Solar Market - 2013

Financing PV Projects- IREDA’s Achievement

Shri B.V Rao Chief General Manager (Technical)

Indian Renewable Energy Development Agency Ltd.

Hotel Crowne Plaza, New Delhi, May 7,2013

Renewable Energy installed capacity, March,2013

Solar Power stands at ~ 6% of total installed renewable energy projects.

• Approx. 88 % of Solar capacity is installed in Gujarat and Rajasthan

Solar PV Financing- IREDA’s Experiences and Perspective

IREDA’s Achievements & Experience

IREDA’s RoleAs a financing institution

Received 54 Project applications ( PV, CSP) for Rs 3191 Crores. Financed ~21 projects – under Gujarat Policy, RPSSGP & GBI

scheme of MNRE, JNNSM Ph-I batch II, third party PPA. Sanction of Rs 669 Crores, Disbursement of Rs 234 Crores with

total capacity of 107 MW .Project capacity from 1 MW to 20 MW, located in various parts of

country including Rajasthan,Jharkhand,Tamilnadu,Punjab,Gujarat, Andhra Pradesh.

Programme Administrator and GBI disbursement for RPSSGP projects.

Re-financing Institution for Off-grid projects.Extending Manufacturing loans.Active involvement in formulation of policies and

implementation.

IREDA’s Role -Observations on RPSSGP Scheme

Suppliers and Services

58.36%

41.64% Indigenous

International

75.36%

17.39%

7.25% Indian EPC

International EPC

Mixed / Col-loboration

PV ModulesEPC Contractors

IREDA’s Role -Observations on RPSSGP Scheme Performance Trends*

S. No. State Technology Capacity Utilization Factor

(%)

Grid Failure ( Hrs/ month)

1. Andhra Pradesh

Poly Crystalline 19.19 0-10

2. Haryana Poly Crystalline 17.45%25-35

Thin Film 16.05%3. Jharkhand Poly Crystalline 15.35% 5-10

4. Madhya Pradesh

Poly Crystalline 19.15% 0-5

5. Rajasthan Thin Film 18.87% 8-12

6. Uttarakhand Thin Film 14- 15% 5-15

7. Uttar Pradesh Thin Film 15.45% 5-15

8. Orissa Poly Crystalline 14-15 % 30-40

* Based on data of minimum 6 months or more for selected projects

Policies ScenarioJNNSM* JNNSM Ph- II Viability gap funding draft announced, 750MW proposed.

Gujarat* Remains the leading state with highest installed capacity of ~ 850 MW till date, initiated several rooftop

pilot projects.

Rajasthan* Second leading state with ~ 500 MW of installed capacity. Separate solar policy allocation in progress. * Released 75 MW shortlist with tariff of Rs 6.75/ unit against a target allocation of 100 MW each in PV

and CSP. Karnataka* Targets solar capacity addition of 350 MW by 2016 under its policy notified in July, 2011.* In mid April, 2012, 80 MW allotted.* To install 200 MW up to 2015-16, for the purpose of procurement by the ESCOMS.

Maharashtra* 125 MW solar PV project under implementation.Madhya Pradesh* Targets setting up of 800 MW (4 solar parks of 200 MW each)* Clearance awarded for setting up 297 MW.

Andhra Pradesh*Incentives to promote utility grid power projects for Captive Use/ Direct Sale

to third party/within the state and Utility Grid Power Projects for sale through RE (Solar) Certificate Mechanism .

*331 bids for development of 1,780 MW under consideration.*Tariff announcement of uniform Rs 6.49/ unit is expected to be dampener.Tamilnadu*Aims to achieve 3GW installed capacity by 2015.*Investment subsidy of INR 20,000 per KW for residential solar projects.*Bids for a total of about 500 MW of solar power generating capacity, with

lowest quoted tariff of Rs 5.97/ unit.Orissa *Targets 50 MW by 2012-13. Allocation of 25 MW projectsUP*Targets of 1 GW by 2017. Competitive bidding to be held for a capacity of

200 MW and the last date for submission being marked as 24th April 2013.

*UPPCL to sign PPA with successful bidders for a period of 10 years

Issues & Barriers

Technology

Financing

Policy

Technology related issues*With reverse bidding ,compromise in quality for cost cutting is visible.

*Delay in Evacuation / Transmission facility/ other land related permissions, Single window clearance remains to be implemented.

*Non- availability of stable grid is a big question for LT connected rooftop projects.

*Lack of best practices in Operation & Maintenance contracts .

Finance related ChallengesFinancial closure not achieved on time Uncertainty of payment by utilities for long period i.e. 25 years; latest policies

envisaging 10 year PPA along with lower tariffs.

Majority of developers not opting for ‘Arms length’ third party EPC Contracts thus increasing risk of delay and performance.

Wide variations in costs using similar components & technology Contract clauses not adequate w.r.t.

LDs, penalties, Performance guarantees, insuranceInadequate specifications

More time taken for obtaining important clearances, usual time taken for NA use permission is 6 months.

Implies that • Banks/FI s due diligence increases. • Strengthening of security.• Repayment period may have to be extended (beyond 10 years).• Debt funding /leverage may have to be reduced in order to achieve comfortable

DSCRs.

Policy related Barriers

*RPO yet to enforce fulfillment, no clarity in enforcement .*REC mechanism– yet to be fully realized for Solar.

*Focus on installation – VGF funding is more focused towards commissioning of installed capacity , present structure has no incentive for optimum performance over period of loan repayment ( at least).

*Policy environment uncertainty – Recent changes in announced policies in AP,

Suggestions/Challenges *Single window Clearances need to be activated urgently.

*PLF/CUF projections to be realistic considering de-rating and heat & dust losses.

*Condition of substation (downtime) to be critically examined for

LT connected projects.

*EPC Contracts should be structured to give back to back guarantees/warranties to mitigate project risks.

*Strengthening of Project performance.

* Contd./-

*Realistic radiation data to be used (ground data). CWET has set up 51 solar radiation monitoring systems to measure on-ground data.

*Strict compliance of RPO will ensure more projects under REC.

*Exchange of information database on project performance among Banks/ FIs .

*Establishment of online performance database for projects under JNNSM and state policies.

*Establishment of Solar parks to optimize costs.

IREDA Financed Projects

1 MW Solar PV Project, Rajasthan, under RPSSGP

IREDA Financed Projects20 MW Solar PV Project, Rajasthan, under JNNSM batch 2

IREDA Financed Projects5 MW Solar PV Project, Gujarat

Installation

Switchyard

IREDA Financed ProjectsAnother 5 MW Solar PV Project, Kutch Gujarat

Switchyard

Installation

IREDA Financed ProjectsUnder construction 10 MW Solar PV Project, Andhra Pradesh

Installation under progress

Click icon to add picture

* 1 MW Solar PV Project setup in Tamilnadu by M/s Great Shine Holdings Pvt. Ltd. under RPSSGP Scheme of JNNSM

IREDA Financed Projects

IREDA Financed Projects

* 1 MW Solar PV Project setup in Punjab by M/s Soma Enterprises Ltd. under RPSSGP Scheme of JNNSM

Sectors Financed*Wind Hydro *BiomassCogeneration

*Solar Waste to Energy*Energy Efficiency Alternate Fuels

Other Activities Administration of MNRE

programs

IREDA- Operational Areas

Schemes*Project Financing *Equipment Financing *Finance for Equipment Manufacturing

Lending Terms*Loan 70% of Project Cost*Interest 11.50% to 13.75%*Repayment Upto 15 Years*MoratoriumUpto 12 months post commissioning

IREDA’s- Financing Terms

*Govt of Netherlands, 1991 : 18 Million Guilders*World Bank (1st LoC), 1993 : $ 145 Million *DANIDA, 1993 : $ 15 Million *ADB, 1997 : $ 100 Million *KfW, Germany (1st LoC), 1999 : € 61.35 Million*World Bank (2nd LoC), 2001 : $ 110 Million *KfW, Germany(2nd LoC), 2008 : € 50 Million *NORDIC Investment Bank : $ 50 Million *KfW, Germany (3rd LoC) : € 19.9 Million*AfD (1st LoC) : € 70 Million *KfW, Germany (4th LoC) : € 200 Million* JICA (1st LoC) : ¥ 30 Billion

Lines of Credit in Pipeline *AfD 2nd LoC : € 200 Million *ADB 2nd LoC : $ 500 Million

International Partnerships- so far

Cumulative Performance

25

• Loan Sanctions :Rs.18747 Cr• Loan Disbursements :Rs. 9685 Cr• Sanctioned Power Capacity : 6555 MW

As on 31.03.2013

Thank you