ENERGY INSIDE - Eclareon · Established in 1974 ... 48 MWp 5 MWp 48 MWp 100 KWp 5 MWp 2 MWp...

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





AGENDA1. Who we are

2. Solar in India

3. Case Study





WHO WE ARE



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



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



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



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



Global Presence



48 MWp

5 MWp

48 MWp

100 KWp5 MWp

2 MWp

Projects in India





AGENDA1. Who we are

2. Solar in India

3. Case Study


Solar Energy in India – IHK Düsseldorf – 31st May 2016Solar Energy in India – IHK Düsseldorf – 31st May 2016


SOLAR IN INDIA



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)



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



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



DCR versus OC

DCR OC



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



DCR versus OC

DCR OC



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



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.



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.



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…



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





AGENDA1. Who we are

2. Solar in India

3. Case Study





CASE STUDY



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



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



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



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)



Case Study - Comparison (1)

Germany India

900 – 1250 kWh/m² 1200 – 2200 kWh/m²




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












---------------------------------- --------------------------------- ----------------------------------------

Payback Period (EPC) 13 years 4.5 years

RoI (Equity) 4 - 6% 10 - 12%

IRR (Internal RoR) 10 - 11% 14 - 15%



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



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!


Solar Energy in India – IHK Düsseldorf – 31st May 2016Solar Energy in India – IHK Düsseldorf – 31st May 2016

THANK YOU

ENERGY INSIDE - Eclareon · Established in 1974 ... 48 MWp 5 MWp 48 MWp 100 KWp 5 MWp 2 MWp...

Documents

Transcript of ENERGY INSIDE - Eclareon · Established in 1974 ... 48 MWp 5 MWp 48 MWp 100 KWp 5 MWp 2 MWp...