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Financing for solar projects under the National Solar Mission, financing for solar rooftops, financing for solar projects, third party finance for solar projects, financing utility scale solar projects, third party ppa, accelerated depreciation, ex im bank financing, suppliers credit, buyers credit, libor plus, hedging and partial hedging, indian banks interest rates, collateral security, non recourse funding



The biggest freedom a country can wish for is freedom from external overdependence. With our humongous current account deficit (CAD), which forces us to depend on volatile capital flows to finance our import bills, the rupee has taken a beating, falling 14 percent in a matter of weeks. But a bad CAD affects more than just the value of the rupee; it imports inflation, weakens government finances by raising subsidies, deters foreign investment and prevents the Reserve Bank from lowering interest rates. Basically, a high CAD sucks the economy into a vicious cycle of high inflation and low growth.

The biggest culprit here is energy imports. Consequently, a solution that kills many birds with one stone is for the government to go big on solar power in partnership with the private sector.


The government’s role should be to: 


  • (a) Act as credit enhancer to tie up facilities from multilateral agencies, the US, Japan and China for the import of solar panels worth, say, $50 billion over the next five years. This will enable the creation of 50 GW of solar power capacity.
  • (b) Assure solar developers that anyone who signs a valid power purchase agreement (PPA) with any state electricity board (SEB) will quickly receive a low-interest rupee loan for 70 percent of the total project cost at the same rate in rupee as the dollar interest rate at which government has borrowed.  
  • (c) Guarantee SEB payments on the solar PPAs against any state defaults and adjust such amounts against disbursements to states. The Central government’s risk will be diversified against 25 states.
  • (d) Encourage insurers like LIC to provide takeout financing for fully commissioned projects—this enables recycling of equity to be deployed for the next project, and a steady yield stream for insurers.
  • (e) Offer a Re 1/KWH subsidy to SEBs if they pay the solar generators on time. This can be funded by a renewable energy fund already built through a cess on coal production. This subsidy can also eventually be recouped from carbon credits.





Finance My Solar ( has announced its market entry as a specialist broking service, after a successful trial in commercial and residential solar and energy projects.

Finance My Solar is designed to support residential and business customers looking to finance their solar or energy installation, and give solar installers and retailers the ability to provide a finance or leasing model to their customers.

“Solar system financing is even more viable in today’s tight energy market,” said Todd O’Brien, Director of Finance My Solar.

“Many individuals and businesses are harnessing the power of the sun and wind to reduce their energy costs, and a large number are turning to a finance option to reduce their capital expenditure. With a choice of on or off balance sheet finance products and associated taxation advantages, businesses can see immediate benefits in leasing their equipment rather than paying cash and tying up their resources,” he said.

Finance My Solar’s lending panel is diverse, and includes major banks such as ANZ and CBA, as well as independent financier Macquarie Energy Leasing and other non-bank funders. Finance solutions are available for small household systems right up to multi-million dollar commercial and industrial energy projects.

After a soft launch in June, many customers have already benefited from the customer service focus of Finance My Solar.

“We are seeing a lot of interest from business customers and solar installers,” said Mark Harrington, Director of The ‘Finance My’ Group.

“As the first of the ‘Finance My’ brands, Finance My Solar has already established a reputation for fast, professional and confidential service – the key attributes of our brand. About Finance My Solar Finance My Solar is a boutique finance broking agency designed specifically to meet the requirements of the solar power and energy markets. The company offers a range of finance and leasing products backed by a panel of lenders and financiers. 
About The 'Finance My' Group The ‘Finance My’ Group is the parent company of Finance My Solar, and seeks to provide finance and broking services to a range of industry sectors and market verticals.  


MUMBAI: US Exim Bank chief Fred Hochberg has said the lender is bullish on the renewable energy space here, especially the solar sector, even though there is a "slight pause" in such projects.

"I think there has been a slight pause in the solar area. (But) I think that's going to be picking up again," Hochberg told reporters during an interaction here. The US Exim Bank is the largest international financier for solar power projects in the country, he said.

Hochberg further said that in the past three years, his bank, which finances importers with an intent to increase jobs back home in the US, has rendered a finance of $ 350 million to solar projects here. "In less than three years, we have done about $ 350 million worth of financing for solar projects, making us the largest international financier for solar power in India," he said.

He further said that in the past decade they have financed over $ 12 billion worth of projects here and currently have a portfolio of $ 8.2-8.5 billion, which is second only to Mexico in the entire world, and is also growing very rapidly. "The US Exim Bank's financing is in the full range of transportation from aircraft to petrochemicals to power to solar energy.

"One of the areas that we're particularly excited about has been in the area of supporting India's drive for more renewable energy and how solar energy has become more and more economical, and some of the price of coal through import and transportation has increased. "The parity between solar power, renewable power, and coal power here has narrowed, but they're very close right now," said Hochberg.

Hochberg had yesterday said though there is more clarity in policy-making in New Delhi now but businesses are still adopting a "wait-and-see" approach in the wake of upcoming general elections.

The polls are scheduled for mid-2014. "The path seems clearer today than it was five to six months ago. I'd say it (the picture) is clearer today than it was six months ago.

"There is some degree of caution right now. There is a little bit of wait-and-see in terms of immediate prospects... We have this in our country, when we have an election, people are just waiting to see how the elections turn out," he had said. "My hunch is that this is a great democracy and they are probably not as different from what goes on in the US before a major election," he added.





*Expo organised to help people avail of loan for installing solar systems


Central Bank of India would provide loans to the people willing to install solar systems in their houses to overcome the power crisis, said D.Lakshmi Narayanan, assistant general manager of the bank, on Saturday.

He told presspersons after inauguration of a retail expo organised by the bank to provide loans for solar power equipment, houses and vehicles that people could avail of the loan depending upon the cost of the equipment.

He said that in Tiruchi region comprising 10 districts and Karaikal in Puduchery the bank had disbursed Rs.1,200 crore as loans this year.

Out of them agriculture loan amounted to Rs.650 crore. Retail loans have been disbursed to the tune of Rs.350 crore.

“Whoever wants to avail of loans for houses, vehicles or solar power equipment, can approach us and get them sanctioned at the expo itself.”

Savithiri Gopal, chairperson, Thanjavur municipality, inaugurated the expo.

T.Raju Rebero, managing director of Contura Solar (India) Pvt ltd, which had put up a stall, said that solar cap with fan (the fan will revolve when the cap is used in sunlight) priced at Rs.600. Solar mobile charger, solar lantern, solar LED lighting system, and solar generator for houses are available with them.



* Financing solar projects using Facebook crowd funding



Paul believes that IT has the power to transform the centralized electric grid but that a "whole new ecosystem of finance is needed for distributed power starting with roof-top solar."

He coined the phrase cleanweb and has funded a series of hackathons to encourage software programmers to train their algorithms on resource management.

"We think about cleanweb in a couple of different categories: ways to accelerate the deployment of cleantech and a way to creating a resource cloud," he told me recently at Connectivity Week in Santa Clara, California.

"Cleanweb is the idea that IT is the biggest lever that we have to address all sorts of resource constraints like energy, water and land use. It's a very broad brush and expands to not only smart grid, but companies that are using IT to restructure business models so they are far more efficient than usual.

"It's not just about data, it's also about social media. There was no way to organise 100s of investors until social media came along."

SunRun, Sungevity, SolarCity, Clean Power Finance and Solar Mosaic are just some of the companies leveraging information technology or "big data" to reduce the cost of solar, he said.

Although Paul also co-founded the Clean Economy Network and started The Gigaton Throwdown Awards with Sir Richard Branson's Carbon War Room, he has claimed that cleanweb will beat cleantech in the race to find solutions to the world's most intractable energy issues.

But these solutions will be ever complex as they leverage increasing volumes of data, even if the end user sees only the simplicity of the technology in their iPhones.

"Since the invention of flint tools, technology has been simplifying complexity - that is the nature of technology," he said. "It's the nature of our society to get more and more complicated and create the appropriate structures. We plug toasters into the wall and don't think about how the electricity was generated. You can get a flint tool from someone else and not worry about how it was made.

"There are other categories that we don't even understand yet. There will be new categories."

Geostellar, a solar analytics and mapping start-up, has been simplifying big data for developers and installers by combining information on solar resources, performance, local incentives and sources of financing to establish the viability of a project.

The "big-data geomatics" company is now targeting consumers after it last month won US$14m in strategic funding from NRG Energy, among others. Sungevity, SunEdison and AES Solar were already using its services but the company now plans to launch a web-based Expedia-type model for solar, so homeowners and businesses can accurately model the potential value of their system within a few mouse clicks.

Geostellar's automization reduces costs by up to 40%, said CEO David Levine. “In the past, the solar equation was too complicated,” he said. “We’ve simplified the operations that go into evaluating opportunities for solar energy, calculating the precise metrics that enable property owners to make informed decisions without the hassle.”

SunFunder is to Geostellar, what Microsoft is to Facebook. The pure-play crowd-source platform launches this summer with two small projects in the Philippines and Kenya. Investors will receive a return on their investment, but will not be able to cash the value because of SEC restrictions. Instead, credits will be earned that can then be re-invested.

But in phase two, investors can expect to get cash on their return, said Ryan Levinson, who developed the idea for SunFunder while volunteering for the Border Green Energy team nonprofit on the Burma-Thailand border.

"What we're trying to do at SunFunder through crowd-sourcing is find a way to tap into a new source of capital that historically has been on the sidelines to provide low-cost affordable sustainable financing to the solar companies.

"Wherever you are - in the US or developing countries - access to affordable financing is a challenge in solar. There are a lot of exciting new business models and crowd funding is one of the more exciting ones that has the potential to unlock that new source of capital that was on the sidelines for solar."

SunFunder aims to make a social impact, but by making a profit for its investors the company hopes to mobilize more capital than it could perhaps as a non-profit, said Levinson.

"The goal is over time to make it a for-profit investment process. But our biggest motivation is solving the problems of energy access and global warming.

"These challenges are so big and the amount of capital that needs to be deployed over the next 10 -20 years is so large that we don't think charity money’s going to solve it.

"A sustainable commercially orientated solution is going to be needed to really get to scale in deploying solar."

Levinson believes that investments in solar makes sense in the developing world where those who can least afford it pay the highest cost for power - even when they can get it.

In the developed world, solar players aim towards grid parity. But in the developing world solar players compete against kerosene parity - which sometimes can be as much as US$1/kwh.

Levinson cites the Lumina Project at Lawrence Berkeley National Laboratory which claims that "users of kerosene lighting pay 150-times more per unit of useful energy services than do those in electrified homes with compact fluorescent lamps (and 600 times more than for traditional incandescent lamps)".

"All over the world where people don't have electricity at all or 1.3bn and another 1bn people that have unreliable electricity, solar is a very affordable alternative with no subsidies as long as some time of affordable financing can be provided," he said.

"That's a really exciting thing to think there is that big a part of the world where solar is already economically viable and it also happens to be where the greatest need for solar is."

But Levinson is no simple idealist and left the solar project finance team at Wells Fargo to strike out on his own. The rules of the game in risk mitigation for investors have not changed, however.

"At Wells Fargo my job more than anything was not to lose money. I worked for a really risk-averse bank. While it's important to deploy capital quickly and scale that up we wouldn't be doing this if our goal wasn't to achieve scale because it's the only way you can really address these problems.

"But we won't ever be in a position to achieve scale if people lose money on their early investment. Risk mitigation is going to be central to how we develop relationships and structure transactions."

Although SunFunder is starting small, its ambitions are to scale to megawatt PV systems thanks to the power of crowd-funding.

"It's so difficult to project the potential of crowd-funding 5 to 10 years out because it's so new. It's really big and exciting and fun to be one of the early players."







Solar PV Project Financing: 

Regulatory and Legislative 

Challenges for Third-Party PPA 

System Owners

Katharine Kollins

Duke University

Bethany Speer and Karlynn Cory

National Renewable Energy Laboratory




 Solar project financing made easy : Haresh Patel SCS Renewables



Last week, we reported on a online platform that will bring solar installers and potential customers together, now we've learned about a platform focused on the commercial side of the industry. 

Both platforms are designed to make the solar market more efficient and to bring down costs.

SCS Renewables is launching an online brokerage platform that brings project investors and banks together with solar developers that need project financing - a global hub for solar project funding. 

An answer to the industry's highly fragmented and inefficient market, the platform is designed to increase the sectors' dismal closure rates and expand the pool of capital available to finance commercial and utility scale solar projects, says SCS Renewables. 

Transitioning out of stealth mode, the SCS brokering and scoring platform currently has available funding sources in excess of $2 billion via its current finance partners, as well as 298 megawatts of solar projects actively seeking finance through its network of project development companies.

"In the PV industry the ultimate customer is the bank." says Haresh Patel, SCS Renewables CEO. "Project development processes lack standards and are currently decoupled from the investor's criteria, which results in huge inefficiencies, adds variable cost to solar projects, and slows overall market growth. The SCS finance platform solves these problems and promises savings over time of $0.10-$0.30/watt due to lower
transaction costs and improved market efficiencies."

The platform enables high quality deals for financial institutions while providing financial certainty for project developers. By using the platform's streamlined process, standard documentation and project scoring methodology, it directly tackles the lack of standards and stubbornly high transaction costs currently hindering project viability.

"SCS' ability to asses and rate projects makes them the Good Housekeeping Seal of Approval for renewable energy projects. The service they offer through their platform is a key prerequisite for the financial industry for syndication and securitization. Tools like this will help accelerate deployment of capital and attract new players," says Jigar Shah, advisor to the company and former CEO and founder of SunEdison.

Cost savings will be achieved by increasing the number of quality projects available while decreasing time wasted evaluating unattractive projects. By adding transparency and standards to the process, the platform opens the door to new investor types and new capital markets, reducing the cost of capital via increased competition. 

The goal is to further drive industry scale and momentum towards grid parity.

Since 2007, SCS Renewables has brokered over $150 Million worth of solar project investments and partner transactions. 

Here's the website:


Website:  28/6/12


* 300 MW at USD 900m !! Approximately at Rs 16 cr per MW !

Why cant India get such project financing !!?

Sky Solar Holdings Company Ltd. (Shanghai, China) reports that it has signed an agreement with the state-owned China Development Bank (Beijing, China) and Sigdo Koppers SA (Las Condes, Chile) for investment in and construction of 300 MW of solar photovoltaic (PV) plants in Chile. The project represents a total investment of USD 900 million. more 

U.S. solar power developers are banking on a new set of financing tools to provide the cash for smaller projects as the pipeline for large power plants slows.


Growth in solar installations in the United States has outpaced forecasts in recent months as low panel prices pushed down costs, but the expiration of two key government subsidies last year has constrained financing.


About $1.9 billion in new U.S. projects totaling 506 megawatts were completed in the first quarter, down from the fourth quarter's record $3.1 billion but well above the $1.46 billion in the first quarter of 2011, according to renewable energy research firm GTM Research.


As subsidies shrink, banks and the companies that build solar projects are trying to package several smaller installations into stand-alone equity vehicles or portfolios that can be packaged into bonds.


The new financing tools may ultimately benefit manufacturers, such as First Solar Inc, SunPower Corp and Suntech Power Holdings Co Ltd.


Their shares have been pummeled amid an industry shakeout caused by a collapse in panel prices that sent weaker rivals into bankruptcy.


Driving the growth has been a surge in mid-sized projects -- constructed by developers like Borrego Solar Systems, SolarCity and MEMC Electronic Materials Inc's SunEdison -- which reached record levels in the first quarter, rather than the large, utility-scale power plants the industry sought to develop in recent years.


The market for mid-sized projects, between 500 kw and 20 megawatts, is growing rapidly since they can often be built on the rooftops of big-box retailers, warehouses, schools and government buildings and are less expensive to build and get approved.


Financing for the projects can be structured in various ways, but are usually funded by development companies and their outside investors or by property owners who benefit from lower power prices or by selling excess electricity back to a local utility at retail prices under "net metering" programs.


The market has been lucrative for privately owned Borrego, which saw revenues double last year.


"We've proven that it works and it's low risk," said Michael Hall, chief executive of Borrego. "We can deliver to investors high-single or low double-digit returns."


A one-megawatt project can cost between about $2.8 million to $4.5 million to develop, and can often be bundled with other similar-sized projects to attract financing.


"There are going to be fewer and fewer megadeals getting done," Hall said.


In addition, municipalities can issue tax-exempt bonds to fund the projects, keeping borrowing costs low.


The profitable smaller projects are driving the industry's efforts to create solar REITs (real estate investment trusts) that bundle projects and create securities that can trade like stocks.


Others in the industry hope to persuade the U.S. Congress to alter the tax code to allow solar plants to be bundled under "Master Limited Partnership" (MLPs) rules, similar to ones used by the oil and gas industry.


The MLPs pay virtually no corporate taxes as they deliver nearly all profits to owners of the MLP's units, which are traded like stocks.


A newly introduced bill by U.S. Senators Chris Coons, Democrat from Delaware, and Jerry Moran, Republican from Kansas, would expand the MLPs to include renewable energy projects, but industry experts have said any effort to expand tax breaks would face a tough fight in Washington this year.


Still, proponents pointed to a study released in May that showed that as of 2011, the oil and gas industry had established dozens of MLPs worth more than $270 billion, mostly in the pipeline and fuel storage business.


Expanding the tax breaks to solar power plants would attract between $3.2 billion and $5.6 billion in new investment by 2021, according to the Southern Methodist University study.




While the large utility-scale projects that sell power into the wholesale markets will bolster installation figures as they come on line over the next two to three years, few new utility projects are getting built because of the difficulty in financing them without government loan guarantees.


Low natural gas prices have also made gas-fired power generation a cheap alternative to solar, and many of the state requirements to add renewables, including California's, are close to being met with projects under construction.


The industry is relying mostly on the "tax equity" market, in which solar developers sell off federal tax credits worth 30 percent of a project's cost to financial players who use the credits to reduce their own tax burdens.


Only about 15 companies are actively buying up credits from solar developers, but experts hope returns in the high-single to low-double digits will draw investors in the credits.


"The cost of tax equity is still pretty high, and that makes it attractive for new people to come into the market," Orrick's Meyers said, citing the technology sector as a likely group to invest in solar.


Google Inc has led the way, sinking about $915 million into solar. Oil giant Chevron Corp is also pouring millions of dollars into funding new projects.


SolarCity, one of nation's largest installers of solar arrays on homes and businesses, recently announced its sixth fund designed to attract tax equity investors to its projects.


"The returns are good," said Darren Van't Hof, director of renewable energy investments at U.S. Bank, a unit of U.S. Bancorp, which took part in SolarCity's new $250 million fund.


(Reporting By Matt Daily; editing by Patricia Kranz and Jeffrey Benkoe)





Securitizing Residential Solar PV Leases and Commercial PPAs

Securitization is a process through which individual financial assets, such as residential solar PV system leases, are pooled together based on statistical analysis of criteria including leaseholders’ credit quality and the geographic distribution of leases. The pooled leases are segmented according to their cash flow and credit quality characteristics, packaged and put into a trust that issues bonds with the underlying leases as collateral. Investors who buy the solar lease-backed bonds receive interest and principal repayments as leaseholders make their payments.

Securitization has had a bad name in the past. Remember the time when in the USA houses were sold to people who can hardly afford to pay and the loans were securitised.

But now in the case of solar project financing, the securitization is different.  The leases are segmented according to cashflow , credit quality and credit quality characteristics.

India needs to look at these to emulate or to evolve an innovative project financing method for solar projects. more may 31/2012

* Financing for solar projects the American way ! Will India follow suit !



The emergence of new business models, new investors and new financing vehicles will be changing the face of financing for United States solar projects in the near future, according to Bloomberg New Energy Finance.

Commissioned by accounting company firm Reznick Group, the report says third-party financing models, new investors, and new financing vehicles like project bonds and trust funds will be replacing U.S. solar power financing’s current practice of bankrolling from financial institutions, energy sector players, and the federal government.


Financing the solar energy projects in India is the single most important question as far as solar energy projects in India are concerned.

The need for more investments, the shrinking role of traditional players, and the dropping cost of solar equipment are playing a role in these changes, the report said.

Despite the growth of asset financing for U.S. photovoltaic projects at an annual rate of 58 percent since 2004, reaching a record high $21.1 billion in 2011, funding the next nine years of PV deployment will need $6.9 billion annually on average.


In India the projects are not bankable because of several reasons. Banks are not familiar with solar energy projects with extremely long break even point.

The Indian banks are in general risk averse. 



With the financing limits of traditional players like banks, especially in the Eurozone where long-term debts are more difficult to procure than usual, new investors such as insurance companies and pension funds are coming to the scene. Reduced federal government support, specifically the expiration of the United States Department of Energy’s loan guarantee program, is another factor.

“A greater understanding of project risk and return is driving new investors into the solar PV market,” said Tim Kemper, renewable energy practice Leader at Reznick Group.

Non-traditional institutional players are seeking stable, long-lived assets to match long term liabilities, and the continuing low interest rate environment and attractive yields are reportedly inviting players. A successful bond issuance for a solar project owned by a Warren Buffett-backed utility also gained some attention.

Will the indian financial institutions look at it that way ? 


The report adds that third-party financing models, including variations of models where homeowners can avail of their own solar power technology at little to no cost, are seen as potentially giving these investors a diversified opportunity to go solar. .

This model of home owners investing little to no funds is an ideal model for the consumers of India.  More than banks, the home owners have their doubts regarding the solar roofs lasting 20 years and 25 years. 

So a scheme like someone taking the long term risk, would suit ideally for the home owners in India. 



Two factors will drive the evolution in usa. First, traditional players are scaling back their participation. Constrained by regulatory requirements and by the continent's financial crisis, Eurozone banks are offering loans of shorter duration and with slightly wider spreads. In the US, a key Department of Energy loan guarantee program lapsed in 2011 making less low-priced capital available for large-scale projects.

Second, thanks to the continuing low-interest rate environment, non-traditional investors are becoming more interested, lured by the risk/return profiles of solar projects that employ well proven PV technology. Motivated by attractive yields and the examples set by Chevron and Google, US corporations are eyeing forays into tax equity. Pension funds and insurance companies are willing to give solar projects a serious look in the wake of the successful bond issuance for a solar project owned by a Warren Buffett-backed utility. The past year has seen a crescendo of conversations around financing vehicles that draw on the capital markets, such as solar-backed securitization, master limited partnerships (MLPs), structures resembling real estate investment trusts (REITs) and publicly listed solar ownership funds.


The investments they made would be made more liquid through financial vehicles like project bonds, solar real estate investment trusts and public solar ownership funds as they will allow developers to tap the capital markets.

HOw come an insurance company like LIC doesnt get into solar energy financing in India ?

With these three, the already lowering prices of solar equipment would incur more savings as the costs of equity, debt and potentially even tax equity would be reduced, according to Michel Di Capua, head of analysis at Bloomberg New Energy Finance North America.

The other problem is who is going to give the gaurantee for power purchase if one were to set up a utility scale plant. The state gov are not financialy strong and discoms and electricity boards are in debt.

The banks have been asked to treat coal and renewable energy similarly. They are used to lending to coal / power sector and would rather lend to them than the unkown solar projects.


Sunrun Inc., the leading provider of residential solar-power systems in the U.S., plans to raise $100 million through debt or an initial share sale, adding to the $60 million in funding investors awarded it last week.


* IREDA the Indian Renewable Energy Development Agency to raise funds of Rs 3 billion 

Indian Renewable Energy Development Agency, or IREDA, is in talks with bankers to raise 3 billion rupees ($54.15 million) through a bond issue, a company source with knowledge of the deal said on Monday. 

This is good news for all the independent power producers and banks in India for financing solar projects and other renewable energy projects.
The state-run company is likely to borrow through either a 10-year vanilla bond or a 15-year bond embedded with a put/call option at the end of 10th year, said three bankers who the firm is in talks with for the sale. 

The bond sale may happen as early as this week, said the company source.




"At least" half of the world’s existing photovoltaic manufacturers will either

Go bankrupt or be taken over !

According to Ernst & Young and Bloomberg New Energy Finance (BNEF). Meanwhile, they have identified three key solar trends: financing innovations; residential grid parity; and the trading of large project portfolios.

Read more





An Israeli solar company says it has raised more than $200 million to build eight solar energy fields in the country's southern desert.

Arava Power Co. says the deal is by far the biggest ever in Israel's solar power industry.

Arava Power's chief executive, Jon Cohen, said  the fields will generate 58.5 megawatts of power. Investors include the Noy investment fund, French energy company EDF, Bank Hapoalim, Israeli insurer Migdal and pension fund manager Amitim.

How are these companies getting the funding. Why cant  we do the same at Rajasthan ? What were the calculations for Arava power company ? Capital cost ?

Selling price ? irr ?

Indian companies should start getting funding like this soon.



Kleiner Perkins Caufield & Byers (KPCB) closed its 15th fund, KPCB 15, a $525 million venture capital fund focused on cleantech, digital, and life sciences companies.

The new fund will focus more on the digital than the cleantech side, but KPCB continues to actively invest from its existing funds, including the $1 billion Green Growth Fund, to help speed mass market solutions to the climate crisis.



Solantro gets $ 10 m funding.



* Thin silicon start up Solexel gets $ 25 m funding !


Gentry Venture Partners of Chicago led the round, according to a report in Bloomberg. Gentry has co-invested along with Kleiner Perkins on a number of other deals, includingFisker Automotive and Bloom Energy.

Perhaps more interesting: according to SEC filings, SunPower is also an investor in the round, through its internal venture capital arm. Doug Rose, senior director of technology strategy at SunPower is listed on the SEC document. Gentry and SunPower join Technology Partners and DAG Ventures in this round. SunPower has not yet responded to our request for comment on the investment.

The SunPower participation is notable because of the potential strategic value of Solexel to SunPower, as well as the strong due diligence expected from the c-Si efficiency leader in vetting this type of investment.


* Crowdfunding is the new kid in town for people that want to raise (or contribute) money for everything from small community restoration projects, such, to getting their business off the ground, such as 33Needs, without having to attract big funds from equity-hungry investors.

Crowd sourced funding


*  When it comes to venture funding, less can be more !!

.... High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email to buy additional rights.


“We were literally a few weeks from signing the deal and at that point they pulled the fund,” Watson explains.

Finally he turned to the Creative Advantage Fund, a Birmingham-based venture capital group for the creative industries who, along with a few angel investors, agreed to back him.



*Although GE had impressive in-house research and development capabilities, fresh ideas tended to develop from smaller, external organisations and individuals who were the most innovative in the sector. Read the case study on ecomagination, innovation and venture funding here .



*The solar lease/PPA market is growing by leaps and bounds, growing at 174 % in the first two months !!


Big money has gotten behind solar leasing ! Not yet in India !


Sunrun pioneered the idea of the solar lease in 2007, and still controls most of the market. Depending on where a customer lives, the program entails either a solar lease, which consists of the consumer paying a fixed amount monthly regardless of how much power the system produces, or a power purchase agreement, whereby the customer is billed only for the amount of power his system generates. The solar company owns all the equipment, and the leases generally span 20 years.

Why such finance for households for solar energy  concepts are not happening in India. Is it that Solar energy is not viable yet in India like in California. 


Is it that once the discom's/ electricity board's tariff goes up beyond the costof production of solar energy, such schemes will come into play  in solar energy finance in India ?


This concept has become increasingly popular, and Sunrun claims to have installed $1 million worth of these systems each day since January of last year. Other solar companies are popping up to take advantage of this new solar market, and big investors are seeing the light as well. US Bancorp (NYS: USB) has partnered with Sunrun for several years, and just recently announced another renewable energy tax equity fund that will help purchase $150 million worth of residential solar energy systems. The two entities have teamed up for five previous equity fund initiatives. US Bancorp also has teamed up with Sungevity, an online solar energy provider, to offer 10-year residential solar leases, to the tune of $24 million.  more 



* Indian  commercial banks aren't  sure of the return scenario of solar power projects because of lack of reliable data, high tariffs and sick state utilities, which will eventually purchase power !


S Vishvanathan, managing director and chief executive officer, SBI Capital Markets, said: “The government says we'll buy solar power at variable cost or impel discoms or other users to buy these at variable cost over a period of time through PPA route and over a period of time the cost gets equalized. This method puts an additional amount of risk on banks in case these don't get executed. Given this, the banks are sometimes wary."

The Asian Development Bank, which has invested close to USD 2 billion in the Indian renewable energy including USD 104 million in Reliance Power's latest 100 mw solar power plant in Rajasthan, thinks it's a matter of one or two  years before commercial banks shed their apprehension and invest big in solar.

ADB cites the example of wind power farms where commercial banks took over financing once they got more comfortable with the sector.

Michael Barrow, director - infra division, ADB, said: “Once the commercial banks are comfortable, once they are over their initial concern, once it becomes fairly standard as with wind and also as the price of solar comes down, the banks will become very comfortable. I don't have a crystal ball, but India is on track to meet that target."

So, project financing is going to be the major hurdle for the growth of solar power.

If a power producer can buy the solar cells from a US or Chinese manufacturer who gives liberal rate of interest, the Indian commercial banks will see the viability to fund the rest of the project. more




*Solar energy project financing 

Why India cant do this !!?


As a world-leading supplier of solar energy solutions, Kyocera Solar, Inc. today announced the launch of its latest solution: Kyocera Solar Finance, a program designed to provide loan and lease options to consumers seeking light commercial and mid-to-large commercial installations. In partnership with De Lage Landen Financial Services, Inc. (DLL), Kyocera Solar Finance will offer up to 100 percent financing for qualified borrowers. Interested applicants should contact

Drawing on 37 years of experience in solar panel manufacturing, Kyocera designed a financing program that delivers to qualified consumers the company's industry-leading solar panels and up to 100 percent financing of the total project cost, including inverters, racking, wiring, installation and other costs associated with the system installation. This all-inclusive approach creates a streamlined process for customers ready to make the conversion to solar energy for the environmental and economic advantages it provides.

Based on familiar lease, rental and purchase agreements, Kyocera Solar Finance offers two viable financing solutions: loans and tax leases, both with distinct advantages. For projects $10,000,000 and lower, the loan option enables the end user to own the system outright, retain tax benefits and any qualifying local subsidies. Still relatively unique as a solar system financing model, a loan is an attractive option for buyers seeking to benefit from long term ownership of a 30 plus year energy system while not paying cash for the system up front.


Not paying cash upfront is an option which will ideally suit many Indian households and even corporates. Am not sure if they are going to offer it to countries like India.

Starting at $500,000, the tax lease model is a practical structure where an end user hosts the system, directly benefits from the energy produced and rents the system from De Lage Landen through the Kyocera Solar Finance Program. De Lage Landen, a provider of leasing, business and consumer finance solutions worldwide, will work with pre-qualified applicants to determine final terms of their financing arrangements based on the end-user's credit quality and the need to cash flow lease or loan payments against avoided utility costs and incentive based revenue.

"To carry out our mission and meet consumer demand for photovoltaic (PV) installations, Kyocera formed a partnership with De Lage Landen to offer comprehensive financing solutions," said Steve Hill, president of Kyocera Solar, Inc. "Our goal is to bring solar energy to the world, and with Kyocera Solar Finance we are able to help more consumers gain energy independence through clean, solar-generated electricity."


They are talking about bringing solar energy to the world. Does that mean that we in India too can get that funding. 

"Kyocera's quality products and expertise in the marketplace made our partnership an easy decision," said Mark McGovern, General Manager, Clean Technology for De Lage Landen. "With a U.S. focused program, we aim to support Kyocera's objective towards providing flexible and sustainable solutions to their customers."


What is the additional risk for borrowing such monies from India ! Exchange fluctuation ? 

By securing financing directly through Kyocera Solar Finance, customers seeking light commercial and mid-to-large commercial installations will enjoy both the convenience of completing the process in-house and the assurance of Kyocera's proven leadership in the solar industry. Kyocera, by repeatedly breaking cell efficiency records and producing the world's first modules to have passed the Long-Term Sequential Test performed by TUV Rheinland Japan Ltd., remains at the forefront of solar energy innovation and reliability.



*Europe needs to engage the multi-trillion-dollar bond market in financing renewable energy projects, but bonds can't altogether replace bank loans, which are contracting sharply.




Private bank lending to European wind power projects, for example, is now barely a third of peak levels in 2008, according to Thomson Reuters Project Finance International data.

That's the worst bank project finance market for two decades, say developers, and doesn't help EU countries that are already way behind their targets.

So it is not just India and solar project financing. The problem of project financing is there across renewables and in europe too.

more  apr 27, 2012






*"Domestic banks still perceive significant risks in solar investments," the report by CEEW and NRDC says.



The report cites lack of data and statistics on project development, deployment and performance as one of the reasons for the low comfort level of banks with regard to solar investments. Also, the irradiance measurements from local settings are currently not recorded in the country and hence not available to banks.

"Financial institutions perceive solar energy in India as a riskier investment because it is a fledgling industry without a proven track record in meeting commissioning deadlines, performance benchmarks, and delivering power," the report says.

The report points out that international lenders are less riskaverse on the technology front and offer lower interest rates. However, project completion is a cause of concern for international financial institutions.

"International and bilateral lending institutions that supported several phase-I projects remain interested in supporting additional projects but want more rigorous project selection requirements, such as balance sheets and vetted collateral. Well-structured Renewable Purchase Obligations, Renewable Energy Certificates, and innovative funding mechanisms are opportunities for increasing investments in solar energy," the report says.

Considering that with major information gaps and potential market failures, financial markets would not automatically warm up to the solar market, the report stresses on the need for strategic interventions to create a financing ecosystem.  more 


ADB’s first CSP financing, as well as one of India’s largest solar power projects




Abengoa, Spain to manufacture  cylindrical parabolic solar collectors (CPC) and heliostats in concentrated solar power (CSP) projects , in Vadodra, Gujarat, gets IFC funding


IFC will lend around $14 million for the project.

The greenfield project is to construct a steel fabrication plant near Vadodara in the state of Gujarat, with an annual capacity of 25,000 tons. The plant will manufacture steel structures for transmission & distribution (T&D) projects and metallic support structures for the cylindrical parabolic solar collectors (CPC) and heliostats in concentrated solar power (CSP) projects that will be developed globally, including in India and neighboring countries.

Commenced in 1941, Abengoa provides technology solutions for sustainability in the energy and environment sectors, generating energy from the sun, producing bio-fuels, desalinating sea water and recycling industrial waste. The group is involved in five core businesses including solar, Bio-energy, environmental, IT and Engineering & construction.’s-indian-plant


* Morgan Stanley and Main Street Power Co are financially supporting Clean Power Finance Inc’s clientele to fit almost $300 million in residential solar energy plans.

Something like this should happen in India for rooftop to flourish.





* IFC may provide $26 million in senior debt to three new solar projects being developed byMahindra Solar One !


JV Mahindra & Kiran energy


The JV company is looking to develop 50 MW of capacity in Rajasthan at a total cost of $105 million. Mahindra Solar One, through its wholly-owned subsidiary Mahindra Suryaprakash Ltd, is developing a 20 MW and a separate 10 MW solar photovoltaic plant. Another 20 MW solar PV plant is being developed at the same area by Solarfield Energy Two Private Ltd, wholly-owned subsidiary of Kiran Energy Ltd.

The three projects are using similar technology, and have been awarded similar tariffs and will enter into identical power purchase agreements. 

IFC, the private investment arm of The World Bank, will give $15.9 million loan to Mahindra Suryaprakash, and the balance $10.1 million to Solarfield Two. The loan will have a tenor of 15 years.

Kiran Energy is a Mumbai-based solar power company founded by Ardeshir Contractor (former head of KPMG’s investment banking business in India) and Alan Rosling (a former executive director of Tata Sons).

Other promoters include IIT Mumbai faculty members Dr Sunit Tyagi and Dr Hemanshu Bhatt, who have expertise in the solar sector. Kiran Energy is backed by private equity players New Silk Route, Bessemer Venture Partners and Argonaut Private Equity.



*Indian Banks Exposure to Coal Limits Lending to Solar, SBI Says

Most banks are reaching their 15 percent cap on domestic advances to the power industry and it’s unlikely they’ll seek to separate renewable energy into another category to allow more lending, said S. Vishvanathan, chief executive officer of SBI Capital Markets Ltd., the investment banking unit of the State Bank of India. (SBIN)

“To change sectoral limits, you need approval from the board,” Vishvanathan said yesterday in an interview in Jodhpur in the state of Rajasthan. “What’s the rationale? They really are the same sector.”

A shortfall in commercial project finance could stall the solar industry in India, one of the biggest growth markets, adding to the woes of panel makers like First Solar Inc. (FSLR) and Suntech Power Holdings Co. which are looking to India and China to offset plummeting sales in Europe. India will need at least $3.2 billion of debt finance in the next three years to complete already announced solar projects, according to the Asian Development Bank


This is why it imperative that a solid financing / project financing strategy is arrived by MNRE with RBI



*NRDC on financing solar projects


Bankability: Financing  Solar Energy Projects In 2011, investments in India’s renewable energy markets rose to approximately `51,000 crore ($10.3 billion),2 with  more than one-third of the investments directed to solar projects. Investments are expected to double for Phase 2. Yet  the greatest challenge for solar energy is project financing. Even for smaller Phase 1 projects, developers struggled to raise capital from multiple domestic, international, and selffinancing sources. While there has been some improvement, most domestic banks still perceive significant risks in solar investments. International and bilateral lending institutions  that supported several Phase 1 projects remain interested in supporting additional projects but want more rigorous project selection requirements, such as balance sheets and vetted collateral. Well-structured RPOs, RECs, and innovative funding mechanisms are opportunities for increasing investments in solar energy. In short, with major information gaps and potential market failures, financial markets will not automatically warm up to the solar market without strategic interventions to create a financing ecosystem. Key Findings for Bankability 1. India’s high interest rates impede project development, especially as the costs of solar plants are largely in upfront capital. Overseas financing is more attractive, both for lower interest rates and for longer-term debt, which match the longer payback period of solar loans.  

Key Recommendations for Bankability

1. Regulators should diligently enforce RPO mandates and the REC market. National and state agencies should work together closely to ensure effective RPO and REC systems.

2. With the Reserve Bank of India and the Ministry of Finance, MNRE should encourage priority sector lending for large-scale solar projects to help reduce lending rates to as low as 10 percent and to provide higher employment potential for downstream solar activities.

3. To provide longer-term debt, the government should enhance funding mechanisms, including the proposed Infrastructure Debt Funds. To further reassure financiers, MNRE should share information on the payment security mechanism (PSM) and clarify how the PSM has been calculated to effectively cover potential default on


4. Government agencies and private groups should provide solar resource and project deployment data as soon as they become available. MNRE and the Solar Energy Corporation of India (SECI) should work with developers to establish monitoring and reporting processes that can be implemented before Phase 2. SECI should become a central clearinghouse for all information dissemination relating to the solar ecosystem. A sharing platform for improved irradiance data should be created to disseminate information as it is generated.

5. The Solar Advisory Panel and leading financial institutions should create a network of solar finance leaders to develop bank products that support solar. 





Here’s a breakup of the costs for Solar PV projects as recommended by CERC:




Capital Cost Norm for Solar PV project (Rs.Lakh/MW)

% of total cost


PV Modules




Land Cost




Civil and General Works




Mounting Structures




Power Conditioning Unit




Evacuation Cost up to

Interconnection point (Cables and Transformers)




Preliminary and Pre-Operative Expenses including IDC and contingency




Total Capital Cost










Various options available for getting funding for your Solar Power projects are,

1) Asset / Collateral  based Funding
2) Balance Sheet based Funding
3) Project   Funding

1) Asset Based Funding: Individuals and Companies
In asset based funding the lender provides loan for  solar power plants based on valuation of the assets that your company has or you  have and that you can offer as collateral security for the loan.

You can even get 100 % funding depending upon the value of the collaterals.

Normally for most projects, the banks may demand 30 % equity and loan can be given for 70%.

Some banks in Hyderabad , demand 35 % equity. But if the value of the collateral is high, it can be as said before, 100 % loan..

Many banks ask for Urban property as collateral. It is not actually necessary. Once the banks get used to the performance of solar power generation plants, they will minimise the need for collaterals.

Already many  banks are accepting less than 70 % of collaterals when the projects are pledged.

2) Balance Sheet Based Funding: Companies only
The profit that your company has made in the last three years. The reserves and surplus it has etc will be taken into account and the bank can then fund.

Companies that can avail Accelerated Depreciation  for solar power generation will find it easier to avail loans and lower rates.

Companies should note that it is not a fixed rate of interest. Good rapport based on good performance in the past can bring the interest percentage down.

3)Project Funding: Companies and Individuals
 The projected cash flow of the project or more specifically the PPA will determine  the  decision to fund.  Payment security is important.
Many of these types of funding can be got from India as well as from abroad.

With hedging the cost of international funds also tend towards 11% . Indian banks are now getting closer to 12.5 % and if the asset / balance sheet / ppa are sound one could look at lower rate of interest.

The project cash flow is much better in companies that can avail accelerated depreciation for solar power generation. 


There are many Chartered Accountants who help individuals form a company and they also act as agents to get bank loans.

Commission for getting bank loan is approximately  1- 2% at present in Andhra Pradesh.

These agents normally help put the loan application for solar power generation plant and submit with two to three banks. This helps them get the best interest rate for solar power generation plants in AP.

For companies, this may not be the ideal route, as they themselves will have a finance /accounts department with access to several banks. Whereas for individuals and NRI's, it makes more sense to go thru such chartered accountants who also help get loans, than trying it on their own.

Individuals, can try on their own, if they have 30% or more equity and or good collaterals. They can then go to more than one bank and try to get the best rate of interest.

















Solar power plant projects for loan proposal are new to andhra pradesh and particulary to the  bankers.It is difficult for them  to comprehend a business proposition with no raw material and little capital like a solar power generation project.After a few years, once several loan sanctions happen for solar power projects. The process will become mores simple as the bankers will have a better idea.


A solar power generation plant can be started in any one of the following constitutions i.e.

(1) Proprietary Concern,

(2) Partnership Firm,

(3) Private Limited/Limited Companies, 



1.  Proprietory Concern

Bio-data of the proprietor by way of copies of PAN Card/ Passport/ Voters identity card/ Bio-data with photo and signature attestation by Gazetted Officer.

 2. Partnership Firms that are applying for a bank loan for a solar power generation plant

a. Copy of Partnership Deed

b. Copy of Firm Registration Certificate

c. Extract of Form-A from Registrar of Firms (for old firms and in case of additional loans) regarding existing partners as on date.

d. Bio-data of partners and  copies of PAN card/passport/voters identity card/bio data with pass port size photograph and signature duly attested


3. Private Ltd Companies or Public limited companies applying for a loan for solar power generation plants


a. Memorandum & Articles of Association.

b. Bio-data of Promoter Directors affixing colour photo  duly attested /

Copies of PAN Card/Copies of Passport./voters identity card.

c. Resolution of Board of Directors of the company authorising two directors to raise loans from  and sign necessary loan security documents and affix common seal thereof.

d. Copy of certificate of incorporation if it is a Private Limited Co.

e. Copy of Certificate of Incorporation and Commencement of Business in the case of Limited companies.

f. Copy of General Body Resolution u/s.293 (i) (d) of Companies Act in case of Limited Companies, permitting the company to borrow in excess of paid-up capital and free reserves and Resolution u/s.293 (1) (a) of Companies Act for mortgaging the fixed assets of the company in favour of the Corporation.

g. Consent letters from the Directors about furnishing of their personal guarantee with copies of property documents.

h. Search Report from CA/Extract of register of charge from ROC in case of existing companies and companies seeking additional loans.




The primary security can be either leasehold interest or freehold interest . If the solar power plant is going to be started in a leasehold lands, it is called leasehold and if the solar power plant  is going to be started in own lands, it is called freehold.


a. Original Regd. title deed in the name of the Proprietor/ Firm / Company along with certified copy having clear approach road.

b. Pattadar Pass Book/title deed issued by MRO/RDO in the name of the proprietor/firm/company/society.

c. Original/Copies of link documents (Vendor’s title deed) pertaining to the property under the scheme along with copies of Pass Book and Title Deed reflecting the sale entry. If pass book and title deeds are not issued, a certificate from MRO to that effect is required.

d. Extracts of revenue records i.e. Khasra Pahani for 1954-55 along with Pahanies in Telangana Area and 10 (1) along with Adangals in Andhra Area for the last 13 years.

e. No PT Certificate in case of Telangana Area.

f. E.C for 13 years (or) from the date of document if title deed is of beyond 13 years to the date of deposit disclosing all transactions.

g. ULC permission u/s.26/exemption under ULC Act as the case may be in case the land is within urban agglomeration.

h. Permission from Urban Development Authority/ Building Plans if the site is within the Master Plan of Urban Development Authority.

i. Affidavit by promoters to the effect that there are no court cases pending against the property under the scheme.




 Generally, Banks insists for Collateral Security and the percentage of Collateral Security is dependent upon the location and the nature of industry and the nature of loan. Also many Banks insists for preferably urban immovable property towards Collateral Security and preferably belonging to the borrowers. The Collateral Security can be either in the form of vacant land, house, apartment, fixed deposits, Bank Guarantee.


vacant land:

a. Original Regd. title deed in the name of the surety along with certified copies.

b. Original link documents (Vendor’s title deed). 
c. Extracts of revenue records i.e. Khasra Pahani for the year 1954-55

e. E.C for 13 years from the date of document and in case title deed is beyond 13 years from the date of document to the date of deposit disclosing all transactions.

f. ULC permission u/s.26/exemption under ULC Act as the case may be in case the land is within urban agglomeration.

g. Copy of the Approved Layout/Sketch drawn by Mandal Surveyor demarcating the site/plot with Sy.No and boundaries and a land mark for identification.

If it is house:

a. Original Regd.Conveyance Deed along with certified copy.
b. All the relevant Link Documents.
c. EC for 13 years (or) from the date of document in case title deed is beyond 13 years to the date of deposit disclosing all transactions.

d. Tax Demand & Receipt/Ownership Certificate/ Extract of property tax demand register for the last 13 years.

e. Approved building plans from Competent Authority.

If it is an Apartment:

a. Original Registered Sale deed in the name of the surety.

b. Copy of the development agreement and link documents.

c. Copy of the approved building plan.

d. Encumbrance Certificate for the last 13 years.

e. It shall be established that the original title deeds of the project are not mortgaged to bank or any financial institution availing project finance, by way of declaration from Builder/Landlord.

f. Mutation in favour of the surety.

g. Tax Demand and Receipt / Ownership certificate/ EPPDR.



Fixed Deposits as collateral for loan for a solar power plant


a. The beneficiary/payee of fixed deposit should give a consent letter for pledging the fixed deposit with the Bank as Collateral Security in consideration of sanction of loan to the unit to which the security is being offered.

b. The beneficiary/payee of the fixed deposit should also assign the proceeds of fixed deposit in favour of the Corporation by a proper endorsement by the concerned bank.

c. A discharge voucher from the beneficiary/payee of fixed deposit duly affixing necessary revenue stamp (without mentioning the date) on the backside of the FDR. 


Bank Guarantee: 

Individuals who have good banking record and good rapport with the local bank can get bank guarantee to the lending bank.

Such bank guarantees can be considered as collaterals. 

The collateral security can be offered by the borrower by way of Bank guarantee also in such a case the following documents shall be submitted:

1 Bank guarantee executed by the concerned Bank on required stamp paper by the authorized signatories of the Bank affixing their rubber stamp containing the serial number of the signatory as per the Bank rules.

2 A confirmation copy shall be forwarded by the Bank Manager to the lending Bank in a sealed cover by post.

3 A letter from the Bank that they will pay the amount in case the Bank guarantee is invoked in time.


Format for Bank Guarantee


(To be furnished on non-judicial stamp paper of appropriate value as per Stamp Act relevant to place of execution.)


(Note: - Bank Guarantee is to be submitted “on or before estimate processing for evacuation of power generated(A) or before executing any agreement for wheeling/sale of power generated(3 rd party/captive/pooled cost)(B) or 45 days from issuance of technical feasibility, whichever is earlier (A/B/C)” and the bank guarantee amount is Rs.2 lakhs per MW.)


The purpose of this bank guarantee is for early completion of the project within two years from the date of issuing of this Bank Guarantee.


This bank guarantee is valid for two years and two months till the date------------ with additional claim period of one month till the date…………….      


In  consideration  of  the  -----------  [Insert  name  of  the solar power developer ]   (herein after referred to as solar power developer) submitting the proposal for establishment of solar power project of the capacity of ______ MW, at …………[Insert the location], for supply of solar power to APCPDCL (herein after referred to as DISCOM) under third party sale / captive utilization purpose / pooled cost sale to Discom.


This guarantee shall be valid and binding on this Bank up to and including ___[Insert Date]___________ and shall not be terminable by notice or any change in the constitution of the Bank or the term of contract or by any other reasons whatsoever and our liability hereunder shall not be impaired or discharged by any extension of time or variations or alternations made, given, or agreed with  or  without  our  knowledge   or  consent,  by  or  between  parties  to  the  respective agreement.


Our   liability under   this   Guarantee  is    restricted  to    Rs._______(Rs._ only). Our Guarantee shall remain in force until           _[Insert date] / The DISCOM shall be entitled to invoke this Guarantee till                          [Insert date].


The Guarantor Bank hereby agrees and acknowledges that the DISCOM shall have a right to invoke this PERFORMANCE BANK GUARANTEE in part or in full, as it may deem fit.




The Guarantor Bank hereby expressly agrees that it shall not require any proof in addition to the written demand notice by DISCOM, made in any format, raised at the above mentioned address of the Guarantor Bank, in order to make the said payment to DISCOM.

The Guarantor Bank shall make payment hereunder on first demand without restriction or conditions and notwithstanding any objection by -------------[Insert name of the Solar Power Developer] . The Guarantor Bank shall not require the DISCOM to justify the invocation of this PERFORMANCE BANK GUARANTEE, nor shall the Guarantor Bank have any recourse against the DISCOM in respect of any payment made hereunder


This PERFORMANCE BANK GUARANTEE shall be interpreted in accordance with the laws of India and the courts at Andhra Pradesh shall have exclusive jurisdiction.


The Guarantor Bank represents that this PERFORMANCE BANK GUARANTEE has been established in such form and with such content that it is fully enforceable in accordance with its terms as against the Guarantor Bank in the manner provided herein.


This PERFORMANCE BANK GUARANTEE shall not be affected in any manner by reason of merger, amalgamation, restructuring or any other change in the constitution of the Guarantor Bank.


This PERFORMANCE BANK  GUARANTEE   shall  be  a  primary  obligation  of  the  Guarantor  Bank  and accordingly the DISCOM shall not be obliged before enforcing this PERFORMANCE BANK GUARANTEE to take any action in any court or arbitral proceedings against the Solar Power Developer / Project Company, to make any claim against or any demand on the Solar Power Developer / Project Company or to give any notice to the Solar Power Developer / Project Company or to enforce any security held by the DISCOM or to exercise, levy or enforce any distress, diligence or other process against the Solar Power Developer / Project Company . 


The Guarantor Bank acknowledges that this PERFORMANCE BANK GUARANTEE is not personal to the DISCOM and may be assigned,  in whole or in part, (whether  absolutely  or by way of security)  by the DISCOM to any entity to whom the DISCOM is entitled to assign its rights and obligations under the PPA dated: .


Notwithstanding anything contained here in above, our liability under this Guarantee   is restricted to Rs. _________(Rupees ___________ only) and it shall remain in force until            [Insert date] with an additional claim period of thirty (30) days thereafter. We are liable to pay the guaranteed amount or any part thereof under this Bank Guarantee only if the DISCOM serves upon us a written claim or demand.





Power of Attorney No.                              


           [Insert Name of the Bank]


Banker's Stamp and Full Address.


Dated this          day of           , 20   


1.  …………………………………… Signature

Name and Address

2.  …………………………………..




Name and Address



The Stamp Paper of Rs. 100/- Non Judicial Paper should be in the name of the Executing           Bank.





b. For purchase of land, which is an Inam land, occupancy certificate/Form-B patta from competent authority shall be obtained.

c. Assigned lands should not be purchased without prior written permission of RDO.

d. For purchase of joint family property, the borrower should ensure that all the co-parceners of the vendor family join in the execution of the sale deed.

e. For purchase of lands covered under Master Plan of the respective Urban Development Authority, the borrower shall ensure that the proposed land is falling within the Industrial Zone.

f. If the borrowers are seeking loans on land & buildings, the borrower shall purchase the lands in the name of proprietor/firm/company/ society as the case may be.

g. Generally, the Corporation will not accept third party collateral security.


The following are the loan security documents to be executed by the borrowers in favour of the Bank and the required documents for a particular loan are to be taken from amongst the documents mentioned below:

1. Deed of Hypothecation
2. Memorandum of Deposit of Title Deeds
3. Guarantee Agreement
4. Loan Agreement
5. Promissory Note
6. Assignment of Development Rights

The applicable documents from out of the above shall be executed by the borrowers in favour of the Bank.

The solar power developer, in this case the borrower shall pay the necessary stamp duty that is to be payable and applicable in the State of Andhra Pradesh on the security documents.

The above list is not exhaustive and after scrutiny of the documents that are submitted, if some more documents are required for establishing a valid marketable title for the properties being offered as security for the loan sanctioned by the Bank, the entrepreneurs have to submit the same. For any clarifications, you may contact the Legal Officer in the Branch or Legal Department in the Head Office.




  • Brief project report
  • Copy of  company registration certificate
  • Bio-data of proprietor / partners / directors with 2 pasport size colour photographs as per proforma alongwith copies of certificates regarding academic qualifications, experience etc.
  • Solvency declaration of proprietor / partners / directors as per proforma (on rs.20 non-judicial stamp paper)
  • Copy of partnership deed & firm registration in respect of firms/memorandum and articles of association & certificate of incorporation in respect of companies.
  • Copy of land sale deed/ sale agreement / allotment letter of apiic ltd.
  • Building plans (approved plans in respect of hotels/nursing homes/commercial & residential complexes proposals)
  • Civil estimates
  • Letter from the lessor expressing willingness to let out the building and execution of regd. Lease agreement for 25 years in the unit is proposed in leasehold lands with rough plan.
  • Quotations for machinery and equipment from standard suppliers alongwith comparartive quotations.
  • Copy of panchayat / municipal approval.
  • Copy of power feasibility letter from a.p.transco.
  • Copies of collateral security property documents.
  • Working results (audited balance shdeets and profit & loss accounts) for the last 3 years in respect of existing units and the provisional for the current year with all schedules.
  • Working results (audited balance shdeets and profit & loss accounts) for the last 3 years of associated concerns of promoters, in the case of existing cos.
  • Particulars of available assets (land, buildings, machinery) in respect of existing unit.
  • Other details such as raw material & market tie-ups, technology tie-up with background of technical consultant etc.
  • .

    Copy of PPA

    Credentials of the party providing PPA

    URL of the party providing PPA

  • Service charge @ 0.5% of loan applied 12.36% service tax on the service charges at the time of filing the application.
  • Upfront fee @ 0.5% of the loan sanctioned 12.36% service tax on upfront fee at the time of first disbursement.


Steps involved

1) Register a company (Proprietorship or Partnership or Pvt Ltd or Public Limited) for setting up Solar power Project. Get accredition. Get registered with mnre. Preferred for REC projects.

2) Open a bank account in the new company name if you are an individual . Old name will do if you intend running the solar power generation in the old company’s name.

3) Acquire adequate  land on your company name for setting up Solar Power Project. Create provision for evacuation or atleast get flow study done.

3) Deposit 10% of the project cost in the bank account on company name and take proof of funds from the bank.
4) GET Accredition from local NLDC. GET “ flow study “ approval from Transco. Prepare DPR

5) PPA copy to be there in the DPR or bank loan application.  Get permission to feed power to the T&D network

Bank loan application to have 

1) Proof of Land Ownership , patta, unencumberance certificate
2) DPR,
3) PPA / 
4) Company incorporation certificate by an auditor
5)  Bank Balance in the new bank account.





Equity funding: This is probably the best way to fund and manage a solar power project. Not many developers will have their own funds. 

Pre financing by EPC companies: This can be done by EPCs.But mostly most EPCs operate on tight budgets. The profits in EPC business is not much and hence to expect funding from them is not right.  

Suppliers credit : Normally given by module manufacturers from usa and china to large customers, it is not equity funding, but it helps a lot.  It is also possible to get such credits from  Inverter makers and Tracking sistems makers. That is in case you are going for a tracking sistem.  Especially those tracking sistems that claim over 25 % increase in efficiency can afford to give some credit as they can recover their money from the increased power generated. Many of these companies are funded by VCs and may have provision to give suppliers credit

Non-recourse project financing 

This is the preferred financing structure, wherein the lending institutions would provide debt to a special purpose vehicle set-up for the project and would have a lien on the project’s cash-flows. However as this structure does not provide recourse to the developer’s balance sheet, lending institutions require rock-solid agreements for revenues from the projects. The above structure gives an option for obtaining non-recourse Project Financing. However the developer needs to ensure that the following are in place to make the

lending institutions comfortable Performance – Contractual guarantees from technology providers for the long-term performance of the plant revenues – Long-term power purchase agreements with credible consumers, i.e. direct power sale to the consumer. As discussed above, the current structure of the JNNSM PPA may not be bankable due to the credibility of many states. The government has been contemplating a tri-partite agreement between the developer, state discom and the Reserve Bank of India to ensure the PPAs bankability, however this is not confirmed yet.

 RenewableEnergy Certificate – developers can forego the preferential tariff and trade the RECs on the energy exchange. However the market is in its nascent stage and depends on the state’s renewable purchase obligations.

 Project viability – In addition to the above, developers must convince lenders that projects are viable and have the capability of repaying debt without outside assistance. This could mean that the project has to fund a Debt-Service-Reserve-Account in addition to having healthy


Other options for financing 

Other non-conventional options for financing include:





 1.What is U.S. Ex-Im bank? Or 

   Who are the beneficiaries of U.S. Ex-Imbank financing?

  • U.S.Ex-Im Bank financing is usually the most cost-effective source of financing for international customers to purchase U.S. made technology.
  • U.S. Ex-Im Bank: top priority to support renewable energy & environmental exports
  • U.S. Ex-Im Bank supports short, medium, and long-term financing to creditworthy international customers, and working capital guarantees to U.S. exporters
  • U.S. Ex-Im Bank is interested in any size project

 2. What are the advantages of U.S. Ex-Im bank financing over Indian banks? 

  • The interest rate offered is lesser than Indian banks. You can get limited recourse financing. You can get financing far more than the traditional 70%:30% :: debt:equity structure. 

 3. Who is eligible for U.S. Ex-Im bank financing? 

  • All big companies with clean and healthy balance sheets are eligible for U.S. Ex-Im financing. 

 4. What kind of financing is provided by U.S. Ex-Im bank? 

  • U.S. Ex-Im supports solar projects on a project finance (limited recourse) basis as well as does balance sheet financing. 

 5. Does the bank have any special programs for renewable energy projects? 

  • Terms of up to 18-years for renewable energy projects.
  • Up to 30% local cost support within the U.S. scope of supply.
  • Capitalization of interest during construction.
  • Creation of the Office of Renewable Energy & Environmental Exports in 2008.
  • Creation of a Renewable Energy Express Program in 2010. 

 6.Renewable Energy Express sounds interesting, but what is it all about? 

  • Renewable Express: Renewable Express helps Indian buyers of U.S. clean-energy equipment, technology and services by providing streamlined financing for small clean-energy projects. U.S. Ex-Im Bank can process transactions of between $3 million to $10 million in as few as 60 days.

 7.What is the clean energy portfolio like?

  •  Today, it is a highly active portfolio exceeding $3 billion that includes financing for exports of renewable energy equipment, energy efficiency technologies, wastewater treatment projects, air pollution technologies, waste management services, and other goods and services.

 8. What is the easiest way to avail U.S. Ex-Im bank financing? 

Direct Loan

  • Direct Loans made by U.S. Ex-Im Bank to a foreign buyer.
  • Interest rate for an 18-year Direct Loan is 2.95% (as of November 14, 2012).
  • The International borrower submits the Direct Loan application.
  • U.S. Ex-Im Bank requires the buyer to make a cash payment to the exporter equal to atleast 15% of the U.S. supply contract.
  • 15% cash payment can either be borrowed from a lender or the exporter, or befrom the buyer’s own funds.
  • Shipping must be made on U.S.-flag vessel (except air shipments).

 9. Is any kind of guarantee required for availing an U.S. Ex-Imbank loan? 

Loan Guarantee

  • Guaranteed Loans made by commercial banks (U.S. or foreign) to a foreign buyer with a 100% unconditional repayment guarantee from U.S. Ex-Im Bank.
  • Guarantee covers 85% of the U.S. content of the transaction.
  • Banks often finance the 15% required cash payment.
  • Guarantee available in major foreign currencies.
  • U.S. Ex-Im Bank also has Local Currency Loan Guarantees. 

Working Capital Guarantee

  • U.S. Ex-Im Bank provides 90% repayment Guarantee for working capital loans.
  • The Working Capital Guarantee serves as the collateral to the commercial lender by mitigating the risk inherent when the source of repayment for the loan is an overseas contract.
  • Enables exporters to finance materials, labor, and overhead to produce goods/services for export.
  • In FY 2011, Calisolar, Amonix, Suniva, Miasole, Southwest Windpower, and others used this program to finance production for export sales. 

 10.  First Solar is a big solar panel manufacturing company in the US. Have any projects benefitted from using First Solar modules/panels? 

  11.  Are joint ventures and/or subsidiary companies also eligible for U.S. Ex-Im bank financing?

  •  Solar Field Energy Two, a wholly owned subsidiary of Kiran Energy Solar Private Power Ltd. gets U.S. Ex-Im funding for their solar project! 
  • Mahindra Surya Prakash, a joint venture of Kiran Energy and Mahindra Holding Ltd., received loan for two solar facilities.

  12. Can a long-term financing be entered into? 

 13.  Can same company apply for loan 2nd time around albeit for a different project? 

  • Azure Power again gets a nitrogen boost for its solar business in the form of $70.35 million loan from U.S. Ex-Im bank.  

 14.  Are only solar PV projects eligible or solar thermal (CSP) projects also? 

 15.  What if I, as a company would like to go for a consortium of lending institutions and U.S. Ex-Im bankbe one of them?

  •  Welspun Energy secures the financial closure for their solar PV project in Rajasthan. In achieving this financial closure a consortium of lending institutions were involved.

 16 .What is the duration for provision of loans?


How does one benefit from U.S. Ex-Im loans for renewable energy projects? 


1. Medium-Term

  • Typically up to five years repayment and under $10 million
  • Export-Credit Insurance and Guarantees of Commercial Loans.


  • Quick turnaround
  • Covers both capital goods and services
  • Lower financing costs with negotiated interest rates Covers both principal and interest


2. Long-Term

  • Typically up to 10 years repayment or over $10 million
  • Guarantees of Commercial Loans


  • Extended repayment terms depend on the project but could be up to 18 years for renewable-energy power
  • Available in U.S. dollar and foreign currencies, including the Indian rupee
  • Negotiable interest rates with fixed interest- rate options
  • Tailored principal repayment profiles available.


 17. What is the fee charged by U.S. Ex-Im for providing services?


 18. I’m interested in applying, how do I apply for a loan?


How do I know if I’m eligible to apply?

ü  Procedure for applying to a U.S. Ex-Im bank loan

ü  Eligibility requirement for applying to a U.S. Ex-Im bank loan 

 19.Can I get more detailed information about availing loan from U.S. Ex-Im bank?


ü  Detailed information about various types of loans and related products on offer by U.S. Ex-Im bank for renewable energy (solar) project developers


   Export credit agencies / International investment cum insurance agencies     US EXIM 0.7% (LIBOR27) 3.5%  (Margin) 6.5% (Hedging) = 10.7% Loan Up to 80�sed on value of imports 9 – 16 years duration    Approx. 1.45  DSCR  

  Borrowing from the US EXIM bank has certain limitations for projects.  

 The total consideration of project cost for debt can only be a maximum of 30% over and above the cost of imports from the US. As this financing option is usually based on module imports and prices for modules account for only around 40% of the total project cost, the developer will need to club a US EXIM loan with another source of finance, thereby potentially increasing the cost of procuring debt.    The timelines for financial closure for projects under different policies in India range from six to eight months. TUS EXIM bank can take between six to nine months to process loan requests. Developers aiming for a US EXIM loan usually have to arrange for alternative bridge financing  The long processing time is attributed mostly to the lengthy legal, technical and financial due diligence undertaken by the bank. The due diligence  increases transaction costs.   US EXIM financing is ideal for projects of size 10 MW and above. Only  such projects can bear the high transaction costs. Moreover, to qualify for US EXIM financing, the project developer must import modules and in some cases other equipment from the US.        

Important International  export  credit agencies/export insurance agencies are: Euler Hermes Kreditversicherungs-AG (Germany), China Export & Credit Insurance Corporation (China), Nippon Export and Investment Insurance (Japan), Korea Trade Insurance Corporation (South Korea), Swiss Export Risk Insurance (Switzerland), Export Finance and Insurance Corporation (Australia), OesterreichischeKontrollbank AG (Austria), Export-Import Bank of Malaysia Berhad, (Malaysia), Export Development Canada (Canada), Hong Kong Export Credit Insurance Corporation (Hong Kong).


Foreign funding – Large project developers can tap international banks to get

lower rates of finance. However, hedging can put a substantial dent in the rate differential and only someone ready to take the currency risk should resort to this option.

The idea of collecting large number of small projects and approaching exim bank or LIbor , doesnt make much sense. it can probably operate as suppliers credit. At best.

SBICAPS   SBI Capital Markets (SBICAPS)  

finances solar projects.  Foreign banks in general are  open to lending to Indian investment banks for a portfolio of similar projects. This debt is then passed on to the developers with a margin and a hedging charge. The actual lending to the developer takes place based on RBI guidelines.

SBICAPS has been involved with the financing of projects developed by Tata Power Co., Kiran Energy, Sunborne, Alex Astral and Acme Tele Power.

There are other investment banks operating in India include the

Bank of America,

Barclays Capital,

BNP Paribas,


Credit Suisse,        





        OPIC   The Overseas Private Investment Corporation (OPIC)is the U.S. government’s development finance institution.  OPIC  supports solar in India by providing  financing, guarantees, political risk insurance, and support for private equity investment funds.  OPIC  has committed  Rs 55 billion  to the renewables sector globally last year and nearly one-quarter of it had been earmarked for India.  OPIC is  involved in financing of projects by Azure Power and Sun Edison in India.


  IREDA   The Indian Renewable Energy Development Agency (IREDA) is a development funding institution but operates as a NBFC under the administrative control of MNRE for providing term loans for renewable energy and energy efficiency projects.


IREDA has  a Rs 13 billion  of credit from KfW for a broad mandate of promoting renewable power in India but has not been particularly active in financing utility scale solar projects till date. IREDA also provides loans to other banks at interest rates as low as 2-5% so as to incentivize them to finance renewable projects. Your bank manager can work with IREDA to get low cost funding. It is a less known and less used route.    



ADB   ADB  provides financing support under the India Solar Generation Guarantee Facility (ISGGF), under its Asia Solar Energy Initiative (ASEI) . Apart from providing debt as per ADB’s LIBOR-based lending facility towards solar transmission infrastructure in Gujarat, ADB also considers direct financing and/or guarantees for projects greater than 25 MW. Reliance Power’s 100 MW CSP plant has been partially financed with both debt and equity participation by ADB. Under ISGGF, ADB provides partial credit guarantees (PCGs) available to local and foreign commercial banks that finance private sector solar power plants in the country. This guarantee covers up to 50% of the payment default risk on bank loans made to project developers. Currently, two commercial banks have been approved by ADB as eligible partner banks: L&T Infrastructure Finance Company Limited (India) and the NorddeutscheLandesbank (abbreviated Nord/LB, Germany). ADB aims to support 3 GW of solar power capacity in developing member countries by May 2013.



KfW and DEG   Germany’s KfW and DEG are also invest in  the Indian solar market. KfW is involved in lending to a 125 MW project by Mahagenco in Maharashtra and DEG has provided Rs 6.80cr  risk capital in the form of Compulsory Convertible Debentures (CCDs) to Azure Power     Other active sources for funds Japan International Cooperation Agency (JICA), U.K Department for International Development Cooperation (DFID), Netherlands Development Finance Company (FMO), the European Bank for Reconstruction and Development (EBRD), the European Investmet Bank (EIB) and the Islamic Development Bank (IsDB)




 Indian banks are being very conservative, insisting on 1.2-1.3 DSC ratio. For project economics to look more attractive to developers, DSC ratios should be at a minimum of 1.1-1.15. At this rate, the attractiveness of several projects begins to change substantially.


L&T Infrastructure Finance Company (subsidiary of L&T Financing Holdings),

 Power Finance Corporation (PFC), 

 Mahindra Finance, 



SBI Capital Markets and 

 Indian Renewable Energy Development Agency (IREDA). 

US EXIM bank an  active Export Credit Agency (ECA). IFC,

a member of the World Bank Group

 has provided financing for projects by developers such as Green Infra, Mahindra Solar, Azure Power and SunEdison India. 

ADB provides financing support under the India Solar Generation Guarantee Facility (ISGGF), under its Asia Solar Energy Initiative (ASEI) to promote the development of solar energy in India. Currently, two commercial banks have been approved by ADB as eligible partners: L&T Infrastructure Finance Company Limited (India) and the Norddeutsche Landesbank (abbreviated Nord/LB, Germany).



A demand for the creation of a separate window under the National Clean Energy Fund (NCEF) has been made by the industry. It may provide a boost to the country’s domestic solar energy projects by providing easy access to finance for such clean energy technology, the industry has stated in a FICCI white paper.

The paper on reducing the cost of finance for solar energy projects through NCEF has been submitted to the government for consideration.

The Fund was announced in the budget 2011-12 and is expected to be a step for funding research and innovative projects in clean energy technology. The white paper in essence, suggests innovative models for sharing and distribution of risk and cost of financing through NCEF as the cost of financing from the domestic Financial Institutions is high.

“Given the challenges faced by the solar industry in India due to the high cost of finance, the government’s decision to extend an interest subsidy from the NCEF for enabling lowering the cost of finance for renewable energy projects is a commendable step,” states the white paper.

The paper recommends that the interest subsidy be made available for eligible projects and routed through the lenders to such projects so that borrowers would get lower interest rates for the loans while the lenders directly receive the subsidy. The FICCI Solar Energy Task Force was launched in February 2010, with the launch of Jawaharlal Nehru National Solar Mission (JNNSM) to provide a platform for the solar energy sector to deliberate on policy and regulatory issues and advance interests of the sector at domestic and global platforms.

The document states that since solar energy projects are treated on par and as part of all power sector and categorised under power for categorisation and monitoring of sector exposure, it limits the availability of finance to the sector. Treating solar energy projects under a separate category (say, Renewable Power) or under a sub-limit, similar to RPO norms stipulated by Electricity Regulatory Commissions, will provide the much needed fillip to lending to solar energy projects. In view of the absence of a separate exposure limit to renewable energy, providing a thrust to the sector for creating additional funding mechanisms becomes an imperative.

An interest subsidy could be made available for eligible projects and routed through the lenders to such projects. Thus, borrowers would get lower interest rates for the loans (not a reimbursement) while the lenders directly receive the subsidy. Since number of projects seeking such interest subsidy will be relatively large, some selection mechanism will have to be implemented to select such projects.

One way to select such projects can be in line with the Ministry of New and Renewable Energy (MNRE) scheme for rooftop subsidy, where-in channel partners can directly seek subsidy on behalf of customers. In a similar way, the Concerned Nodal Agency (CNA) can have banks as channel partners where-in Banks would be able to seek interest subsidy directly on behalf of projects. Under such a mechanism, banks acting as Channel Partners would do their own due diligence on the projects before approaching MNRE or the CNA. This will ensure that only quality projects get such an interest subsidy.

Since there are no industry-wide benchmarked interest rates, domestic lenders typically lend on semi-fixed rate, that is, interest rate linked to a base rate which is reviewed from time to time. Such fluctuation in the rate of interest is borne by the borrowers. The lenders may be incentivised to provide fixed interest rate loan for three to five years by providing an additional interest subsidy (for instance, 1-2 per cent per annum higher than the regular interest subsidy). Cost of financing can also be brought down through a guarantee scheme that guarantees a certain percentage of exposure to banks.

Non-performance of this guarantee scheme can be funded through the NCEF. NCEF will need to create a corpus that will act as a backstop determined based on an assumed default rate. To prevent the issue of moral hazard, guarantee can be provided on 50 per cent of exposure to the bank.


The ministry is gradually running out of funds allocated for giving  subsidies , this is a fact .FICCI has advised to use  NCEF fund however , as it was already commented by  joint secretary  Tarun Kapoor in RENERGY 2013 in chennai  "We are currently getting part of the funds used for subsidy from the National Clean Energy Fund and we are talking to them for more funds," he added.


The white paper is of the view that interest rates in India are high compared to other countries including developed and other emerging markets such as China. While loans from international organisations are available at a low interest rate, the hedging costs have impeded its utility. While multilateral agencies are willing to lend, they do not want to take the Rupee exposure. In case of floating rate, the hedging cost includes cost of hedging currency and cost of hedging interest rate. Both these costs lead to a much higher effective cost of debt. As a result, a fully hedged loan in foreign currency, for example the US Dollar, becomes expensive. It is suggested that while the fluctuation in the rate of interest in the case of international loans may be borne by the borrower, the currency should be hedged with government support.








India, with its high annual solar yield and large number of sites ranks 4th in solar power destinations. The annual solar energy yield ranges between 1700-1900 kWh per m2 per year which ranks India amongst the highest solar radiation receiving countries of the world. Furthermore, favorable policy support from the government is making India a hot-spot for solar generation.


The managing director of Indian Renewable Energy Development Agency Ltd (IREDA), said that India is facing a major problem -- that is, how do we get the financial community to seriously look at solar.


Types of Financing


The two major financing mechanisms are equity and debt financing


  1. Debt
    1. Project Finance
  2. Equity
    1. Private Equity
    2. Venture Capital


Debt Financing includes both short-term borrowing from financial institutions and the sale of long-term bonds, wherein money is borrowed from investors for a fixed period. Lenders have right to interest and principal payment or to be repaid at a particular date.

Debt Financing for Solar Energy � Highlights

(1)    Debt: Equity  70:30 ( The Project developer should contribute a minimum of 30% of the total capex and the rest 70% will be funded by any of the financing institutions)

(2)    A loan tenure of 7 to 8 years inclusive of a 1 year moratorium

(3)    Interest rates range between 11-11.5%  (fixed)

Equity financing refers to the use of retained earnings otherwise paid to stockholders, and the issuance of stock. Both forms of equity financing use funds invested by the current or new owners of the company. The equity financiers� returns are usually paid in dividend payments and depend on the growth and profitability of the business.


For medium and large capital requirements (upwards of $100 million), private equity is the most optimal route, as venture capital companies try to invest relatively smaller amounts. They are hesitant to invest in emerging technologies and other potentially high risk ventures.


Venture capital companies look for innovative (and hence more risky) but high return investment opportunities.

General eligibility criteria for solar energy loans:

Who Can Apply?

  • Public, Private Ltd companies, NBFCs and registered Societies
  • Individuals, Proprietary and Partnership firms (with applicable conditions)
  • State Electricity Boards which are restructured or in the process of restructuring and eligible to borrow loan from Power Finance Corporation (PFC) or Rural Electrification Corporation (REC)



  • Profit making companies with no accumulated losses.
  • Debt Equity Ratio not more than 3:1 (typically 5:1 in case of NBFCs)
  • No default to any government agency (IREDA/PFC/REC) and other FIs / Banks
  • No erosion of paid-up capital.


Challenges in Financing


Despite the favorable policies and support being provided by the centre and state governments, solar power remains a risky and expensive option for power generation. It is expected that solar projects may reach grid parity in the coming years, however, that is a distant dream and currently the cost of generation (levelised) far exceeds conventional as well as other renewable power.


The particular risks to solar projects that make financial institutions uncomfortable are:


Technology- Solar technologies are at a nascent stage in India and there are considerable risks in execution of the projects. Crystalline cells and modules are comparatively easier to execute and less risky as manufacturers generally guarantee the products for 20 years. However newer technologies like thin-film and concentrated PV, may provide lower up-front costs, but are unproven and therefore considered more risky.


Power Purchase Agreements � the current draft of the JNNSM provides for a �trader PPA� with NVVN (NTPC Vidyut Vyapar Nigam Ltd. � a wholly owned subsidiary of NTPC Ltd incorporated for the purpose of trading power), which passes on the risk of default by state discoms to the developer. Given that many state discoms are notorious about delaying payments and even defaulting, financial institutions refuse to consider these PPAs bankable.


Estimation of Solar Radiation � The returns of a solar project are highly sensitive to radiation levels. High quality solar radiation data is a pre-requisite for proper market assessment and project development. Hence, solar radiation assessment is a very important activity and typically requires several months for ground measurement of solar radiations. Any error in solar resource estimation adds an uncertainty to expected future returns. As of now, on-ground solar

Radiation data is sketchy and the simulation models are at a preliminary stage.


Evacuation Infrastructure � Evacuation of the electricity generated from power plants located in isolated areas is a potential challenge. It may require development of new transmission lines which are often controversial, both because of their expense and the potential of damage to property and environment.


Other options in financing


Other non-conventional options for financing include:


EXIM financing � the United States export-import bank provides financing for projects which import a substantial part of the project components from US. This is a good option in case the main technology provider is from the US and has relations with the EXIM bank.


Foreign funding � Large project developers can tap international banks to get lower rates of finance. However, hedging can put a substantial dent in the rate differential and only someone ready to take the currency risk should resort to this option.


Green Energy funds � there are many green energy funds currently in the market and these can provide equity, quasi-equity and mezzanine financing.


Financial Institutions that Fund RE Projects in India













SBI Caps

Yes Bank


List of Venture Capital and Private Equity Companies in India Active in the Renewable Energy Sector Private Equity


 3i Group

ADB Capital

Apax Partners

Axis PE

Barings Private Equity


BTS Investment Advisors


GE Equity

Global Environment Fund


IFC ( a division of World Bank)

Merrill Lynch Private Equity

Tano India PE Fund


Venture Capital


 Aureos South Asia

Battery Ventures

Bessemer Venture Partners

Canaan Partners

Citigroup Venture Capital

Draper Fisher Jurvetson (DFJ)

Eplanet Ventures

Footprint Ventures




Intel Capital India

Lightspeed Venture Partners


Nexus India Capital

Reliance India Power Fund


Silicon Valley Bank

Trident Capital




Finance for solar projects in India !


Why cant we get financing like how Clean Power Finance provides for consumers in usa ! If we have such project financing for solar energy in India, Indian solar energy will boom and India's  economy too will boom.


How do the residential financing for solar power works in usa. Can we not have the same model working here in India for solar energy finance.


Read more here 


 Sunray Solar, Clean Power Finance Partner To Offer Consumers A More Affordable Solar Solution

Sunray Solar™, a leader in simple, affordable solar solutions, has partnered with Clean Power Finance to bring more affordable financing options to homeowners interested in clean low cost energy solutions. As a leading provider of residential financing for the solar industry, Clean Power Finance will provide unparalleled support, enabling both organizations to expand into more markets throughout the United States.

The partnership with Clean Power Finance supports Sunray Solar's focus on delivering the absolute best solar solutions available while extending the company's ability to offer affordable solar power to more consumers.  According to the Solar Energy Industries Association, residential installations in the United States grew by 21 percent toward the end of 2011, and analysts and industry experts expect to see continued demand for residential solar in 2012 and beyond.



List of Private Equity Firms in India
2i Capital (India) Private Ltd - Bangalore3i India - New DelhiAIG INV Corporation (Asia) Ltd - MumbaiAPIDC-Venture Capital Ltd HyderabadAavishkaar India Micro Venture Capital FundAavishkaar India Micro Venture Capital Fund - MumbaiAccel Partners & Co Inc - BangaloreAcer Technology Ventures Asia Pacific - BangaloreAlliance DLJ Private Equity Fund - BangaloreAlliance Venture Capital Advisors Ltd MumbaiAnandrathi Real Estate FundApax Partners India Advisers Pvt Ltd MumbaiAvendus Advisors Pvt. Ltd.Avigo Capital Partners DelhiBTS Investment Advisors Private Ltd MumbaiBTS Investment Advisors Pvt. Ltd.Bank America Equity Partners (India) MumbaiBaring Private Equity Partners (India) Ltd New DelhiBaring Private Equity Partners (India) Pvt Ltd GurgaonBaring Private Equity Partners India Ltd.CDC Capital Partners [South Asia] DelhiCanbank Venture Capital Fund LimitedCanbank Venture Capital Fund Ltd BangaloreChrysCapitalChrysCapital Investment Advisors New DelhiChrysalis Capital MumbaiCipher Capital Advisors Pvt Ltd MumbaiCiti Alternative InvestmentsCitibank Private Equity Ltd New DelhiClearstone Venture Advisors Pvt Ltd MumbaiConnect CapitalCreditcapital Venture Fund (India) Ltd New DelhiDE Shaw India Advisory Services Private Ltd MumbaiDE Shaw India Software Private Ltd HyderabadDHFL Venture Capital Fund India Pvt MumbaiDraper Fisher Jurvetson BangaloreDuke Equity Partners MaharastraEvolvence Advisory Services Pvt. Ltd.Fidelity India Capital Partners MumbaiFrontline StrategyGE Capital Services India Ltd GurgoanGVFL Ltd.GVFL Ltd AhmedabadGW Capital Pvt. Ltd.Gaja Capital PartnersGaja Capital Partners MumbaiGlobal Internet Ventures LLC (GIV) BangaloreGrass Valley Group BangaloreGujarat Venture Finance Ltd AhmedabadHBSC Private Equity Management Mauritius Ltd New DelhiHSBC Private Equity Advisors (India) Private Ltd MumbaiHSBC Private Equity Management Mauritius LtdHansuttam Finance Ltd New DelhiICF Ventures Private Ltd BangaloreICICI Venture Funds ManagementICICI Venture Funds Management Co Ltd BangaloreICOS CapitalIDFC Private EquityIDG Ventures India BangaloreIFB Venture Capital Finance Ltd CalcuttaIFCI Venture Capital Funds LtdIFCI Venture Capital Funds Ltd (IVCF) New DelhiIL & FS Investment Managers Ltd MumbaiIL & FS Venture Corp Ltd New DelhiIL&FS Venture Corporation Ltd.India Value FundIndia Value Fund BangaloreIndia Value Fund MumbaiIndian Angel NetworkIndian Direct Equity AdvisorsIndian Direct Equity Advisors Pvt Ltd MumbaiIndocean Chase Capital Advisors MumbaiIndus Venture Management Ltd MumbaiIndustrial Venture Capital Ltd ChennaiInfinity Technology Investments Pvt Ltd - BangaloreInfinity Technology Investments Pvt Ltd - MumbaiInfinity Technology Investments Pvt Ltd - New DelhiInfinity Venture FundIntel India BangaloreIntel India MumbaiJina VenturesJumpStartUpJumpStartUp Fund Advisors Pvt Ltd BangaloreKarnataka Asset Management Co Pvt Ltd BangaloreKarnataka Asset Management Company Pvt.Ltd.Karnataka Information Technology Venture Capital Fund BangaloreKerala Venture Capital Fund (P) Ltd.Kerala Venture Capital Fund Pvt Ltd KochiKotak Private Equity GroupLightspeed Venture Partners BangaloreLightspeed Venture Partners New DelhiMarigold Capital Services Ltd MumbaiMatrix India Asset Advisors Pvt Ltd MumbaiMefcom Capital Markets Ltd.NIIT Venture New DelhiNavis Capital (India) Private Ltd MumbaiNew Path VenturesNewbridge Financial Advisors Put Ltd MumbaiNokia Growth Partners GurgaonNorwest Venture Partners BengaluruNorwest Venture Partners MumbaiNovaStar Capital BangaloreOch-Ziff India Private Ltd MumbaiOrbiMed Advisors LLC MumbaiPSi Inc.Paracor Capital Advisors (P) Ltd GurgaonPassion FundPathfinder Investment Co Ltd PunePradeshiya Industrial and Investment Corporation of UP LtdPrivate Equity Partners SGR SpA MumbaiProvidence Equity Partners Inc New DelhiPunjab Venture Capital Ltd.Punjab Venture Capital Ltd ChandigarhRabo India FinanceRajasthan Venture Capital Fund (RVCF)Rajasthan Venture Capital Fund JaipurRedclays Capital - Private Equity and Venture CapitalRedclays Capital Pvt Ltd BangaloreReliance Technology Ventures Ltd MumbaiRisk Capital & Technology Finance Corporation Ltd (RCTC) - New DelhiSAIF PartnersSAIF Partners GurgaonSICOM Capital Management Ltd PuneSIDBI Venture Capital Limited (SVCL)SIDBI Venture Capital Ltd - MumbaiSage Modern Capital - New DelhiSamara CapitalScroder Capital Partners (Asia) Ltd - MumbaiSicom VentureSiemens Venture CapitalSiguler Guff & Co LLC - MumbaiState Street Global Advisors IndiaSterling Technology & Venture Corp - MadrasSun F&C Asset Management (I) Pvt Ltd - MumbaiTA Associates Inc - MumbaiTDA Capital Partners Inc (India Liaison Office) - MumbaiTPGTVS Venture Fund Private Ltd - ChennaiTano Capital LLC - MumbaiTata Investment Corp Ltd - MumbaiTechcap IndiaTempleton India Private Equity Fund - MumbaiTexas Pacific Group - MumbaiThe Carlyle Group DubaiThe View GroupTishman SpeyerUTI VenturesUTI Ventures - BangaloreUnit Trust of India - Technology Venture Unit Scheme - BangaloreUnit Trust of India - Technology Venture Unit Scheme - MumbaiUsha Martin Ventures Ltd - CalcuttaUttar Pradesh Venture Capital Fund - MumbaiVIEW Advisors Private Ltd - MumbaiVentureastVentureast-APIDC HyderabadVickers Ballas Securities India Pvt Ltd - New DelhiWalden - Nikko India Management Co Ltd - BangaloreWalden - Nikko India Management Co Ltd - MumbaiWalden International India - MumbaiWalden Nikko India Management Co. Ltd.Warburg Pincus India Pvt. Ltd.Warburg Pincus India Pvt Ltd - MumbaiWest Bengal Venture Capital Fund Trust for IT Telecom & Electronics - CalcuttaWest Bridge Capital Partners Advisors - MumbaiZephyr Management Africa (Pty) Ltd - BangaloreesdevNET Inc-------------------------------------------------------



Renewable Energy Project FinanceNREL - National Renewable Energy Laboratory

Skip to ContentFunding Solar Projects at Federal Agencies: Mechanisms and Selection CriteriaBethany K Speer's pictureSubmitted by Bethany K Speer on Mon, 04/09/2012 - 9:00amShareThis
These are how renewable energy project finance is happening in usa. It will soon happen in India too. 
May be with some necessary modification.

Implementing solar energy projects at federal facilities is a process. The project planning phase of the process includes determining goals, building a team, determining site feasibility, and selecting the appropriate project funding tool. This document gives practical guidance to assist decision-makers with selecting the funding tool that would best meet their site goals. Because project funding tools are complex, federal agencies should seek project assistance before making final decisions.

High capital requirements combined with limits on federal agency energy contracts create challenges for funding solar projects. Solar developers typically require long-term contracts (15-20) years to spread out the initial investment and to enable payments similar to conventional utility bill payments. In the private sector, 20-year contracts have been developed, vetted, and accepted, but the General Services Administration (GSA) contract authority (federal acquisition regulation [FAR] part 41) typically limits contract terms to 10 years. Payments on shorter-term contracts make solar economically unattractive compared with conventional generation. However, in several instances, the federal sector has utilized innovative funding tools that allow long-term contracts or has created a project package that is economically attractive within a shorter contract term.

Part I: Selecting a Project Funding Tool

The following sections outline five funding tools that federal agencies have used to implement solar projects. Each section includes a short description, advantages and challenges, and rules of thumb to judge the appropriateness of the funding tool. There are many exceptions to the rules of thumb listed, and a project could be implemented through one funding tool or a combination of them. Agencies also have access to free assistance through the U.S. Department of Energy's (DOE) Federal Energy Management Program (FEMP) financing specialists [1]. It is also good practice to gauge developer interest before moving to implement a funding tool.

Agency-Funded Project

Agency-funded or agency-appropriated projects have money designated for the outright purchase of a solar energy system. The government owns the system, its energy production, and all the environmental attributes produced (e.g., solar renewable energy credits [SRECs] and clean energy credits [CECs]).

  • Well-understood project funding tool
  • Similar to many federal capital projects
  • Incurs no financing costs
  • Stable long-term energy prices
  • Agency is responsible for operations and maintenance (O&M) arrangements (including inverter replacement) but can purchase an O&M service contract
  • No assurance of long-term performance (can purchase optional long-term performance guarantees, which differ from a manufacturer’s warranty)
  • Cannot monetize available tax incentives
  • Appropriations may not be readily available for the project

If the agency has budgeted funding for a solar project that meets its goals, then purchasing a system could be the preferred option as it tends to lower internal transaction costs and is likely to have a lower overall cost to the taxpayer. However, an agency-funded project may not produce the best project-level economics as tax benefits cannot be utilized.

Agency-Funded Project Examples2

GSA Federal Center, Denver, ColoradoSocial Security Administration, 
Philadelphia, Pennsylvania
This photo depicts solar photovoltaic panels at the Denver Federal Center

Photo from Dave Mowers; U.S. General Services Administration (GSA), NREL/PIX 17421

Shown here are high-temperature hot water panels at the Social Security Administration building in Pennsylvania

Photo from Ed Hancock, Mountain Energy Partnership

  • 1.19-MW PV system
  • 6 acres of land
  • Generated 1,726,000 kWh in 2008
  • High-temperature hot water
  • 54 m2 gross collector area (evacuated tube)
  • 143 million Btu/year (estimated)

Broadly we can replace Federal with Central Government for India. 

Financing for Indian Government projects will more or less happen this way.So, it is important to read and understand for all those in Finance in solar energy companies to read this article from NREL usa.


Federal On-Site Renewable Power Purchase Agreement

Federal on-site renewable power purchase agreements (PPAs) are contracts for energy. On-site PPAs have been used to finance solar projects in the private sector since 2003 and are now commonly used for commercial installations. Under an on-site renewable PPA, a private entity installs, owns, operates, and maintains the customer-sited, solar energy generation system. The federal facility purchases electricity or thermal energy through a long-term contract with specified prices. Payment is based on actual energy (kilowatt-hours or MMBtu) generated from the solar equipment and consumed by the site. On-site renewable PPAs are more common for solar electric than solar thermal installations, but they can be used for either system type [3]. FEMP offers more details in its PPA Quick GuidePDF.

  • Private developers may be eligible for tax incentives, RECs, and accelerated depreciation, and these savings can be passed along to the agency in the form of a lower electricity rate
  • Agency is typically not required to provide upfront capital
  • Renewable energy system owner provides O&M for the duration of the contract
  • Government only pays for energy delivered
  • Agency typically receives a known long-term electricity or thermal energy price for a portion of the site load, reducing the price risk of fluctuating utility energy prices
  • Developer has incentive to maximize system production because energy payment is based on actual production
  • Without constraints of appropriated funding or required savings, PPAs can enable a system size that best meets site goals
  • Transaction costs may include a significant learning curve and time investment
  • Federal-sector experience is limited both in terms of agencies and developers capable of executing due to sector-specific challenges
  • Civilian agencies are limited to a maximum 10- year term for PPA contracts; however, the U.S. Department of Defense (DOD) is permitted up to 30-year terms under 10 USC 2922a
  • Possible contracting issues due to federal regulations include termination for convenience, land-use agreements, and assignment and innovation
  • To secure needed financing, developers usually require solar PV projects to be at least 500 kW in size (solar thermal thresholds are unknown because of a lack of projects); smaller solar PV systems are sometimes acceptable and could be aggregated to achieve minimum scale
  • Some states do not allow third-party PPAs

An on-site renewable PPA may warrant further investigation if:

  • There is not enough funding to cover the upfront cost of the project
  • The size of the project is greater than 500 kW
  • The state in which the project is located does not apparently disallow PPAs (
  • The project is for the DOD and the 10 USC 2922a 30-year contract authority is an option
  • The project is in Western Area Power Administration's (Western) territory; Western has long-term contract authority and can act as contractual intermediary for federal agencies. The Western service territory map can be accessed

As noted above, making an on-site renewable PPA economically attractive usually requires a long-term contract. Without specific long-term contract authority, PPAs need to be creatively designed to meet economic thresholds. Innovative options have included:

  • Using Western as a contractual intermediary with long-term contract authority, as was done at the U.S. Department of Energy's National Renewable Energy Laboratory and Fort Carson. Western does not work under the FAR construct, and therefore it does not need to meet those requirements. Sites must be in Western territory to use this option. Other federal power administrations may have this contracting authority, but no projects have been completed at the time of this writing.
  • Making a large PPA payment in the first year and using a typical 10-year contract. In this case the agency must have sufficient funds in the first year and confirm form of payment is within agency's authority.

The following two additional models were customized for the specific circumstances of the project:

  • Providing the project owner a long-term land-use agreement of more than 20 years combined with a short-term PPA contract of less than 10 years with options to renew. Depending on the project circumstances, this could increase the risk to the developer and may increase the cost (i.e., higher risk leads to higher targeted returns by developers as well as their financiers).
  • Providing the project owner a long-term land-use agreement combined with an indefinite-term PPA contract with a 1-year termination option (e.g., Nellis Air Force Base, This option increases risk to the developer and would therefore require mitigating economic factors, such as attractive long-term REC prices.

Site-specific examination is recommended to ensure the circumstances that allowed these projects to be financed are replicable.

On-Site Renewable PPA Examples

NREL, Golden, ColoradoFort Carson, Colorado Springs, Colorado
A solar photovoltaic system at the National Renewable Energy Laboratory is depicted against the backdrop of foothills.

Photo from SunEdison, NREL/PIX 17423

This photo shows the large solar photovoltaic installation at Fort Carson, Colorado.

Photo from U.S. Army Fort Carson, NREL/PIX 17394

  • 720-kW PV system (Generates 1,200 MWh/year)
  • 20-year contract using Western
  • 2-MW PV system (Generated 3,200 MWh in the first year)

Energy Savings Performance Contract

Energy savings performance contracts (ESPCs) have a long history of use in the federal sector and have primarily been used for energy efficiency projects. ESPCs are increasingly seen, however, as a long-term financing method for solar projects. ESPC efficiency improvements combined with solar can make an economically viable bundled package. An ESPC is a guaranteed savings contracting mechanism that requires no upfront capital funding. An energy services company (ESCO) incurs the cost of implementing a range of energy conservation measures—which can include solar— and is paid from the energy, water, and operations savings that result (DOE EERE 2010). The ESCO and the agency determine who operates and maintains the conservation measures. Payments to the contractor cannot exceed savings in any given year. These contracts are generally recommended for renewable energy projects only if combined with energy- efficiency measures.

Federal agencies may pursue ESPCs via two paths:

  • An indefinite-delivery, indefinite-quantity (IDIQ) master contract; at least two IDIQ options are available to the federal sector. The DOE IDIQ ESPC enables federal agencies to work with 16 prequalified ESCOs for projects at any feder- ally owned facility worldwide. The Army also offers an IDIQ ESPC.
  • A "site-specific" ESPC uses a traditional request for proposal (RFP) methodology but borrows the format and many of the terms and conditions of DOE's IDIQ contract. This option could potentially be used to contract directly with a solar developer, but as of this writing, there are no examples.
  • The 25-year maximum contract authority fits well with longer renewable energy project paybacks
  • The annual energy production (kWh/yr or MMBtu/yr) is counted as savings and is part of the guaranteed savings package
  • O&M can be included as part of the contract
  • The agency in charge of the site can require that solar be a part of the project
  • A project facilitator is assigned and funded by FEMP through an initial proposal or preliminary assessment
  • Because ESCOs traditionally do not own assets, an additional agreement to allow third-party ownership of the system is required to monetize tax incentives related to solar
  • Because of ESPC annual payment limitations, it can be difficult to make solar-only projects work, especially without tax incentives
  • Can involve a large contracting transaction, resulting in significant project management costs and/or lengthy processes
  • In most cases, renewable projects alone do not provide sufficient savings to justify an ESPC and must be done along with efficiency projects to balance the cost
  • Guarantees are only as strong as the measure-ment and verification options and their associated methodologies
  • Limited to smaller-size projects because of the need to bundle with non-renewable projects

The DOE IDIQ ESPC should be considered if:

  • There is not enough appropriated funding to pay for the project up front
  • Energy efficiency upgrades in addition to solar are being considered
  • The typical solar system size is under 1 MW (maximum size is dependent upon capturing incentives and/or available savings from bundled energy efficiency upgrades)

As with PPAs, longer-term contracts are generally required to make ESPCs economically viable. The DOE IDIQ ESPC has a 25-year contract authority, which enhances financial viability. The U.S. Coast Guard has also been successful in making one of the ESPC's energy conservation measures a PPA for solar (formerly known as an energy services agreement or ESA) to allow third-party ownership and improve project economics within the DOE IDIQ ESPC.

The site-specific ESPC should be considered if:

  • There is not enough appropriated funding to the pay for the project upfront
  • The project is solar-only, not combined with efficiency measures
  • The system size is relatively large (e.g., greater than 1 MW)

A site-specific ESPC may be used to contract directly with a solar developer. Developers have shown interest, but at this time, there are no examples. The advantage of this type of ESPC is that it can lower system costs, but it will likely still require the additional time and expense of a competitive RFP process.

As with all ESPCs, the annual payments to the company supplying the energy cannot exceed the annual energy savings. In other words, for solar-only ESPCs, the estimated cost per kWh or Btu produced by the solar system needs to be the same or lower than what the site spends on energy from present sources. In a combined solar and energy efficiency project, the energy efficiency savings can help "subsidize" solar energy that is often more expensive than utility power, such that the bundled project meets the annual cost-savings requirement. Larger systems that benefit from economies of scale and high utility rates help make ESPCs work for solar-only projects. Also, agencies that have the authority to sell government property and retain the proceeds, rather than returning them to the U.S. Treasury, can sell renewable energy credits or carbon credits to improve the economics of the project. One agency that has done this is the GSA.

ESPC Examples

U.S. Marine Corps, Twenty-Nine Palms, CaliforniaFederal Correctional Institution, Phoenix, Arizona
This is a photo of the solar photovoltaic system at the Marine Corps Air Ground Combat Center at Twentynine Palms.

An array of solar panels supplies energy for necessities at Marine Corps Air Ground Combat Center Twentynine Palms, Calif. (U.S. Marine Corps photo by Pfc. Jeremiah Handeland/Released). Photo from Wikipedia

The parabolic trough system at the Federal Correctional Institution in Phoenix Arizona is shown here.

Photo from Ed Hancock, Mountain Energy Partnership, NREL/PIX 09048

  • 1.1-MW PV system
  • 6.5 acres of land
  • Parabolic trough solar water heating system
  • 17,040 ft2 of collectors
  • 1,161,803 kWh in 1999 (87.1% of water heating load)

Utility Energy Services Contract

Utility energy services contracts (UESC), like ESPCs, have a history of use in the federal sector primarily for energy efficiency projects. Now, these contracts are also being seen as a method of long-term financing for solar projects. A UESC is an agreement that allows a serving utility to provide an agency with comprehensive energy- and water-efficiency improvements and demand-reduction services. The utility could partner with an ESCO to provide the installation, but the utility remains the prime contractor. Depending on project payback, a UESC could be used for a renewable-only project but, like an ESPC, renewable projects will typically be bundled with efficiency measures. The steps in the UESC process are similar to other contracting mechanisms and include identifying opportunities, completing a detailed analysis, negotiating the contract, completing construction, testing performance, accepting the project, and handling any post-acceptance issues.

  • The UESC contract term limit is not legislated and varies by agency with a maximum of 25 years
  • The GSA legal opinion states that agencies may enter into utility agreements with a timeframe greater than 10 years
  • Investor-owned utilities are eligible for a renewable investment tax credit (the utility must own the renewable energy plant); the agency can indirectly benefit from the tax savings
  • Interconnection, tariff, and standby issues (e.g., capacity charge) are often minimal with utility ownership (not always true and should be explored prior to proceeding)
  • Utilities are interested in a wide range of project sizes in comparison to the PPA model, which are typically used for larger systems (e.g., 500 kW or larger) on federal sites
  • A relationship between the utility and the federal agency already exists
  • Utilities often have access to favorable financing rates due to their financial strength
  • Utilities subject to renewable energy mandates want to add eligible energy to their mix
  • Not all utilities offer UESCs, though FEMP is helping launch UESC programs
  • Utilities may be resistant to participating in a UESC due to concern about adding renewable power to their grid (FEMP technical assistance can help)
  • Concerns often arise for some agencies regarding contract terms longer than 10 years

Several different contracting mechanisms are available for implementing a UESC:

  • GSA area-wide contract (AWC)
  • Separate Contract (used in absence of GSA AWC)
  • Basic Ordering Agreement (BOA)
  • Master Agreement (used underneath an AWC or as a stand-alone contract)

An agency can use any of these approaches; however, when an AWC exists, FAR states that agencies should use it to acquire service except under extraordinary circumstances. The GSA has developed AWCs with more than 100 utilities for use by all agencies within a participating utility's service area. A list of available AWCs can be found at: To acquire service, agencies place a delivery order under the specific AWC.

When an AWC does not exist and an agency intends to implement many task orders, a BOA or Master Agreement can be used. BOAs are general terms and conditions for future contracts and are negotiated between an agency and a utility. A BOA may be specific to one agency or it may allow use by others. A UESC model agreement has been developed through a multi-agency collaborative effort and can be used as the basis of a separate contract for utility energy management services, a master agreement, or a BOA. UESC projects may be implemented with appropriated dollars, private financing, or any combination of the two [4,5].

A UESC should be considered if:

  • There is insufficient funding to pay for the project up front
  • A serving utility offers energy and demand-side management services or is willing to offer a UESC
  • Energy efficiency upgrades are also considered [6]
  • System size is under 1 MW

If contemplating a larger solar electric-only system (e.g., greater than 1 MW), another option is a utility renewable electricity service contract (URESC). Under this type of agreement the utility provides power to the agency from an on-site solar electric system. The utility can either own the solar system or purchase the power from a third-party owner. URESCs are being used for multiple projects that are several megawatts apiece.

UESC Examples

Camp Pendleton, North San Diego County, CaliforniaJoshua Tree National Park, California
This photo depicts the solar photovoltaic system at Camp Pendleton in North San Diego County, California

Photo from U.S. Marine Corps, NREL/PIX 16462

Here, a solar photovoltaic system with a large battery and propane gas system at Joshua Tree National Park, California is depicted

Photo from Harry Carpenter, NREL/PIX 07260

  • 75-kW PV system (Generating 116,000kWh/year)
  • 10-year contract term
  • 20.5-kW PV system with a 613-kWh battery and a 35-kW propane generator

Enhanced Use Lease

An enhanced use lease (EUL) is a real estate transaction that derives income from underutilized but non-excess land. Prospective developers compete for the lease, and payment can be either monetary or an in-kind consideration (e.g., solar generated electricity). The value of the lease is used to determine the amount of the consideration. An EUL typically is used for large projects (e.g., greater than 1 MW and possibly greater than the site load).

  • Monetizes potential value of underutilized property (can be a stand-alone lease with no energy sold or remunerated back to the host agency)
  • Supplements underfunded facilities' costs
  • Currently only DOD, National Aeronautics and Space Administration (NASA), and the U.S. Department of Veterans Affairs (VA) have the authority to execute an EUL
  • Must not be excess property as defined by 40 U.S.C. § 102
  • Market value of lease may be difficult to determine if property does not have comparables (e.g., land is remote or contains environmental hazards)
  • Can be extremely time consuming to execute
  • Land used by DOD that is BLM withdrawn land can only be used for military purposes. Renewable energy generation on withdrawn land in excess of that needed for military purpose triggers development under the BLM right of way process.

An EUL should be considered if:

  • There is insufficient funding for the project
  • DOD, NASA, or the VA is leading the project [7]
  • The proposed system is greater than 1 MW
  • The land is "underutilized" but not "excess" and wholly owned, leased, or licensed by the agency for at least the length of the contract

EULs typically are more complex and have high transaction costs; therefore, they have only been used for larger installations. Large projects may produce more energy than the site can absorb and require a market in close proximity, such as a utility, to purchase the excess energy. Larger systems can help to maximize the value of the project to the agency.

EUL Examples

NASA Kennedy Space Center, Merritt Island, FloridaFort Irwin, Barstow, California (PROPOSED)
This is an arial photo of the Florida Power and Light solar PV system on land leased from NASA

Photo from NASA Kennedy Space Center/Florida Power & Light

This photo is an aerial shot of the Fort Irwin, Barstow, California solar thermal and photovoltaic project.

Photo from Attribute Google (e.g. © 2011 Google) and third-party suppliers (e.g. © 2011 Tele Atlas)

  •  Florida Power & Light (FPL) 10-MW PV system
  • On leased land that feeds FPL transmission
  • Separate 990-kW PV system for NASA
  • First phase: 500-MW of solar thermal and PV planned

Part II: Implementing Project Funding Tools

Each funding tool has its own implementation pathway. Some implementation processes are more rigid than others, but there are variations on the steps. Figure 1 illustrates recommended steps in the processes that are outlined for each of the funding tools.

This figure shows the relative project funding tool process for agency-funded, power purchase agreements, energy savings performance contract, utility energy service contract, and enhanced use lease projects through the planning to close-out phases. For additional details, please contact the author.

Figure 1
Recommended Project Funding Tool Process Steps

(Source: Stoltenberg and Partyka 2010)


In addition to government appropriations, federal agencies have multiple solar project funding options. Some of the more common types of funding mechanisms have been described above. One of the first steps in selecting any funding tool or financing mechanism is to define the conditions and goals of the project. From there, the agency can evaluate which tool will provide the greatest value to the government and the taxpayer. The list provided in this document is intended to give agencies a starting place for considerations and options available to implement projects.

The rules of thumb given in each funding tool section can help determine which tool should be considered for specific projects. It is recommended that project decision-makers develop a background understanding of funding tools that meet rule-of-thumb criteria and then seek advice from FEMP federal financing specialists and other experts to aid in the selection of a funding tool.

The Solar Procurement Process for Federal Agencies

For a more thorough examination of funding tools and the procurement process, see:


Solar adaptation

The US solar sector has experienced dramatic growth over the last few years supported by plentiful cheap finance.  This low-priced capital has meant asset financing for solar PV projects in the US reached a record $21.1 billion last year. But the two major sources of this finance are about to dry-up. The first is the cessation of the US Department of Treasury’s 1603 'cash grant' program and Department of Energy 1705 loan guarantee program. The second is that

Europe’s debt crisis is piling the pressure on European banks, long the biggest funders of clean energy projects in the US. And with Basel III regulations edging closer, the ability of banks in every corner of the globe to offer long-term asset financing will be reduced.

So given that the US government has scaled back incentives for the solar sector to just the 30 per cent investment tax credit and the eurozone financial crisis is refusing to drift calmly away into the night, innovation in financing has become crucial.

Welcome to the sector

While the banks may be offering more unfavourable terms in terms of loan timing, loan size and wider spreads, interest rates remain near historic lows, drawing institutional investors into the sector as they seek stable, long-term assets and diversification. Pension funds*, insurance firms and investment banks are getting more involved, the latter’s enthusiasm highlighted by last week’s announcement from Goldman Sachs that it was looking to be a party to $40 billion worth of investment in clean energy (which will include investments in solar).

Yes, the Goldman Sachs decision may have had a hint of PR point scoring about it, but the world’s most closely watched investment bank labeling renewable energy as one of the biggest profit opportunities since emerging markets stood out in 2001, says a lot.

Goldman isn’t the only major Wall Street player getting engaged in the sector, with Warren Buffett also having significant links to solar after a utility backed by the world renowned investor (MidAmerican Energy Holdings) bought a $2.4 billion, 550MW solar farm in California last December.

MidAmerican’s financing of the project was no doubt helped by the Buffett name, but how it successfully went about securing finance raised both eyebrows and sector hopes. A $1.3 billion bond offering with the first part of it, $700 million worth of bonds, heavily oversubscribed. Indeed, it was oversubscribed to such an extent that the company chose to lift the first raising to $850 million and could really have raised it by more.

Beyond the Buffett example of project bonds, other new financing plans have seen the use of:

-- Asset-backed securitisation;

-- Public market vehicles;

-- Long-term equity stakes from pension funds;

The sharp declines in solar costs and a greater understanding of the industry are also significant factors in driving wider interest in the sector. And as the industry becomes simpler for investors to understand, the future for financing is destined to become much more complicated as illustrated in this Bloomberg graphic below


Similar to the strategy employed by AGL here in Australia for its wind farms, energy companies and power project developers are stepping back from long-term ownership of power projects. Instead they provide technical and management expertise to convert a potential power project from a high risk to low risk proposition and make their money from development fees and on-selling finished projects to pension/superannuation funds.




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  • sysadmin
    sysadmin -


  • shankar
    shankar -

    12.16 rupees ($0.26) per kilowatt hour for solar photovoltaic power and 11.48 rupees ($0.24)/kWh for solar thermal power.
    These are the current rates.Tata BP Solar has said that these rates are not bankable. It is not going to encourage industries to rush into solar business. Like

  • Nikoli
    Nikoli -

    Nice blog. Thanks Aathmika. Great effort.
    Thanks for the time and the effort. Like

  • Romila
    Romila -

    nice blog.



  • Daniel
    Daniel -

    Nice blog. Thanks Aathmika. I would like just to share some interesting informations.

    Here is a very new source of solar radiation data for India.

    This source of solar radiation data for India is from new solar radiation database SolarGIS.
    I would like to inform that this company will change this situation in India, thanks to this new solar radiation database ( which is available already now) acknowledged by International Energy Agency.

    Equally thanks to new online tools for the best site prospecting (for India available from august 2011)

    &planning of photovoltaic projects (for India available from august 2011)

    &Bankable reports for solar energy projects


  • aathmika
    aathmika -

    Six stages of solar bankability  Like

  • dsrchandiraprasad
    dsrchandiraprasad -

    Nice work .... Like

  • hardeepsingh
    hardeepsingh -

    i read the whole blog, the estimation strategy, plans , goals, etc and came with the solution that all this plans and strategies is nothing but a bull shit. i am sorry that i used this term bullshit but i can explain what which made me using this, first thing who so ever thought about this plan is a brilliant guy but also a big dumbo. tell me what is the economic system of odisha, tell me what government policies, tax break and ethical issues stand for setting up this plant? if you think that planning and directing make you or help you achieving these goals, then i saw bull shit. i am a guy who dwell from odisha, but right now i live in delhi, i dont see my future in delhi because my main plan or my dream is to develop my sate odisha. the solar project which yoj guyz planning is what i thought not right now but the day when i moved out to delhi for my post graduate degree, this project is the only way which can help all small scale industries of odisha to come up and i will definately try my best to come out with this plan.
    if you think that am wrong of i made any wrong statement then i appologise for it as my main motive was to make you people aware of all these things.

    for any querry

    Mr Hardeep Singh Fagura
    Ph No 8860550181 Like

  • Ibrahim
    Ibrahim -


    We Electronica Finance Limited Provide Term Loans and Finance on Boot basis (PPA) for Solar projects ...

    For EPC players or customers: Kindly contact me if you have financing requirement.

    Thanks and Regards,
    Ibrahim Kadriinamdar
    91 8806661004 Like

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