100 MW CSP Project, Rajasthan, India

Transcription

1 100 MW CSP Project, Rajasthan, India

2 CSP Location in India Nearest town: Pokaran (18 km) Nearest highway : NH 114(Jodhpur- Jaisalmer) Nearest airport : Jodhpur (170 km) Nearest rail station: Pokaran

3 Rationale for CSP Investments Policy Support Preferential Tariffs Long term PPAs with creditworthy entity Market Leadership First Mover advantage Long term development plans drive down costs Technology Improvements Technology still evolving improved PLFs to drive down cost of generation Storage potential as a likely upside Base load generation With storage solutions, CSP has potential to serve as base loan generation Regulatory Support Coupled with Long Term Strategies Drive Investments

4 Financing Structure Typical Thermal Power Project Financing includes Debt financing of around 70% from local banks and financial institutions Remaining financing through Equity A solar CSP financing structure includes Senior debt tranches of around 70% from ECA from countries where equipment is being supplied DFIs Development Financial Institutions across globe including multilaterals, Climate Change funds, Governments A small portion through local banks Subordinate debt tranche of 5-10% from Development Financial Institutions / Infrastructure Debt Funds Remaining 20-25% equity from Sponsor Complex financing structure for CSP Projects Essential for Project Viability and Promoting Clean Energy

5 CSP Project Stakeholders MNRE Project Sponsor State Government Regulatory Support 100% Equity Land Lease Agreement Lenders Loan Agreement ProjectCo PPA NVVN O&M Contract EPC Contract Grid Connectivity EPC Contractor EPC Contractor State TransCo

6 Key Risks and Challenges in Financing CSP Solar Resource DNI estimation uncertainties Availability of large land parcels with optimum DNI Technology and EPC Experience No precedence of proven technology in the country Lack of experienced EPC partners with local experience Limited in-house operations experience Lack of experienced manpower in the country Long term water availability Challenges get compounded for a new CLFR technology

7 Risk Allocation Among Project Stakeholders Lenders Project Sponsor ProjectCo Solar Resource Ground measurement, P90 estimate Water Long term supply agmt. from govt EPC Contractor Technology Robust performance guarantees with BG Operations O&M agmt. with availability commitment Optimum Risk Allocation Required for Attractive Financing

8 Risk Allocation the intention Central Provides resource data to all bidders Solar resource Technology O&M Offtake Supply & Installation Interconnection Water FX Hedging arrangements Project EPC Contractor O&M Contractor Central EPC contractor State State Project Technology provider State EPC subcontractors Consumers

9 Risk Allocation the reality Central Ground data at all project sites is ~10-15% lower than provided by govt. Project To avoid delays, project builds its own 35km transmission line. Solar resource Technology O&M Offtake Supply & Installation Interconnection Water FX Severe delays on water connection Project EPC Contractor O&M Contractor Central EPC contractor State State Sponsor Design changes to suit local conditions Poor finances of state discoms Local supply chain takes time to establish. Hedging costs increase given INR depreciation Technology provider State EPC subcontractors Reluctance to increase retail tariffs Consumers

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11 Key Financing Enablers for Future CSP Development Availability of DFI capital crucial for CSP development Attractive rates make project viable Provision of sub debt by DFIs to encourage new technology development Helps in sharing new technology risks and improving developer returns Extended Moratorium for new technology projects Organization for Economic Co-operation and Development (OECD) Guidelines generally restrict moratorium period to 6 months New technology needs time for fine tuning and optimization post COD, hence a moratorium of 24 months should be considered for CSP technology based projects Provision of interest and currency hedging facilities by DFIs Countries such as India has limited longer team hedging options Bilateral ties between DFIs and Government to carve out local currency limits Role of Public Finance Crucial for CSP Development

12 Thank you! Sachin Patel Founder Partner, Saathwic Capital Advisors LLP Tel: Aniruddha Patil Senior Investment Specialist, Asian Development Bank Tel: