This is my third post on the Intersolar India conference and Exhibition held in Mumbai between 13 and 16 December, 2010. My blogs on the Day 1 of the conference is available at
Day 1, Part 2: http://eai.in/blog/2010/12/intersolar-day-1part-2.html
The 2nd and 3rd days of the conference were half day affairs. This was planned so that delegates to the conference could also go the Intersolar Exhibition held at a different venue. The organizers had arranged for free shuttle services for the delegates to travel to the Exhibition.
The second day of the conference had the following focus areas
1. Photovoltaic Technologies : Crystalline silicon and Thin film PV
2. Photovoltaic Policy and Financing
3. Solar Thermal Technologies: Solar Thermal applications and CST/CSP Technologies.
Since myself and my colleagues at EAI were very much interested in learning about the Financing of Solar Projects, I decided to attend the two sessions on Policy and Financing. And I have to admit, I enjoyed every bit of it, taking copious notes and assimilating all the insights provided by some great speakers.
The first session was “The Role of International Organizations Concerning PV in India”. The first person to speak was Ms. Sujata Gupta, Head Private Sector Group, India Resident Mission(Asian Development Bank), India. She talked about a Partial Credit Guarantee scheme by ADB, wherein ADB will contribute 50% of loans to Solar projects while the local and international banks will contribute the rest. She mentioned that while Indian banks are aware of the commercial risks, they are not very sure about the technology risks associated with large scale Solar Power projects. On the other hand, International banks are aware of the technology risks in Solar projects, but they are not aware of the commercial risks.
She elaborated the detail s of the scheme and the different options proposed. Natalie Obiko Pearson, Asia Energy Reporter at Bloomberg, has posted more details on the scheme at http://www.bloomberg.com/news/2010-12-14/adb-to-guarantee-425-million-of-indian-solar-projects-update1-.html.
The next topic was “Developing Solar Cities in India”, delivered by Mr. Dwipen Boruah, Director Energy& Climate, ICLEI . He discussed about the various initiatives by the MNRE and other organizations in increasing solar penetration in cities. He gave the example of Agra where major initiatives were undertaken.
The final speaker of the session was Mr. Hermann Herz, Team Leader, Carbon Procurement Unit, German Technical Corporation(GTZ), Germany. His topic was “Promoting the Commercialization of Solar Energy in Urban and Industrial Areas”. He described the various initiatives by GTZ in popularizing Solar PV generation – notable of which were
a. the feasibility study they did for Delhi Metro in installing Solar PV modules on the roofs of the railway stations and
b. the installation of a 1 MW Solar Thermal plant at the spiritual institution – Brahmakumaris in Mount Abu, Rajasthan
The next session was “Financing of PV Projects”. Mr. S.J. Vijay, Managing Director of Salmon Leap started the session with the topic “Financing the Phase Wise 22 GW Solar Power Generation & the Indian Solar Manufacturing”. According to his estimates, about US $50 billion(Debt and Equity combined) will be required to meet the targets of the National Solar Mission. The proportion of investment in each phase will be as follows
Phase 1 (2010-2013): US $ 3 Billion for 1200 MW of installations
Phase 2 (2014-2017): US $ 11 Billion for 4800 MW of installations
Phase 3(2018-2022): US $ 36 Billion for 16000 MW of installations
In manufacturing, the capacity of Solar Cell and Modules is expected to increase to about 4-5 GW equivalent by 2020 and this requires an investment of about US $ 13 Billion.
After this, Mr. Rana S. Mookherjee, Senior Director, Solaria Corporation, USA spoke on the topic” Path to Project Financing for Solar Projects in India”. He gave a very excellent presentation and covered a range of aspects of financing that included – Key economic drivers for Solar projects, Evolution of Financing Markets, important financial metrics like performance ratios, Debt Service Coverage ratios. He concluded with what he felt were the critical factors for the successful execution of a Solar project.
Ms. Petra Leue-Bahns spoke next. She is the CFO, ecolutions GmbH & Co, KGaA, Germany and spoke on the topic “Key Challenges for an International Investor in India”. True to the topic, she gave the perspectives of an international investor and the following are some noteworthy points she mentioned.
1. She is happy about the Government of India’s commitment to the National Solar Mission
2. However, she felt that the local content requirement(modules and cells) could lead to supply bottlenecks and may hamper the competitiveness of Indian manufacturers in the international markets
3. Local content requirement artificially increases project cost
4. EPC companies in India do not have enough track record, but getting into Joint Ventures with foreign EPCs will be a good way to go forward for them
5. Lack of non-recourse financing(project financing) is a concern and it is important for Indian banks to adopt project financing.
Overall, her presentation was very enlightening.
The next presenter was Mr. Anmol Singh Jaggi, Director, Gensol Consultants Pvt. Ltd., India. He spoke about the “Bankability of Solar Power: Indian Scenario”. He explained the various factors that affect the bankability of a solar Project. Some of it are
a. Technology adopted(C-silicon vs Thin film)
b. Track record of the EPC
c. Tariffs – He gave a comparison of the risk and rewards for 3 schemes – JNNSM, Gujrat State Policy(GSP) and REC based scheme. According to him, GSP had the lowest risk of all three whereas REC based scheme is riskiest. On the reward side, he feels that NSM has good rewards but REC has the highest reward.
d. Credible data availability : One concern that was expressed by many speakers was the lack of decent solar insolation data. The data currently available is the less accurate satellite based information from NASA, Meteonorm or 3-Tier. However, the more accurate ground monitored data gathered over a period of time is not available in India.
He also highlighted the fact that in India, not much Project financing is happening and most companies have to resort to Balancesheet financing, which is a barrier for many aspiring project developers. Like the previous presentation, this presentation also gave good insights into the financing of solar projects.
The last speaker, Mr. Alok Nigam, Lanco Solar, spoke about the practical issues related to solar PV projects. He mentioned that a total of 1334 MW of Solar projects are set to come online in the next few years and he felt that all the developers will have to have excellent project management in they want to get these projects executed on time, particularly keeping in mind the monsoon seasons and time in getting clearances. He highlighted some of the risks involved in the execution of the projects and ways to mitigate them. Like many other speakers, he also stressed the importance of non-recourse financing in the Indian context.
This speech brought the day to a close. Overall a terrific day for me in terms of learning. After the conference, I pushed off to the Intersolar Exhibition. But having attended the DIREC 2010 in Delhi about a month back, I felt the exhibition a bit underwhelming mainly because of the fact that DIREC had more than 500 exhibitors(about 350 of them in solar) about 150 Exhibitors at Intersolar. Having so many exhibitions back to back is perhaps leading to this situation.
That takes me to the end of this post. Stay tuned for the final post on the Intersolar Conference.
Update : The final post is available here.