Post on 30-Dec-2015
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
20005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
0
20000
40000
60000
80000
100000
120000
140000
160000
4162111031698222901
36382
5900773626
99104109016
136170Total Assets (Crores)
20005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
55 94200
304478
727
977
1301
1618
2005PAT (Crores)
Pan-India Penetration (June 30,2015)
(Branch /ATM Network – 662/1,277)
Complete Suite of Financial Products
Market CapitalizationINR 296 BN
Knowledge Banking
INR
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
CriteriaImportant
for Developers to build
Better Financing Credibility
Sponsor Support till Project Stabilization
Solar Finance – Project Issues & Solutions
Issue Description Solution
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 Performance Appointment 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 Acquisition Pre-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 15000 MW by FY19 under three tranches of 3000 MW, 5000 MW and 7000 MW.
•Bidding for 3000 MW to be completed by December 31, 2015. 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. 1.31 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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