www.indianpowersector.comPower Plus Consultants.

SOLAR

A brief comprehensive handbook for developers and investors to maximize their returns.

How much can you expect as returns from your investment into solar.

Choose the best alternative

Know your Policy

Know your Buisness Model

Know your Open Access state

Choose the best alternative

Know your Policy

Know your Buisness Model

Know your Open Access state

A brief comprehensive handbook for developers and investors to maximize their returns.

How much can you expect as returns from your investment into solar.

2 Power Plus Counsultants

Why Solar Energy Make Sense in India

What is the difference between Indian solar PV market w.r.t solar markets in E.U and U.S.? The answer is simple for E.U. and U.S. solar or renewable power is a green and safe alternate option to Coal and Nuclear based production. However, for India it is utmost necessity for fuelingthe sustainable growth.

Key Drivers •Energy Deficit of 12% of peak demand•If India continues to grow at an average rate of 8% for the next 10 years, the country's demand for power is likely to soar to 315 to 335 GW by 2017 which will require a generation capacity of 415 to 440 GW (Mckinsey Report) •About 68.1% of India's energy generation capacity is from fossil fuels with coal accounting for 58% of India's total energy consumption (Central Electricity Authority)•High dependence on imports for energy requirement , total imports represents 13% of the total primary energy supply ( Energy Statistics Report 2013)•Rising price of electricity based on coal and gas •Environmental concerns

How Solar Fits in

•High Solar Irradiation (annual average GHI of 5.1) in most of the parts of country•Large number of sunny days available (apprx. 330 )•Availability of large area of land at comparatively low costs•High solar potential near main load areas in country (Western and Southern India)•Support from Government under NAPCC and Renewable Purchase Obligation (RPOs)•In parity with other resources of energy generation with costs still going down•Can be used both for centralised power generation capacity addition as well as off grid for decentralised use of energy

Choose your Policy Right

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Choose your Model: Business Models for Solar Plants

APPC + REC

•The power generated is sold to the discom at APPC.•The tariffs offered by various discoms are relatively low and thus the viability of the project largely depends on the revenue generated through REC sale.

Captive model

•The power is sold to the off-taker through a captive route.•It is a win-win proposition for both the parties as both can achieve significant profits by this type of collaboration.

Third party sale through open access

•A lucrative market in states where industrial tariffs are in the range of INR 5 – 5.50.•The financial strength of the off-taker makes the PPA credible. •Open access clearances are a hurdle, as discoms do not wish to let go their high paying

consumers easily

Bidding in state policies/ NSM

•The biddings are crashing as new or strategic developers bid aggressively.•The PPAs are however one of the most bankable.•Also a lot of capital and time is invested in the bidding process.

Choose your Open Access state: Comparing the returns as per existing industrial tariffs

Source: PPC financial model

Average Capex for Open Access Project: INR 80-85 million

13.07%

16.67%

21.26%

27.06%

34.24%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

90 Mn 85 Mn 80 Mn 75 Mn 70 Mn

Equi

ty IR

R

CAPEX in Million INR

Most conducive state for Open Access projects. 5 MW project by Emvee

already instsalled

Andhra Pradesh :The Upcoming “Solar Capital of the India” flying high with promising returns

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Source: PPC financial model

Average Capex for Open Access Project: INR 80-85 million

6.47%

8.84%

11.85%

15.76%

21.02%

27.98%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

90 Mn 85 Mn 80 Mn 75 Mn 70 Mn 65 Mn

Equ

ity

IRR

CAPEX in Million INR

NPV become > 0 at CAPEX 0f INR 79 Million for Rajasthan

Rajasthan : The leading state for JNNSM – Investor Attractiveness slips to third position due to low industrial tariffs.

9.57%

12.53%

16.32%

21.22%

27.56%

35.50%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

90 Mn 85 Mn 80 Mn 75 Mn 70 Mn 65 Mn

Equi

ty IR

R

CAPEX in Million INR

NPV become > 0 at CAPEX 0f INR 85 Million for Maharashtra

Maharashtra : Industrial capital comes in second: Though Open Access clearances still a bottleneck

Source: PPC financial model

Average Capex for Open Access Project: INR 80-85 million

The above states have their own pros and cons and will require in detail analysis for their viability

and priority for a particular project developers. For more information on the techno-commercial

viability and future of Indian Solar market contact us at info@indianpowersector.com.

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Captive Model : A win – win situation for all the stake holders involved

14.80%

18.47%

22.77%

27.83%

33.81%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

90 Mn 85 Mn 80 Mn 75 Mn 70 Mn

Equ

ity

IRR

CAPEX in Million INR

Source: PPC financial model

Highly Recommended • Captive model • Third Party Open Access sale with highly bankable PPAs

Viable Options • Projects under state policies through competitive bidding or through direct

allocation

Opportunistic Market • NSM through Viability Gap Funding • APPC + REC

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