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B.V. RaoGM,IREDA

b.v.rao@ireda.in

21st September 2010, Hotel Lalit, New Delhi

Conference on Solar Energy

Institutional Finance for Solar Projects

mailto:b.v.rao@ireda.inmailto:b.v.rao@ireda.inmailto:b.v.rao@ireda.in

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JNNSM- Mission Objectives

To establish India as a global leader in solar energy, by creating

the policy conditions for its diffusion across the country.

Mission anticipates achieving grid parity by 2022 and paritywill coal based thermal power by 2030.

To adopt a 3-phase approach from 2010 to 2022.

Aim of the mission is to focus on setting up an enabling environmentfor solar technology both at centralized and decentralized level.

Jawaharlal Nehru National Solar Mission has been launched under

the National action Plan on Climate Change with an objective:

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Mission Targets

Application Segment Phase - I Phase-II Phase- III

2010-13 2013-17 2017-22

Utility grid power 1,000-2,000 MW 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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Mission Strategy

To create necessary environment to attract industry and projectdevelopers for investment in power generation, manufacturing.

To work closely with State governments, regulators, power utilitiesand local self government bodies.

To attract banks and financial institutions to provide necessaryfinance for setting up solar power projects for grid/ off-grid.

To promote off-grid solar applications to meet light and powerrequirements of energy poor by provision of low cost credit throughre-finance facility from IREDA

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Policy & Regulatory framework

Solar Power Purchase Obligation

Solar specific RE Certificates

Incentivizing through NTPC Vidyut Vyapar Nigam Ltd. (NVVN) for setting upof large solar power plants.

Designated as nodal agency for entering into PPA with Solar PowerDevelopers.

MoP allocating equivalent amount of MW to NVVN.

Sale of power as per CERC regulations (to provide Generation Basedincentive)

Rooftop solar PV and other small power plants connected to LT/11 KV gridwith a remunerative feed-in tariff ( routed through IREDA)

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Fiscal Incentives

Custom duties and excise duties concession/ exemptionson

Specific capital equipment

Critical materials components

Project imports

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Solar-Manufacturing

To establish low cost, high quality manufacturing facilityfor solar PV with the targets of 4-5 GW by 2020.

To provide incentives to establish SEZ for solarmanufacturing parks.

To provide soft loans for technology up gradation andworking capital through re-finance facility from IREDA.

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Financing the Mission Activities

Fund Sources

To provide budgetary support for the activities

To access International Funds under the UNFCCC framework

Fund requirement for Phase II

Review of progress achieved at the end of 11th Plan Analysis of the efficacy of the model adopted

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Research and Development

To set up a solar research council to guide the overalltechnology development strategy

To establish a national centre of excellence to implementthe plans formulated by the council.

Main tasks will be testing and certification, developingstandards and specifications, networking among differentresearch institutions.

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Fund Requirements

First stage Second Stage

A Grid Connected

Power Plants

1,100 MW 20,000 MW

Approximately Rs. 16500

crores

Approximately Rs. 3,00,000

crores

B Off-Grid

Applications

200 MW 2,000 MW

Rs. 5,000 crores Rs. 50000 crores

C Solar Thermal

collectors

7 million meter square 20 million meter square

Rs. 7000 crores Rs. 20,000 crores

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Status of Grid Solar Power-ISmall Power Plants up to 2 MW

Projects for 120 MW shortlisted.

Projects up to 100 MW capacity where PPA signed andregistered with IREDA, are finalized.

Compliance to technical standards mandatory.

GBI will be given to DISCOMs on reimbursement basis.

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Status of Grid Solar Power-IIPower Plants above 5 MW capacity

1,000 MW Capacity allocation between SPV and ST to be 50:50 by

NVVN.

84 MW capacity projects (54 PV & 30 Thermal) allocated underMigration

Selection of PV projects to be done in two batches.

First Batch in 2010 and limited to 150 MWp.

Second batch next year of approximately 300 MWp

Solar Thermal : selection for 470 MW to be done in 2010.

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Funding of Off-grid Solar Applications

(SPV and ST) 200 MW capacity in the first phase

Demand driven expansion

SPV

30% subsidy & loan @ 5% for individuals & non commercial

30% subsidy OR loan @ 5% for commercial

SPV

30% subsidy & loan @ 5% for individuals, non commercial &

commercial

90% subsidy for Government projects in special category States and

in other remote and difficult areas

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Channelization of Funds for Off-grid Solar

Applications

Funding under scheme Project mode.

Directly by MNRE (approved by PAC)

Scheduled commercial banks, NBFCs, FIs such as NABARD,

NHB, SIDBI, IREDA etc.

Additional channels for supply and maintenance (RESCOs,Financial Integrators, System Integrators, MFIs, Government

agencies etc.)

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Channelization of Funds for Off-grid Solar

Applications

Accreditation

Performance Monitoring

Refinancing

MoU signed by IREDA with NABARD, NHB and Central

Bank of India.

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About IREDA

ObjectiveExtend financial support to Renewable Energy,

Energy Efficiency & Conservation projects.

Sectors being financed: Wind Small & Medium Hydro Biomass Power & Cogeneration Solar Waste to Energy

EE & Conservation Bio Fuels/ Alternate Fuels

Other Activities Intermediary for providing financing facilities for various MNRE Schemes. Implementing Agency for GBI Scheme Wind & Solar

http://www.clubofpioneers.com/media/user/11/w360/australien_gluehbirne.jpghttp://www.originenergy.com.au/files/ClydeHydroPowerStation_update3.jpghttp://images.google.co.in/imgres?imgurl=http://www.tfot.info/upload/items_icons/Repower-5M-wind-turbine_large.jpg&imgrefurl=http://thefutureofthings.com/pod/1096/repower-5m-largest-wind-turbine.html&h=768&w=1024&sz=136&hl=en&start=52&usg=__iOWpjRaGa8icIpBm94AMDxzLu_0=&tbnid=-1Ja7LeX2l_NdM:&tbnh=113&tbnw=150&prev=/images%3Fq%3Dwind%2Bturbine%26start%3D40%26gbv%3D2%26ndsp%3D20%26hl%3Den%26sa%3DN

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Financing Schemes

Quantum of Assistance - Upto 70% of Project Cost

Rate of Interest - 9.75% to 12.25%

Repayment Period - Upto 13 Years

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Financing terms for different sectors

Sector Interest Rate range

(%) p.a.

Maximum Repayment

period (years)

Small Hydro (up to 25 MW) 11.50% to 12.15% 10

Hydro above 25 MW 11.50% to 12.15% 15

Wind Energy 10.50% to 11.40% 10

Biomass Co-generation 10.50% to 11.40% 10

Biomass Power Generation 10.50% to 11.40% 10

Solar PV/ Solar Thermal Grid

connected Power Projects

10.75% to 11.75% 10

Energy Conservation 10.25% to 12.25% 10

Energy Efficiency Projects 10.25% to 12.25% 8

Waste to Energy 12.25% 10

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Cumulative Performance

No of Projects Sanctioned : 1921 Projects

Total Loan Sanctions : Rs. 121794 Mn

Loan Disbursements : Rs. 66440 Mn Sanctioned Power Capacity : 4378 MW

Commissioned Capacity : 2173 MW

Conventional Fuel Replacement :1.3 M MTCR/Yr

As on 31.3.2010

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Role of IREDA under JNNSM

Type of system Role of IREDA

Grid connected power projects

Financing of ProjectsSmall solar power projects and roof

top systems

Financing of Projects

Generation Based Incentive

Monitoring

Off- grid applications

Soft loans through banks by re-financing Monitoring of the systems

Solar thermal sector- SWHS Administration of Interest subsidy

scheme through banks / financial

institutions

Funding of projectsFunding through intermediaries

Solar Manufacturing Soft loans

Working capital

Re-financing facility as per MNRE

k b

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Risk Factors perceived by FIsFor Financing Solar Power Projects

Regulatory Risk Fixing of the tariff and assurance on the power saleagreement

Technology Risk Technology yet to be proven on the ground

Implementation Risk Uncertainties in the implementation of the project as

per scheduleInfrastructure Risk Inadequate evacuation facility and clearances on land

and other statutory clearances.

Repayment Risk Non assurance of repayment from the utilities may

result in repayment risk to the developers/ FIs.

Political Risk Changes in fixing of unallocated power with respect to

change in political system.

Policy Risk Assurance of long term policy with greater accuracy

and uncertainties in development of the solar sector.

Ri k F t i d b FI

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Risk Factors perceived by FIsFor Financing Solar Power Projects

Financial Risk

In time financial closure by the project developer.High project cost - funding from single source .

Raising of equity

Guarantee and Warranty

Risk

Availability of long term guarantee and warranty from

the technology providers for the new technology.

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Suggested Measures for Risk Mitigation

Advocation for long term / stable/ consistent policies at central/ state level- to honor PPAs and MoUs.

Proper Resource assessment studies.

Provision of Risk Guarantee Fund.

Importance of timely clearances / approvals for solar projects.

To create special single window clearance cell at state level.

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Suggested Measures for Risk Mitigation

To take advance actions to avoid delay of deliveries.

To increase manufacturing capacity for indegenious cells/modules .

To establish a mechanism to have information exchange betweenvarious FIs and banks for co-financing or consortium financing.

Detailed site survey reports to be undertaken throughprofessional bodies to maximize performance efficiencies.

To establish more training institutions for producing skilledmanpower.

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Suggested Measures for Risk Mitigation

Concurrent monitoring of projects by FIs - appointment oflenders engineers.

Periodic inspection / monitoring of projects even afterimplementation. (TRA and Generation data)

Innovative financing models by accessing low cost funds from

international institutions.

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Thank youIndian Renewable Energy Development Agency Limited