PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
ENERGY INSIDEFrom Zero to Hero
A realistic look at India‘s tremendous PV market
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
AGENDA1. Who we are
2. Solar in India
3. Case Study
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
WHO WE ARE
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
THE VIKRAM GROUP
Established in 1974
Presence of the Group in 32 countries
More than 5000 employees worldwide
100% family-owned
Headquarter in Kolkata, West Bengal, India
Over 40 years of manufacturing excellence
Diversified business
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
VIKRAM INDIA(engineering)
VIKRAM SOLAR (solar)
PIONEER SYNTEX (textile)
BHC TRUST & HKC
FOUNDATION (education)
VIKRAM GROUP
THE VIKRAM GROUP
World’s largest manufacturer of tea processing machineries and turnkey tea factory installations
India’s leading module manufacturer
Education Institutes:Day schoolsBoarding schoolsPG Eng. CollegesDegree Colleges
State of-the-art textile processing plants
in Surat
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
Cell Manufacturing
• 200 MW initial capacity planned
• By end of 2018, Start in 2017
Module Manufacturing
• Currently 500MW automated capacity in Falta, India
• MoU with Government of Andhra Pradesh in place
EPC – Engineering, Procurement and Construction
• Already 130 MW completed
• More than 400MW to be built in the next 15-18 months
O&M – Operations and Maintenance
• Service Contracts for 100 MW in place
Vikram Solar – Value Chain
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
2006Vikram Solar is
borne
2009Vikram Solar
enters the German market
2010Vikram Solar starts its EPC
division
2011Total
installation of 3 MW under the JNNSSM
in India
2013Vikram Solar commissions first 40 MW
plant
2014Vikram Solar
ranked as India’s only
Tier 1 module
manufacturer (Bloomberg)
2014India’s 1st
floating solar plant
2014Expansion
intoMENA region
2015Vikram Solar supplies to European Utilities
2015India’s largest
rooftop airport
installation
2015Offices in
South Africa, USA and
Singapore
????
IPO
Vikram Solar – Milestones
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
Global Presence
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
48 MWp
5 MWp
48 MWp
100 KWp5 MWp
2 MWp
Projects in India
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
AGENDA1. Who we are
2. Solar in India
3. Case Study
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016Solar Energy in India – IHK Düsseldorf – 31st May 2016
PROPRIETY & CONFIDENTIAL 2016
SOLAR IN INDIA
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
100 GW in past ≈ 25 years 93 GW in the next 5 ½ years*
*around 7GW installed solar capacity as on30th April 2016 (source: Hindu Business Line)
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
UDAY – Key to affordable 24/7 Power for All*
UDAY = rise = Ujwal DISCOM Assurance Yojna
Approval was given on 05th November 2015
Weakest link in energy supply is efficient distribution
DISCOMs have accumulated losses of Rs. 3.8 lakh crore = EUR 50.6 billion
DISCOMS cumulative outstanding debts are Rs. 4.3 lakh crore = EUR 57.2 billion
Operational losses funded by debts at 14-15% rate
UDAY is optional scheme, not mandatory
States that accept UDAY, have to comply with RPOs (good for solar) but are also
eligible to priority funding through multiple schemes from the MNRE
17 out of 29 states have already agreed to UDAY(77 % of India’s power demand)
*Source: Press Information Bureau, Government of India, 05th Nov 2015
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
UDAY – Key to affordable 24/7 Power for All*
FY 2015-16 FY 2016-17
50% of the debt as on
30th Sept 2015
25% of the debt as on
30th Sept 2015
Phase 1 - Quick wins
FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21
5% of the loss of
previous FY
10% of the loss of
previous FY
25% of the loss of
previous FY
50% of the loss of
previous FY
Phase 2 - Permanent Solution
Financially sound DISCOMs
Compliance with RPOs
Investment Confidence for IPPs (Independent Power Producers)
Timely and assured payments from DISCOMs
Lower finance costs for IPPs as payments come on time and debts can be served
9 out of 17 states already signed the tri-partite agreement
*Source: Press Information Bureau, Government of India, 05th Nov 2015
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
DCR versus OC
DCR OC
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
DCR versus OC
DCR OC
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
DCR versus OC
DCR OC
BOS costs dropped by 20% in 2015
7.2 GW
to be auctioned
Good for EPC
Module prices dropped by 80% over past 6 years
Funds remain in India
1.2 GW
to be auctioned
Good for local manufacturers
Job Creation
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
DCR versus OC
DCR OC
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
Financial Support (1)Banks & Financial Institutions that support Renewable Energy Finance in India: ICICI, IDFC, IL & FS, IREDA, SBI, YES Bank, among many others
Worldbank (USD 750mn)Asian Development Bank (USD 500mn)BRICS Development Bank (USD 500mn)KFW (USD 1bn)
Indian Government preparing support scheme for a “quantum jump” in domestic large-scale manufacturing:• Making cells and modules at a globally competitive price• Access to cheaper (solar) capital• Vertical Integration (Silicon, Ingot and Wafer plants in India)• Access to cheaper and reliable energy for manufacturer
IREDA (under the administrative control of MNRE) is a Public Limited Government Company established as a Non-Banking Financial Institution in 1987 engaged in promoting, developing and extending financial assistance for setting up projects relating to new and renewable sources of energy and energy efficiency/conservation.
Commercial and industrial rooftop solar project w/o capital subsidies
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
Financial Support (2)Rooftop PV Programs from banks will include third-party ownership, leasing, rooftop rental, as well as direct end-user ownership.
“Accelerated Depreciation”:• Government allows up to 80% depreciation in the 1st year• Normally 15 % depreciation• On a project worth INR 150 lakhs > INR 40.8 lakhs tax benefit
Exemption from excise duties and concession on import duties on components and equipment required to set up a solar plant.
A 10-year tax holiday for solar power projects.
Guaranteed market through solar power purchase obligation for states.
Special incentives for exports from India in renewable energy technology under renewable sector-specific SEZ.
A subsidy of 30% of the project cost for off-grid PV projects.
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
Tender Process* (1)
1. Tender announced in Indian Trade Journal, National Daily, Website,
Indian Embassies abroad and Foreign Embassies in India
2. Bid Submission
a. Technical Bid (First Evaluation)b. Financial Bid (Second Evaluation)
3. EMD (Earnest Money Deposit) of 2 – 5% of the estimated tender value
4. TOC – Tender Opening Committee
5. TEC – Tender Evaluation Committee
6. Determination of L1, L2, L3, …
7. Determing Reasonableness of the L1 rates
*Source: National Institute of Communication & Finance; Central Vigilance Commission Guidelines.
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
Tender Process* (2)
8. Purchase Order and Award of Contract
9. Performance Bond to be produced at time of winning the
tender/signing the LOI (5 – 10% of bid value and valid for at least
60 days beyond completion)
10. EMD will be refunded to unsuccessful bidders and to successful
bidders after Performance Bond is produced
*Source: National Institute of Communication & Finance; Central Vigilance Commission Guidelines.
Start digging…
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
Ambitions versus RealityWhat I want… What I have… Actions
Investors and IPPs Bankrupt DISCOMs UDAY scheme
Domestic Content Requirement WTO ruling against it Appeal or Accept
7.2 GW Tender RFQs (L1 principle) Aggressive Bidding / Risk of defaults Stricter Financial DD
100GW by 2022 (or 93GW in 5 ½ years) 5.7 GW/year local manufacturing Financial Support
Tariff*:• In 2010-11: 10.95 – 12.76• In 2015-16: 4.34 – 4.36
More than 50% reduction in tariff and bids competing at decimal points*Source: Mercom Capital Group, February 2016
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
AGENDA1. Who we are
2. Solar in India
3. Case Study
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
CASE STUDY
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
Case Study - Basic Parameters
Project Name BAP
Size 10 MW
Location BAP, Rajasthan
Land 50 acres
Owner SECI
EPC Vikram Solar
DCR YES
Temperature 16 – 45°C
Humidity 18.3 – 99.1%
Monsoon July - Sept
GHI 1850 - 2150kWh/m²
Commissioned 31-03-2016
*source: MNRE
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
Case Study - Qualifying Requirements
Incorporation in India under the Companies Act, 1956 or 2013
Min. 2x 5MW under continuous operation for past 2 years
Avg. annual turnover of INR 100 Crores (= EUR 13.5 mn) across past 3 years
Positive Net Worth of the Bidder
EPC experience of cumulative 25MW, min. 1MW plant
4 Indian solar companies qualified:Vikram, Jackson, Tata and Lanco
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
Case Study - Basic Financials
Project Name BAP
MWh/year (e) 18308
Tariff in INR 7.05/kwh
Tariff period 25 years
Revenue/year (e) INR 12.97 croresApprox. EUR 1.73mn
Total EPC cost INR 58 croresApprox. EUR 7.7mn
L2 was at INR 60.71 croresApprox. EUR 8.07mn
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
Case Study - Milestones
07-Aug-15
12-June-15 16-May-16
31-March-16
17-Nov-15 16-Nov-17
10% of Contract Value = INR 5.8 Crores = EUR 770,000 (24 months)
INR 2 Crores = EUR 266,000 (refundable)
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
Case Study - Comparison (1)
Germany India
900 – 1250 kWh/m² 1200 – 2200 kWh/m²
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
Case Study - Comparison (2)
Parameter Germany India
Size 10 MW (NRW) 10 MW (Rajasthan)
Irradiance Level 900 - 950 kWh/m² 1800 - 2150kWh/m²
Electricity Generation (e) 9500 MWh/year 18308 MWh/year
Per capita consumption 7091 kWh/year 1100 kWh/year
Coverage (people) 1,340 16,644
Avg. time to install 90 days 120 days
Module Cleaning On demand Once per month
---------------------------------- --------------------------------- ----------------------------------------
Parameter Germany India
Size 10 MW (NRW) 10 MW (Rajasthan)
Irradiance Level 900 - 950 kWh/m² 1800 - 2150kWh/m²
Electricity Generation (e) 9500 MWh/year 18308 MWh/year
Per capita consumption 7091 kWh/year 1100 kWh/year
Coverage (people) 1,340 16,644
Avg. time to install 90 days 120 days
Module Cleaning On demand Once per month
---------------------------------- --------------------------------- ----------------------------------------
Interest Rates (Debt) 2.0 – 3.0% 10 – 12% per annum
Tariff 7.41ct/kWh (< 10MW) INR 7.05/kWh = 9.3ct/kWh
Tariff period 20 years 25 years
Revenues/year EUR 0.70mn USD 1.9mn = EUR 1.7mn
Total EPC cost EUR 9.2mn USD 8.6mn = EUR 7.7mn
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
Case Study - Comparison (3)
Parameter Germany India
Size 10 MW (NRW) 10 MW (Rajasthan)
Irradiance Level 900 - 950 kWh/m² 1800 - 2150kWh/m²
Electricity Generation (e) 9500 MWh/year 18308 MWh/year
Per capita consumption 7091 kWh/year 1100 kWh/year
Coverage (people) 1,340 16,644
Avg. time to install 90 days 120 days
Module Cleaning On demand Once per month
---------------------------------- --------------------------------- ----------------------------------------
Payback Period (EPC) 13 years 4.5 years
RoI (Equity) 4 - 6% 10 - 12%
IRR (Internal RoR) 10 - 11% 14 - 15%
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
Case Study – Main lessons learned
Local & State authorities very helpful (solar spirit)
Engage with local communities (someone knows someone)
Solar is still a relatively new/unknown technology
Clear communication with subcontractors
Construction workers don’t always show up
Have a Plan B and a Plan C
Fencing & Surveillance
High Maintenance & Monitoring
Infrastructure (nearest railway station/airport, road service)
Price war (Tariffs and EPC prices going downwards)
Short payback periods due to high irradiance levels
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
Recommendations
1. Find a local partner company!
2. Visit India as often as possible!
3. Identify the state(s), preferably “UDAY” states!
4. Get accustomed with the state you are building/investing in!
5. Read the Tender RFQ very carefully!
6. Ask questions rather than quoting with assumptions!
7. Don’t miss deadlines!
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016
PROPRIETY & CONFIDENTIAL 2016
Solar Energy in India – IHK Düsseldorf – 31st May 2016Solar Energy in India – IHK Düsseldorf – 31st May 2016
THANK YOU