INTERVIEW WITH MANISH CHOURASIA Chief Executive Officer (CEO) Tata Cleantech Capital Ltd.
EQ: GOI has set up a target of 100GW Solar & 75GW Wind Energy by 2022….What would be the financing requirement and will it be a challenge to raise this finance ?
h EQ: Developers Healt ring : Big developers decla SunEdison bankruptcies such as financing of and its impact on the solar projects ruptcy was mainly MC: SunEdisons bank MC: Since May 2014, when the l portfolio and curnew Government took office, India contributed by globa t because of their has embarked upon an ambitious rency volatility and no ver,lenders will target of increasing renewable energy Indian exposure. Howe global exposer (RE) capacity five-fold by 2022 (from carefully evaluatethe developers ~40GW currently to ~200GW). This of various renewable would require additional funds in the for projale and their ration range ofUS$130-150 billion depending on ia. Ind in g ect biddin the global price scenario of solar and wind technology. Of this, 25-30% are expected from sponsors’ equity and the rest through debt instruments. Organizing such a huge funding is going to be challenging but not impossible provided a few structural issuesare properly addressed. Most importantly, renewable energy is fast becoming a mainstream source of power across the world. Continued technological advancement, reduced cost of modules and large investments in utility scale play have been bringing down the cost of renewable energy generation significantly. Certainly, the timing of the government’s renewable energy initiative is favorable, coming as it does in the backdrop of both solar and wind energy nearing grid parity. The increased pace of capacity addition in the recent times has boosted the confidence of all stakeholders. India added over 10GW RE capacity during last 12 months, which indicates the seriousness of the government support. Therefore,India can achieve the targets
provided the government continues to address the structural issues such as financial health of State owned electricity distribution companies of India (DISCOMs), land acquisition, and adequate transmission infrastructure With regards to the current financial landscape of India, the main players are: • Global and domestic private equity firms such as, Morgan Stanley, Goldman Sachs, Actis, IDFC, Syndicatum, JP Morgan, Equis Fund, etc. • International utility players such as First Solar, EDF, Erene, etc. • Development Finance Institutions: ADB, IFC, Proparco, FMO, etc. • Domestic institutions: PFS, Yes Bank, L&T Finance, Axis Bank, Tata Cleantech
Capital etc. However, given the ambitious renewable energy targets, there is a need to explore alternative modes ofrenewable power projects financing by leveraging existing resources more effectively as well astapping additional sources like pension funds, insurance funds and capital market products. The Indian government has attempted to bridge this gap in infrastructure investment through a number of initiatives, such as Infrastructure Debt Funds and the National Clean Energy Fund. Further, ADB is increasing its sovereign and non-sovereign lending to support India’s new initiatives from the present US$7 billion to US$9 billion in three years from 2015 to 2017 and then from $10 billion to $12 billion between 2016 and 2018 using ADB’s expanded lending capacity.New renewable energy policies and clarifications from various State Governments onsolar park allocation, distributed solar generations, etc. are taking place continuously, which is enhancing confidence from potential investors and financiers. These kind of ongoing initiatives can certainly push India towards achieving its stated renewable energy targets.
EQ: Financial health of DISCOMS is a concern for Bankability of Solar Projects. How to overcome this challenge: MC: Poor financial health of State owned Discoms remains a major barrier for deployment private sector capital in Indian power sector including solar energy sector. The Discoms have an estimated accumulated loss of about US$60 billion, which is big concern. Ministry of
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