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Programmatic CDM Projects FinancingProgrammatic CDM Projects Financing

Experiences and ChallengesExperiences and Challenges

Carbon Bazaar 2009Carbon Bazaar 2009

K. UmamaheswaranK. Umamaheswaran

Deputy Team Leader, GTZ-International ServicesDeputy Team Leader, GTZ-International Services

Carbon Procurement UnitCarbon Procurement Unit

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GTZ ISis an extendedbusiness arm of GTZ

GTZ IS-CPU Indiais a conducive Carbon Markets platformbetween India and Germany

About GTZ InternationalAbout GTZ International

ServicesServices

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End-to-end solutions including Project Development Assistanceand Emission Credits Trading Assistance

CPU: Operational ModelCPU: Operational Model

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Identify eligible GHG emission reductionprojects

Facilitate / finance CDM projectdocumentspreparation and approvals inline with the CDM/GS VER projectdevelopment cycle

Introduce high qualified/rated big buyers inGermany (Compliance Buyers)

Facilitate Financing/ Carbon EmissionCredits Trading in all stages for GHGmitigation projects

Facilitate Buyers with MonitoringManagement to timely and reliable delivery

Facilitate transfer of advanced cleantechnologies from Annex I countries

GTZ IS-CPU ServicesGTZ IS-CPU Services

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1. Reliance Energy

2. IL&FS Ecosmart Limited

3. Integrated Sustainable Energy and Ecological Development

Association (INSEDA)

4. Aster Silicates Pvt. Ltd.5. Malavalli Power Plant (P) Ltd.

6. Hanjer Biotech Energy Private Limited

7. Ravi Mettalics

8. Ganesh Mettalics

9. Energy Marketers

10. Raja Bhaskar Power Generation Limited

11. Anu Solar Power Private Limited

12. Satish Sugars Limited

13. Santoshimata Power Generation Limited

14. Dhampur & Asmoli Sugar Mills

Total CERs contracted = ~ 6 Million till 2012

Carbon Financing = ~ 5 Million Euros = 30 CRs

GTZ IS- CPU Clients.GTZ IS- CPU Clients.

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is associated with AAA rated Compliance Buyers-end users of emission credits

is widely networked in Indian and European carbon

market has long-term involvementwith project developers

worldwide

has credible experience in the carbon market

provides complete solution from CDM projectdevelopment to transaction of carbon credit with reputedbuyers

is cost/risk free to the project developer

GTZ IS- CPU Advantages.GTZ IS- CPU Advantages.

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As per UNFCCC definition

PoA - Voluntary action by aprivate or public entity,coordinatesand implements

any policy/measure or statedgoal

leads GHG emission reductionsor increase net GHG removalsby sinks

that are additional to any thatwould occur in the absence ofthe PoA

via an unlimited number ofCDM project activities (CPAs)

PoA Programme of ActivitiesPoA Programme of Activities

PoA

CPA

CPA

CPA

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Project finance, financing projects based upon a financialstructure where debt and equity are used to finance theproject. Debt is repaid using the cash flow generated byoperation of the project, rather than the general assets orcreditworthiness of the project sponsors

Carbon finance, financing of projects based upon financialstructure where debt, equity, carbon emission reductions.Debt is repaid using the cash flow generated by operation ofthe project, Carbon Emission Reductions are transferred basedon pre agreed price

FinancingFinancing

http://en.wikipedia.org/wiki/Financehttp://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Financehttp://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Financehttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Finance

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1. Public Private Partnership - Government Agencies(Program Financing / Complete Program)

implementation of GHG mitigation policies

Transportation / EE Programs

1. Financial Institutions

Re Financing - Financial Assistance (Sectoral EmissionReductions)

Projects with fast return and high Capex

1. Private Entities with plausible projects pipeline (ProjectSpecific / CPAs)

Project Developers (RE power projects)

Technology Suppliers

1. Industrial Development Associations

Industrial Promotions

Financing Models for PoAFinancing Models for PoA

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Project Idea

Project Implementation

CER Buyer

CER potential

Upfront PaymentProject Developer

(equity)Project Developer

(equity)

InvestorInvestor

Technology providerTechnology provider

BanksBanks

GovernmentGovernment

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Investment - Project Specific (CPA) / Program (PoA) ????

Project Specific Program Specific

CER Generation Per CER Cost

Transaction Cost

Technology and Operation of Project

Return on Investment

Investment PerceptionInvestment Perception

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Additional liabilities on Validators

Reflections on Additional Validation Expenses

PoA has to be revalidated every time its baseline

methodology is revised (Increased TC)

Complication in CER Issuance: CERs are issued to the PoAnot CPA Specific

Credibility of PoA Manager

Long Term Risks Investment Returns

CPA Inclusion

Challenges - CDM Regulatory Challenges - CDM Regulatory

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Regulatory Regulatory clearances of the Project

Institutional Creditworthiness of Project Owner

Stability of the political and investment climate of the project parties

Technology Creditworthiness of the technology

Penetration of the technology

Project Proponent technical expertise

Miscellaneous Risk

Environmental and social compliance + additional benefit General Market Risks

Challenges Project Related Challenges Project Related

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Grid Connected Biomass PowerProjectimplemented in India

Project Participant: Green Planet Energy PrivateLimited & Others

Coordinating Agency: Malavalli Power Plant (P)Limited (PoA Manager)

Present CDM Stage: Under Development

No: of CPAs 12 Nos. (6 MW each)

Financing Model: Private Entities

CPA specific Investment

Equity against CERs

GTZ IS- CPU: ExperienceGTZ IS- CPU: Experience

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PROJECTDEVELOPER

Carbon Credit

Buyer

Equity PartnerERPA

Debt

Carbon FinancingCarbon Financing

http://www.orkut.com/Community.aspx?cmm=15575288

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K Umamaheswaran

Deputy Team Leader

uma.krishnan@gtz.de

+919899853564 / 9810422689

Thanks for your attention!Thanks for your attention!

mailto:uma.krishnan@gtz.demailto:uma.krishnan@gtz.de