presentation risks opportunities solar
TRANSCRIPT
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Risks and Opportunities in securing
Financing Phase I and Phase II
National Solar Energy Summit 2012
Solar Thermal Power14thDecember 2012
Presented By:
Saurabh Kamdar,
Associate Director, CRISIL Infrastructure Advisory
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Agenda
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1 Solar PowerOpportunity & Current Adoption Status3
2 Solar Thermal Technologies..16
3 Solar Thermal - Risks and Funding Trends..21
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Solar PowerOpportunity & Current
adoption status
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Solar Power Development Potential
India receives on an average 4-7
kWh/m2 of solar energy daily with an
average of 250-300 sunny days in ayear
Rajasthan and Gujarat receive maximum
radiation in the range of 66.6 KWh per
square meter
Solar power potential for Indiaaccessed to be >100,000 MWeq
However, capacity additions in
Indian solar industry have been
miniscule as compared to the
additions globally
4
Solar Power Density in India
Solar Installed Capacity - India Value
Grid connected Solar Power (Cumulative Capacity) 1,035 MW
Additions during last year (FY12) 446 MW
Off-grid Solar PV plants (Cumulative Capacity) 85 MW
Solar Water HeatingCollector Area (Cumulative Capacity) 5.63 Mn Sq. m
Source: MNRE (As at June30, 2012)
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Grid connected Installed Solar capacity
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Source: MNRE (As at October, 2012)
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Indian Power Generation Capacities
(As on 31stMarch 2012)
Presently, of Total Installed Capacity in the country Solar forms 0.45%, and it
forms 3% of the Total Renewable Energy Capacity in the country
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Thermal,131,353,
66%
Hydro,38,990,
20%
Nuclear,4,780,
2%
Renewable,24,915,
12%
Total Installed Capacity (MW)
Wind,17,353,
70%
Small
Hydro,3,396,14%
Solar,905, 3%
Biomass,3,225,13%
Installed RenewablePower Capacity (MW)
Source: MNRE
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Solar capacity additions expected to increase
Source: MNRE
Solar power is expected to be ~11% of capacity additions of renewable
capacity additions in XII Plan period (2012-17)
JNNSM is expected to be a major driver for Solar capacity additions
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3.5
10.2
24.9
55
2002 2007 2012 2017P
Cumulative RenewableCapacity in GW
400
200 200
500550
50 200 200 500 550
2012-13 2013-14 2014-15 2015-16 2016-17
Projected Solar CapacityAdditionsJNNSM (MW)
Solar PV Solar Thermal
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Jawaharlal Nehru National Solar Mission (JNNSM)
JNNSM is one of the major initiatives in promotion of solar energy
technologies, Mission aims to achieve grid tariff parity by 2022
JNNSM (Phase 1) - Capacity allocation between SPV and Solar Thermal was
decided to be 50:50.
Solar PV: Selection of PV projects done in two batches of 150 MW and 350 MW over
two financial years of Phase 1 i.e., 2010-2011 and 2011-2012
Solar Thermal: Given the longer gestation period of Solar Thermal Projects, entire
capacity was selected in Batch 1 (2010-2011)
The various phase wise targets set under the NSM are as follows:
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Application Phase I (2010-13) Phase II (2013-17) Phase III (2017-22)
Utility grid power, including roof top 1,100 MW 4,000-10,000 MW 20,000 MWOff Grid Solar Applications 200MW 1000MW 2000MWSolar Collectors 7 million sqm 15 million sqm 20 million sqm
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Various Sale options for Solar
Developers are preferring the PPA route as of now.
Once the REC markets mature and the regulations are put in place to
enforce RPOs, developments based on RECs will also gain traction.
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Utility
NVVN
Exchange
Solar RadiationElectricity
Generation
IPP/ Grid Sales
& Captive
Sales
Solar
Power
Plant
Sale to Utility Bundled Power
Sale through state tariff policy or REC route
(I) FIT + GBI (PPA) (II) APPC + REC (non-PPA)
Merchant Sale
Market Price + REC
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Solar Thermal Projects under development in JNNSM
(Phase 1)
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Sr.
No.Project Name Promoter Location
Capacity
(MW)Technology
Tariff
(Rs./KWh)
1 Rajasthan Sun TechniqueEnergy Private Limited
Reliance Power Jaisalmer,Rajasthan
100 Compact LinearFresnel Reactor
11.97
2Diwakar Solar Projects
Private LimitedLanco Infratech
Jaisalmer,
Rajasthan100 Parabolic Trough 10.49
3KVK Energy Ventures
Private LimitedKVK
Jaisalmer,
Rajasthan100 Parabolic Trough 11.20
4 MEIL Green Power LtdMegha
Engineering &
Infrastructure
Anantapur,
Andhra Pradesh50 Parabolic Trough 11.31
5Aurum Renewable Energy
Private LimitedAurum
Mitrala,
Porbandar,
Gujarat
20Compact Linear
Fresnel Reactor12.19
6 Corporate Ispat Alloys AbhijeetPokaran,
Rajasthan50 Parabolic Trough 12.24
7Godavari Green Energy
Limited
Godawari Power
and Ispat Limited
Jaisalmer,
Rajasthan50 Parabolic Trough 12.20
7 projects for 470 MW selected in December, 2010. Average Tariff Rs. 11.48 per
unit (25% reduction on CERC Tariff)
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Other Solar Thermal Projects under development
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Sr.
No.Project Name Developer Location
Capacity
(MW)Technology
1 Rajasthan Solar One Entegra Rajasthan 10 Parabolic Trough
2 Bap Solar Power Plant Dalmia Cements Rajasthan 10Parabolic Dish
Sterling
3 NTPC Pilot Project NTPC Rajasthan 15 Parabolic Trough
4 Andhra Pradesh Project Sunborne Energy Andhra Pradesh 50 Parabolic Trough
5 Cargo Solar Power GujaratCargo Power &
InfrastructureKutch, Gujarat 25
Parabolic Trough with
Thermal Storage
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Gujarat has been front runner in Solar Power Adoption
First state to launch an independent solar policy in 2009 (operative till 2014)
PPAs of 969 MW signed. The projects allocated through the MOU route with pre-
qualification criteria
Projects of 690 MW commissioned till 30th June, 2012.
High investor confidence being showcased as
More than 1000MW of projects have pre-registered for future allocations
Applications worth 1715 MW received for allocation of 150MW
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Tariffs PV project
(Rs. /kWh)
Thermal projects
(Rs. /kWh)
Projects commissioned before
31.12.10
15 (for first 12 years) 10 (for first 12 years)
5 (from 13thto 25thyear) 3 (from 13thto 25thyear)
Projects commissioned after
31.12.14
12 (for first 12 years) 9 (for first 12 years)
3 (from 13thto 25thyear) 3 (from 13thto 25thyear)
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Other states have also framed their Solar Policies
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Particulars Karnataka Rajasthan Madhya Pradesh Tamil Nadu
Policy instrumentKarnataka Solar Policy,
2011-16
Rajasthan Solar Energy
policy, 2011-2017MP Solar Energy Policy
TN Solar Energy Policy
2012
Target Capacity
200 MW - DISCOMS
upto 2015-16 (40 MW
p.a.)
50 MWSolar
Thermal
100 MW - REC
mechanism
50 MW SPV; 50 MW
ST - DISCOMS
Phase I (upto 2013) -
200MW
Phase II (2013 - 17) -
400MW
200 MW SPV
announced
3000 MW by 2015,
including rooftop
1500 MW utility scale
by 2015
Capacity Cap
SPV : Min 3 MW, Max
10 MW
ST : Min 5 MW
SPV : Min 5 MW, Max
10 MW
ST : Min 5 MW, Max -
50 MW
SPV : Min 5 MW NA
Sale of Energy under
state policy
Reverse bidding
Ceiling tariff :
SPV : INR 14.50 / kWhST : INR 11.35 / kWh
Reverse bidding
Ceiling Tariff :SPV : INR 10.12 / kWh
Reverse bidding
Ceiling Tariff :SPV : INR 15.35 / kWh
Reverse bidding
Ceiling Tariff :SPV : INR 15.35 / kWh
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Way ForwardJNNSM Phase 2
3000 MW capacity to be supported by the Government of India
Bundling with thermal power to the extent the latter is available
Generation Based Incentive
Use of viability gap funding mechanism
Additional 6000 MW is envisaged through Solar RPO requirement
Requirement of solar power capacity by 2017 is estimated to be about 10000 MW
1000 MW off grid solar applications by 2017
15 million square meters solar thermal collector area by 2017
Solar Capacity required to meet Solar RPOs (MW)
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2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
1465 3018 4659 6387 8204 10109
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Solar RPO requirements are expected to provide fillip to
the sector
Solar RPO obligations of these states are higher than installed capacity in
India at present.
Enforcement of RPO obligations will lead to increased demand for solar
power in coming years.
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State RPO Target Target in MW
Gujarat 1.00% 451
Haryana 0.75% 366
Madhya Pradesh 0.60% 166
Rajasthan 0.50% 152
Karnataka 0.25% 87Maharashtra 0.25% 182
Tamil Nadu 0.25% 45
Punjab 0.07% 6
Total 1,455
Solar RPO Targets in selected states (2012-13)
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Solar Thermal Technologies
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Technology for Solar power plants
Solar power generation technologies
can be broadly classified into two
broad categories: Solar Thermal: Thermal power plants
produce electricity by converting the solar
radiation into high temperature heat using
mirrors and reflectors. This energy is used
to heat a working fluid and produce steam.
Steam is then used to rotate a turbine or
power an engine to drive a generator and
produce electricity
Solar Photovoltaic(PV): Photovoltaic
converters are semiconductor devices that
convert part of the incident solar radiation
directly into electrical energy
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Solar Power GenerationTechnologies
Solar Thermal PowerPlants
Parabolic Trough
Solar Tower
Parabolic Dishes Compact Linear Fresnel
Reflectors
Photovoltaic technologies
Wafer-based crystalline-silicon
Thin Films
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Solar Thermal Technologies
Also referred to as CSP (concentrating solar power) technologies for power
generation
Technology Options include
Parabolic Troughs
Compact Linear Fresnel Reflector systems
Central Receivers or Power towers
Paraboloid dish systems
Thermal storage and hybridization with conventional sources are the
biggest strength
Lot of scope for indigenization, local manufacturing and employment
generation
Of the 470 MW of CSP capacity being developed under JNNSM Phase 1
350 MW is using Parabolic Troughs and 120 MW is using Compact Linear Fresnel
Reflector
Inline with global trends as 88% of worlds CSP is being operated using Parabolic
Troughs
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Solar Thermal Technology Options (1/2)
Parabolic Trough
Parabolic troughs focus the sun onto a linear
receiver tubes placed in the trough focal line Gives temperatures up to 400 deg C.
Hot liquid is passed through a series of heat
exchangers to generate steam, and to drive a
turbine
Globally most widely adopted technology
Compact Linear Fresnel Reflector
Similar to parabolic trough however the
parabolic trough sliced into individually tracking
strips of mirrors & installed near ground
Receiver is stationary and does not move with
mirrors as in trough systems thus providing
additional design flexibility
Has advantage of lower production costs and
requires least amount of land per MW capacity
among all solar technologies
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Solar Thermal Technology Options (2/2)
Central Receivers or Power towers
Uses field of mirrors called heliostats that
individually track sun on two axes and redirectsunlight to receiver at the top of a tower
Sunlight is concentrated 6001,000 times, and
achieves working fluid temperatures of 500
800C
Paraboloid dish systems
These systems use series of mirrors arranged
in concave plate to focus light onto a point
Usually a Stirling external combustion engine is
placed at the focal point for collecting heat to
drive pistons by continually expanding andcondensing hydrogen gas
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Solar Thermal -
Risks and Funding Trends
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Solar Thermal ProjectsRisks and Challenges (1/3)
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Some Phase 1 projects encountered imprecise irradiancedata from satellite
Leading to project delays and higher costs because
developers needed to re-design project systems
However reliable DNI data availability is expected in futurewith 51 new stations being set up by C-WET for SolarRadiation Data collection pan India across various states
Limited solar irradiancedata
CSP at early stage of deployment and development in Indiathus carrying higher risk on its applicability and performance
record Lack of trained technicians to build CSP projects: Some
developers have struggled in finding adequately trainedtechnicians with fabrication and welding skills for CSPprojects leading to project delays
Technology Risk &Implementation Record
Escalating prices and limited supplies of heat transfer fluid(HTF) have posed challenges to developers
Several developers have also experienced delays from longlead times for CSP-specific turbines
Supply Chain & Sourcing
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Solar Thermal ProjectsRisks and Challenges (2/3)
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The cost of a parabolic trough CSP plant in India rangesfrom Rs 10.5 crore to Rs 13 crore per MW
Whereas the prices of Solar PV have come down to Rs 10crore per MW
Storage increases the capital cost further but also increaseselectricity generation
Capital Cost Premium
CSP plants require water predominately for cooling and alsofor cleaning similar to thermal plants
Locations suitable for CSP are usually arid regions withshort supply of water
Technology choices to reduce CSPs water demand areavailable, but affect the levelized cost of electricity (up to90% reduction in water consumption possible with 9% rise inelectricity costs)
Water Requirement &Availability
Projects are located in remote areas which are often not well
connected and lacking in adequate infrastructure Under JNNSM the developer is required to put the required
infrastructure (land, water, clearance and evacuation) inplace themselves
Adds to project cost and increases risks of timely completionof projects
Infrastructure Constraints
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Solar Thermal ProjectsLenders Perception & Financing (1/2)
Emerging energy technology Discomfort:
Bankers want to see a CSP project track record in India due to low levels of familiarity
and a discomfort with CSP technology. This can only be resolved when consistentperformance record develops.
Parabolic trough technology deployed in India has been used by more than 80 percent
of international CSP projects with a track record of more than 20 years
Non-recourse project finance:
CSP developers reported securing financing only after parent companies furnishedcorporate guarantees
No CSP plant under the Mission has been financed on a non-recourse basis
Endemic power sector issues affecting CSP investment
Banks approaching power sector lending limits and hence unwilling to increase exposure
to the sector
Poor and worsening financial situation of State Discoms increasing credit risks for
lenders
Even in JNNSM PPAs, the responsibility of payment rests with Discoms (and not NVVN)
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Solar Thermal ProjectsLenders Perception & Financing (2/2)
However, loan syndication broadening lender base for solar projects
When financing CSP projects, banks have typically taken 25 percent of the projects debt
and shared the remaining debt and risk among other participating banks
Leading to involvement of a wide range of banks including Power Finance Corporation,
Bank of Baroda-Dubai, Punjab National Bank, and State Bank of Bikaner and Jaipur
Payment Security Scheme
MNRE introduced an additional payment security scheme for grid connected solar
projects under JNNSM to facilitate financial closure of projects under Phase I
Gross Budgetary Support (GBS) amounting to Rs.486 crore in the event of defaults in
payment by the State Discoms to NVVNL
Introduction of this scheme has mitigated the payment risks perceived by the lenders
considerably
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In Summary.
India has very high solar power potential (>100,000 MWeq) with an average of
250-300 sunny days in a year, which so far has remained largely unutilized
Solar forms only 0.45% of the total Installed Capacity in the country
Of the 1,045 MW of Grid connected solar installed, almost all projects are
using PV technology and are based in Gujarat & Rajasthan
Solar power expected to be ~11% of renewable capacity additions in XII Plan
period with JNNSM expected to be a major driver
470 MW of Solar Thermal Capacities under development in states of
Rajasthan, Gujarat and Andhra Pradesh
Parabolic Trough & Compact Linear Fresnel Reflector technologies being
adopted in India in Phase 1 (JNNSM)
Being new technology, CSP project are subject to various challenges onaccount of performance benchmarks, radiation data reliance, supply chain
issues, infrastructure constrains and Difficulty in Financial Closures
Lenders not open to Non-recourse project finance during Phase 1 due to
unproven track record
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CRIS Credentials
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About CRISIL Infrastructure Advisory*
CRISIL Infrastructure Advisory is
division of CRISIL Risk and
Infrastructure Solutions Limited(CRIS), a wholly owned subsidiary of
CRISIL Ltd.
CRISIL Infrastructure Advisory is
associated with infrastructure
development and investment. We are
present across various infrastructure
sectors.
We are the preferred consultant to
governments and leading
organizations.
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Our Local Presence
Delhi
Ahmedabad
Mumbai
BengaluruChennai
Kolkatta
Hyderabad
Pune
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About CRISIL Infrastructure Advisory
CRISIL Infrastructure Advisory is a professionally managed multi-
disciplinary consultancy firm.
Our offerings span the entire spectrum of activities in infrastructure
development.
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India
Conventional RenewableTransmission Distribution
Coal Oil & GasMinerals
HealthcareGeneration Fuels
Power Natural Resources
St rate gy | Val uati ons | F inanci al Mar kets | PPP Poli cy | Re gul atory | PPP Proje ct
Deep domain knowledge | Strong analytical skills | Independence of opinion
Companies | Equity Investors | Lenders | Governments | Multilateral Agencies
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& Reforms
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Waste
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ment
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A f r i c a | S o u t h - E a s t A s i a | M i d d l e - E a s t
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Key Service Offerings - Power Sector
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Policy Formulation for
Project Structure, PPP,
Fuel Supply/Pricing, Tariff Advise to Regulators for
License, Tariff, and reform
implementation and
planning
Bid Process Management
Project Appraisal
Regulatory and Tariff Filings Power purchase, electrification,
staff, capital investment and
contracts planning
Business Plans & Entry
Strategy
Risks identification,
evaluation & mitigation
plans
Contractual Structuring
Strategic Bid Advisory
Due Diligence & Risk
Analysis
Market assessment &
business intelligence
Project /Portfolio analysis
Valuation
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Select Engagement Spread in Power Sector
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POWER SECTOR ADVISORY
Regulatory and
Policy Advisory
Central and
State Govt. Utilities
Cause 2
Developers Cause 4
Forum of RegulatorsAssessment of tariff (structure,rationalization, and MYT), viability of distribution licensee
Coal India Implementation of NCDP
MNRE Generation based incentive
NVVNPower trading and development of Power
Exchange
DEARisk Management Framework for InfrastructureProjects
NTPC, PGCIL, BHELAppraisal of Capital
investment plans
PFC, REC Policy for Promoter Appraisal of
Private Power Project
Extensive work in Mah, Guj, Chhattisgarh,
Raj, UP, Pun, HP, J&K, TN for Tariff
structuring and Bid Process management
Developers
Tata PowerBid Advisory for Successful award ofMundra UMPP
GMR Market Assessment & Strategy for Power Sale
GVK Escrow abilityStudy for sale of Power
Adhunik Power Finalization of PPA
Indiabulls, Moser Baer, HCC, Essar, Sembcorp
Strategic and Commercial Advisory
Investors
Morgan Stanley, NVP, 3i, Actis, SC TPG
Successful PE Investment in Power Sector
ICICIBank, SCB, BTMU, USEXIMProject and
Sector Assessments
GMR, EMCO, DS ConstructionAcquisition of
majority stake
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CRISIL Risk & Infrastructure Solutions LimitedA Subsidiary of CRISIL Limited, a Standard & Poors Company
www.crisil.com
Mr. Saurabh Kamdar
Associate Director, CRISIL Infrastructure Advisory
Contact Numbers-
Direct: + 91 22 3342 3000 (Board)
Email: [email protected]