100 MW CSP Project, Rajasthan, India

Nearest town: Pokaran (18 km)Nearest highway : NH 114(Jodhpur-Jaisalmer) Nearest airport : Jodhpur (170 km)Nearest rail station: Pokaran

Nearest town: Pokaran (18 km)Nearest highway : NH 114(Jodhpur-Jaisalmer) Nearest airport : Jodhpur (170 km)Nearest rail station: Pokaran

CSP Location in India

Rationale for CSP Investments

Policy SupportPolicy Support• Preferential Tariffs

• Long term PPAs with creditworthy entity

• Preferential Tariffs

• Long term PPAs with creditworthy entity

Market LeadershipMarket Leadership• First Mover advantage

• Long term development plans drive down costs

• First Mover advantage

• Long term development plans drive down costs

Technology ImprovementsTechnology 

Improvements• Technology  still evolving – improved PLFs to drive down cost of generation 

• Storage potential as a likely upside

• Technology  still evolving – improved PLFs to drive down cost of generation 

• Storage potential as a likely upside

Base load generationBase load generation • With storage solutions, CSP has potential  to serve as base loan generation  • With storage solutions, CSP has potential  to serve as base loan generation  

Regulatory Support Coupled with Long Term Strategies Drive Investments

Financing Structure

Complex financing structure for CSP Projects – Essential for Project Viability and Promoting Clean Energy

• Typical Thermal Power Project Financing includes• Debt financing of around 70% from local banks and financial institutions• Remaining financing through Equity

• A solar CSP financing structure includes• Senior debt tranches of around 70% from

• ECA – from countries where equipment is being supplied• DFIs – Development Financial Institutions across globe including multilaterals,

Climate Change funds, Governments• A small portion through local banks

• Subordinate debt tranche of 5-10% from Development Financial Institutions / Infrastructure Debt Funds

• Remaining 20-25% equity from Sponsor

CSP Project Stakeholders

EPC Contractor

EPC         Contract

ProjectCo

Project SponsorProject Sponsor

Lenders PPA

Loan Agreement

100% Equity

NVVN

State Government

Land Lease Agreement

State TransCo

Grid Connectivity

MNRE

Regulatory Support

EPC Contractor

O&M Contract

• Solar Resource • DNI estimation uncertainties• Availability of large land parcels with optimum DNI

• Technology and EPC Experience• No precedence of proven technology in the country• Lack of experienced EPC partners with local experience

• Limited in-house operations experience• Lack of experienced manpower in the country

• Long term water availability

Key Risks and Challenges in Financing CSP

Challenges get compounded for a new CLFR technology

Risk Allocation Among Project Stakeholders

EPC Contractor

ProjectCo

Project SponsorProject Sponsor

Lenders 

• Technology• Robust performance guarantees with BG

• Operations• O&M agmt. with availability commitment

• Solar Resource• Ground measurement, P90 estimate

• Water• Long term supply agmt. from govt

Optimum Risk Allocation Required for Attractive Financing

Solar resourceSolar 

resource TechnologyTechnology O&MO&M OfftakeOfftake Supply & InstallationSupply & Installation

Inter‐connection

Inter‐connection WaterWater FXFX

Project EPC Contractor

O&M Contractor

Central government

EPC contractor

State government

State government

Project

Technology provider

State government

EPC sub-contractors

Consumers

Central government

Provides resource data to all bidders

Risk Allocation – the intention

Hedging arrangements

Solar resourceSolar 

resource TechnologyTechnology O&MO&M OfftakeOfftake Supply & InstallationSupply & Installation

Inter‐connection

Inter‐connection WaterWater FXFX

Project EPC Contractor

O&M Contractor

Central government

EPC contractor

State government

State government

Sponsor

Technology provider

State government

EPC sub-contractors

Consumers

Central government

Ground data at all project sites is ~10-15% lower than provided by govt.

Risk Allocation – the reality

Reluctance to increase retail tariffs

Local supply chain takes time to establish.

Poor finances of state discoms

Project

To avoid delays, project builds its own 35km transmission line.

Design changes to suit local conditions

Severe delays on water connection

Hedging costs increase given INR depreciation

• Availability of DFI capital crucial for CSP development• Attractive rates make project viable

• Provision of sub debt by DFIs to encourage new technology development• Helps in sharing new technology risks and improving developer returns

• Extended Moratorium for new technology projects• Organization for Economic Co-operation and Development (OECD) Guidelines

generally restrict moratorium period to 6 months• New technology needs time for fine tuning and optimization post COD, hence a

moratorium of 24 months should be considered for CSP technology based projects

• Provision of interest and currency hedging facilities by DFIs• Countries such as India has limited longer team hedging options• Bilateral ties between DFIs and Government to carve out local currency limits

Key Financing Enablers for Future CSP Development

Role of Public Finance Crucial for CSP Development

Thank you!

Sachin PatelFounder Partner, Saathwic Capital Advisors LLPEmail: spatel@saathwiccapital.comTel: +91 74982 57591

Aniruddha PatilSenior Investment Specialist, Asian Development BankEmail: apatil@adb.orgTel: +6326831836