Structure & Challenges of Funding Solar RESCOs. Discussion Document

Transcription

1 Structure & Challenges of Funding Solar RESCOs Discussion Document

2 Target Customers Commercial Captives Many large industries have RPO obligations Price of grid power is increasing and in some states a commercial establishment can pay up to INR 10/kWh Telecom Towers 580,000 telecom towers consume 5 billion litres diesel consumption/year In remote area cost of power with a diesel genset can exceed INR 20 Diesel backup Large parts of India suffer from power cuts or are off grid and use diesel as back up

3 RESCO Model Principle RESCO establishes solar project to provide captive power to consumer RESCO & Consumer agree off-take terms RESCO engages OEM to provide plant RESCO seeks debt financing to leverage equity OEM Financial Institution RESCO Debt funding Operation Owner & Operator Consumer takes power in place of diesel or grid (unavailable) Equipment, EPC O&M Plant Power Supply Consumer RESCO receives tariff for each unit generated Debt amortised over period of PPA or c. 12 years OEM provides operation & maintenance

4 RESCO Model Issues Sufficient equity returns over 10yr GoI Bonds Financial Institution Cost of debt Tenor of loan Debt funding Credit Rating of Consumer OEM RESCO Competitive Module pricing Owner & Operator Equipment, EPC O&M Plant Power Supply Consumer Capital Costs Tariff competitiveness

5 Fund Structure Institutional Financial Sponsor (eg KfW, DEG, EIB) Other Investors (follow anchor) European Fund Vehicle or Onshore Vehicle Equity Mez. Debt Solon Technical Partner PRM Power (RESCO) Plant Project Cash Flow 1. Debt Service 2. Equity Returns

6 Investment Structure Profile Public-Private Partnership Anchor Investors Development Agencies / Government Follow Investors Funding Structure Tranche C Tranche B Tranche A Financial Institutions & Private Investors Multiple tranches to reflect investor risk / return requirements First loss investment, reflecting development assistance capital Senior to Tranche C, yielding spread over LIBOR plus share of profits Senior to Tranche B, yielding spread over LIBOR plus share or profits

7 Discussion Points Access to capital, using anchor to secure additional investors Cost of capital Base lending rates Hedging if FX loan Ancillary lending costs Tenor of Loan In excess of 10 years Credit enhancement of consumer of power Structuring and placement of Fund Legal & Tax advisory Establishing fund vehicle Placement activities in Europe

8 Team Dr. Pankaj Agarwal Dr. Agarwal is a cleantech expert and entrepreneur with over 20 years experience in financing, business development and commercialization of new technologies in the renewable energy sector with particular emphasis on renewable energy (solar & wind) and fuel cell technology. He is the founder and Managing Director of Panitek AG, an investment advisory firm, based in Germany, Liechtenstein and India and active in the field of cleantech, new materials and deployment of new and sustainable technologies worldwide. In 2007 he co-founded Indian Energy Limited, an Indian focused renewable energy independent power producer which listed on the London Stock Exchange (AIM) in 2009 and acquired by Infrastructure India PLC in He is on the board of Sinmat Inc., a US-based nanotechnology company and is an advisor to Next Hydrogen, a Canadian electrolyzer manufacturer. Rupert J. Strachwitz Mr. Strachwitz is a corporate finance specialist who has focused on developing operating businesses and arranging equity and debt financing. With Dr. Agarwal he co-founded Indian Energy Limited, one of the first internationally financed power producers to enter the Indian market in He acted as Managing Partner of CB Equity Partners, a Munich-based specialist investment firm focusing on cross-border debt and equity transactions. In 2002 he co-founded Kingsbridge Capital Limited, a private equity management business that specialises in mid-market buy-outs and distressed situations, predominantly in Germany. Prior to this he worked at Dresdner Kleinwort Capital primarily focusing on the structuring and funding of the Fine Art Fund. He is a member of the Chartered Institute for Securities & Investment. Tassilo Halt Mr. Halt is an entrepreneur and business advisor for a number of businesses in communication electronics, real estate and renewable energy. After finishing his law-exams at the University of Munich he established his law-firm focusing on the structuring and advising start-ups and funds in the real-estate business as well as advising renewable energy companies operating in Europe and India. He has been instrumental in arranging multiple asset and project finance facilities in Europe and providing corporate finance services to Indian Energy, a renewable energy power producer operating in India. He is also the managing director of compotek GmbH a technology transfer company working in Europe and Asia. Suri Penubolu Mr. Penubolu is a founder and Director Business Development of Microsol/Solon Group, a leading International PV technology company. He has over two decades experience in the marketing PV products including cells, modules and systems. He has extensive marketing experience which spans from rural markets in India to globally leading module manufacturers internationally. He has been working in the renewable energy space since the mid 1980s.