1. Solar Market in India, 2012 “Key risks and challenges associated with solar projects” 29 th August, 2012

2. About IREDA Established in 1987 as a Public limited Government Company under the Companies Act, 1956 Promotes, develops and extends financial assistance for RE and Energy Efficiency/Conservation Projects. Mission : “Be a pioneering, participant friendly and competitive institution for financing and promoting self-sustaining investment in energy generation from Renewable Sources, Energy Efficiency and Environmental Technologies for sustainable development.” Motto is “Energy for Ever.”

3. IREDA’s Role  As a financing institution  Financed 15 projects - JNNSM, Gujarat Policy, RPSSGP & GBI scheme of MNRE of a total capacity of 60 MW out of which 13 have been commissioned.  Acted as Programme Administrator for RPSSGP projects.  Out of the total 78 projects (98.05 MW) under RPSSGP, 65 (81.55 MW) commissioned  PLF 17-20%  GBI routed through IREDA for various schemes like RPSSGP/GBI Scheme of MNRE

4. Key Growth Drivers for Solar in India Shortage Access RadiationSecurity Climate Change Demand In next 12 years India’s electricity requirement to grow 2.5 times Climate Change is also an important issue India is dependent on oil imports for 80% of its demand, increase in conventional energy prices by 8-10% in last 6 months 400 Million people still without access to electricity Electricity shortage estimated at 25-35 GW, likely to increase to 100 TWh by 2017 High radiation available 4-6kWh per sq. m per day

5. Enabling Policies/Schemes The Electricity Act, 2003 – SERCs to specify RPOs The Tariff Policy, 2006 – setting solar specific RPOs for states Amendment in Tariff Policy, January 2011 – SERCs to specify a min. percentage of solar power to be purchased by discoms – upto 0.25% by end 2012-13 and up to 3% by 2022 National Action Plan on Climate Change (NAPCC) – RE electricity injection into grid to be 5% starting from 2009-10 and to increase 1% every year to achieve 15% at the end of 2019-20 Jawaharlal Nehru National Solar Mission (JNNSM) – Migration Scheme, New projects scheme, RPSSGP etc. State Solar Policies – Gujarat, Rajasthan, Karnataka etc., Gujarat being the 1 st one to notify solar policy in 2009 i.e. before launch of JNNSM Solar Specific Renewable Purchase Obligation (RPO) – 26 states have their RPOs in place Solar specific RECs – 1st solar REC already issued to M&B Switchgear

6. Contd./- Various states gearing up and introducing their solar policies CERC - comprehensive tariff regulations for RE based power CERC has waived interstate transmission charges and losses for entire life of solar projects commissioned in 2012-13. For under or over-generation, the developer is not liable to pay or receive any unscheduled interchange charges

7. 7 JNNSM Road Map Application SegmentTarget for Phase I (2010-13) Cumulative Target for Phase 2 (2013-17) Cumulative Target for Phase 3 (2017-22) Grid solar power (large plants, roof top & distribution grid plants) 1,100 MW4,000 - 10,000 MW 20,000 MW Off-grid solar applications200 MW1,000 MW2,000 MW Solar Thermal Collectors (SWHs, solar cooking/cooling, Industrial process heat applications etc.) 7 million sq. meters 15 million sq. meters 20 million sq. meters Solar Lighting System5 million10 million20 million

8. Growth in Solar Installations, Manufacturing

9. Current status of JNNSM Phase-I Scheme / TechnologyProjects allotted (no.) Capacity (MW) Projects commissioned (no.) Capacity (MW) Batch I Large scale PV28*140.0025125.00 Migration scheme (PV)1354.001148.00 Migration Scheme (Thermal) 330.001**2.50 RPSSGP7898.056581.55 Solar thermal7470.00-- Batch II Large scale PV28350.00-- *30 projects were originally sanctioned **Only 1 project has been partially commissioned

10. State Scenario Gujarat  1 st to notify solar policy in 2009 i.e. before the launch of JNNSM  Allocated 1200 MW of solar PV & thermal projects  Signed PPAs for 968.50 MW of which 680 MW is commissioned Rajasthan  Plans to set up 12 GW by 2022 Karnataka  Targets solar capacity addition of 350 MW by 2016 under its policy notified in July, 2011  In mid April, 2012, 80 MW allotted Maharashtra  To set up 125 MW PV plant at Dhule Madhya Pradesh  Targets setting up of 800 MW (4 solar parks of 200 MW each)  Clearance awarded for setting up 297 MW. Orissa  Targets 50 MW by 2012-13 UP  Draft released, target of 1 GW by 2017

11. RPOs of various states

12. Tariff for Batch I & Batch II projects Average Tariff (Rs./kWh) CERC tariff (Rs./kWh) % discount on CERC tariff Batch I Solar PV12.1617.9132% Solar Thermal11.4815.3125% Batch II Solar PV8.7715.3943% Solar Thermal--15.04--

13. Recent developments Melt down in the US Economy and Eurozone Effect Disproportionate Supply & Demand scenario resulting in unexpected cost reduction Major solar manufacturers from all over the world showing interest in India Immense investors’ interest Reduction in Tariffs Abrupt increase in installed capacity from 3 MW to approx. 1 GW in 3 years

14. Issues & Barriers  Technology  Financing  Policy

15. Technology related issues Solar grid power projects new to India - Lack of adequate technical expertise Compromise in quality for cost cutting Lack of sufficient authentic irradiation data – Data from Meteonorm, NASA etc. being used which is quite different from actual data Delay in Evacuation / Transmission facility Lack of skilled Project Management staff Non- availability of stable grid Lack of best practices for Operation & Maintenance Lack of availability of quality water for cleaning purposes

16. Finance related Challenges  Financial closure not achieved on time  Uncertainty of payment by utilities for long period i.e. 25 years  Non-availability of ground data at site and excessive variation in satellite data from various sources  Many developers not opting for external EPC Contracts and implementing projects in their own capacity without adequate experience thus increasing risk  Wide variations in costs using similar components & technology  Contract clauses not adequate w.r.t. LDs, penalties, Performance guarantees, insurance Inadequate specifications  Improper selection of inexperienced / quality vendors for BOS  More time taken for obtaining clearances, Usual time taken for N/a use is 6 months  No planning for supply of water during construction and O&M  Unreasonable time lines at various stages like financial closure, COD etc. with substantial financial implications

17. Contd./-  Critical Financial health of utilities  Delay in Land allotment / possession before financial closure  High project costs, not commensurate with low tariffs, viability is an issue  Unrealistic generation projections for the projects

18. Policy related Barriers RPO yet to enforce fulfillment REC mechanism– yet to be fully realized for Solar Not adequate support available for indigenous module manufacturers

19. Suggestions/Challenges Single window Clearances to be encouraged Techno-commercial viability of projects to be critically examined before bidding PLF to be realistic considering de-rating and heat & dust losses Condition of substation (downtime) to be critically examined Experienced EPC Contractors to be selected EPC Contractors to give back to back guarantees/warranties

20. Contd./- Realistic radiation data to be used (ground data). CWET has set up 51 solar radiation monitoring systems to measure on-ground data. Domestic Solar PV Manufacturing sector needs additional support State transmission companies to ramp up their transmission infrastructure To ensure timely implementation of CSP projects allotted and performance evaluation Strict compliance of RPO will ensure more projects under REC

21. Thank you

22. Analysis of generation data State No. of Projects PLFTechnology Andhra Pradesh118.72%Polycrystalline Chhattisgarh215.22-18.83%Polycrystalline Haryana215.55%Polycrystalline 18.75%Thin Film Maharashtra318.74%Polycrystalline 16.53-18.71%MonoCrystalline Orissa312.80%Thin Film (a-Si) 3.17-12%Polycrystalline Rajasthan29.73%Polycrystalline 10.46%Thin Film Punjab116.77%Polycrystalline Tamil Nadu217.77-18.38% Polycrystalline + Thin film 16