Presentation by

A.A.Khatana Executive Director

Indian Renewable Energy Development Agency Limited (IREDA) th 7 January, 2014

Market Forecast for 2013-2017

State-wise Installations in India

State Tamil Nadu Gujarat Maharashtra Rajasthan Karnataka Andhra Pradesh Madhya Pradesh Kerala Others Total Capacity as on 31.03.2013(MW) 7162.18 3174.58 3021.85 2684.65 2135.50 447.65 386.00 35.10 4.30 19051.46

Indian Wind Energy Scenario

Cumulative installed capacity (MW)
20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 Upto 2002 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Cumulative installed capacity (MW) 1666 1908 2523 3635 5351 7093 8756 10241 11806 14155 17352

India: Wind Growth

About IREDA
Dedicated Institution for financing of RE IREDA has
Financed (580 )Wind Projects Loan Sanctions of over (Rs 6000 Cr) Implementing Agency for GBI Scheme IREDAs Wind Sector Performance
Year 2007-08 2008-09 2009-10 2010-11 2011-12 Sanctions (Rs Cr) 426 728 1164 3126 2888 Disbursements (Rs Cr) 271 483 521 1224 1340

Highlights
Dedicated FI for RE Financing Unique in the World Specialized knowledge of RE / EE sector Recognized internationally High Brand Equity All Multilaterals/ Bilaterals prefer working with IREDA Perceived as a leader in the sector Profit earning & dividend paying ISO 9001:2008 Certified Company

Successes
Highest share in RE Financing. Encouraged entry of private sector in RE. Developed RE capacity through innovative financing. Catalyzed market development leading to commercialization of RE Helped in creating manufacturing, design & engineering, O&M capabilities. Assisted in framing of conducive RE policies

Evolution
Inception
Incorporated under the Companies Act on 11th March, 1987 to promote, develop and extend financial assistance for Renewable Energy and Energy Efficiency/ Conservation Projects.

Mission
Be a pioneering, participant friendly and competitive institution for financing and promoting self-sustaining investment in energy generation from renewable sources, energy efficiency and environment technologies for sustainable development.

MOTTO
Energy For Ever

Outreach
Branch Office Hyderabad
Registered & Corporate Office New Delhi

Branch Office Chennai

Camp Office Ahmedabad

Camp Office Kolkata

Conducts Business Meets, Seminars, Workshops, etc

IREDA Operational Areas

Sectors financed (Projects & Equipment) Wind Hydro Biomass Power & Cogeneration Solar Waste to Energy EE & Conservation Helping to administer MNRE Programmes:
Intermediary for routing MNRE support under various schemes. Programme Administrator for GBI Schemes Wind & Solar Designated Nodal Agency for Refinancing under JNNSM.

Financing Schemes

Project Financing Schemes Equipment Financing Schemes

Quantum of Assistance - Upto 75% of Project Cost Current Rate of Interest - 11.5% to 13.75% Repayment Period - Upto 15 Years

Cumulative Performance

Loan Disbursements Commissioned Capacity

: :

,12,864 Crore 5,570 MW

Conventional Fuel Replacement: 13L MTCR/Yr

As on 23.12.2013

Cumulative Disbursements to various sectors

EEC Others 3% 1%

Sector-Wise Disbursements
Sector
Wind Hydro Biomass/Cogen Solar EEC Others Total

Solar 7%

Amount (Rs/Crore) % Share

6551 2462 2509 868 333 141 12864 51 19 19 7 3 3

Biomass/Cogen 19% Wind 51%

Hydro 19%

As on 23.12.2013

IREDAs Loan Outstanding Portfolio

Sector
Wind Hydro Biomass Cogen Solar EEC Others

Amount (Rs/Crore)
3884 1412 212 970 390 225 18

Biomass 3%

Solar 5% Cogen 14%

EEC 3%

Others 0%

Wind 55%

Hydro 20%

Total

7111
As on 23.12.2013

Resource Base
Authorized Share Capital Paid-up Capital Net-worth
International Borrowings
KFW 22% ADB 3% NIB 5% IBRD 4% IDA 8% Banks 26%

: : :

1,000 Crore 745 Crore 1,733 Crore

AFD 13%

JICA 45% Bonds 74%

Source IBRD IDA JICA AFD NIB ADB KFW Total

Amount (Rs/Crore 139.1 290.34 1689.44 480.76 195.03 125.06 823.01 3742.74

Domestic Borrowings
Source Bonds Banks Total Amount (Rs/Crore 1485 517.23 2002.23

Drivers for market acceleration in India

Wind Growth Trends

12000 10250 10000 9000 8000

6000

5427

4000

3583

2000 733 0 Before 9th Plan (1992-97) 9th Plan (1997-2002) 10th Plan (2002-07) 11th Plan (2007-12) 820

Actual Capacity Addition (MW)

Plan Target (MW)

Generation Based Incentive

Stagnation experienced in 2008-09 & 2009-10 GBI scheme introduced in December, 2009 to invigorate Wind sector Incentives @ Rs 0.50/ unit Upper cap of Rs 62 Lakhs/MW, now revised to Rs 100 Lakhs/MW Duration : > 4 years, and < 10 years Transition from investment based incentive to outcome based incentive Scheme for 4,000 MW in 11th Plan, Now Extended for 12th Plan for 15000 MW

TARIFFS FIXED BY SERCs

State RPS(%) specified Tariffs fixed by commissions in INR per kWh Validity of tariff (year) Charges for captive users

Tamilnadu

14%

3.39 (fixed)

20

10 % (includes 5% for banking if applicable) 2% to 5% Actual OA charges

Karnataka Maharashtra

10% 6%

Rajasthan Andhra Pradesh Madhya Pradesh Kerala West Bengal Gujarat Haryana

7.45% 5% 10% 3% 4-6.8% 4.50% 10%

3.7 5.07 (Wind Zone 1)* 4.41 (Wind Zone 2)* 3.75 (Wind Zone 3)* 3.38 (Wind Zone 4)* 3.83 for Jaipur, Jodhpur and Barmer dist. 4.03 for rest of Rajasthan 3.5 4.35

10 13

20 10 25

50% of normal OA charges Actual OA charges 2% plus transmission charge 5% 2% 4% 2%

3.14 (fixed) 20 4.00 (fixed, to be used as a Flexible cap) 3.56 25 4.08 (with 1.5 % escalation 5 per year)

Wind Power Incentives

Income Tax Holiday under section 80 1A Excise Duty relief Concessional Customs Import Duty on specified parts and components Preferential Tariff by State regulators Accelerated Depreciation of 35% for the first year Generation Based Incentive (Projects commissioned before 31/03/2012) REC floor price of Rs. 1.50 per unit till 2017

IREDAs Wind Sector Performance

1400 1200 1000

800

600

400

200

2007-08 Sanctions (Rs Cr)

2008-09 Disbursements (Rs Cr)

2009-10

Financing Wind Energy Projects by IREDA

Rich experience of more than 25 years with innovative project financing. Played key role in development of the Sector in the Country across all wind regime states. IREDA, played a key role in market development of Wind projects in the country during 1993-2000, by showcasing success stories to the commercial banks & financial institutions Availed Lines of Credit from various multilateral agencies for financing RE projects.

Financing Wind Energy Projects

Five Years Ago Recourse Financing Project viability based on IRR and DSCR Sole financing Fixed repayment Repayment period 10 years Presently Non-recourse Financing Project viability based on DSCR Sole financing / Co-financing Fixed / Structured repayments Upto 12 years IREDA assesses the project based on P-75 with sensitivity analysis

Financing Wind Energy Projects

Five Years Ago Upfront additional interest for creation of mortgage of Project (revenue) land time PPA to be submitted before release of disbursement Presently Time is provided for creation of mortgage of Project (revenue) land with no upfront additional interest till the time provided PPA to be submitted before release of last and final disbursement Funding Large Capacity IPPs in Cofinancing / Consortium Funding Projects with REC mechanism Funding evacuation and transmission facility for wind energy projects Securitisation of renewables

Initiatives at IREDA
Land No mortgage requirement for Forest Land, letter of comfort from Forest Department Time provided for creation of Mortgage in case of private land

Financing Initiatives

Line of Credit to one large utility Customized/ structured repayment schedule based on project receivables Take-away finance Interest rate discount to GBI eligible Wind Projects Recently financed evacuation substation and associated equipment facilities

Present challenges in financing wind projects

Low return on equity discouraging developers/ PE funds from investing in wind projects Present preferential tariff in many states are not sufficient to meet debt obligations even with structured repayment and longer repayment period Payment delays from DISCOMs Need for rationalization of price for wind sector Mismatch in energy estimation and actual generation in large IPPs may expose lenders to repayment risk A visibility in REC price beyond 2017 will help lenders / FIs to finance projects under REC route and will also attract PE Funds in the sector

Present challenges in financing wind projects

Scarcity of good sites, leading to higher land costs Development of robust transmission and evacuation arrangement Development of scheduling and forecasting system Tariff under competitive bidding Development of Off shore wind farms Repowering of existing wind power projects Secondary market for wind energy projects as IPPs by better O&M improving generation

Thank You

THANK YOU

Indian Renewable Energy Development Agency Limited

www.ireda.gov.in