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Solar Power Plant

5 MW – Photo voltaic

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CONFIDENTIAL AND PROPRIETARY


Any use of this material without specific permission of Sunshakti Energy Solution Pvt. Ltd. is strictly
prohibited
Index
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¾ Executive Summery
¾Solar Energy Sector
¾ Renewable Energy Opportunity & Energy Mix Forecast
¾ Investment in Renewable
¾ Solar Growth Drivers
¾ Global Market Size & Global Market by Geography
¾ Indian Solar Industry

¾ Financials
¾ Financial Structuring
¾ Company Structuring
¾ Exit Options Available

¾Risk Analysis

¾ Technology

¾Govt. Role and Project phases

¾Execution Team Background l


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Executive Summery
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• The Primary reason a Solar power plant is financially viable is due to the tremendous
amount of subsidy provided by Govt. of India. Currently electrical power is sold at ` 3.5/unit
by power plants to the govt. Under the Jawaharlal Nehru National Solar Mission any
electricity produced by PV solar power plants is bought by the govt. at the rate of ` 15/unit.

• The equity funding is required to be released only once the Power Purchase agreement
has been signed with the Govt. hence reducing the risk exposure of the equity partner.

•The solar power plant is proposed to be established in Rann of Kutch , Gujarat , India . The
primary reason for the site selection is the intensity of the solar irradiation at the proposed
location . The other influencing factors include favorable govt. support, hard packed soil
(reducing maintenance cost),strong electricity infrastructure availability , lack of socio
economical turbulence etc.

•The technology provider’s engineers work closely with us to develop the PV solar power
plant.

•IT Benefit-Section 80 I [Indian tax code][from 2011]

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Solar Energy Sector
Solar Energy Sector
-Renewable Energy Opportunity
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vddgggggggggggggggggs
Solar Energy Sector
-Evolution of Worlds Energy Mix
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Source : EPIA
Solar Energy Sector
-Investment
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Investment - Global Trends

Global Investment in Renewable


Energy Sector
Solar Energy Sector
-Solar Growth Drivers
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• Each hour the sun delivers to Earth the amount of energy used by humans in a
whole year

• Sun radiation onto earth corresponds to 120,000 TW

• Total human energy need in 2020: 20TW


Source : EPIA
Solar Energy Sector
-Global Market Size
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Source : EPIA

The expected growth rate is in the range of 20% - 30%, mainly fueled by pro solar
policies being announced by various governments around the world.
Solar Energy Sector
- Global Market by Geography
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Solar Energy Sector
-Indian Solar Industry
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National Solar Mission - The objective of the Jawaharlal Nehru National Solar Mission (JNNSM) under the
brand ‘Solar India’ is to establish India as a global leader in solar energy, by creating the policy conditions for
its diffusion across the country as quickly as possible.
The Mission aims at :

•20,000 MW (20GW) of installed solar generation capacity by 2022

• 100,00 MW by 2030

• Solar power cost reduction to achieve grid tariff parity by 2022

• Achieve parity with coal based thermal power generation by 2030

• 4-5 GW of installed solar manufacturing capacity by 2017


Solar Energy Sector
-Indian
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•India’s growing economy is
one of the primary drivers for
the field of alternative energy
investments .

• India is also currently one of


the top 2 carbon credit
generators globally .

•Solar energy sector in India


is in a pole position because
of India's geographical
location .
Financials
Financials
-Financial Structuring
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•Financial Structure
•Debt Financing – 60%=42 cr. approx
•Equity Financing – 40%=28 cr. approx

•Break Even Period approx. 5-5 ½ years

•Financial agreement & Guarantee - Govt. of India [Power Purchase Agreement


{PPA} ]

•Insurance cover against


a)Natural Calamities- Earthquake, Hurricane,
Flooding etc
b)Unforeseen damage

•Cash infusion required only after a PPA(power purchase agreement ) has been
signed by the Govt. of India –PPA is a promissory by the Govt. to buy the
electricity at a fixed rate for the next 25 years irrespective of the global or
domestic price movement /fluctuation in the unit cost of electricity.

•The repayment is guaranteed by the Govt. of India.


Financials
- Company Structure
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Archeron

Foreign Market
Manufacturing Consulting Alternative Energy
Entry

Sun Shakti Energy Solutions Pvt. Ltd.


Photovoltaic Solar Power Plant

Board of Directors Carbon Credits Trading


Solar Panels & Inverters
Equity Partners
– Assembly &
Technology Partners Manufacturing
Power Plant Designing &
Commissioning
Strictly Confidential
Financials
-Exit Options Available
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We have all the Exit-Options categorized into 2 Time lines


• Early Exit[EE]
• Mid term Exit[MTE]

Exit options –

•QIP*--[EE] & [MTE]

• Sellout --[EE] & [MTE]

•Buyback by promoters -- [MTE]

•IPO--[MTE] l
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•Securitization --[EE] Strict

* QIP-Qualified Institutional Placements


[Govt. regulations allow the equity partners to exit as early as 1 month into the
project-only the promoters (Sun Shakti ) has to hold min. 26% for at least 5 years]
Exit options
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The IPO valuation is above 323 cr. ` (without hype) because of the following
reasons :

• The Govt of India’s payment guarantee is 200 cr. ` plus.


•The sale of carbon credits generate another 40-60 cr.`(at current average price )
and the price of carbon credits rise continuously [i.e. today’s carbon credit price is
12-13 euro per unit and around 24-36 months back it was 28 -30 Euros per unit ].
•The trading division (i.e. Carbon Credit Trading ) of sun shakti will generate
revenue from 2011 and the valuation of any trading firm is done at a very high
exponential premium rating.
• We have deal’s with foreign solar panel manufacturers who will have a joint
venture with sun shakti – The implementation is two fanged –primary :
manufacturing activity ; secondary-Product Marketing activities . This adds
another important chunk for the IPO valuation .

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Risk Analysis

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Risk Analysis
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Risk Mitigation Measure
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Development Risk

Promoter Risk The risk which is higher for the promoters is not going to be shared or transferred
to the Equity or Debt partner , all the responsibility and onus of securing the Ppa
lies with Sun Shakti .
Pre PPA – Risk : High

Once the contract/ppa has been secured with the Govt. the equity and debt
partner come into play hence drastically reducing their risk exposure .

Post PPA – Risk :Low

Financing Risk The equity contribution for the project is proposed to be funded through the
promoters’ contribution, private equity investments and unsecured loans. The
company is in discussion with various potential private equity investors for tying
up the requisite equity contribution. The risk assessment is based on the fact that
ppa has been secured or not .
Risk – low

Strictly Confidential
Risk Analysis
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Risk Mitigation Measure

Construction Risk

Project Management Sun Shakti proposes to adopt lump sum turnkey


Risk execution as implementation scheme and this approach reduces
the project management risk.
It handles project planning, supervision, erection & commissioning
projects, etc. For this we are in current negotiations with multiple firms which have
the requisite know how and global experience ,for example JUWI [Germany]
Risk – low

Cost & Time Overrun The Company proposes to award the contracts on fixed cost basis
Risk to experienced and reputed technology suppliers. The Company
will ensure to keep relevant provision for liquidated damages in
case of delay of project. Such liquidated damages would partially
offset the adverse impact of cost overrun.
A provision of 5% contingency is kept in the Project Cost to meet
any cost overrun due to unforeseen events. Further sensitivity to
increase in capital cost of Project cost, up to an extent of 5%, has
been analyzed and debt servicing has been found to be
Comfortable.
Risk – low

Strictly Confidential
Risk Analysis
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Risk Mitigation Measure

Construction Risk
Infrastructure Risk The project site has adequate transport infrastructure and
connectivity to ensure smooth and timely transportation of heavy
plant and machinery at Site.

Risk – Low

Technology Risk The basic technology risk the project faces is probable breakthroughs in the
field of Photovoltaic's in the next 8-12 years ,hence making the current
technology obsolete .

Risk – Medium

Strictly Confidential
Risk Analysis
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Risk Mitigation Measure

Performance Risk

Fall of Performance Risk 25 years performance guarantee from both our Execution partners and from the
firms we are procuring our cells .

Risk : Low

Maintenance Risk
Operational Risk The company has already brought in experienced executives into the Project

Maintenance Risk The company is bringing in experienced executives into the Project Management
team. After successful execution of Project, the Company will strengthen the team
by bringing in relevant manpower to operate the plant by adopting prudent
practices. The project also has provision for sending relevant employees and
operators for necessary training for managing and running the plant operations
efficiently.

Risk – Low

Strictly Confidential
Technology

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Technology
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ABC of Photo Voltaic Solar cells

sunlight [photons] hit the solar panel and are absorbed by semiconducting materials

Electrons ( - ve charged) are knocked loose from their atoms, allowing them to flow through the material to
produce electricity.

A photovoltaic module is a packaged


interconnected assembly of solar cells.

Over 95 % of all solar cells are made


from Silicon (Si). It is a basic P-N
Junction

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Technology
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Solar Cells today are classified into three generations :
First Generation Second Generation Third generation

1st generation accounts for 89% Second gen. uses new Third generation technologies
of 2007 -08’s total production. manufacturing techniques enhance poor electrical
(vapour deposition, performance of thin film
•Large-area, high quality and electroplating). technologies while maintaining
single junction devices , Silicon low production costs.
based standard PV cells . •2nd generation technologies are
faulted for “poor” conversion •Current research is targeting
•Single junction silicon devices efficiencies and despite high Si conversion efficiencies of 30-
are approaching the theoretical prices were unable to gain 60%.
limiting efficiency of 33%. significant market share.
•Most successful 2nd generation •There are a few approaches to
•High production costs -unlikely to materials have been cadmium achieving these high efficiencies:
achieve cost parity with fossil fuel telluride (CdTe), copper indium Multiple junction devices.
energy generation. gallium selenide, amorphous Modifying incident spectrum
silicon, and micromorphous (concentration).
silicon. Use of excess thermal generation
•Materials are applied in thin films to enhance voltages or carrier
to supporting substrates (glass, collection.
ceramics) reducing material mass
and costs
•In 2007-08 CdTe production
represented 4.7% of total market
share, thin film silicon 5.2%
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Technology
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In 2007-08 first generation solar cells accounted for 89.6% of commercial production, though
the market share of these solar cells are declining. The manufacturing processes that are used to
produce first generation cells are inherently expensive, meaning that these cells may take years to pay
for their purchasing costs.

A standard example of second generation cells would be the solar cells made by Nanosolar, which uses
a special machine to print the cells at an extremely fast rate. Though these cells have only 10-15%
conversion efficiency, the decreased cost more than makes up for this deficit and it is thought that
second generation solar cells will surpass first generation cells in market share sometime around 2010.
Second generation solar cells have the potential to be more cost effective than fossil fuel, though this
may not occur until 2016 (est.) or later. The great advantage of second generation, thin-film solar cells,
along with low cost, is their flexibility. Thin-film technology has spurred lightweight, aesthetically pleasing
solar innovations such as solar shinglesand solar panels that can be rolled out onto a roof or other
surface.

Third generation solar cells are just a research target, and do not really exist yet. The goal of
third generation solar cell research are low-cost, high efficiency cells. Some analysts predict that
third generation cells could start to be commercialized sometime around 2020, but this is just a guess.

Technologies associated with third generation solar cells include multi junction photovoltaic cells,
tandem cells, nano structured cells to better pick up incident light, and using excess
thermal generation to enhance voltages or carrier collection. l
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Technology
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Solar cells Efficiency issues

•Solar cell efficiencies vary from ~ 6% for amorphous silicon-based solar cells to ~ 41% with
multiple-junction research lab cells.

•Solar cell energy conversion efficiencies for commercially available multi crystalline Si solar cells
are ~ 14-19%.

•High efficiency cells are not always the most economical.

•30% efficient multi junction cell based on exotic materials might well cost one hundred times as
much as an 8% efficient amorphous silicon cell in mass production, while only delivering about
four times the electrical power.

•There are still operational and life span issues that have to resolved for 2nd and 3rd generation
cells .

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Technology
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Technology
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•Technology chosen is based on not only the efficiency of the systems but also the long term survivability
of the systems in harsh desert climates .

• The system integration is a major factor in increasing the overall efficiency of the system .

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Government Role &
Project Phases

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Government Role
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•Govt. of India and its various state governments have started playing a primary role in
the development of the solar energy sector in India. This can easily be portrayed by the
stated aims of the Jawaharlal Nehru Solar mission .

• The solar photovoltaic power plants are financially viable and profitable at today’s
technological stage only because of heavy Govt. subsidies ; starting from California to
Germany to India .

• In the clearance department the Solar Power projects have an inherent advantage
over other sectors .The primary clearances required by the solar power plant is an ‘No
objection certificate ‘ for the land usage and a Evacuation availability from GETCO ‘s
nearest 66KVA or higher substation.

• Govt. of India in 2010’s budget has reduces and in some cases waivered the excise
duty for the equipment used in alternative energy segment .

•CERC has made it mandatory for all power utilities to purchase 6% of tpower l
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Project Phrases
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Phase Activity Involved Parties Prerequesits
1Submission of Expression of interest Promoter N/A
2Acknowledgement On submitted letter of Interest GEDA Promoters Background
Successfully short listing of letter
3 Invitation for Application GEDA of interest

Financial criteria
Technical criteria
Demand Draft of 50Lakh
Application fees

4Application submission Promoters


Successful short listing based on
5Letter of intent GEDA application
Successful evidence on finance &
6PPA Sign GEDA & Promoters technology
7Power Plant Implementation Promoters PPA signed
8Power generation Promoters Timely Construction of the facility
9Backward integration
- Phrases Completed
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Project Control Structure
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Board of Directors

C.E.O.

Scientific Advisor*

Department
Financial Advisory Technology Partners
Heads

* Scientific Advisor is from Dept. of Energy – Govt. of United States of America –


Solar research division

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Summery
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• The 5 MW solar PV power project .

• Cash infusion required only after the PPA [power purchase agreement ] has
been signed with the Govt. ,guaranteeing us a steady cash flow for the next 25
years .

• The Power project is phase-I of sun shakti’s expansion plan , Phase-II of the
plan includes a growth of above 30% annually .

•A robust management team with a wide spectrum of experience .

• The complete proprietary details of Phase II will be provided only after first round
of discussions .

•The segment in which Sun Shakti is operating is the fastest growing investment
segment in the market .

Thank You Strictly


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