1. DEVELOPMENT OF LARGE SCALE SOLAR ENERGY PROJECTS Seethapathy Chander Chair, Energy Committee Asian Development Bank

2. CONTENTS CONTEXT OF SOLAR ENERGY DEVELOPMENTCONTEXT OF SOLAR ENERGY DEVELOPMENT RISKSRISKS RISK MITIGATIONRISK MITIGATION ADB’S POSSIBLE ROLES AND ASSISTANCEADB’S POSSIBLE ROLES AND ASSISTANCE

3. CONTEXT OF SOLAR ENERGY DEVELOPMENT IN ASIA ENERGY DEMANDENERGY DEMAND –New Demand vs Substitution ACCESS TO ENERGYACCESS TO ENERGY –Supply to Remote Locations ENERGY SECURITYENERGY SECURITY –Relative Costs of Grid Connected Energy –Access to Hydrocarbons LOAD DEMAND CHARACTERISTICSLOAD DEMAND CHARACTERISTICS –Increasing Cooling and Charging Loads Due to Increasing Affluence and Industrialization

4. RISKS RISKSRISKS –Sponsor Risks Land Acquisition, Offtake ArrangementsLand Acquisition, Offtake Arrangements Offtake CreditworthinessOfftake Creditworthiness RegulatoryRegulatory Specification RisksSpecification Risks –Government Risks Public Acceptability – Costs, Procurement Method, SubsidiesPublic Acceptability – Costs, Procurement Method, Subsidies Land, Transmission, Water UseLand, Transmission, Water Use –Financier Risks Overall ProjectOverall Project

5. RISK MITIGATION LAND ACQUISITIONLAND ACQUISITION –Best done by Governments –Ensures Specificity of Purpose –Greater Acceptibility by Public –Saves Time OFFTAKE ARRANGEMENTSOFFTAKE ARRANGEMENTS –Can be Done by Sponsor, But More Efficient if Done by Government/ Purchasing Utility

6. RISK MITIGATION SPECIFICATION RISKSSPECIFICATION RISKS Need to Specify Insolation Levels to Optimize Site and Obtain Competitive ProposalsNeed to Specify Insolation Levels to Optimize Site and Obtain Competitive Proposals However, Long Term Quality Survey Data Not Available in DMCsHowever, Long Term Quality Survey Data Not Available in DMCs Crucial for Project Economics, Especially During the First Few YearsCrucial for Project Economics, Especially During the First Few Years Could be Mitigated Through a Guarantee That Pays Sponsor the Difference Between Specified and Actual For (say) First Five Years of Commercial OperationsCould be Mitigated Through a Guarantee That Pays Sponsor the Difference Between Specified and Actual For (say) First Five Years of Commercial Operations Guarantor Could Be Government orGuarantor Could Be Government or Independent Entity Independent Entity

7. RISK MITIGATION PUBLIC ACCEPTIBILITYPUBLIC ACCEPTIBILITY –Current Higher Costs Need to be Explained in Terms of Lower Future Costs –Energy Security –Sharing of Burden Between Regions, Countries –Competitive and Transparent Procurement –Subsidies/ Grants need to be Time Based, Targeted and Explicit

8. POSSIBLE ADB SUPPORT PUBLIC SECTOR/ GOVERNMENTPUBLIC SECTOR/ GOVERNMENT –Preparatory Activities –Bid Documentation –Offtake Arrangements –Assistance for Regulatory Reforms –Evaluation of Proposals –Contract Negotiations

9. POSSIBLE ADB SUPPORT PRIVATE SECTORPRIVATE SECTOR –Small Equity –Long Term Debt –Specification Risk Guarantee –Political Risk Guarantee

10. THANK YOU