Financing Challenges For Large Ground Mounted Solar Projects 15 September, 2015

YES BANK- Growth Story & Strengths YES BANK- Renewable Energy Partner Solar Project Financing: Criteria Solar Project: Project Issues and Solutions Solar Project Financing: Factors Affecting Fund Flow Experience from Solar Projects Overview of Policies and Programmes - Utility Scale Projects Flow of Presentation

YES BANK Growth Story & Strengths Remarkable Growth Story Pan-India Penetration (June 30,2015) (Branch /ATM Network – 662/1,277) Complete Suite of Financial Products Market Capitalization INR 296 BN Knowledge Banking INR

YES BANK- Strategic Partner Through Project Life Cycle Dedicated Corporate Finance Team Project Advisory Services Long term Project Financing Trade Finance, Working Capital & CMS Services LS & IB Desk Dedicated professional infrastructural financing team - over 150 members Project advisory services including - Pre-bid & Post Bid Long term Project Financing In-house Syndication team, with established relations with domestic/foreign lenders Investment Banking team facilitates raising equity, structured equity-contribution Renewable Energy Expertise RE-INVEST Knowledge Partner First private sector bank to provide Green Energy Commitment (GEC) – to finance 5,000 MW of projects in renewable energy sector in next 5 years. Projects financed across states and across policies First Green Bond issued by a commercial Indian Bank INR 1,000 Crores ; 10 Years Bullet Repayment

Solar Project Financing: Criteria Power Sale Arrangement, Policy Framework (Centre/State) and Strength of Discom Sponsor & Borrower Assessment Approvals and Agreements Solar Module & BOP Quality Financial Assessment of Project ( Project Cost, Energy Yield Assessment, DE ratio, other financial covenant ) Power Evacuation Facilities EPC & O&M Contractor Strength Criteria Important for Developers to build Better Financing Credibility Sponsor Support till Project Stabilization

Solar Finance – Project Issues & Solutions IssueDescriptionSolution Solar Yield Assessment Issues related to availability and reliability of on ground data for long period Financing based on P99 Level; Models incorporating variability Design/ Operational Risk Unsatisfactory PerformanceAppointment of LIE SEB Issues Payment Delays DSRA Payment Security Mechanism Working Capital Technology Risk Changes in Technology Location specific issues PV – Established Choice Pre-approved list of suppliers LIE Review Land Issues Delay in Land AcquisitionPre-Disbursement Condition Evacuation Issues Shut-down due to evacuation constraints Green Corridor Deemed Generation Generation Less than projected generation Liquidated Damages Bank Guarantees Inverter Replacement Capital Expenditure Maintenance Reserves Base Case Projections

Solar Project Financing: Factors Affecting Fund Flow Asset Liability Mismatch Power Sector Limit Approaching Upper Limit (INR 5.77 Trillion~ 61% of Infrastructure Exposure July 24, 2015) Lack of Insurance Products Underdeveloped Bond Market Absence of Robust Credit Enhancement Schemes

Solar Projects: Pitfalls from Experience Delay in Setting Up of Evacuation Facilities Delay in Payments from Discoms Delay in Land Acquisition & Right of Way Related Issues Supplier Performance Solar Assessment Credibility * Visual Size of box is proportional to probability of happening of the related event.

Policies and Programmes - Utility Scale Projects Targeted capacity addition of MW by FY19 under three tranches of 3000 MW, 5000 MW and 7000 MW. Bidding for 3000 MW to be completed by December 31, RFS for 1,000 MW released for projects to be set in solar parks in Andhra Pradesh. Selection of projects based on tariff based bidding process and PPAs will be signed with NTPC. JNNSM Phase II Batch II Targeted capacity addition of 2000 MW in Solar Parks on VGF model ( up to 30% of project cost or Rs. 1.0 Cr/MW for OCR and Rs Cr./MW for DCR whichever is lower). PPA will be signed with SECI at a pre determined tariff of Rs. 5.43/Kwh with an escalating clause (resultant levelized tariff of Rs. 5.79/kwh) JNNSM Phase II Batch III Targeted capacity addition of 20 GW by FY19. States to bear complete responsibility for development and O&M of the solar park. Proposed capacity of 3000 MW under JNNSM Phase II Batch II Tranche I is completely being set in Solar Parks. Solar Park/Ultra Mega Solar Power Projects

Policies and Programmes - Utility Scale Projects Many states have released renewable policies with specific targets for power generation through solar. Few state policy targets include Karnataka 2000 MW by FY21 (existing 104 MW), MP 2654 MW by FY17 (existing 637 MW), Andhra Pradesh 5000 MW by FY19 (existing 228 MW), Telangana 5000 MW by FY19 (existing 83 MW), Punjab 4280 MW by FY22 (existing 239 MW), Maharashtra 7500 MW by FY19 (existing 354 MW). Individual State Solar Policies Green energy corridor project to develop a transmission network dedicated to renewable power characterized by fluctuating generation and un predictability. Estimated fund requirement of INR 43 BN. Interstate capacity to be developed by PGCIL Intra-state capacity to be developed by State Transmission Utilities Dedicated Transmission Corridors SoftBank to invest USD 20 billion in next 10 years to set up solar power parks in India along with Bharti Enterprises and Foxconn. USAID to provide USD 2.7 MN for increasing clean energy access to India KFW sanctioned Rs 515 Cr at concessional rate of interest towards green energy corridor in Andhra Pradesh. Low cost financing with multinational agencies

Policies and Programmes - Utility Scale Projects Exemption from excise duty for solar tempered glass, backsheet and EVA sheet, machinery, equipments etc. required for setting up of solar energy production projects. A 10-year tax holiday for solar power projects. GBI schemes for small solar projects connected to a grid below 33KV. Reduced wheeling charges as compared to those for conventional energy. Special incentives for exports from India in renewable energy technology under renewable sector-specific SEZ. A subsidy of 15% of the project cost for off-grid PV and solar thermal projects. Loans at concessional rates for off-grid applications Other Incentives and Benefits

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