1. Financing of solar power projects Presentation by Abhilakh singh general Manager ireda
28th July, 2016

2. Power for all
Focus on attaining ‘Power for all’ has accelerated the renewable energy capacity addition in the country.
About 1/4th of the overall capacity addition during has been from renewables and India is now set to become the largest energy market.
As per India Solar Handbook of Bridge to India, India is poised to become the 4th largest solar market in 2016, leaving behind three major solar markets, U.K., Germany and France.
Renewable energy sector in India is now a crucial and significant player in the power generation capacity and it is now supporting the government agenda of sustainable growth

3. Cumulative Deployment from RE Sources
Sector FY
Cumulative Achievements
(as on )
Target 
Achievement 
Wind Power
106.40
Solar Power
559.78
Small Hydro Power
250.00
1.80
Bio-Power
400.00
Waste to Power
10.00
115.08
Total
670.98
Source : MNRE

4. Solar Power Installed Capacity
Total Solar installed capacity in the country is 7568 MW as on

5. Ramping up Targets
By 2022, aiming 175 GW of renewable energy capacity, 90% of which is to come from Solar and Wind Energy.
Aiming to generate 100 GW solar power by 2022, predominantly comprising 40 GW Rooftop and 60 GW through large and medium scale grid connected solar power projects.
With these challenging targets, the country is now operating one of the largest RE capacity expansion programmes in the world, with action-oriented plans and vision.

6. Roadmap to RE-INVEST 2015
With the intent of providing a platform to the global investment community to connect with stakeholders in India, First Renewable Energy Global Investment Promotion Meet & Expo (RE - INVEST) was organized in 2015.
A first of its kind Event at such a massive level, saw participation of 3,000 delegates from 41 countries with more than 200 global investors.
462 global and domestic companies/stakeholders made commitments to set up renewable energy projects aggregating to more than 287 GW, 16 companies also committed to setting up manufacturing facilities of 62 GW. 40 Banks and NBFCs committed to finance over 78.7 GW of renewable energy projects

7. Post RE-INVEST 2015 – Policy initiatives
Suitable amendments to the Electricity Act and Tariff Policy for strong enforcement of Renewable Purchase Obligation (RPO) and for providing Renewable Generation Obligation (RGO);
Setting up of exclusive solar parks; Development of power transmission network through Green Energy Corridor project; Identification of large government complexes/ buildings for rooftop projects;
Provision of roof top solar and 10 percent renewable energy as mandatory under Mission Statement and Guidelines for development of smart cities; Amendments in building bye-laws for mandatory provision of roof top solar for new construction or higher FAR;
Infrastructure status for solar projects;  Raising tax free solar bonds; providing long tenor loans; making roof top solar a part of housing loan by banks/ NHB;
Incorporating measures in Integrated Power Development Scheme (IPDS) for encouraging distribution companies and making net-metering compulsory;
Raising funds from bilateral and international donors as also the Green Climate Fund to achieve the target.

8. Investments in re
Estimated investment in the renewable energy power projects during the last 3 years has been around Rs crores.
Indian Banks and FIs have sanctioned large debt over the last 1 year and around Rs crores have already been disbursed.
MoUs being signed with key countries for investment flow in developing new and renewable energy technologies
RE expected to gain from several announcements in the Budget. Clean Environment Cess at Rs. 400 per ton shall further enhance the funds for promoting renewables and infrastructure associated with it.
RE Sector has been given “Priority Sector Lending” status by Reserve Bank of India (RBI). Banks can extend loans upto a limit of Rs.15 crore to corporate borrowers and upto Rs.10 lakh to individual borrowers for RE projects under priority sector.

9. Financing Requirements
Renewable Energy Scale up plan • MNRE 19
175 GW RE plan entails investment of Approx. Rs 12,00,000 crores
Debt (70%)
(Rs. 8,40,000 Crore)
Equity (30%)
(Rs. 3,60,000 Crore)
Multilateral and Bilateral
NBFCs
Commercial
banks
18000
58000
102000
120000
128000
136000
143000
149000
160000
140000
100000
80000
60000
40000
20000
(p) (p) (p) (p) (p) (p) (p)
Rs. Crore
Annual investment in RE (Rs. Crore)
SHP and Biomass
Wind
Solar

10. Indian Renewable Energy Fund (IREF)
Government proposing to create an Indian Renewable Energy Fund with the fund size of US$ 1 to 1.5 billion for enhancing financing to the renewable energy infrastructure in the country.
IREF, proposed to be set up as an Indian trust, would raise funds to invest in Renewable Energy Projects and associated value chain.
In-principle commitment for USD 315 million has already been made by Anchor Investors.

11. IREDA – A dedicated FI for Renewables
Mini-Ratna “Public Sector FI dedicated for financing renewable energy (RE) projects in India.
Maintaining its leadership position in Renewable Energy space for last 29 years and developing several innovative financial schemes/solutions for meeting the market requirement from time to time.
Enabled the commercialization of Renewable Energy sector in India, resulting in active participation from domestic commercial banks, international funding agencies
As a result of the above, today, several commercial banks and financial institutions are actively financing renewable energy projects.

12. IREDA Financing Highlights
Cumulative Loan Sanctions : Rs crores (As on 30th June, 2016)
Cumulative Loan Disbursements : Rs crores (As on 30th June, 2016)
Supported green capacity addition of more than 6000 MW
IREDA Financing Norms
Parameters
Norms
Maximum Loan Quantum
Upto 70% of the project cost
Upto 75% of project cost in Wind and Solar projects*
Interest Rate
9.90 % %
Repayment Period
Upto 15 years
Moratorium
Upto 1 year
*Subject to meeting minimum conditions

13. IREDA Operations( Rs. in Crores)
Loan Sanctions
Loan Disbursements

14. IREDA : Solar Sector Performance Parameters
Cumulative Sanctions as of June, 2016
Rs Crs.
Installed Capacity of IREDA Funded Projects : MW

15. Financial Services Fund Based Term Loan
Take-out financing from Banks/FIs
Bridge Loan for SDF, Solar VGF, GBI etc.
Securitization of Project Receivables
Short term loan to RE Developers/ Suppliers
Refinance to Banks/ FIs under NCEF Scheme
Line of Credit to NBFCs for lending to RE Projects
Non-Fund Based
Performance Guarantee to RE Suppliers/ Promoters
Underwriting/ Syndication
Program Administrator for Wind & Solar GBI

16. IREDA’s Initiatives in RE Financing
Rooftop Solar Financing Scheme (through Aggregators )
Off grid Solar Financing – Telecom Towers, Solar Pumps.
Scheme for CST
Direct Discounting of GBI for grid interactive Wind and Solar power projects
Direct Discounting of Capital Subsidy payable to channel partners / SNAs for SWHS
To take up the Lead FI Role

17. IREDA’s Initiatives in RE Financing
Credit Enhancement Guarantees
Supplier Credit Guarantees
Comfort Letter against EMDs
Enhancement in quantum of loan – upto 75%
Enhancement of Loan Tenure- Repayment period from years

18. Financing issues Financial Closure not achieved on time
Lack of bankable solar projects particularly under tariff based reverse bidding
Uncertainty of payment by Utilities for long period i.e., 25 years.
Health of DISCOMs for timely payment of power purchased
Non-availability of suitable land for setting up of projects
Delays in obtaining clearances, usual time taken for NA use permission is 6 months
Variations in costs using similar components & technology
Contract clauses not adequate w.r.t. LDs, Penalties, Performance Guarantees, Insurance

19. SUGGESTIONS Single window Clearances need to be activated urgently.
PLF/CUF projections to be realistic considering de-rating and heat & dust losses.
EPC Contracts should be structured to give back to back guarantees/warranties to mitigate project risks.
Strengthening of grid and payment security for PPAs by utilities
Strengthening of Project performance.
Exchange of information database on project performance among Banks/ FIs .

20. Way Forward
Renewable energy is seen as the next big industry, with the potential to transform the trillion dollar energy industry across the world.
Investing in renewable energy would enable India to develop globally competitive industries and technologies that can provide new opportunities for growth and leadership by corporate India.
In addition to increasing share of renewable energy in India’s energy supply mix, India could become a manufacturing hub for renewables.

21. THANK YOU