1. 16th Renewable Energy Summit
Unlocking Decentralized Renewable Energy Potential
16th Renewable Energy Summit
October 2016

2. We are morphing into a future where DRE sources are becoming a part of the mix. Capital and Sops skewed towards larger generation
Tax free bonds
Long term loans
Subsidized fuel linkages
Guarantees
Coal power
Hydro-power
Nuclear power
Large industry
Generation Grid
For capital to flow into DRE, the terms need to be similar (or more lucrative) to that of other electrification segments
20 years Power Purchase Agreements
Assured Feed-in Tariff
Directive to banks to lend
Distribution Grid
Rural customers
City/ town customers
Commercial customers
Industry customers
Solar farms
Wind farms

3. Future necessitates a smart infrastructure and innovative financing
Imperatives
175 GW Renewable (incl. 40 GW rooftop) targets as part of India’s INDC
20 million households injecting energy into the grid is going to make the grid different and complex
Electric Mobility Mission, which targets 6-7 million electric vehicles on the roads by 2022
100 Smart Cities initiative
Consequently Grid changing
Role and implications of storage (non-utility scale vs. utility solutions); Hybrid Inverters
Large scale footprint of bi-directional distribution system
Advanced Metering Infrastructure
Building blocks
National Smart Grid Mission (lessons from the initial pilots): Universal access; < 10% AT&C losses
FOR led ‘model’ Smart Grid Regulation: early states – Assam, Karnataka
smart grid ‘cells’
time of use tariff regime
demand response and mandatory rooftop generation for large customers
National Standard for Smart Meters: 100 million smart meter rollout over the next 5-7 years

4. Financing Outlook for DRE
DRE is like other infrastructure
Needs long term and low-cost capital to attract ESCOs and more equity participants
Debt is needed but not adequately available at the terms that align best to the needs of the segment
Capital is there that can potentially be interested in DRE
Capital competing with other opportunities
Mainstream has shown interest in debt refinancing: provides a key to crowd-in capital
For DRE to become an option: the market needs to reach a critical mass of installations
This presents a conundrum – critical mass will only be built, if there is investment capital and ESCO interest, while the interest will only pour in, once there is a certain critical mass on ground
Market creation mind-set required to break the conundrum
Blending needed to lower cost of capital (just like in other infrastructure)
Significant interest amongst some key global catalysts to shape integrated blended facilities
Financing and operation cannot be de-linked
Adapting debt products: Outlook of sub-scale Project Finance

5. Document data-flows on operational parameters (create evidence)
Domestic financing capacity needed in form of market maker vehicles: infrastructure project finance outlook to enable match-up with project cash flows
Co-developer philosophy for “risk managed fund deployment”
Co – develop business / projects with (small/ early stage) borrowers
Identify assets and investments with challenge in access to finance due to over-pricing of operational risk
Leverage operational insight and prior data collected: bringing a project finance outlook
Document data-flows on operational parameters (create evidence)
Evidence leading to lowering of risk perception and causing newer investors to come in over time

6. Public-Private Linkages should focus on:
Addressing Risk and enabling a strong domestic debt market
Pooling of capital into specialist DRE financing intermediaries
Credit Enhancement Pools /First Loss Default Guarantees
Pre-requisites
Unit level economics
Performance and Standards
Project development approach a key differentiator (role of M&V)
Currency Hedges and Partial Insurance support
Refinancing of Operational Projects

7. cKinetics
New Delhi • Palo Alto