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Mercom Capital Group, llc, a global clean energy communications and consulting firm, released its report on funding and mergers and acquisitions (M&A) activity for the Battery Storage, Smart Grid, and Energy Efficiency sectors for the second quarter and first half of 2017. 

In the first half (1H) of 2017, $1.03 billion was raised by Battery Storage, Smart Grid, and Efficiency companies compared to $807 million in 1H 2016.

To get a copy of the report, visit: http://bit.ly/MercomSGQ22017

Battery Storage

Venture capital (VC) funding (including private equity and corporate venture capital) for Battery Storage companies jumped in Q2 2017 to $422 million in 10 deals compared to $58 million in eight deals in Q1 2017 due to very large funding deal. Year-over-year (YoY) funding was higher compared to $125 million raised in Q2 2016 from 10 deals. In the first half (1H) of 2017, $480 million was raised in 18 deals compared to the $179 raised in 20 deals in 1H 2016. 

The top VC funded Battery Storage companies in Q2 2017 were: Microvast Power, which raised $400 million from CITIC Securities, CDH Investment, National Venture Capital, and others; Vionx Energy received $12.75; and Moixa Technology raised $3.2 million in funding from the Greater Manchester Combined Authority, Tokyo Electric Power Company (TEPCO), and First Imagine! Ventures. 

Eleven investors participated in Battery Storage funding in Q2 2017 with Lithium-based Battery companies raising the most. 

There were seven debt and public market financing deals in Battery Storage in Q2 2017 totaling $107 million compared to $22 million in two deals in Q1 2017. In 1H 2017, there was $129 million raised in nine deals compared to three deals bringing in $69 million in 1H 2016. 

There was one Battery Storage project fund in 1H 2017 for $152 million compared to three deals raising $195 million in 1H 2016. 

Battery Storage project funding in 1H 2017 totaled $5 million in two deals compared to no deals in 1H 2016. 

There were three M&A transactions involving Battery Storage companies in Q2 2017. In Q1 2017, there was one M&A transaction. In the first half of 2017, there were four transactions (one disclosed) compared to six transactions in 1H 2016 (two disclosed). 

Smart Grid

VC funding for Smart Grid companies in Q2 2017 came to $139 million in eight deals compared to $164 million in 14 deals in Q1 2017. In a YoY comparison, $222 million was raised from 15 deals in Q2 2016. $304 million was raised in 22 deals in 1H 2017 compared to $331 million raised in 29 deals in 1H 2016. 

The top VC funded Smart Grid companies included: Actility, which secured $75 million from Creadev, Bosch, Inmarsat, Idinvest, Bpifrance, Ginko Ventures, KPN, Orange Digital Ventures, Swisscom, and Foxconn; ChargePoint raised $43 million from Siemens; FreeWire Technologies received $7.6 million; and Enervalis secured $4.8 million from LRM, Nuhma, and ABB. 

Seventeen investors participated in Smart Grid VC funding rounds in Q2 2017 with Demand Response companies raising the most. 

There was one debt and public market financing deal in Smart Grid in Q2 2017 totaling $9 million compared to no deals in Q1 2017. In 1H 2017, $9 million was raised in one deal compared to $217 million in three deals in 1H 2016. 

There were six Smart Grid M&A transactions in Q2 2017 compared to seven transactions in Q1 2017. In the first half of 2017, there were 13 transactions (three disclosed) compared to five transactions (two disclosed) in 1H 2016. 

Efficiency

VC funding into Energy Efficiency technology companies fell significantly to $29 million in six deals in Q2 2017 compared to the $213 million in 14 deals in Q1 2017 and $86 million in nine deals in Q2 2016. $242 million was raised in 20 deals in 1H 2017 compared to $297 million raised in 23 deals in 1H 2016. 

The Top Efficiency VC deals included: $15 million raised by CIMCON Lighting from Energy Impact Partners; the $5 million raised by Tendril Networks; OptiWatti raised $4 million from Taaleri Kiertotalous and Butterfly Ventures; and Illumitex raised $4 million from WP Global Partners and NEA. 

Six investors participated in VC funding in Q2 2017. Within the sector, Efficiency Lighting companies brought in the most funding. 

Debt and public market financing for Efficiency companies rebounded to $1.4 billion in six deals in Q2 2017 compared to $301 million in three deals in Q1 2017. In 1H 2017, there was $1.7 billion raised in nine deals compared to $2 billion raised in the same number of deals in 1H 2016. 

There was one M&A transaction in the Efficiency sector in Q2 2017 compared to four in Q1 2017. In the first half of 2017, there were five transactions (two disclosed) compared to 10 transactions in 1H 2016 (four disclosed).

To get a copy of the report, visit: http://bit.ly/MercomSGQ22017

About Mercom Capital Group

Mercom Capital Group, llc, is a global communications and research and consulting firm focused on cleantech. Mercom delivers market intelligence and funding and M&A reports covering Battery Storage, Smart Grid, and Energy Efficiency and Solar and advises companies on new market entry, custom market intelligence and strategic decision-making. Mercom's communications division helps companies and financial institutions build powerful relationships with media, analysts, local communities, and strategic partners. About Mercom: http://www.mercomcapital.com. Mercom's clean energy reports: http://store.mercom.mercomcapital.com/page/.

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Ecoprogetti srl is the leading manufacturer of complete Turnkey Line for module manufacturing.

Growth Opportunities in the Indian PV Market & Requirement of Indian Module Companies

Solar power tariff in India has witnessed a drastic fall over the last few years. 

 The solar technology is likely to play a key role in India’s current & future power scenario.

Bitcoin, blockchain technology and the Internet of Things are dramatically disrupting every industry sector.

The government of India has set up an ambitious target of 40,000 MW of rooftop solar by 2022.

With various solar energy policies in place, there is very interesting solar energy market developing in India.

Negotiating photovoltaic (PV) module warranties can seem like a complicated task with blurred lines separating fact and fiction.

Mercom Capital Group, llc, a global clean energy communications and consulting firm, released its report on funding and merger and acquisition (M&A) activity for the solar sector in the second quarter of 2017 and first half of 2017.

Total corporate funding (including venture capital funding, public market and debt financing) in the first half (1H) of 2017 was slightly up compared to the same period in 2016 with about $4.6 billion raised compared to the $4.5 billion raised in 1H 2016. There were 97 deals in 1H 2017 compared to the 79 deals in 1H 2016.

Corporate funding in the solar sector fell in Q2 with $1.4 billion raised in 37 deals compared to the $3.2 billion raised in 60 deals in Q1 2017. Year-over-year (YoY) funding in Q2 2017 was about 17 percent lower compared to the $1.7 billion raised in Q2 2016.

To learn more about the report, visit: http://bit.ly/MercomSolarQ22017

“There is a great deal of uncertainty in the solar markets right now, which is reflected in funding activity. However, solar public companies, especially on the U.S. stock markets, have done well this year. A lot is riding on how the Suniva anti-dumping case plays out as it will dictate market dynamics going forward,” commented Raj Prabhu, CEO of Mercom Capital Group.

Global VC funding (venture capital, private equity, and corporate venture capital) for the solar sector in 1H 2017 was 23 percent higher with $713 million compared to the $579 million raised in 1H 2016, largely due to a strong first quarter in 2017.

In Q2 2017, VC funding for the solar sector saw a steep decline with $128 million in 23 deals compared to $585 million in 22 deals in Q1 2017. Most of the VC funding in Q2 2017 went to solar downstream companies (72 percent); $92 million was raised in 15 deals.

Top VC deals in 1H 2017 included the $200 million raised by ReNew Power Ventures followed by the $155 million raised by Greenko Energy Holdings, the $125 million secured by Hero Future Energies, Silicon Ranch’s $55 million, $25 million raise by Siva Power and the $25 million raise by Spruce Finance. A total of 55 investors participated in solar funding in 1H 2017.

Solar public market funding was much higher in 1H 2017 compared to the first half of 2016 with $934 million raised compared to $276 million in 1H 2016. Public market financing was slightly up in Q2 2017 with $473 million raised in six deals compared to the $461 million in 13 deals in Q1 2017.

Announced debt financing in 1H 2017 came to $3 billion compared to $3.7 billion in 1H 2016. In Q2 2017, announced debt financing fell to $798 million in eight deals compared to $2.2 billion in 25 deals in Q1 2017. There was one securitization deal in Q2 2017 by Sunnova which raised $255 million.

Announced large-scale project funding in 1H 2017 came to $7.4 billion in 81 projects. In Q2 2017, announced large-scale project funding came in at $4.8 billion in 48 deals.

Announced residential and commercial solar funds totaled $1.8 billion in 1H 2017 compared to $2.3 billion in the same period of 2016.

In 1H 2017 there were a total of 40 M&A transactions, compared to 30 in the same period of 2016. There were 11 solar M&A transactions in Q2 2017 compared to 29 solar M&A transactions in Q1 2017 and 16 transactions in Q2 2016. Of the 11 total transactions in Q2, eight involved solar downstream companies, two involved PV manufacturers, and one transaction was by a BOS company.

There were 100 large-scale project acquisitions in 1H 2017 totaling 10.6 MW, compared to 90 project acquisitions totaling 4.5 GW in the first half of 2016.

Investment firms and funds were the most active acquirers in 1H 2017, picking up 37 projects totaling 4.2 GW, followed by project developers with 17 transactions for 4.6 GW.

Mercom tracked 206 new large-scale project announcements worldwide in Q2 2017 totaling 11.1 GW.

To learn more about the report, visit: http://bit.ly/MercomSolarQ22017

 

About Mercom Capital Group

Mercom Capital Group, llc, is a global communications and consulting firm focused exclusively on clean energy and financial communications. Mercom’s consulting division advises cleantech companies on new market entry, custom market intelligence and overall strategic decision making. Mercom’s consulting division also delivers highly respected industry market intelligence reports covering Solar Energy and Battery Storage/Smart Grid/Efficiency. Our reports provide timely industry happenings and ahead-of-the-curve analysis specifically for C-level decision making. Mercom’s communications division helps clean energy companies and financial institutions build powerful relationships with media, analysts, government decision makers, local communities and strategic partners. For more information about Mercom Capital Group, visit: http://www.mercomcapital.com. To get a copy of Mercom’s popular market intelligence reports, visit: http://eepurl.com/cCZ6nT.

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How important it has become for developers to have solar fencing & security systems on the solar projects

Effects of choosing the right type of wires on the overall performance of the product/ project. 

Ecoprogetti srl is the leading manufacturer of complete Turnkey Line for module manufacturing.

Growth Opportunities in the Indian PV Market & Requirement of Indian Module Companies

How important it has become for developers to have solar fencing & security systems on the solar projects

Effects of choosing the right type of wires on the overall performance of the product/ project. 

Best Practices in the BOS Procurement Industry

“ACME is really proud to participate in Indian government’s continued effort to make renewable energy more bankable and attractive for both financial investors and Indian utilities.

Mr. Neelesh Garg, Managing Director, Saatvik Green Energy

"When examined in isolation, this target appears daunting. However, viewing it in perspective of land size required, the ask is 4050 hectares of land. It still seems a far cry from reality. Now, consider it as one-third of the entire rooftop space available in Delhi. Does this sound more realistic? This is exactly what it takes to hit that goal, breaking down the numbers to a vision with high clarity and a strong sense of purpose. In a nutshell, once you can visualize it, you can achieve it. The government has launched the National Solar Mission and is providing subsidies, corporates are doing their best to market their product, yet all stakeholders are missing the mark because of one roadblock-awareness.

Mr. Prashant Panda, President, Solar Business, ACME Solar

Let us first understand why there is a thrust on developing Renewable power plants in India. The peak shortage is currently shown to be around 2-4% and of course we have latent demand for which efforts are going to bring into the system which would heighten the peak demand further. Most of the load is being met through fossil fuel based power plants which is about 186 GW, installed capacity, which are working at the PLF of about 58% on an average. Further, Fossil fuels are finites in nature. Therefore, to serve the demand in an efficient way and to use fossil fuels in an optimized manner, it is time for all of us to look for alternative energy sources for our future energy needs and Renewable fits into this very easily. 

Mr. Kiran Patil, Managing Director, PLG Clean Energy Projects Private Limited

Do you feel the Indian solar market is overheating and needs to cool down to avoid problems in the long run?

My view is, the Solar market in India is evolving, it is not overheating.

With a target to have an operational solar power capacity of 100 GW by March 2022, the Indian government hasannual capacity addition targets for the next few years. By early March this year more than 5.7 GW of solar power capacity was operational in India.The Ministry of New & Renewable Energy (MNRE) plans to add 12 GW,15 GW and 16 GW solar power capacity in the financial years 2016-17, 2017-18 and 2018-19, respectively.

Mr. Manish Singhal, Head-BD, Mahindra Susten

What is your outlook for the Indian O&M sector for the next 5 years

The Indian O&M sector is changing rapidly. Over the last 5 years the solar industry has quickly realised the importance of effective operations and maintenance being the key to plant generation maximisation as well as equipment longevity. The market currently does not have a consensus on whether it should be In-House or Outsourced, we believe that Solar not needing O&M is a myth which developers are realising and in the coming years, O&M will no longer be looked as a cost centre but in-fact as a performance enhancer leading to increase revenues. Water consumption in O&M is going to be a matter of concern given scarcity of water and Mahindra Susten has developed in-house Cleaning Robots which will help reduce water consumption by over 80% besides helping reduce cleaning costs drastically. Adoption of such technologies will be the key in future

What measures should be taken for efficient costs and budgeting for effective Operations and Asset management.

Effective O&M begins right from effective Design, equipment selection and array layout – Having done the design and construction right is half the work done. The other perspective is the correct budgeting, in today’s competitive market, due to the increasing pressures on costs, Operators have started to cut corners during the O&M phase. Whether it is mobilising a team with no experience or it is improper spares planning the impact on your asset could be detrimental. 

At Mahindra Susten our experience of over 5 years, across a diverse plant portfolio, helps us to create precise budgets to attend to the plant with the best possible resources ensuring maximum benefits to our customers.

What can be done to maximize energy production while minimizing downtime ?

In our perspective, Minimising downtime is a subset of maximising generation. The O&M team at Mahindra Susten has a 2 pronged approach, 1. Maximise generation and 2. Improve plant longevity. The generation can be maximised through

-          High plant availability

-          Immediate downtime alert

-          Short MTTR

-          Effective module cleaning

-          Remote monitoring through a dedicated expert team

-          Plant performance analytics to identify & address under - performance

We at Mahindra Susten, achieve these goals through effective remote monitoring at our central command centre in Mumbai, additionally we have invested in a team of analyst who critically analyse each plant performance to give inputs not just to the site O&M teams, but also the Design , Procurement, Construction and the Quality teams. Also the performance is benchmarked on a continuous basis, across plants and equipment.  The site team is also trained extensively across functions to handle the complete O&M of the plant. The team is then supported by the various teams at HO for all other activities be it HSE / Sustainability or effective Warranty management. These steps over the last 5 years have helped us consistently maintain a plant uptime of 99.5% and are proud to have some of India’s best performing plants in our portfolio of over 500 MW.

What can be done to increase the performance of the project while improving the life of the project ?

The plant longevity can be improved not just by following the O&M guidelines from the OEM but also through conditional monitoring and predictive maintenance. The other important factor being the selection of equipment to ensure the OEM last as long as the plant lifetime, and provides necessary after sales support. In our experience already there have been OEMs who have gone out of business and no longer support the Solar industry. The solar PV plants have an expected lifetime of over 25 years and it is critical to keep a close watch on the equipment to get the most out of the plant.

Another important aspect is the focus on HSE and Sustainability and we are proud to be leaders in that area. Although the results are not seen immediately but it is important to ensure that we are net givers to the environment and society. Our efforts for Local inclusion, 6 Million man-hours of work without a single reportable accident, ISO and OHSAS certification, Education, Girl safety, Sanitation and Hygiene across our plant regions is a testamony to our commitment.

 

Mr. Ashu Gupta, Vice President-Corporate, Ujaas Energy Limited

What is your outlook for the Indian O&M sector for the next five years?

With the Indian Government’s plan to achieve an installed solar power generation capacity of 100 GW by the year 2020, the Indian O&M Sector will definitely be at a boom.  

With the increased installation of mega power plant having capacity in multiples of 100’s of MWs or above coming and the increase in distributed power generation, O&M will play a huge responsibility in increasing the service life of this solar Power Installations.

Currently total no. of expected employment generated per MW of solar power plant installation is around 12 people, however with the increasing installations there will be a new rise in requirement and that will be in the sector of O&M.   

What measures should be taken for efficient costs & budgeting for effective operations & asset management?

At the initial investment levels O&M friendly measures are mostly neglected; one should realize that every potential issue represent a risk factor which can have monetary consequences.  At the time of budgeting we are more bothered on installation at lower cost, effect of O&M of the plant is not considered.

For effective operations & asset management, focus should not be only towards installation of the plant by lowering cost; however it should be towards increasing the overall life of the project where O&M will play a key role. Adequate and strategic approach has to be applied towards efficient operation and maintenance of the plant. An effective strategic O&M not only decreases the unnecessary expenses but also maximizes lifetime energy yield of the plant.

Use of handy gadgets like IR Cameras, on site performance analysers, flash testers etc decreases dependency on laboratories and expenses on inspection. This will low down a costly affair which can cost the owner lacs of rupees to thousands.

What can be done to maximize energy production while minimize downtime?

A properly maintained plant can maximize the energy yield while minimizing downtime, by providing long term profitability to the owner. More importance should be given to predictive maintenance which in turn develops the better preventive maintenance mechanism. A predictive maintenance first mitigates risk factors by proactively identifying the problematic areas, potential issues first and addressing them fast before they can impact the plants performance. Owners should also consider ease of O&M beforehand at the time of execution itself, which enables have a smooth and effective maintenance. 

What can be done to increase performance of the project while improving the life of the project?

With an EPC and O&M integrated approach rather than only focusing towards cutting down the installation cost, the performance of the project will be increased with the improvement in the life of the project.

 

Mr. Anand Kumar, Chief Operating Officer, Panchavaktra Power Limited

What is your Outlook for the Indian O&M Sector for the next 5 years?

As of now , India has installed more than 4 GW of Solar and atleast  60% of the plants O&M is outsourced. 

And the trend of outsourcing O&M seems to be the flavour of the industry. So O&M sector is poised for leap and is expected to be on the Sunny side.

What measures should be taken for efficient costs and budgeting for effective Operations & Asset Management?

- Regular site audits 

- Equipment & Performance Audits help in Budgeting of costs.

- Insurance of Asset also adds to your asset valuation.

What can be done to maximise production while Minimize Downtime?

- Effective Pre-emptive measures are best method for minimizing downtime. 

- Equipment suppliers should be made to visualize the changes in the performance of equipment’s

What Can be done to increase performance of the projects while improving the life of the project?

- Futuristic Design is critical as there will be many destructive technologies that might giving higher efficiency and performance of the plant.

- Innovative methods of execution are being seen that can not only reduce the cost of Project but also improve on performance

- Detailed analysis of site and discom is critical for ensuring better performance.

 

Mr. Ashok Nehra, Head-Development & Strategy, Rays Experts

What is your Outlook for the Indian O&M Sector for the next 5 years 

Total Installed capacity of solar plant in India is over 5.5 GW which is expected to be over 100 GW in next 5 years. it will be exponential increase in capacity. All these plant are under long term PPA and performance of plant will be most important aspect of all developers. Currently EPC companies are looking after O&M of project post execution with 2-5 years O&M contracts but as India add's over 15-20 GW projects YoY, there will be requirement of companies specialize in Operation and Maintenance of plants. It will be over Rs 6000 Crore industry. We are observing companies are forming dedicated O&M divisions and emergence of new companies, which are offering, specialized O&M services for solar plants. 

What measures should be taken for efficient costs and budgeting for effective Operations & Asset Management?

Operation and Maintenance is very labor intensive work. it required skilled technical manpower along with semi/unskilled manpower on long term basis. There will be huge challenges for O&M operators to maintain plants at high operating ratio and managing manpower along with cost. We expect lot innovation in automation and maintenance of plant will be introduced. We have designed process of 10 Minute fault identification and corrective measures sung automation of fault identification, soil losses to be kept in 2% limits using string monitoring etc. 

What can be done to maximise production while Minimize Downtime?

Preventive Maintenance is most important aspect of maximizing energy production, we have designed SOP's for weekly, month and quarterly preventive maintenance, this help us in identifying issue well before and regular maintenance will in increasing operating ratio of plant.

Use of analytics plays very innovative and important role in identifying potential issue in plant. We have defined set of parameters in SCADA system whose monitoring and analysis points out any potential down/issue in plant. Problems at any point in a production chain can reduce output to level of output from problem point. This analysis help us in getting addressed such weak points in chain and regular identification of weakest point in chain help us in increasing performance. 

What Can be done to increase performance of the projects while improving the life of the project?

Preventive maintenance of plant plays major role in life of plant and reduces downtime like regular checking of connections, transmission line, structures strength, site drainage system, transformers etc. Regular inspection of plant will increase life of plant along with performance.

 

 

Vishvesh Bhatia, Sr. General Manager / Sales & Marketing, APAR INDUSTRIES LTD., (Unit:UNIFLEX CABLES)

Our expectations from the budget is that Excise duty on materials being used for Renewable Energy ie., both Solar  & Wind may be exempted without MNRE so that dealers are able to stock the cable and it can be used for Solar Roof Top without Excise duty for smaller projects.

Additional duty may be levied on import of solar cables particularly on DC cables so that Government is able to protect the domestic manufacturers.  Indian cable industry is making lot of investment to enhance capacity for manufacture of Solar Cables so that they are able to meet requirements of Solar Plants ie, life of the cable should not be less than 25 years.  Even we made lot of investment in establishing E Beam Plant for irradiation cables which guarantees life of the cable of 25 years.

Budget may provide developers soft funding with low rate of interest so that they are able to generate energy at a low cost.  We also expect that budget may give tax exemption so that they are able to develop and generate energy at low cost since they produce green energy.

We should not forget that India is running the largest Renewable Capacity in the world and to meet this target Govt must encourage the Renewable Energy Plants so that India is able to meet the largest target of the world.

Mr Hartek Singh, CMD, Hartek Group

Renewable energy, particularly solar power, will drive the growth of the Indian power sector in coming years. The Centre should take concrete fiscal measures to turn India into a leading global solar powerhouse by creating a strong manufacturing base. The recent push to increase the budget in roof top sector was very encouraging. Overall by and large the government has been very proactive when it comes to renewable energy sector and we are satisfied with it.

Mr. Anirban Sen, Director – Infrastructure Fund, Kotak Investment Advisors Limited.

In the previous budget and in various forums held subsequently, the Government has outlined that it intends to simplify the tax regime by reducing the corporate tax rate and simultaneously withdrawing various tax incentives. Investors would appreciate if a clear and definitive path regarding the proposed changes is outlined in the budget.

Also, there are certain benefits (e.g., 80 IA, reduced withholding tax) that, based on our current understanding, are expected to expire over the next few years. At the same time, there is an expectation in the industry that some of these benefits may be extended from time to time. Clarity on regulatory and tax matters over a longer term, say 10-12 years, would enable investors to have greater certainty and visibility on cash flows and return estimates.

One key area of concern for all participants in the renewable energy sector is related to stability of the grid when renewable energy becomes a more material component of power generation. While some steps towards partially addressing this issue has already been taken by the Government by initiating construction of green energy corridors, the Government can consider introducing incentives in the next budget along with a policy framework for creation of grid level storage solutions that would address the intermittency and variability issues associated with wind and solar power generation.

Mr. G Krishnamurthy (Chief Executive - L&T Infrastructure Finance Company Limited)

We expect the budget to address the prevailing structural headwinds in the broader power sector and help create conditions for realizing the ambitious renewable targets. The measures could    include a clear fiscal incentive roadmap (including their withdrawal) on a medium term basis, a robust contract enforcement framework, transmission infrastructure approach and a uniform national policy framework e.g. for third party sale, wheeling and banking charges and so on. Essentially more we de risk the model more capital flows the sector would attract, and at lower costs so that consumer also wins.

Wish list:

•    Sunset clause for the 10 year tax holiday for power generation, distribution and transmission of power (available till FY 2017) should be extended by another 5 years

•    Power sector may be kept out of the purview of MAT so as the sector could avail the benefit u/s 80IA fully

•    Clarity on availability of Generation Based incentives for renewable players, post 12th Five year plan

•     Utilize national Clean Energy Fund more effectively e.g. to provide stability to IPPs through liquidity support for delays in receivables, development of a vibrant trading market for renewable Credits (for RPOs) so that states best suited to generate renewable power focus on generation and others share the cost and benefits. Essentially instead of each state reinventing the wheel, we should be guided by a national mission that enables equitable responsibility distribution.

•    Encourage capital based or tariff based incentives for new and important initiatives like energy storage, roof top, smart grid etc. just as Gujarat's solar policy in early days galvanized the entire solar sector.

Rajaram Pai, Business Leader, DuPont Electronics & Communications and Photovoltaic Solutions, South Asia

 “India is currently dependent on solar panel imports to support the solar growth charted by the PM’s vision to achieve 100GW by 2022. Import dependence is largely on account of two critical factors: Capacity inadequacy at the local solar manufacturers to meet 100% demand and high cost of local currency financing. The two factors are inter-related.

New 3.5 ~ 4 Gigawatts of solar installation are expected to come on-stream in 2016. The gap is a definite opportunity for local and overseas companies to “Make in India for India”. Government needs to make provisions for providing competitive rates of financing to attract near and long term investments, necessary for augmenting capacities and addressing technology efficiencies for staying relevant in the market.

Additionally, in-country R&D efforts are needed to keep pace with the manufacturing growth and private entities are challenged in setting up individual R&D centers. The Union budget needs to consider allocating dedicated investment and resources for promoting research and development of solar technologies within the country. This can be through a collaborative set-up between the Indian government, public sector agencies and private sector resources”

Mr. S. C. Bhargava, Senior Vice President and Head of L&T Electrical & Automation

The ‘Make in India’ an initiative will surely give a boost to the solar segment. We are quite hopeful that this budget will address issues related to land acquisition and power evacuation infrastructure.  I am sure the country will see an impressive growth in this segment.  

Solar products are exempted from tax in the current regime of excise and VAT, and the same should continue even in the GST regime as and when it is implemented.

 

 

Mercom Capital Group, llc, a global clean energy communications and consulting firm, released its report on funding and mergers and acquisitions (M&A) activity for the Battery Storage, Smart Grid, and Energy Efficiency sectors for the second quarter and first half of 2017. 

In the first half (1H) of 2017, $1.03 billion was raised by Battery Storage, Smart Grid, and Efficiency companies compared to $807 million in 1H 2016.

To get a copy of the report, visit: http://bit.ly/MercomSGQ22017

Battery Storage

Venture capital (VC) funding (including private equity and corporate venture capital) for Battery Storage companies jumped in Q2 2017 to $422 million in 10 deals compared to $58 million in eight deals in Q1 2017 due to very large funding deal. Year-over-year (YoY) funding was higher compared to $125 million raised in Q2 2016 from 10 deals. In the first half (1H) of 2017, $480 million was raised in 18 deals compared to the $179 raised in 20 deals in 1H 2016. 

The top VC funded Battery Storage companies in Q2 2017 were: Microvast Power, which raised $400 million from CITIC Securities, CDH Investment, National Venture Capital, and others; Vionx Energy received $12.75; and Moixa Technology raised $3.2 million in funding from the Greater Manchester Combined Authority, Tokyo Electric Power Company (TEPCO), and First Imagine! Ventures. 

Eleven investors participated in Battery Storage funding in Q2 2017 with Lithium-based Battery companies raising the most. 

There were seven debt and public market financing deals in Battery Storage in Q2 2017 totaling $107 million compared to $22 million in two deals in Q1 2017. In 1H 2017, there was $129 million raised in nine deals compared to three deals bringing in $69 million in 1H 2016. 

There was one Battery Storage project fund in 1H 2017 for $152 million compared to three deals raising $195 million in 1H 2016. 

Battery Storage project funding in 1H 2017 totaled $5 million in two deals compared to no deals in 1H 2016. 

There were three M&A transactions involving Battery Storage companies in Q2 2017. In Q1 2017, there was one M&A transaction. In the first half of 2017, there were four transactions (one disclosed) compared to six transactions in 1H 2016 (two disclosed). 

Smart Grid

VC funding for Smart Grid companies in Q2 2017 came to $139 million in eight deals compared to $164 million in 14 deals in Q1 2017. In a YoY comparison, $222 million was raised from 15 deals in Q2 2016. $304 million was raised in 22 deals in 1H 2017 compared to $331 million raised in 29 deals in 1H 2016. 

The top VC funded Smart Grid companies included: Actility, which secured $75 million from Creadev, Bosch, Inmarsat, Idinvest, Bpifrance, Ginko Ventures, KPN, Orange Digital Ventures, Swisscom, and Foxconn; ChargePoint raised $43 million from Siemens; FreeWire Technologies received $7.6 million; and Enervalis secured $4.8 million from LRM, Nuhma, and ABB. 

Seventeen investors participated in Smart Grid VC funding rounds in Q2 2017 with Demand Response companies raising the most. 

There was one debt and public market financing deal in Smart Grid in Q2 2017 totaling $9 million compared to no deals in Q1 2017. In 1H 2017, $9 million was raised in one deal compared to $217 million in three deals in 1H 2016. 

There were six Smart Grid M&A transactions in Q2 2017 compared to seven transactions in Q1 2017. In the first half of 2017, there were 13 transactions (three disclosed) compared to five transactions (two disclosed) in 1H 2016. 

Efficiency

VC funding into Energy Efficiency technology companies fell significantly to $29 million in six deals in Q2 2017 compared to the $213 million in 14 deals in Q1 2017 and $86 million in nine deals in Q2 2016. $242 million was raised in 20 deals in 1H 2017 compared to $297 million raised in 23 deals in 1H 2016. 

The Top Efficiency VC deals included: $15 million raised by CIMCON Lighting from Energy Impact Partners; the $5 million raised by Tendril Networks; OptiWatti raised $4 million from Taaleri Kiertotalous and Butterfly Ventures; and Illumitex raised $4 million from WP Global Partners and NEA. 

Six investors participated in VC funding in Q2 2017. Within the sector, Efficiency Lighting companies brought in the most funding. 

Debt and public market financing for Efficiency companies rebounded to $1.4 billion in six deals in Q2 2017 compared to $301 million in three deals in Q1 2017. In 1H 2017, there was $1.7 billion raised in nine deals compared to $2 billion raised in the same number of deals in 1H 2016. 

There was one M&A transaction in the Efficiency sector in Q2 2017 compared to four in Q1 2017. In the first half of 2017, there were five transactions (two disclosed) compared to 10 transactions in 1H 2016 (four disclosed).

To get a copy of the report, visit: http://bit.ly/MercomSGQ22017

About Mercom Capital Group

Mercom Capital Group, llc, is a global communications and research and consulting firm focused on cleantech. Mercom delivers market intelligence and funding and M&A reports covering Battery Storage, Smart Grid, and Energy Efficiency and Solar and advises companies on new market entry, custom market intelligence and strategic decision-making. Mercom's communications division helps companies and financial institutions build powerful relationships with media, analysts, local communities, and strategic partners. About Mercom: http://www.mercomcapital.com. Mercom's clean energy reports: http://store.mercom.mercomcapital.com/page/.

# # #

Mercom Capital Group, llc, a global clean energy communications and consulting firm, released its report on funding and merger and acquisition (M&A) activity for the solar sector in the second quarter of 2017 and first half of 2017.

Total corporate funding (including venture capital funding, public market and debt financing) in the first half (1H) of 2017 was slightly up compared to the same period in 2016 with about $4.6 billion raised compared to the $4.5 billion raised in 1H 2016. There were 97 deals in 1H 2017 compared to the 79 deals in 1H 2016.

Corporate funding in the solar sector fell in Q2 with $1.4 billion raised in 37 deals compared to the $3.2 billion raised in 60 deals in Q1 2017. Year-over-year (YoY) funding in Q2 2017 was about 17 percent lower compared to the $1.7 billion raised in Q2 2016.

To learn more about the report, visit: http://bit.ly/MercomSolarQ22017

“There is a great deal of uncertainty in the solar markets right now, which is reflected in funding activity. However, solar public companies, especially on the U.S. stock markets, have done well this year. A lot is riding on how the Suniva anti-dumping case plays out as it will dictate market dynamics going forward,” commented Raj Prabhu, CEO of Mercom Capital Group.

Global VC funding (venture capital, private equity, and corporate venture capital) for the solar sector in 1H 2017 was 23 percent higher with $713 million compared to the $579 million raised in 1H 2016, largely due to a strong first quarter in 2017.

In Q2 2017, VC funding for the solar sector saw a steep decline with $128 million in 23 deals compared to $585 million in 22 deals in Q1 2017. Most of the VC funding in Q2 2017 went to solar downstream companies (72 percent); $92 million was raised in 15 deals.

Top VC deals in 1H 2017 included the $200 million raised by ReNew Power Ventures followed by the $155 million raised by Greenko Energy Holdings, the $125 million secured by Hero Future Energies, Silicon Ranch’s $55 million, $25 million raise by Siva Power and the $25 million raise by Spruce Finance. A total of 55 investors participated in solar funding in 1H 2017.

Solar public market funding was much higher in 1H 2017 compared to the first half of 2016 with $934 million raised compared to $276 million in 1H 2016. Public market financing was slightly up in Q2 2017 with $473 million raised in six deals compared to the $461 million in 13 deals in Q1 2017.

Announced debt financing in 1H 2017 came to $3 billion compared to $3.7 billion in 1H 2016. In Q2 2017, announced debt financing fell to $798 million in eight deals compared to $2.2 billion in 25 deals in Q1 2017. There was one securitization deal in Q2 2017 by Sunnova which raised $255 million.

Announced large-scale project funding in 1H 2017 came to $7.4 billion in 81 projects. In Q2 2017, announced large-scale project funding came in at $4.8 billion in 48 deals.

Announced residential and commercial solar funds totaled $1.8 billion in 1H 2017 compared to $2.3 billion in the same period of 2016.

In 1H 2017 there were a total of 40 M&A transactions, compared to 30 in the same period of 2016. There were 11 solar M&A transactions in Q2 2017 compared to 29 solar M&A transactions in Q1 2017 and 16 transactions in Q2 2016. Of the 11 total transactions in Q2, eight involved solar downstream companies, two involved PV manufacturers, and one transaction was by a BOS company.

There were 100 large-scale project acquisitions in 1H 2017 totaling 10.6 MW, compared to 90 project acquisitions totaling 4.5 GW in the first half of 2016.

Investment firms and funds were the most active acquirers in 1H 2017, picking up 37 projects totaling 4.2 GW, followed by project developers with 17 transactions for 4.6 GW.

Mercom tracked 206 new large-scale project announcements worldwide in Q2 2017 totaling 11.1 GW.

To learn more about the report, visit: http://bit.ly/MercomSolarQ22017

 

About Mercom Capital Group

Mercom Capital Group, llc, is a global communications and consulting firm focused exclusively on clean energy and financial communications. Mercom’s consulting division advises cleantech companies on new market entry, custom market intelligence and overall strategic decision making. Mercom’s consulting division also delivers highly respected industry market intelligence reports covering Solar Energy and Battery Storage/Smart Grid/Efficiency. Our reports provide timely industry happenings and ahead-of-the-curve analysis specifically for C-level decision making. Mercom’s communications division helps clean energy companies and financial institutions build powerful relationships with media, analysts, government decision makers, local communities and strategic partners. For more information about Mercom Capital Group, visit: http://www.mercomcapital.com. To get a copy of Mercom’s popular market intelligence reports, visit: http://eepurl.com/cCZ6nT.

# # #

Equity IRR seen at 12-13% despite bidding aggression; modules prices a key monitorable

Bhadla Phase-III Solar Park : Key trends indicating how solar become cheaper than coal fired power plant with LCOE of Rs 2.44/kWh

L1 Bid of Rs.2.44/kWh LCOE of Bhadla Phase-III Solar Park Project on 12th May’2017 by ACME Solar.

Solar Power LCOE of Rs 2.44/KWh-

If we look at the last six years, the tariff has been on the downtrend with an unprecedented drop of almost 80% across the world thanks to the aggressive bidding by global players including SunEdison. The few of the recent trends of L1 bid and quoted solar tariff in India:-

On 12 May 2017, Solar Power tariff dropped to 2.44 per unit during an auction of 500 MW of Bhadla Solar Park phase III

On 10 May, Solar Power tariff dropped to Rs 2.62 per unit during an auction of Bhadla Solar Park phase IV

In April 2017, solar power tariffs had fallen to an all-time low of Rs 3.15 per unit quoted by Solairedirect during the auction of a 250 MW project at Kadapa in Andhra Pradesh.

In February 2017, lower capital expenditure and cheaper credit had pulled down solar tariff to a new low of Rs 2.97 per unit (a basic bid of Rs 2.97 a unit) for the first year in an auction conducted for 750 MW capacity in Rewa Solar Park in Madhya Pradesh. However, The lowest tariff quoted by Mahindra Renewables Pvt. Ltd, for a grid connected solar power project before that stood at Rs 3.30 per unit i.e. the levelised tariff (LCOE) for 750MW Rewa solar park in Madhya Pradesh has worked out to be at Rs 3.30 per unit.

In January 2016, solar power tariff had dropped to a new low, with Finland-based energy firm Fortum Finnsurya Energy quoting Rs 4.34 a unit to bag the mandate to set up a 70-MW solar plant under NTPC's Bhadla Solar Park tender.

In November 2015, the tariff had touched Rs 4.63 per unit following aggressive bidding by US-based SunEdison, the world's biggest developer of renewable energy power plants.

bhadla img2

On 10th May (i.e. On Wednesday), the lowest bidder for the solar park in Rajasthan had quoted Rs 2.62 per unit for Bhadla Solar Park phase IV and after two days, on Friday May 12th, ACME Solar Holdings quoted lowest solar tariff at Rs.2.44/kWh for 200 MW followed by Japan's SBG Cleantech One at Rs.2.45/kWh for remaining 300MW during an auction carried out by Solar Energy Corporation of India Limited (SECI) for 500 MW capacity in Bhadla Phase-III Solar Park, Rajasthan. The solar park is being set up by Saurya Urja Company of Rajasthan Ltd, a joint venture between Rajasthan and IL&FS Energy Development Company Ltd. Respectful players like Acme, SBG, Vinnet Mittals – Avada, Hero, Renew Power, Shapporji Palonji etc participated in the bid and it is really heartening and charismatic to see that LCOE of Rs. 2.44 per kWh is not only a finance game but a big game of technology as well.

The projects are likely to be completed in about 12-13 months.

The quoted tariff is fixed for 25 years with no escalation and the bidders have sought no VGF (viability gap funding) from the government.

The entire solar power will be consumed in Rajasthan, and power sale agreement with the state distribution companies is already tied up.

The developers are responsible to connect to the pooling sub-station of solar park. The developers will be paying solar park charges of Rs 45.2 lakh per megawatt towards land, connectivity (from pooling substation to state network) and other infrastructural facilities.

bhadla img3

Winning bids for the solar power plant of 500 MW of Bhadla Solar Park phase III, were reportedly made by Acme Solar Holdings Pvt. Ltd (200 MW out of 500 MW plants each) and Japan's SBG Cleantech One (300 MW out of 500 MW plants each) at Rs. 2.44 per kWh and Rs. 2.45 per kWh respectively. ACME Solar Holdings quoted lowest solar tariff at Rs.2.44/kWh for 200 MW followed by Japan's SBG Cleantech One at Rs.2.45/kWh winning remaining 300MW

This news was remarkably in the limelight and the main reason of getting the world's attention was that this level of LCOE happens to be lower or close to the APPC (average power purchase cost)

Nevertheless, the reduction of Rs. 0.18- 0.19 /kWh compared to past bids of Rs 2.62/KWh is impressive.

bhadla img4

In essence GOI Policy, CAPEX, Energy Yield, Leverage factor, Hedging Risk, OPEX are the few key cost drivers responsible for the drop of LCOE from Rs 4.63 / kWh in November 2015 to Rs 4.34 / kWh in January. 2016 again to Rs 3.3 / kWh in Feb. 2017 again to Rs 3.15 / kWh in April. 2017 again to Rs 2.62 / kWh in May10. 2017 and recently again to Rs. 2.44 / kWh in May12. 2017. (LCOE is a ratio puts all costs both fixed and variable in the numerator, and divides it by energy yield in the denominator. Both numerator and denominator involving financial "discounting" using Weighted Average Cost of Capital to bring costs and energy yields from the future to the present).

ujjwal

About Author: Ujjwal Kumar Gupta, MBA - XLRI; B.Tech - IIT; Sectorial experience - Infrastructure, Energy, EPC, OEM, Power, Mining, Construction, Steel

Author's Linkedin Profile: https://www.linkedin.com/in/ujjwal-kumar-gupta-178221101/ 

Article Link: http://bit.ly/2t31a3T

Disclaimer: The author contributed to this article in his personal capacity out of the passion of writing as a hobby and also by doing judicious utilization of available free time. The views and opinions expressed in this article are those of the author and do not necessarily reflect or represent the views or the official policy or position of the any entity, institution and organization. Assumptions made within the analysis are not reflective of the position of any entity, institution and organization. The author disclaim any liability in connection with the use of this information. Examples of analysis performed within this article are only examples. They should not be utilized in real-world analytic products as they are based only on very limited and dated open source information.

 

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The key drivers of lower LCOE (Levelized Cost of Electricity) of solar power is the result of combination of factors and the most important being:-

Cost Driver / Factor # 1 - Favorable Policy of GOI –

Decision by GOI to cover solar power by SECI under the ambit of Tripartite Agreement for payment security against defaults by State distribution companies. This has helped to eliminate the so called inherent risk associated with liquidity generated from power sale by the developers during the entire tenure of 25 Years mentioned in Financial Model

Cost Driver / Factor # 2 - Energy Yield –

Superior energy yield (eg: better solar resource at the site, and operational efficiencies) owing to approximately 7-10% higher yield in Rajasthan due to better solar radiation conditions. Rajasthan happens to be an excellent solar location, with high fraction of DNI (direct normal irradiance). Perhaps the use of mature single-axis tracker technologies that can tilt for a greater angle (e.g.: 55-60 degrees instead of 45 degrees) could enhance yield further. Lower ground coverage ratio (GCR), i.e. more land per MW Peak (MWp) could be additional factors. Use of shorter strings in the inverters could be a factor as well. Another possibility is the use of DC-optimizers in the architecture which would reduce balancing losses.

Cost Driver / Factor # 3 - CAPEX –

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Lower cost of CAPEX owing to drop in module prices in the international markets. Solar module (or photo voltaic panel) costs account for more than 50% of the entire project CAPEX costs in India. The CAPEX segregation mentioned here shows the relative costs estimate of Rs. 400 lakh / MWp. Note that all the non-module costs (Land, Civil & General Works, Mounting structure, Power conditioning unit, Evacuation lines & equipment, power electronics, cabling) are single digit or close to 10 %.

And if we compare this CAPEX segregation with that of many of the western countries then we find that module CAPEX is only about 25-30% of total CAPEX due to their higher standard of living cost and higher commodity cost leading to higher supply chain cost and human installation costs.

Needless to mention here the Chinese factor due to which solar PV module costs have fallen faster. This Chinese factor has been originated by the temporary overcapacity in China resulting from delayed projects in several key markets.

As with every emerging technology, the prices for solar cells are falling with the increase in series production and technological innovations. Because similar programs to the ones in the USA are also being launched in other countries like Japan, Germany, Spain, Netherlands etc., it can be assumed that the costs for solar power will continue to fall in the coming years.

Moreover, based on the experience curve, it can be concluded and interpreted that each time the total production quantity has doubled; the prices for solar modules on the world market have fallen by 20 %.

So the CAPEX factor can be concluded that the ACME and SBG auction at Bhadla Solar Park phase III (Which allows 11 months for the project to be built) allows locking in some of these price-declines, and hedging to capture future price declines over 11 month period. Therefore, it is interpreted that the decline of 40-47% e.g. Rs 4.63 / KWh to Rs 2.44/KWh, essentially financed by bleeding module makers from China.

We can see that innovations to reduce capital costs or increase energy yield are the key to bringing solar to coal fired without subsidies. Also note the important role played by the "Weighted average cost of capital (WACC)" or “Cost of capital” or discount rate and term (N). We can say that financial engineering innovations have been a big part of solar companies work to make solar affordable to all. For instance in the western countries like US, Japan, Germany, etc., financial innovations have allowed the “cost of capital” to drop significantly, having a huge impact on affordability of solar as 25% decrease in “cost of capital” reduces the LCOE by more than 5 %. We now need to make similar innovations at the technical and financial levels to enhance the solar penetration and also to bring solar affordably to the emerging markets and the poor.

Capital Cost as per the Draft CERC (Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2017( Dated: 16th February 2017)-

Capital Cost Norms (February 2017) - The Commission shall determine only project specific capital cost and tariff based on prevailing market trends for Solar PV project.

Capital cost as per the Central Electricity Regulatory Commission (CERC)’s proposal on Overall capital cost dated 23rd April 2016 –

Capital Cost Norms (April 2016) -

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Central Electricity Regulatory Commission (CERC)’s Norms on Overall capital cost during Financial Year 2014-2015. The table below indicates CERC determined benchmark cost for Financial Year 2014-15.

Capital Cost Norms (FY 2014-2015) -

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Cost Driver / Factor # 4 - OPEX –

OPEX is not likely to be significantly lower unlike CAPEX, though newly gained capabilities like robotic cleaning, drone-based image analytics (to catch quality/operational issues) are starting to be actively implemented at the commercial level that could reduce costs and revenue losses due to inconsistent operations quality.

In The Financial Model I have estimated OPEX improvement at 5.72% over last year. Also sunk CAPEX dominates OPEX in solar farms especially with high interest rates.

Accelerated Depreciation (AD) rules on CAPEX have tightened up in India since last year (allowing only 40% depreciation per year, down from 80%). This is a modest negative factor relative to 2016 and 2015.

As per the Financial Model, from an LCOE perspective, a net CAPEX drop of 40-47% (aggressive) will lead to a linear drop in LCOE of 40-47% from Rs 4.63/KWh to Rs 2.44/KWh

Cost Driver / Factor # 5 – Debt Equity Ratio (Leverage factor), Hedging Risk, Risk during tenure, Interest Rate, Debt Tenure –

Strengthening of Indian Rupee against US dollar amalgamated with Economies of scale is also a factor as it is a 200 MW / 300 MW plant.

The park capacity, cheap financing / capital options and the lack of any big tender are some of the other contributing factors.

Cheap credit owing to lower Interest rates, lower weighted average cost of capital, including lower risk premium, and longer loan tenure are important factor and this amalgamated with lower risk and higher leverage (i.e. debt-to-equity ratio) matters a lot in reducing the LCOE

As mentioned in my earlier article "Financial Model of 200 MW Solar Park" , A 8-10% decrease in after-tax cost of debt, reduces the LCOE from 2.6 to 3.0%

In the recent past, Infra projects IDC (Interest during construction) is squeezing because of decline of after-tax cost of debt.

Here in India, the long term interest rates for 12-25 year financing are higher than the short term rates and this can be substantiated by the MCLR of 7.5-8.5% by several nationalized and private banks of India.

Many argue on the point that overseas loan offered by Government financial institutions from Japan, Europe and by the World Bank are cheaper and therefore the financing should be sourced from that overseas financial institutions and banks. In spite of minimal interest rate (almost close to zero) associated to overseas funding, we should be aware that these money from overseas sources have the inherent currency risk owing to devaluing Indian currency and subsequent costs of hedging. And there are chances that the bidders have not fully hedged their exposures over the entire tenure of the financing. Therefore, bidders may have inherent risk through currency risks for their un-hedged exposures which will bleed them later unless these bidders and competent enough to be smart currency traders.

If the leverage ratios assumed to have increased beyond the industry standard of 70% debt / 30% equity to 85 % debt / 15% equity then the risk-adjusted interest rates derived from Weighted Average Cost of Capital (WACC) shall drop from 8.36 % to 7.15% under the condition that (i) Loan tenure is 25 years (ii) Beta is 1 (Assuming that in Rajasthan the sun rises every day and the yearly irradiance averages are relatively stable and solar PV equipment is relatively long lived) (iii) the risk free rate of return is 1.5% (iv) the expected market return is 14% and (v) after-tax cost of debt is 9%. All these has been estimated in the Financial Model

Cost Driver / Factor # 6 - Grid integration-

Grid connected solar power plant is a big hidden cost of renewables that is being absorbed by the government today. Currently we are more focused on decreasing LCOE (Rs/KWh) and now-a-days constantly decreasing quoted LCOE is considered a milestone for India. On the brighter side for the perspective of GOI, in future, we can see the movement from LCOE to balancing cost where this hidden cost shall be borne by developers.

Line Graph perception is that the solar power price has gone down by half since Q1 2016:-

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 ujjwal

About Author: Ujjwal Kumar Gupta, MBA - XLRI; B.Tech - IIT; Sectorial experience - Infrastructure, Energy, EPC, OEM, Power, Mining, Construction, Steel

Article Link:https://www.linkedin.com/pulse/bhadla-phase-iii-solar-park-key-cost-reducing-factors-gupta?trk=v-feed&lipi=urn%3Ali%3Apage%3Ad_flagship3_profile_view_base_recent_activity_details_shares%3BFPx8xq3ayL1Hibo37DbNYw%3D%3D

Author's Linkedin Profilehttps://www.linkedin.com/in/ujjwal-kumar-gupta-178221101/

Disclaimer: The author contributed to this article in his personal capacity out of the passion of writing as a hobby and also by doing judicious utilization of available free time. The views and opinions expressed in this article are those of the author and do not necessarily reflect or represent the views or the official policy or position of the any entity, institution and organization. Assumptions made within the analysis are not reflective of the position of any entity, institution and organization. The author disclaim any liability in connection with the use of this information. Examples of analysis performed within this article are only examples. They should not be utilized in real-world analytic products as they are based only on very limited and dated open source information.

Indian solar tariffs are in a state of free fall. New record lows are created in the recent round of auctions of 500MW solar projects.

 

ACME Solar emerged as the lowest bidder followed by SBG Cleantech. The auction was a very tightly fought one with Hero Solar Energy and Renew Power missing out by 0.02 paise and 0.03 paise respectively.

Here are the details

 

Bidder's Name Tariff Bidders Quantity
ACME Solar Holdings Private Ltd 2.44 200
SBG Cleantech One Ltd 2.45 500
Hero Solar Energy Pvt. Ltd. 2.46 300
Renew Solar Power Pvt. Ltd. 2.47 500
Awaada Power Pvt. Ltd. 2.6 200
Shhapoorji Pallonji Infrastructure Capital Company Pvt. Ltd. 2.65 400
RatanIndia Solar 3 Pvt Ltd.  2.87 100
Duroc Solar 2.88 100
Orange Renewable Power Pvt. Ltd. 2.95 200
Lightsource Renewable Energy Holdings Ltd. 2.98 100
Solairedirect Energy India Pvt. Ltd. 3.08 300
Mahoba Solar (UP) Pvt. Ltd. 3.14 300
Aditya Birla Renewables Ltd. 3.18 200

 

History is created today, as the record low tariffs achieved in the auction concluded on 09.05.2017 for Bhadla Phase-IV Solar Park, Rajasthan has been broken, with even lower tariff of Rs. 2.44 per unit discovered in the auction carried out by Solar Energy Corporation of India Limited (SECI) for 500 MW capacity in Bhadla Phase-III Solar Park, Rajasthan. The park is being set up by M/s Saurya Urja Company of Rajasthan Limited, a joint venture between the Govt. of Rajasthan and M/s IL&FS Energy Development Company Limited. This tariff is fixed for 25 years with no escalation and the bidders have sought no VGF from the Government. The winners are M/s ACME Solar Holdings Pvt. Ltd. (200 MW) at a tariff of Rs. 2.44 per unit and M/s SBG Cleantech One Ltd. (300 MW), quoting a tariff of Rs. 2.45 per unit.

The entire solar power will be consumed in the State of Rajasthan and power sale agreement with the State Distribution Companies is already tied up. The developers are responsible to connect to the pooling sub-station of solar park. The developers will be paying solar park charges of Rs.45.2 lakh per megawatt towards land, connectivity (from pooling substation to state network) and other infrastructural facilities. The projects are likely to be completed in about 12-13 months.

The earlier lowest tariff of Rs. 2.62 per kWh, was discovered recently in the auction conducted by SECI for 250 MW Bhadla Phase-IV Solar Park in Rajasthan.

It is understood that this fall in solar tariffs is the result of combination of various factors, most important being the decision of the Government of India to cover solar power by SECI under the ambit of Tripartite Agreement for payment security against defaults by State distribution companies. Other factors contributing are about 7-8% higher yield in Rajasthan due to better solar radiation conditions, drop in module prices in International market, and strengthening of Indian rupee against US dollar.

For the present bid, the bids were submitted by 24 bidders for a capacity of 5500 MW which is 11 times of the bid capacity. Bid received overwhelming global response including developers from Finland, France, Saudi Arabia, Singapore and Japan. This became possible only due to constant endeavor at SECI to streamline the bidding process with highest level of transparency and integrity under the guidance of Ministry of New and Renewable Energy.

Bhadla Phase 4 Auction Results: New Lows, New Records

Insights Form Solar Marketplace: More Quotes Result In Greater Purchase Probability

Latest analysis of EnergySage Solar Marketplace data reveals accelerating decrease in solar prices, and how more quotes results in a greater probability of purchase. EnergySage published its fourth semiannual Solar Marketplace Intel Report™, providing a comprehensive analysis of consumer behavior, demographics, and preferences, as well as a complete account of industry trends in the U.S. residential solar market in 2016.

This latest edition of the industry-leading report presents several new datasets and analyses including an expanded list of new states, a review of the community solar landscape, and greater insights into solar shopper demographics. According to EnergySage data, the typical solar shopper is a mid-career male in his mid-40s with interests in real estate, financial services, and home services in addition to solar energy.

This most recent report also features a new section analyzing residential solar data by utility territory. EnergySage compared the levelized cost of energy (LCOE) of solar to today’s electricity rates in territories served by Commonwealth Edison Co., Consolidated Edison (ConEd), Dominion Power, Florida Power & Light Co., Southern California Edison, and Xcel Energy. In all service areas, the LCOE of solar is lower than the 2016 residential electricity rate offered by the utility, affirming the comparative benefits of solar as a low-cost energy source.

Profile of the Typical Solar Shopper

EnergySage compiled Solar Marketplace demographic data and user preferences to develop a profile of the solar-interested consumers in 2016. The typical solar shopper is a mid-career homeowner and is interested in a variety of real estate products & home services. More than three-quarters of solar shoppers are male.

Typical EnergySage solar shopper is a mid-career homeowner, interested in financial and home services 71% of solar shoppers on the EnergySage Solar Marketplace in 2016 were between the ages of 25 and 54. In addition to the solar category, users were also in-market for a variety of products and services, including financial and investment services, residential real estate, home improvement products, and home appliances – revealing a customer segment that is extremely valuable to a range of industries.

Three out of every four solar shoppers are male 77% of 2016 users were male, a significant disparity indicating that the solar product category, while growing rapidly, still has a ways to go before it can reach true mass-market appeal in the United States.

chart

Solar prices are falling at accelerating rate

Between H1 2016 and H2 2016, gross cost per watt on EnergySage dropped by 6.25%. That is more than triple the rate of decline from the first EnergySage Solar Marketplace Intel Report from July 2014 to June 2015, and the greatest rate of decline measured in any of the reports to date. This trend may reflect improved operational efficiencies at solar companies, lower customer acquisition costs via online channels like EnergySage, increased competition, and the low cost of solar panels and inverters.

chart2

graph2

 

More quotes result in more sales

Consumers who receive offers from multiple solar installers are significantly more likely to complete a solar purchase. EnergySage users who received 5+ quotes in 2016 were nearly eight times more likely to buy than those who received only one quote. These results offer a clear message: quotes from multiple installers will increase consumer confidence, and solar shoppers should be encouraged to seek multiple quotes.

graph4

Solar shoppers are mostly male

EnergySage used Solar Marketplace demographic data to develop a profile of today’s solar-interested consumers, and found that three out of every four solar shoppers (77%) are male. This gender imbalance presents an opportunity for the solar industry to develop new messaging and outreach strategies to attract more female shoppers, and expand the product category to achieve true mass-market appeal.

“This latest report speaks to the importance of transparency and comparison-shopping in residential solar,” said EnergySage CEO and founder Vikram Aggarwal. “For the consumer, getting more quotes empowers them to make better-informed decisions. For the installer, more quotes results in increased consumer confidence, which in turn results in a higher likelihood of purchase. Comparison-shopping platforms like EnergySage make win-win situations like this possible.”

EnergySage is a leading online comparison-shopping marketplace for rooftop solar, community solar, and solar financing, and is uniquely positioned to share solar market insights. This report furthers EnergySage’s mission to support the healthy growth of the solar industry via consumer education and empowerment, price transparency, and greater information sharing among all stakeholders.


India Ratings and Research (Ind-Ra) estimates that INR560 billion out of total debt of INR1,730 billion could be refinanced at a lower borrowing cost across various infrastructure sub-sectors in its portfolio till FY19. Also, there could be a shift in the type of instruments issued for the purpose of raising capital in the sector largely to the capital market instruments, namely bonds, from the conventional term loans.

Ind-Ra estimates that for each 1% reduction in interest rate, the incremental surplus as a % of cash flow available for debt service would be highest in toll roads, followed by solar and wind energy. This could mainly be because the interest burden on these sectors is high as most of these projects are in the ramp-up stage.

Solar energy projects owing to their stable revenue profiles and better counterparties and toll road projects with reasonable track records and stronger sponsors and longer tail period, than other sub-sectors, appear to be the ideal candidates for refinancing. Though Ind-Ra expects a replacement of banks loans by bonds, traction will be witnessed through infrastructure investment trusts.

Also, Ind-Ra observes that the benefit of interest rate reduction will be the least for the annuity sector, followed by the thermal power sector, because refinancing risk has already been factored in at the time of initial funding for the former and due to minimal improvement in persistent issues in the latter.

An estimated INR45 million/project/year is projected to be the surplus for FY18, based on the average interest rate reduction of around 65bp witnessed for Ind-Ra rated entities across various infra sectors. The debt service coverage ratio is likely to improve 0.04x in FY18 across infra sectors.

The strong payment security mechanism from the counterparty in the recently concluded auctions for 750 MW of solar projects in Rewa Solar Park, Madhya Pradesh, will enable fund raising at competitive rates, says India Ratings and Research (India Ratings). The agency believes that the reduced risk from the counterparty because of payment security mechanisms is one of the levers for the steep fall in tariffs quoted by the bidders.

The new payment security mechanism includes the state government payment guarantee, payment security fund (about 35-40% of revenue at plant load factor of 22%) and a deemed generation compensation for the grid unavailability, in addition to the regular letter of credit. Low tariff will also incentivise the offtakers to pay on-time. Notwithstanding the new payment structure, in the event of the tariffs not being commensurate with the capital cost - reminiscent to the aggressive bids seen in the road sector – will stress the coverage ratios of these projects. Thus the cost of funding and lower solar panel prices (fallen by ~28% yoy) are critical factors for the sharp fall in solar bids.

While the state guarantee and payment security fund (PSF) provides a cushion,however it is imperative to know the terms for invocation of the guarantee and the replenishment of PSF. In the event of guarantee invocation or tapping of PSF after a substantial delay in payments – beyond 60 days – the players could be forced to avail working capital facilities and bear the related financial costs.

In another development, Solar Energy Corporation of India (SECI) is now included as a beneficiary in the tripartite agreement with the Reserve Bank of India, Government of India and the states. This development will allow withholding of central assistance to states in case of a default to SECI. As a result, SECI’s future bids are likely to fall to lower tariffs than earlier. The reduced counterparty risk will aid in curtailing the borrowing costs for these projects.

Evolving Security Mechanism A Positive

Though solar projects relatively enjoy stable receivable days from most counterparties, the underlying risk from the weak financial profile of most distribution utilities remain. Certain distributionutilities however exhibit different payment days for different generation assets (thermal and wind) and this pattern among discoms provides limited comfort in assessing the reliability of the offtakers. Thus the inclusion of SECI as a beneficiary in the tripartite agreement gains significance in providing reliability of collections.

Threat of Grid Uncertainty Partially Addressed

In light of grid curtailment faced by wind projects in few states and also by solar projects in Tamil Nadu, the development of providing deemed generation benefits for grid non-availability is a positive development. India Ratings had highlighted this in the report ‘Market Wire: Grid Curtailment Contagion Puts Pressure on Credit Profiles of Renewable Energy Projects’.

However, Ind-Ra believes that it may be unsustainable for the off-takers to carry this risk as the distribution utilities do not operate the grid. The responsibility of grid operation lies with the loaddespatch centres within the constraints posed by the transmission infrastructure and load-generation balancing. Thus, the onus of enabling evacuation also lies with the open access provider and network operator. Clarity in responsibilities and contractual incentives and penalties will ensure that all the stakeholders (including off-takers, open access providers and network operators) are aligned towards the goal of uninterrupted evacuation for renewable power.

Bids Reach New Lows

Auction for implementing 750MW in Rewa Solar Park was concluded at INR2.970-/kWh, INR2.979 and INR2.974 for three units of 250MW each, with 5 paise per year escalation for first 15 years. Offtakers are Delhi Metro Rail Corporation and Madhya Pradesh Power Management Corporation Ltd. The previous low in terms of tariffs of INR4.34/kWh was offered by Fortum of Finland was exactly a year ago in January 2016. Rewa Ultra Mega Solar Limited, which is developing the Rewa solar park, is a joint venture of SECI and Madhya Pradesh Urja Vikas Nigam Limited. Land acquisition and evacuation are the responsibility of the solar park, thus mitigating significant risks for the project developers. The low tariffs discovered makes the solar projects highly competitive in merit order, as the variable charges of marginal power for most states lie above INR3.5/kWh. - Contributed By ICRA

In conversation with Mr. Sunil Singh,Mr. Sunil Singh,CEO (Renewable Division), OPG Group

In conversation with Rahul Mishra, CEO, Rays Future Energy India Pvt. Ltd

In Conversation with Mr. Vijay Karia, Chairman & Managing Director, Ravin Group of Companies 

 

Let’s begin with a glimpse of your company’s presence and offerings in India?

Ravin Group is an Indian Multinational with a strong foothold in the electrical industry for more than 65 years. Founded in 1965, our group is headquartered in Mumbai and has various manufacturing facilities not only across the country, but also outside the country. Right from our inception we have always been ahead of the curve by meeting the demands or inventing new products for the segment we are in. Coming from a rich legacy and years of experience our vision is to deliver quality and innovative products & services. We aim to be a catalyst in providing sustainable solar electricity solutions and reliable power for everyone, everywhere.

As a company we are rooted to our core values of integrity, accountability, customer satisfaction, and speed.
We are structured across five verticals, all focused on electricity.

Complete Solar Solutions – The offerings include rooftop mounted systems, tracking systems -single axis, dual axis, uni polar tilted trackers; fixed array trackers, water pumping solutions, home lighting systems, solar mobile generating systems, micro and mini grids, solar chargers, lamp and lanterns.

Electric Cables up to 220 kV– It offers complete range of cabling solutions for KV, MV, HV, EHV cables ranging from 1.1 kV to 220 kV.
Power Equipments – Manufacturer of TRANSEC moisture removal system for transformers under license from TRANSEC UK. The product improves the life and reliability of the transformer substantially.

EHV Projects and Services – Provides end-to- end solutions from designing to commissioning of sub- stations which includes system design, selection of cables ; accessories, cable laying, cable jointing and termination, testing, commissioning and finally ensuring full safety of the installation.

Retail Electrical Products –The range of products include power banks, solar chargers, solar lanterns, LED lights & lamps and USB cables.

Apart from serving our Indian clientele across the country, we have clients in more than 55 countries across the globe.

What have been some of the recent developments at your organization?

We as a company have always remained open towards change and innovation with constant advancement in the infrastructure and technology. We have been contributing to the goal of generating electricity from renewable sources in a big way through our solar vertical ‘Solar Energy Solutions’.

We entered the solar market only 5-6 years back but we have been successful in creating a niche for ourselves in this segment. Through this vertical we are not only helping to generate electricity through solar energy, but are also helping to increase the efficiency of panels which help in generation of the electricity by almost 30-35 %, through our specialized tracking systems.

We have been one of the few companies in India who manufacture fully automated and computerized solar tracking systems which increase generation by about 17-35%.

We also have expertise in the cables segment and have been serving the industry from past more than six decades. Over the years we have lead the cables industry, created trends and helped in creating a more organized sector.

We have introduced various new products which greatly enhance the safety of installations through a special grade of compound which has great fire resistance properties, and is equivalent to fire survival cables but with normal construction. Apart from this, we have developed so many other special application cables like VFD cables and colour changing wires to name a few.

From generation, transmission, distribution to consumption of electricity we provide all kinds of energy solutions or rather electricity solutions.

Tell us a bit about the recent technology advancements in your sector?

Our government is moving towards making the renewable energy more handy and easy to manage by helping and encouraging technological advancements in this sector. One of the most recent developments in this is the creation of Solar Calculator App by ISRO. This new innovation can provide solar energy potential of any given location by typing the name of the required location; the location can also be obtained through GPS. It offers monthly minimum and maximum temperature to calculate realistic solar potential and also suggests optimum tilt angle for solar PV installation. This is a great way of identifying the key areas where Solar energy can be promoted and then harnessed the most. This also opens new areas of development based on the availability of the solar energy.

Trackers are also picking up, not just in the utility scale projects but also in the rooftop segment. Ravin Group long back had identified that the need will arise to gain maximum output of sun’s energy. Hence making us amongst the first ones to pioneer in the solar tracker technology which increases the efficiency of solar trackers up to 30-35%.

In the cable segment application centric cables are getting gaining momentum. Customers these days are becoming more aware of the importance and quality of cables that lead to less electricity losses is picking up as we are talking.

What are your growth plans for the Indian market? What are the milestones you wish to achieve by the end of this fiscal year?

One of our main strategies is that we have always remained rooted to the business we know the best i.e. electricity. All our business verticals also revolve around our core business right from Power cables, Solar energy solutions, EHV Projects to Power Equipments and Retail products.

India is a very price conscious market and we concentrate on serving our customers with the best quality products and services at affordable prices.

Our hon. Prime Minister Shri Narendra Modi has given our country a brilliant opportunity of building technologically advanced infrastructure by launching Make In India initiative. All our business verticals also promote this ideology of manufacturing and assembling completely in India. The technology which is used at our plants and research centers is created in India; employees working at our manufacturing plants, across offices are also Indians. We intend to increase the manufacturing in India and create more demand for the products across the globe.

We not only concentrate on increasing the revenue of the business but believe that employees play a strong role in building any organization. This year we wish to become amongst the best places to work with. We aim to establish ourselves as an incubation centre where new ideas and innovations take place in order to contribute towards the growth of the electrical industry.

What have been the latest trends in demand for your products & services in India? Where do you see the next demand growth coming from?

Our country is now moving on the path of becoming global manufacturing hub. This infrastructural shift has lead to increase in the demand of application products. In a few years time, fossil fuel vehicles will be redundant. And so we have the entire ecosystem changing to keep pace with the anticipated product changes.

We have been part of the electrical industry now for more than six decades and we feel these are the most exciting and optimistic times for the entire industry, both internally and externally in terms of technological development and demand.

Another trend that has picked up recently is the use of our rooftop solar panels with tracking system. These tracking systems have Module Level Power Electronics (MLPE) or DC Optimizers. We are amongst the first ones to introduce this advanced technology in India. Through this technology, challenges like shadows of trees, advertising hoardings and telecom towers which affect the electricity generation in the rooftop solar installations will drastically reduce. With usage of this technology there will be huge reduction in the power loss, risk of failure and fire will be minimal and real time performance can be monitored online of individual panels as well.

We believe electricity storage is another trend that will soon attract industry’s attention in a big way.

Once the consumers are equipped and comfortable with the new introductions the demand will then be coming to make all these trends more consumer friendly by introducing products associated with it like mobile applications to maintain and control the systems. The inclination will then be turning consumers into prosumers.

Anything else you would like to add for our readers.

These are the best times to be in this industry. Consumers need to be quality conscious rather than price conscious, as safety and reliability are big factors in this segment today. In case of solar products, the focus should be on efficiencies and not just price per KW or MW of installed capacity. There is going to be a huge thrust on integration of Electricals with Electronics, and with the whole emphasis on Electro-mobility, the electrical map of the country is going to change very rapidly. Petrol pumps will become redundant like landline telephones, if they do not upgrade themselves quickly. At the moment, the Government is going at a faster rate of change than the industry, and we might find ourselves struggling with changes in technology, if we do not adopt latest technologies in manufacturing and product development. This is India Gen-Nxt, with Tech-Nxt on the horizon, and rapidly growing into our everyday lives, which we need to wholeheartedly adept ourselves to, and very shortly, we will be leading rather than lagging the world in terms of technology.

In Conversation with Mr. Gautam Mohanka, Director- Gautam Solar

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