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    Solar Power Project Financing

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    fundu567
    The document discusses financing for solar power projects, with the goal of aligning perspectives between bankers, borrowers, and investors. It outlines the agenda, which includes clean energy business models, potential and challenges, risk-reward frameworks, de-risking strategies, and financing options. It notes that additional investment is needed to meet climate goals and outlines the premise of cleantech business growth. Key points of discussion are cleantech investment dilemmas, risk-reward matrices, risk profiling of projects, and emerging financing trends that incorporate more players and innovative structures.

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    © All Rights Reserved
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    Solar Power Project Financing

    Uploaded by

    fundu567
    172 views19 pages
    The document discusses financing for solar power projects, with the goal of aligning perspectives between bankers, borrowers, and investors. It outlines the agenda, which includes clean energy business models, potential and challenges, risk-reward frameworks, de-risking strategies, and financing options. It notes that additional investment is needed to meet climate goals and outlines the premise of cleantech business growth. Key points of discussion are cleantech investment dilemmas, risk-reward matrices, risk profiling of projects, and emerging financing trends that incorporate more players and innovative structures.

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    Solar Power Project Financing

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    The document discusses financing for solar power projects, with the goal of aligning perspectives between bankers, borrowers, and investors. It outlines the agenda, which includes clean energy business models, potential and challenges, risk-reward frameworks, de-risking strategies, and financing options. It notes that additional investment is needed to meet climate goals and outlines the premise of cleantech business growth. Key points of discussion are cleantech investment dilemmas, risk-reward matrices, risk profiling of projects, and emerging financing trends that incorporate more players and innovative structures.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    172 views19 pages

    Solar Power Project Financing

    Uploaded by

    fundu567
    The document discusses financing for solar power projects, with the goal of aligning perspectives between bankers, borrowers, and investors. It outlines the agenda, which includes clean energy business models, potential and challenges, risk-reward frameworks, de-risking strategies, and financing options. It notes that additional investment is needed to meet climate goals and outlines the premise of cleantech business growth. Key points of discussion are cleantech investment dilemmas, risk-reward matrices, risk profiling of projects, and emerging financing trends that incorporate more players and innovative structures.

    Copyright:

    © All Rights Reserved
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    of 19

    Solar Power Project Financing

    Aligning Banker-Borrower- Investor Perspective

    International Conclave on Climate Change


    October 12-14 ,2011
    Hyderabad
    1

    Agenda

    Clean Energy Biz Architecture


    Clean Energy Biz Potential
    Clean Energy Financing Dilemma
    Clean Energy Financing Risk Reward Matrix
    Financing De-Risking Strategy
    Clean Energy Financing Options
    Way Forward

    Global Warning to Global Warming


    Economic Prosperity
    Financial Crisis

    Fuel Crisis

    Energy Security

    Food Crisis

    Food Security
    3

    Clean Tech biz Enablers

    Clean Tech is Main Tech


    Clean Tech Biz- A Growth Path
    BASICS- Low Carbon High Growth Economies

    Cleantech Biz Tri- Angle


    Science case
    Socio economic case
    Asia Energy and GHG Growth
    De-carbonizing Asian Growth

    Political Barriers
    Regulatory barriers
    Early Stage Barriers
    Commercial barriers

    Drivers for Private capital


    Political and
    Regulatory interventions
    Risk Mitigation Interventions
    Early stage project development
    interventions
    Carbon Market interventions

    Cleantech Business Architecture

    Clean Energy

    Wind

    Solar

    Hydro

    Clean Energy
    Infrastructure

    Clean Energy
    W2e

    Bio Gas

    Clean Energy Infra/


    Urban Transport

    Clean Technologies

    Co-generation

    Electric
    Vehicles

    Low Carbon
    Biz

    Energy Efficiency

    CFL
    Street
    Lighting

    Heat
    recovery

    Global additional investment and financial flows of $350 bn


    needed by 2020, just to return to current emission level in
    Technology Transfer/Capex

    Clean Technology

    Fuel Switch

    Bio mass

    Sustainable materials

    Energy Efficiency

    Cleantech Biz Premise


    Cleantech Industry $ 350 bn by 2020
    61% of total emissions contributed by energy production
    sector
    65 % of power generation based on coal and lignite
    Only 8 % in total installed power capacity is renewable
    India can generate 714 GW from Renewable till 2032
    India can generate >- 50 % of its energy needs till 2032
    through RE Power
    50 % RE Power scenario will help us to reduce more than
    2 bn tons of CO2( 2bn CER) every year till the life of the
    projects which has around $ 20 bn USD revenue potential
    through sale of CER
    7

    Cleantech Biz Investment Dilemma

    Cleantech
    Developer

    Cleantech
    Financer/Investor

    Patents selling than Product selling


    Long Time to market cycle ( 15- 20 yrs)
    Scourge of finance capital
    Resistance to change for new clean tech
    Absence of Large scale Technology roll out plan

    Shortening Time to Market Cycle


    Aligning of Tech Developer and Financer goals
    More business driven innovation
    Low cost capital and its efficient use
    More realistic regulations
    Joint Manufacturing initiative
    Cross Licensing technology agreement
    Tariff/Duty Exemption
    Uncertain business outlook
    Risk management of emerging clean
    technologies

    RISK REWARD MATRIX

    Break Through Tech


    Policy in place

    R
    E
    W
    A
    R
    D

    Market Demand

    Medium Tech
    Policy in place
    Market Demand
    Low Tech
    Policy in place
    Market Demand

    LOW ( r & d) MEDIUM( r &D) (R & D)HIGH


    FINANCING RISK
    9

    Banker Borrower Risk Profiling

    Banker/Investor

    Borrower

    Project Performance
    Policy uncertainty/Continuum
    Political Risk
    Technology Risk
    Sponsor Risk
    Construction Risk
    Project Implementation Risk
    Domain competence
    Financial Strength
    Project approval risk
    Offtaker Risk
    Return on Investment
    Project Execution Risk
    Interest rate volatility
    Policy continuum
    Off taker creditworthiness
    Financing Cost
    Project Approval Risk
    Land Acquisition and approval
    R & R issues

    10

    De-Risking Strategy
    Banker

    Borrower

    Limited Recourse
    Balance Sheet Financing
    Escrow Mechanism
    Environmental Rating
    Corporate Guarantee for SPV
    Personal Guarantee
    Technology Performance Guarantee

    Performance Guarantee from Tech supplier


    Generation guarantee
    Insurance cover
    Low Cost capital
    Long term Capital
    Optimum Moratorium
    Long Technology Life cycle
    Long term O & M arrangement
    Project cost overrun and Time over run
    management

    11

    Clean Energy Biz- Finance Model


    Regulatory
    Networking

    IFC
    ILFS
    BVP
    Olympus Capital
    I-Venture

    Clean Energy
    Finance
    Low Carbon PE
    Networking

    And many more


    ;;;;;

    RBI
    MOEF/GOI
    BEEE
    TERI
    MNRE
    CERC

    FIs
    and
    Multilateral
    agencies
    networking

    PFC
    KFW
    ADB
    IIFCL
    ICICI
    IDBI
    STANCHART
    CREDIT SUSSIE
    And many more

    Co-invest

    Co-Finance
    12

    Emerging Financing Trends


    Existing

    Emerging

    Conventional finance
    through Debt and Equity

    Financing through subordinated debt , PE Funds and


    Insurance companies

    Debt through INR Loans

    ECB,
    ECA and Green Credit Lines
    Multilateral Agency funding
    Long Term Patient capital/ Soft Loan

    Limited Exit options for


    Lenders
    Difficult Risk mitigation
    mechanism

    Buy Out Clauses in concession agreement

    Innovative Financial engineering

    13

    Case Study
    Astonfield Renewable India Limited

    14

    Solar Project Finance Key parameters


    Project Finance Mix
    Debt : equity : 70 :30
    Loan Tenure : 2 + 10 year
    Pricing : L + 500 bps

    Capex per MW
    Solar PV- $ 3.5 mn
    Solar CSP - $ 2.75 mn
    OPEX $ 1.4 cents- $ 2 cents
    per KWH

    Solar Project
    Finance

    Project life cycle 25 years


    Traiff Rs 15- 17 per KWH
    Or 25 cents to 40 cents per
    KWH for first 12 years and
    than Rs 5 per kwh from 13th

    year

    Return on Investment
    15 -20 %
    Payback : 5- 7 years
    MDSCR 1.2

    ADSCR 1.3 mn
    Debt/ATNW : 1 Min
    Debt/NCA: 4,5 min

    min

    Solar Project Financing Lenders


    Domestic

    International

    SBI

    JBIC

    IDBI

    IFC

    ICICI Bank

    ADB

    EXIM

    USAID

    IDFC

    WORLD BANK

    IIFCL

    KFW

    PFC

    CREDIT SUSSIE

    ILFS

    HSBC

    IREDA

    STANCHART

    16

    Mainstreaming Clean energy Financing


    Insurance
    company
    Multilateral
    agencies

    Banks

    Integrated
    Clean Energy
    Finance

    Private
    Equity

    Regulator
    Power
    Trading
    Exchange

    17

    Order of the Day- A Triple Bottom-line Approach

    Economical Profit

    Social Profit

    Inclusive
    Growth

    Environmental Profit

    18
    18

    Thank You

    19

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