SANTOSH KUMAR SAHU DIRECTOR (Finance) OHPC

CONCEPT VISUALIZED BY

ENERGY SECURITY & SUSTAINABLE SOLAR POWER

Santosh Kumar Sahu Director (Finance), OHPC Ltd.

Solar Radiation over India

What can be done to put Electricity

Distribution Sector on a fiscally

sustainable path and bring

investment in distribution, to provide

Energy security with intense of

political pressure to supply

quality power cheaply and provision

of access of Electricity to all ?

Answer

Engineered Finance and Finance

Engineering to be done for Cheaper

and Quality Power

SILICON

S - Solar

I - Incredible

L - Laboratory

I - Indian

C - Cost

O - Operational

N – Nominal

(Incredible Indian Solar Laboratory with Nominal Operational Cost)

(C) SOLAR

PRICING OF SOLAR

Selecting Right Site with higher CUF for Solar

Development of Mega Solar Park with Evacuation

Selecting the Right Technology, Module and

Cell and other Equipment like Inverter,

Transformer etc.

Use of Balance unused land of existing Factories, Dam Sites,

Institutions, Railway, Airport etc

Manufacturing of Mega PV Modules for use of floating Solar

Panel in the Reservoir. R&D from Silicon to Electricity.

Capacity Building of Professional Maintenance Contractor

Use of Roof Top Solar

Regulation for Net Metering arrangement in

Roof Top Solar

Land Identification of Non-Agricultural/ Non-Forest Land

Lease hold Land for 25 Years

Un-Used Land of Factory/ Airport/Railway/Institution

Depleted Mines

Ownership / JV with Land Owner / Rooftop

Sourcing of Finance 75% investment from India

25% from Outsource/ FDI/ECB

Public Financing

Pension/ Gratuity Fund

Debt /Equity

Equity Capital Investment

NCEF Utilization/ Coal Cess

International Bond Market

Tax Free Bond 54 EC/ Infrastructure Bond

Subsidy

Capital Subsidy

Revenue Subsidy

GBI

VGF

Financing Issues

Bankable DPR

Standard Bidding Documents

Buyer ? Long Term PPAs

Declaration of Renewable as Priority Sector like Agriculture

Revision of Banking Sectoral Cap

RBI Approval for Re-Engineering of Power Sector Cap

Long Term Loan – Tenure of Loan 20 years

Risk Management through Insurance

Collateral Security

Servicing of Bonds

Re-Payment of Loans

Concessional Interest / Reduction in Cost of Financing

Securitization/ Solar On lease (USA)

Project Finance Lease (Japan)

Guarantee Mechanism / BG/FIG/CG/Comfort Letter

Comfort Mechanism

Other Issues

Green Corridor and maintenance of the same

Bundling of Dirty Power with Clean Power

Energy Security

Payment Mechanism / TRA/Escrow

Collaborative Efforts

Consistency / Commitment of Regulator

Use of National Clean Fund to balance Hedging Cost

Guarantee of Module, Inverter, Transformer and Cell

Insurance during O&M Period

Open Access/Wheeling Charge

Logistic/ Rail

Scheduling/Deviation mechanism

Capacity Building for O&M

Support from Govt

Renewable Policy

Incentive Policy of Govt.

Allocation of Land

Signing of PPAs

Acceptance of Feed in Tariff for a fixed period/

Bid Price

Appointment of Task Force

Savings for Country

Saving Of Subsidy in Kerosene

Enhancement of GDP by using Solar Pumps

CONCERNS

Enforcement of RPO/RGO

Enforcement for purchase of REC.

Who is to buy?

Continuation of Income Tax Relief.

Exemption from Clearances and easy doing Business

Green Corridor and its Allocation of Maint. Cost

Uniform Pricing

Source of Debt (70%) to be collected from Tax saving Infra Structure

Bond (7.5%) ( i,.e Investor can invest at 7.5% Tax free Bond) = 11.34%

0.5% Charges to Funding Agency like IREDA

Working Capital Interest rate at 0.5% over TDR

Charging of Up front fees to Borrower to balance the Arranger Cost

Pool Borrowing by IREDA from Foreign Agency

CONCERNS

Favorable FDI Policy – 100% under automatic route

Home Loans to include Roof Top Solar

Continuance of Accelerated Depreciation

CUSTOM DUTY / EXCISE/ VAT Exemptions

Advise to RBI for simpler Hedging formulae to take care the FERV.

Any Shortfall / Excess in Hedging and FERV to Budget Provision.

Enhancement of Domestic Manufacturing

Project Life Cycle Cost is yet to be Established.

Funding Option

Debt Instruments

NBFCs

Commercial Banks

ECB

Exim Bank Finance

Suppliers Credit

Construction Finance

Re-Finance

Lease Financing

Equity

Pvt Equity

Venture Capital

RE Challenges

High Cost Debts

Low Availability Of Debt

Low Familiarity of Banks in RE Sector

Restriction in Foreign Borrowings

Under Developed Bond Market

Risk in Equity

Grid Parity

Weak Discoms

Inconsistency in Regulation

Sensitive Analysis of Solar Cost in India

Size Of plant (MW) Debt : Equity

Post Tax RoE %

Interest Rate %

Depreciation %

O&M (Lakh/MW upto 10 year with Esc-

6% from 11th year)

Interest Rate on WC %

Capacity Utilisation Factor (%)

Capital Cost

/Cr/MW Tariff /Rs /

kWh

20 70:30 15 11 4.5 7 9 18 7 6.43

20 70:30 16 11 4.5 7 9 18 7 6.56

20 70:30 15 12 4.5 7 9 18 7 6.58

20 70 :30 15 11 5.83 7 9 18 7 6.62

20 70:30 15 11 4.5 8 9 18 7 6.50

20 70:30 15 11 4.5 7 8 18 7 6.41

20 70:30 15 11 4.5 7 9 19 7 6.09

20 70 :30 15 11 4.5 7 9 18 8 7.26

20 70 :30 15 11 4.5 7 9 17 7 6.79

20 70 :30 15 11 4.5 7 9 20 7 5.79

20 75 :25 20 8 4.5 7 9 17 7 7.17

20 75 :25 20 8 4.5 7 9 20 7 6.11

APPOINTMENT OF REGULATOR FOR LENDING AGENCY IN

POWER SECTOR

Regulation for Lending Agencies

for fixation of margin like trading

of Power being 70% of Capital is

invested by them in the project.

Relaxation in Allowing Generation, Transmission & Wire Business to

avail External Commercial Borrowing and FDI

Arrangement of Inter Ministry meeting for liberalization of Hedging

in case of Foreign Borrowings or Foreign Contracts

Allowing cheaper FIG (Financial Institution Guarantee) instead of

Bank Guarantee (BG)

PROPOSED REGULATOR FOR

LENDING AGENCY

ENDLESS ENERGY NEVER END