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FINANCING OF SOLAR PV

POWER PROJECTS

Presentation by

K.S.Popli

Indian Renewable Energy Development Agency

25th January 2011

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Agenda

• Mission Objectives

• Current status of schemes

• Issues in financing Solar Projects

• Sensitivity analysis

• Existing Solar PV projects in India

• Actual Generation data

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Mission Objectives

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Mission Objectives

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.

Jawaharlal Nehru National Solar Mission has been launched under the

National action Plan on Climate Change with the objective :

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Mission Targets

Application

SegmentPhase - I Phase-II Phase- III

2010-13  2013-17  2017-22 

Utility grid power   1,000-2,000MW  4000-10,000 MW  20,000 MW 

Off- grid

Applications 200 MW  1,000 MW  2,000 MW 

Solar Thermal

Collectors Area 7 million Sqm  15 million Sqm  20 million Sqm 

Manufacturing Base  --  --  4,000-5,000 MW 

Solar Lighting

Systems --  --  20 million 

Solar RPO  0.25%  --  3% 

A 3- phase approach has been formulated

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Current status of schemes

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NVVN Grid connected plants- Current Status

Migration Projects

• 84 MW capacity projects (54 PV & 30 Thermal) allocatedunder 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.

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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 ofcommissioning.

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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 secondbatch (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 perunit 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

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IREDA- Rooftop and other Small Solar Projects

Current Status

• 78 projects aggregating to 98.05 MW selected in 12 states.

• PPAs for all the projects signed with state utilities in August, 2010.

• In these projects no separate deadline for financial closure.

• Projects to be implemented within 12 months of issuance of RegistrationCertificate. Further, grace period of 6 months has been provided with penalties.

• Tariff ranges between  Rs 15.32/kWh (Rajasthan) to 18.45/ kWh (TamilNadu) in various states for PV.

• IREDA received status report of around 40 projects• Debt tie-up done :         7 projects• EPC contractor finalized:       13 projects• Commissioning anticipated by June 2011:     18 projects

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Issues in Financing Solar Projects

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Issues in Financing Solar Projects 

• Main concern of developers was allocation of projects.

• After allocation few developers have approached FIs before completingdue diligence

• Without finalizing project cost : Some project developers have indicatedCERC 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

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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

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Issues in Financing Solar Projects 

• Other  Issues:

• Partial Commissioning not allowed in NVVN and delay in meetingcommissioning timelines increases lenders risk.

• Large number of experienced EPC contractors shall be required toimplement projects in time.

• Inadequate Operation and Maintenance experience- Long term

O&M contracts.

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Sensitivity Analysis

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Sensitivity for Migration Scheme

Interest Rate (% per annum) Equity IRR  (post- tax) Average DSCR10.50 13.81 1.4811.00 13.47 1.4611.50 13.14 1.4412.00 12.81 1.4312.50 12.5 1.41

ASSUMPTIONSProject Cost Rs 14 crores /MW

Tariff  Rs 17.91/ unitRepayment Period 10 years

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Sensitivity for NVVN new projects

ASSUMPTIONSProject Cost Rs 13.5 crores /MWCost of Debt 12% per annum

Repayment Period 10 years

Tariff (Rs. Per unit) Equity IRR (post- tax) Average DSCR10.90  3.24  0.93 

11.25  3.74  0.95 

11.50  4.10  0.97 

11.75  4.46  0.99 

12.00  4.82 1.00

12.25 5.18  1.02 

12.50 5.55 1.04 

12.75 5.91 1.06

13.00 6.28 1.08

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Existing Solar PV Projects in India

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Existing Solar PV ProjectsPlant* Location Size Finance Cost Tech

Asansol WB 2 MW PFC 35 Cr Crystalline

Azure Amritsar 2 MW IFC + FDI Crystalline

KPCL Kolar 3 MW Self   58 Cr Crystalline

KPCL Belgaum 3 MW Self Crystalline

Moser Baer Sivaganga 5 MW IDBI + IFC 70 Cr Thin Film

MahaGenco Chandrapur 1 MW Self   12.5 Cr Thin Film

Reliance Jodhpur 5 MW Crystalline

NDPL Delhi 1 MW Crystalline

These plants are eligible for GBI from MNRE

* Illustrative List

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FIs/ banks active in financing solar 

projects• Power Finance Corporation

• Rural Electric Corporation

• IREDA

• State Bank of India

• Yes Bank

• Asian Development Bank

• IOB

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Actual Generation Data

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Actual Generation from Commissioned Projects

1 MW Azure Solar PV Plant at Amritsar, Punjab 

Technology  Mono- Crystalline

Month  Estimate as per DPR (kWh)  Actual Generation 

Dec 2009  180000  96975 

Jan 2010  160000  60795 

Feb 2010   160000  118890 

Mar 2010  185000  152715 

Apr 2010  185000  149265 

May 2010  200000  132780 

Jun 2010   190000  144975 

Jul 2010   170000  128970 

Aug 2010   160000  116190 

Projected  CUF 24.27% 

Actual CUF16.76%  

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Actual Generation from Commissioned Projects

Analysis of 1.1 MW WBGEDCL SPV  Plant at Asansol, West Bengal 

Technology  Poly- Crystalline

Month  Actual Generation 

Nov 2011  92400 

Dec 2011  85000 Jan 2011  109400 

Feb 2011  101300 

Mar 2011  116600 

Apr 2011   101300 

May 2011  98600 

June 2011 88600

July 201187000August 2011 84900

September  2011 82700

October 2011 90600

Actual CUF- 11.81%

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Actual Generation from Commissioned Projects

Analysis of 1 MW MAHAGENCO Plant at Chandrapur, Maharashtra 

Technology  Thin Film

Month  Actual Generation 

June 2010 106860.00

July 2010 96550.00Aug 2010 105890.00

Sept 2010 100390.00

Oct 2010 114770.00Nov 2010 105660.00Dec 2010 112570.00

Actual CUF- 14.53%

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Thank You