DIREC 2010

 The Delhi International Renewable Energy Conference was a big event in terms of exhibitors, visitors and seminars; though some exhibitors had reservations on the quality of the visitors. Nevertheless, the event turned out to be a good opportunity to understand the situation on ground.

The focus of exhibition was definitely solar with some emphasis on wind and other aspects of renewable energy. Ironically, India currently has more installations in wind and biomass rather than in solar; but then the expectations look more from solar.

With many seminars being held simultaneously; it was more of a battle to coordinate meetings, attend seminars, and visit the stalls. Not to forget running out for a quick bite and coffee.

One of the seminars I attended was “Financing for grid connected Solar Farms”

The seminar focused on financing for grid connected solar farms in India with speakers from financial institutions and Private Equity companies.  Some highlights from this seminar were: 

  1. Financials institutions are still trying to understand solar technology, risks and on-ground situation in India.
  2. Questions were raised on bankability of the PPA.
  3. Lack of seed / angel funding environment in India.
  4. Reverse bidding under NVVN may become too competitive making the project not very financially attractive.
  5. Individual projects are not being looked at.
  6. Hesitation from banks to allot project financing to solar projects. Average debt rate currently spoken about was ~ 12% which will make the project not so financially attractive.
  7. Financial institutions though interested in off-grid models have yet to see feasible and scalable business models in India.
  8. RESCO & ESCO models appreciated but again financing & business model plays a key role.
  9. PE firms are currently not very keen on solar projects in India.
  10. Very high valuations/expectations from Indian promoters for PPA projects; which further acts as a hurdle.
  11. Solar equipment business is on radar for PE companies but then the business scale in India is currently small.

 

Conclusions

  1. Equity financing will be seen more from Indian and foreign corporate companies
  2. High valuation expectations from promoters will need to be toned down.
  3. Debt financing from outside India will make the projects more feasible
  4. Technology & Execution risks will compel companies to look at JV projects with atleast one partner bringing on an experienced solar team.
  5. EPC companies assisting debt financing from outside India will be preferred.
  6. EPC companies will also need to work on performance guarantees to safeguard investor returns.
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2 Responses to DIREC 2010

  1. PANKAJ SARAOGI says:

    Your analysis is absolutely correct

    Like

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