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AsiaCleanEnergyForum2011
ADB,Manila
AnoopSingh
Dept.ofIndustrialandManagementEngg.,
IndianInstituteofTechnologyKanpur
Kanpur 208016(India)
Email:[email protected]
BusinessModelforFeedintariffs
RE Projects EPC
O & M
Equity
Debt
Feed-in-tariff
Regulatory uncertainty
due to revision of tariffs
CDM
Uncertainty
In the carbon market
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Business
Model
for
RECsAPPC
RE Projects EPC
O & M
Equity
Debt
RECRegistry
REC
Market Based Pricing
with Floor Price Support
CDM
Uncertainty
In the carbon market
BusinessModelofREC&Energy
EfficiencyCertificates
ProjectEnergy Service
Company (ESCO)
EE Project
Funding
Revenue
EE
Benefit
CDM
RegistryEcerts
BEE
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FinancialViabilityandBankabilityofRenewable/CleanEnergyProjects
NetCashFlows=P1*Q1+P2*Q2 C1 C2 C3.
Where,P PriceofOutputs;Q QuantityofOutput
, .
APPC + PREC_min - Feed-in-tariff, projects
should be viable and financeable.
RiskProfileforRECs
RE Project
Natural
Resource
Electricity
RECs
CERs
Other
Inputs
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RiskProfileforEcertsEE Project
Energy
Input
Ecerts
CERs
Product
Output
Other
Inputs
FinancingRenewableEnergyProjects Generall LowTechnolo Risk
Highbutdecliningcosts
RenewableSupportObligation/VoluntaryGreenMarkets
Publicsupportthroughsubsidies,fiscalincentivesandlucrativepriceofelectricity(Feedintariff)
RevenuesfromCleanDevelopmentMechanism
NewsupportschemeslikeRenewableEnergyCertificates
RegulatoryandPolicyStability
RecourseandNonrecourseFinancing
Weatherrisk,predictableintheshortrun.
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FinancingCleanEnergyProjects
Low
Technology
Risk
ModeratetoHighcosts
Ro eo EnergyServiceCompanies
Publicsupportthroughsubsidies,fiscalincentivesandlucrativepriceofelectricity(Feedintariff)
RevenuesfromCleanDevelopmentMechanism
NewsupportschemeslikeEnergySavingCertificates(Whitecertificates/Ecerts)
RegulatoryandPolicyStability
RecourseandNonrecourseFinancing
OutputRisk(productioncut)
Lowenergypricerisk(lowprobability)
ChallengeofMonitoring(leakagepotential)
SourcesofRiskinFinancingRECProjects Chan einAPPC,
riceatwhichelectricit issoldto
localdistributionutility.Predictableinshorttomediumterm.
PriceaswellasQuantityofRECsaleissubjecttomarketrisk.
AbsenceofpenaltyforRPOnoncompliancemakesREC
demanduncertain.
RECsarecappedbyfloorprice(seemshigherintheIndiancontext)
PoorliquidityintheRECsmarket
RegulatoryRisk
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SimranWind RECCaseStudy Simran
WindProjectPrivateLimited,a100%ownedsu si iaryo Tec noE
ectric&EngineeringCompanyLimited.
WindCapacityExpansionfrom50.4MWto126.9MWinMuthianpatti,Amdhapuram
andRastainTamilNadu.
USD15million IFCscorporateequityfinancing
uptoUSD$40millionIFCALoan(12yeartenorwith3
yeargraceperiod).
IFCPost2012CarbonFacilityproposestoforwardpurchase
upto1.75millionCertifiedEmissionReductions(CERs)tobegeneratedthrough2020
atapredeterminedpercentageoftheCERspotpriceatthetimeofdelivery,subjecttoafloorandacap.
Conclusions Marketsarenota anaceainitself.MarketDesi nand
RegulatoryandPolicyEnvironmentsignificantinfluenceriskprofileandriskperception.
MediumlongtermRegulatorycertaintycanimproveappetiteofdomesticlenders.
EnergyEfficiencyCertificateshavegreaterriskandchallengethanREC.
