and warranty from Risk the technology providers for the new technology. .funding from single source . •High project cost .
Suggested Measures for Risk Mitigation • Advocation for long term / stable/ consistent policies at central / state level. • To create special single window clearance cell at state level. • Importance of timely clearances / approvals for solar projects.to honor PPAs and MoUs. . • Provision of Risk Guarantee Fund. • Proper Resource assessment studies.
.Suggested Measures for Risk Mitigation • To take advance actions to avoid delay of deliveries. • To establish more training institutions for producing skilled manpower. • Detailed site survey reports to be undertaken through professional bodies to maximize performance efficiencies. • To establish a mechanism to have information exchange between various FIs and banks for co-financing or consortium financing. • To increase manufacturing capacity for indegenious cells/ modules .
• Periodic inspection / monitoring of projects even after implementation. (TRA and Generation data) • Innovative financing models by accessing low cost funds from international institutions. .Suggested Measures for Risk Mitigation • Concurrent monitoring of projects by FIs .appointment of lenders engineers.
Thank you Indian Renewable Energy Development Agency Limited .
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