Financing PV Projects- IREDA’s Achievement

1. Financing PV Projects- IREDA’s Achievement Shri B.V Rao Chief General Manager (Technical) Indian Renewable Energy Development Agency Ltd. Solar Market - 2013 Hotel Crowne Plaza, New Delhi, May 7,2013

2. Solar PV Financing- IREDA’s Experiences and Perspective 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

3. IREDA’s Achievements & Experience

4. As 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 Croreswith 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

5. Suppliers and Services IREDA’s Role -Observations on RPSSGP Scheme EPC Contractors PV Modules

6. IREDA’s Role -Observations on RPSSGP Scheme Performance Trends* * Based on data of minimum 6 months or more for selected projects

7. JNNSM • 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. Policies Scenario

8. 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 projects • UP • 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

9. Technology • Financing • Policy Issues & Barriers

10. 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 . Technology related issues

11. Financial 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, insurance • Inadequate 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. Finance related Challenges

12. 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, Policy related Barriers

13. 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. Suggestions/Challenges

14. 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. Contd./-

15. 1 MW Solar PV Project, Rajasthan, under RPSSGP IREDA Financed Projects

16. 20 MW Solar PV Project, Rajasthan, under JNNSM batch 2 IREDA Financed Projects

17. 5 MW Solar PV Project, Gujarat IREDA Financed Projects Switchyard Installation

18. Another 5 MW Solar PV Project, Kutch Gujarat IREDA Financed Projects Switchyard Installation

19. Under construction 10 MW Solar PV Project, Andhra Pradesh IREDA Financed Projects Installation under progress

20. IREDA Financed Projects • 1 MW Solar PV Project setup in Tamilnadu by M/s Great Shine Holdings Pvt. Ltd. under RPSSGP Scheme of JNNSM

21. IREDA Financed Projects • 1 MW Solar PV Project setup in Punjab by M/s Soma Enterprises Ltd. under RPSSGP Scheme of JNNSM

22. IREDA- Operational Areas Sectors Financed • Wind Hydro • Biomass Cogeneration • Solar Waste to Energy • Energy Efficiency Alternate Fuels Other Activities • Administration of MNRE programs

23. IREDA’s- Financing Terms 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 • Moratorium Upto 12 months post commissioning

24. Govt of Netherlands, 1991 : 18 Million Guilders World Bank (1stLoC), 1993 : $ 145 Million DANIDA, 1993 : $ 15 Million ADB, 1997 : $ 100 Million KfW, Germany (1stLoC), 1999 : € 61.35 Million World Bank (2ndLoC), 2001 : $ 110 Million KfW, Germany(2ndLoC), 2008 : € 50 Million NORDIC Investment Bank : $ 50 Million KfW, Germany (3rdLoC) : € 19.9 Million AfD(1stLoC) : € 70 Million KfW, Germany (4thLoC) : € 200 Million JICA (1stLoC) : ¥ 30 Billion Lines of Credit in Pipeline AfD 2ndLoC : € 200 Million ADB 2ndLoC : $ 500 Million International Partnerships- so far

25. As on 31.03.2013 • Loan Sanctions :Rs.18747 Cr • Loan Disbursements :Rs. 9685 Cr • Sanctioned Power Capacity : 6555 MW Cumulative Performance

26. Thank you