BUILDING A BANKABLE

SOLAR + ENERGY STORAGE PROJECTVikas Bansal

Head, Business Development, International Solar

RANKED WORLD’S #1SOLAR EPC COMPANY

Outside China by IHS Markit

Source: BNEF, 2017

WORLD’S INSTALLED POWER MIX: OPPORTUNITY

EU

Non EU Europe

Africa

MENAAsia

Total Installed Power Globally ~ 5700 GWInstalled Solar Capacity < 500 GW

SWOT ANALYSIS

OPPORTUNITIES

• Capability to replacing coal/oil based power plant to serve base load

• Reduction in Cost on Solar PV + ESS, lowering LCOE every Year

• Favorable Government policy & incentives promoting clean energy

• Awareness to Decarbonizing the world & embrace clean energy

THREATS

• Unclear USE cases for ESS, together with finite life cycles of battery

• Relatively uncertain revenue stream makes project financing difficult

• Li-Ion ESS comes with poor OEM warranties with too many caveats

• Combined Cycle Gas plant, Bloom Cell & Hydrogen Cell technology

STRENGTHS

• Huge Development and Financing Experience on Solar PV, which can be

extended to Solar PV + ESS

WEAKNESS

• Limited Technical Expertise on ESS

• Limited Track Record of Project Financing for Solar + ESS

BANKABLE PV+ESS PROJECT

TECHNOLOGY RISK REVENUE STREAM UNCERTAINTY

Hedge the Risk

Insurance company underwrite

Technology Risk, thus protect

both the developer as well as

the lender

Pass On the Risk

Full wrapped EPC Agreement

deliver single point of

responsibility, thus make the

project bankable.

Avoid the Risk

EPCs Engineer the plant &

ensure performance as

envisaged in the business

model for financing

Realize through Energy Payment

Fuel cost + O&M costs + Variable Operational Payment

Measured through quantum of electricity delivered.

Realize through Capacity Payment

Compensation for fixed costs of Plant installation + ROI.

Predetermined amount, adjusted for plant availability.

Realize through Renewable Credits

Incentives to produce renewable energy.

To increase production of renewable energy.

REVENUE STREAMS

Ancillary Services

Reserve & Regulation market, with frequency/voltage Regulation,

, Reactive Power Control, Transient Smoothing service

Policy Incentives

30% ITC in USA

RECs in S. Korea

Capacity PPA

Entire capacity sold in exchange for fixed monthly capacity fee

+ reimbursement of other recurring expenses.

Time-of-Day (TOD) PPA

TOD factor in PPA, means electricity produced during peak times

is more valuable than electricity produced during off-peak time

Energy PPA Model Market Participation Model

Energy Arbitrage

Real Time & Day Ahead market options. And even leftover is

sufficient for making business model viable with Real Time market

3.49

4.31

4.95

5.455.78

3.49

5.14

6.44

7.47

8.17

3.49

5.98

7.97

9.54

10.66

0.00

2.00

4.00

6.00

8.00

10.00

12.00

0 Hr 1 Hr 2 Hr 3 Hr 4 Hr

LCO

E in

USD

Cen

ts

LCOE trend: Year 2019

25% BESS 50% BESS 75% BESS

Cost of PV @ 65 USD cents per Wp

Cost of interest @ 6% PA, Loan term = 12 Yr, Project Life = 25 Yr

Cost of BESS (USD per kWh) is as below

Cost of PV @ 60 USD cents per Wp

Cost of interest @ 6% PA, Loan term = 12 Yr, Project Life = 25 Yr

Cost of BESS (USD per kWh) is as below

2.53

3.23

3.78

4.214.50

2.53

3.95

5.07

5.95

6.55

2.53

4.67

6.38

7.74

8.69

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

0 Hr 1 Hr 2 Hr 3 Hr 4 Hr

LCO

E in

USD

Cen

ts

LCOE Trends: Year 2021

25% BESS 50% BESS 75% BESS

1 Hr back-up 2 Hr back-up 3 Hr back-up 4 Hr back-up

USD 298 USD 263 USD 233 USD 203

1 Hr back-up 2 Hr back-up 3 Hr back-up 4 Hr back-up

USD 345 USD 305 USD 270 USD 235

LCOE: PV + ESS PROJECT

Thank You

solarinternational@sterlingwilson.com

www.sterlingandwilson.com

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