Overview of Solar Guidebook and Knowledge Management Project Sustainable Business Advisory
April 2012 Knowledge Management Project - the Aim
“to build capacity, capture lessons learned and disseminate and share knowledge on the Indian PV market with the aim of supporting future solar PV projects by IFC and other market players” Utility Scale Solar Power Plants
7KHJXLGHERRNFDQKHOS )RUH[DPSOH ,QWHUIDFHULVNV"6HH 6HFWLRQ,QWHUIDFH0DQDJHPHQW $SSHQGL[&²(3&KHDGVRIWHUPV ZZZLIFRUJSXEOLFDWLRQV Outline • Presentation 1: Introduction and project overview • Presentation 2: Completion / Technology Risks and Mitigation • Presentation 3: Operating Risks and Mitigation Utility Scale Solar Power Plants – a guide for developers and investors • Solar PV technology • Financing PV projects • The solar resource • CSP annex • Project development • EPC contract heads of terms • Site selection • O&M contract heads of terms • Energy yield prediction • Plant design • Permits and licensing • Construction • Commissioning • Operation and maintenance • Economics and financial modelling Technology Risk, Completion Risk and Related Risk Mitigation Sustainable Business Advisory
April 2012 Risk Identification, Mitigation & Removal
• Ground, weather, access and resource Site Risks • How does resource vary monthly and annually? What is the confidence level?
• Issues that could affect construction milestones, Completion Risks particularly energisation
Technology Risk • Is the technology proven? Is it suitable for the site?
• Issues that could affect project revenue over the project life Operating Risks • Are there contractual or physical mitigants?
• Assess the volatility of cashflow Financial Risk • Are mitigants in place? Completion risks 3DUWLFLSDQWFDSDELOLWLHV 2QHRIWKHPRVWFULWLFDODVSHFWV 6SRQVRUV&RQWUDFWRUV ([SHUWLVH ([SHULHQFH 0DQDJHULDOVXSSRUW 7HFKQLFDOVXSSRUW )LQDQFLDOVWUHQJWK 7HDPRUVLQJOHSHUVRQ 6LWH,QYHVWLJDWLRQV UHPRYHXQZDQWHGVXUSULVHV )RXQGDWLRQUHTXLUHPHQWV 6RLOW\SHDQGFRQVLVWHQF\ 6HLVPLF]RQHV )RUPHUXVHRIODQG Former use of land Completion risks
3HUPLWWLQJ $OOUHTXLUHGOLFHQFHV &RPSOLDQFHZLWKSHUPLWFRQGLWLRQVIRUDOOSKDVHVRIWKH SURMHFW·VOLIH (QYLURQPHQWDOUHVWULFWLRQV 1REXLOGSHULRGV %XIIHU]RQHV VFUHHQLQJ *ULG&RQQHFWLRQ 7LPLQJRIFRQQHFWLRQ &DSDFLW\DQGVWUHQJWKRIJULG ,VLWFRQWHVWDEOH²ZKR·VGRLQJLW" ,QWHUIDFHV $FFHVVURXWHVWRJULGFRQQHFWLRQSRLQW SHUPLWVZD\OHDYHVURDGRSHQLQJOLFHQFHV Completion risks
&RQWUDFWVWUDWHJ\ (3&RU0XOWLFRQWUDFW %RWKKDYHEHQHILWV GUDZEDFNV ,QWHUIDFHV 'HVLJQ &RQVWUXFWLRQ :KRKDQGOHVWKHP" 3URJUDPPH 5HDOLVWLF /HDGWLPHV &ULWLFDOSDWK :HDWKHUGHOD\V $GHTXDWHOLTXLGDWHGGDPDJHV 6XSSO\FRQWUDFWV (3&FRQWUDFW Supply chain
Module Inverter Module supply eased Talk of quality inverters since 2008, but quality become issue tightening Range of quality Range to types & quality/suitability Bankability Bankability
Supply chain problems lead to:
• Technology risks • High prices / poor contract terms • Extended project schedules Completion
Trial Operation (10 days - 4 Acceptance weeks) Provisional Acceptance Reliability of: Final Acceptance Inverters (12-24 months later?) Tracking Whole System Performance Ratio Tests Sapphire – construction / completion issues
13 Technology Risks - Modules 5HOLDELOLW\,VVXHV 4XLFNFRQQHFWRUUHOLDELOLW\ &RUURVLRQ loss of grounding ,PSURSHULQVXODWLRQ 'HODPLQDWLRQ *ODVV GLVFRORXUDWLRQ Physical degradation 0RLVWXUHLQJUHVV %\SDVVGLRGHIDLOXUH IEC Certification?
,V,(&RUSURRIWKDWDSURGXFW LVGXUDEOHDQGUHOLDEOH" 1R 1RWLQWHQGHGRUFDSDEOHRIVKRZLQJORQJ WHUPSHUIRUPDQFH 6RPH$FFHOHUDWHG/LIH7HVWLQJ %XWQRWUHSUHVHQWDWLYHRIUHDOILHOG FRQGLWLRQV ,(&3URYHVWKDWWKHPRGXOHPHHWV FHUWDLQVWDQGDUGV IEC Certification
/RRNLQJIRULQIDQWPRUWDOLWLHV $FFHOHUDWHG/LIH7HVWLQJZLWKFRPELQDWLRQVRIZHDWKHUFOLPDWH Suitable for location 6DOWPLVWFRUURVLRQWHVWLQJ :LWKLQNPRIWKHVKRUH ,(& 6QRZORDGLQJ 7HVWLQJWRWKHKLJKHUORDG3D Inverters – very important component!
Quality counts Reliability Suitability Maintenance response Inverters
7HPSHUDWXUHIDFWRUV 'HUDWLQJ 6KXWGRZQ (QFORVXUHUDWLQJV ,QGRRURXWGRRU &RROLQJ )RUFHGRUQDWXUDO )DQV²GXVW\HQYLURQPHQWV 0DWFKHGWRWKHPRGXOHVDQGVWULQJV (IILFLHQF\ (XŤ /LIHWLPH 0LGWHUPUHSODFHPHQWV Mounting systems
6HFXULW\RIIRXQGDWLRQV • Security of modules
• Theft prevention Mounting systems
• Soil Consistency and Stability • Domino effect • Module bending stress Tracking systems Tracking systems
6WRUPPRGH /RVVRIWUDFNLQJERQXV ,QFUHDVHGPRGXOH WHPSHUDWXUH 7UDFNLQJHUURU PLVPDWFK )DXOWVLQPRYLQJSDUWV 5HJLRQDOGLIIHUHQFHV 2SHUDELOLW\LQKDUVK FOLPDWHV Key Messages Risk Identification, Mitigation & Removal
• Ground, weather, access and resource Site Risks • How does resource vary monthly and annually? What is the confidence level?
• Issues that could affect construction milestones, Completion Risks particularly energisation
Technology Risk • Is the technology proven? Is it suitable for the site?
• Issues that could affect project revenue over the project life Operating Risks • Are there contractual or physical mitigants?
• Assess the volatility of cashflow Financial Risk • Are mitigants in place? Post Construction Risk and Related Risk Mitigation Sustainable Business Advisory
April 2012 Risk Identification, Mitigation & Removal
• Ground, weather, access and resource Site Risks • How does resource vary monthly and annually? What is the confidence level?
• Issues that could affect construction milestones, Completion Risks particularly energisation
Technology Risk • Is the technology proven? Is it suitable for the site?
• Issues that could affect project revenue over the project life Operating Risks • Are there contractual or physical mitigants?
• Assess the volatility of cashflow Financial Risk • Are mitigants in place? Energy Yield Prediction Accuracy 'RFXPHQW&RQWURO GHVLJQYHUVLRQ 6LWHFKDUDFWHULVDWLRQ 7LOWDQGRULHQWDWLRQ 6KDGLQJ +RUL]RQ 1HDUVKDGLQJ ,QWHUURZ 6RODU5HVRXUFH 6RXUFHRIGDWD 3HULRGRIGDWD 8QFHUWDLQW\LQGDWD
28 Energy Yield Prediction Accuracy • /RVVHV • 0LVPDWFK • 6RLOLQJ • $&'&FDEOH • 7HPSHUDWXUH • ,QYHUWHU • 0337UDFNLQJ • 7UDQVIRUPHU • 'RZQWLPH • 0RGXOHGHJUDGDWLRQ • 7RWDOSUHGLFWLRQXQFHUWDLQW\
29 Operating Risk
$QH[SHULHQFHG2 0FRQWUDFWRUUHTXLUHGWRFDUU\RXW PDLQWHQDQFHWDVNV ERWKSUHYHQWDWLYHDQGXQVFKHGXOHG 5HJXODULQVSHFWLRQV 0RGXOHFOHDQLQJ +RWVSRWGHWHFWLRQ 5HSDLUV 'DWDFROOHFWLRQDQGUHSRUWLQJ 6LWHVHFXULW\ 0DLQWDLQLQJDVWRFNRIVSDUHV ,QHIILFLHQFLHVLQWKHRSHUDWLRQDQGPDQDJHPHQWRIWKH SURMHFWPD\UHGXFHWKHFDVKIORZ Mounting Structures
([SHQVLYHUHPHGLDOZRUNFDQEH DYRLGHGE\FKHFNLQJIRU (URVLRQRIIRXQGDWLRQV 7LJKWQHVVRIEROWV WRUTXHZUHQFK &KDQJHVLQJHRPHWU\ 6LJQVRIFRUURVLRQ 'HIHFWVLQJDOYDQLVDWLRQ Modules &KHFNIRU 'HODPLQDWLRQ *ODVVIUDFWXUH 0RLVWXUHLQJUHVV &OHDQPRGXOHV 7LJKWHQEROWV &KHFNFDEOHFRQQHFWRUV Inverters &OHDQLQJ $LULQWDNH +HDWVLQN )DQV 7LJKWHQFDEOHFRQQHFWLRQV &KHFNIRU XQXVXDOQRLVH 'LVFRORUDWLRQ )XVHV 5HIXUELVKUHSODFH 0LGWHUPUHSODFHPHQWV" 'HSHQGVRQVLWHWHPSHUDWXUHIDFWRUV 0HFKDQLFDOYHQWLODWLRQ"QDWXUDO"DLUFRQ" O&M contract Operational risk mitigated by a robust O&M contract &ODXVHVWRPLWLJDWHSODQWXQGHUSHUIRUPDQFH $YDLODELOLW\JXDUDQWHH" 3HUIRUPDQFH5DWLRJXDUDQWHH" 3HQDOWLHVIRUQRWDFKLHYLQJWDUJHWV" /LTXLGDWHGGDPDJHVFDSSHGDWRIFRQWUDFWSULFH" %RQXVHVIRUH[FHHGLQJWDUJHWV" Financial Risk
Can the project generate sufficient revenue to cover annual debt payments and operating costs?
To assess the financial risk carry out a “sensitivity analysis” i.e. modify financial model input parameters according to stress test scenarios Financial Risk
Stress test scenarios: Annual module degradation 0.3% - 0.5% - 0.8% O&M costs ±10% Inverter replacement- once over project life? Module soiling losses: 2% , 3%, 4% (O&M dependent) Unavailability: 99%, 98% and 97% (dependent on grid strength)
Reduce the likelihood or impact of the risk Module cleaning linked to performance monitoring Include a maintenance reserve account
Yield is often skewed to the summer months Include additional financial reserves to ease financial strain Sapphire Industrial Infrastructures 5 MW PV Project, Tamil Nadu, India
Energy yield prediction Only one resource database considered Uncertainty and confidence in prediction not considered (P90)
Operation and Maintenance Site found to suffer from extreme soiling - cleaned continuously String level performance monitoring not undertaken Key Messages Resource risk: Uncertainty in energy yield prediction is dominated by resource uncertainty Use several resource datasets Understand the uncertainty and probability of exceedance in energy yield prediction (P90)
Operating risk Use experienced O&M contractors Have a well defined O&M contract with performance targets
Financial risk Carry out appropriate stress tests Reduce the likelihood or impact of stress scenarios SgurrEnergy
• Leading independent engineering consultancy
• International - Glasgow (UK Head Office) - Portland , Maine (America) - Paris (France) - Beijing (China) - Pune (India) - Wexford (Ireland) - Vancouver (Canada)
• Experienced - Over 100 responsive engineers and consultants
• Professional - Triple accreditation to British quality standards
Leading position by experience We have consulted on over 65,000 MW of renewable energy in over 30 countries covering both project development and due diligence
Europe Asia Africa • Belgium • China • Angola • Bulgaria • India • Kenya • Estonia • Korea • South Africa • France • Pakistan Oceania • Germany • Sri Lanka • Australia • Greece • The Philippines • New Zealand • Ireland • Turkey • Italy • Vietnam • Malta North America • The Netherlands • Canada • Poland • USA • Portugal South America • Russia • Brazil • Romania • Chile • Slovakia • Galapagos Islands (Ecuador) • Spain • Sweden • UK Any questions? [email protected]
41 IFC Advisory engagement in India to support new markets and business models in Solar energy Ongoing Activities
Projects Focus
6LYDJDQJD3URMHFW²0:6RODU3URMHFWProject operational 7ULDORI7KLQ)LOPWHFKQRORJ\XQGHU,QGLDQFRQGLWLRQV3RZHUSHUIRUPDQFH (Advisory Services and Concessional Financing) YDOLGDWLRQ5HVRXUFH9DOLGDWLRQ5HSOLFDWLRQLQ0DUNHW
*UHHQ7HOHFRPV²,QGLDExpansion of new and existing business models 5HJXODWLRQ7HFKQRORJ\GHYHORSPHQW%XVLQHVVPRGHOGHYHORSPHQW for ‘greening telecom towers’ and ‘community power’ 5HSOLFDWLRQLQ0DUNHW
6RODU 0DQXIDFWXULQJ 3URMHFW Support to current Investment Climate %XVLQHVVPRGHO(FRQRPLFPRGHO0DQXIDFWXULQJ7HFKQRORJ\ efforts in Rajasthan (3GW+)
6RODU5RRIWRS²*XMDUDWPPP transaction being supported %XVLQHVV PRGHO &RPPHUFLDO PRGHO 6WDQGDUGVJXLGHOLQHV 333 7UDQVDFWLRQ5HSOLFDWLRQLQ0DUNHW
Activities under development Projects Focus
Concentrated Photo Facilitate pilot trials to validate financial and technical feasibility of business models Voltaics Status - Help create business model for Solar CPV to have the technology adopted in India
Lighting Asia Expand the usage of Solar Lanterns and the concept of micro grids through supporting business models and industry standards Status - Evaluating the market and the business models
Rooftop Solar Scale-up PPP business model expansion Expansion into creating business models for private home owners to own and operate rooftop solar projects Status - Evaluating the different potential PPP transactions Case Study – Thin Film 5 MW Solar Plant in India • Client Need
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43