Presentation from Intersolar India - December 2017

1. Debt Financing Options for C&I Rooftop Solar PV
Aspiration Cleantech Ventures
December 6, 2017
Mumbai

2. About Aspiration Cleantech Ventures
• Solar PV
• Solar Thermal
Renewable Energy
An Asset Development and Management platform in the Clean Energy
Sector.
Founded and Managed by highly successful entrepreneurs, global business
leaders and technocrats with rich experience working in marquee firms.
Aspiration Cleantech
Ventures
• Efficient Lighting
• Drives(VFDs)
• HVAC (Heat Pumps,
Chillers)
Energy Efficiency
• E-Mobility
• Electricity and
Thermal storage for
Industries
Energy Storage

3. Asset Base
Solar PV Solar Thermal Energy Efficiency
• Total Portfolio size ~ 1 MW
• Rooftop systems and Carports
• Grid-Interactive and Off-grid
• RESCO/PPA and rental models
• Multiple states(Tamil Nadu,
Telangana, Maharashtra, etc)
• Less than 100 Deg C hot water
for industrial processes
• Evacuated Tube Collector(ETC)
Technology
• Thermal Energy Purchase
model
• ESCO Model
• Technology – Heat Pumps
• Long term contracts for Heat
Delivery ; Cash Flow from
demonstrated energy savings

4. Agenda
1
• Rooftop Solar PV in India – An Overview
2
• Debt Funding Options for Solar Rooftop PV
3
• Bankability of a Solar Rooftop PV Project
4
• Typical Debt Terms and Covenants
5
• Takeaways

5. 1
• Rooftop Solar PV in India – An Overview
2
• Debt Funding Options for Solar Rooftop PV
3
• Bankability of a Solar Rooftop PV Project
4
• Typical Debt Terms and Covenants
5
• Takeaways
Agenda

6. Rooftop SPV Target – Path to 40 GW
200
4,800 5,000 6,000 7,000 8,000 9,000
200
5,000
10,000
16,000
23,000
31,000
40,000
810
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Solar PV Rooftop - Target Vs Actual Capacity
Annual(MW) Cumulative Target Capacity (MW) Cumulative Actual Capacity (MW)
Source : MNRE, pib.nic.in Cumulative Actual Capacity as of 31 October 2017
810 MW?

7. What is the Actual Capacity?
810
1345
1600
0 200 400 600 800 1000 1200 1400 1600 1800
MNRE
Mercom
Bridge to India
Cumulative Rooftop Capacity(MW)
(As of 30 June 2017)
(As of 30 June 2017)
(As of 30 June 2017)
Take your pick!!

8. Investment requirement for 40 GW
112,000 , 70%
48,000 , 30%
Capital requirement(Rs. Crores)
Debt
Equity
Assumptions
• Capital Cost per MW - Rs. 4 Crores
• Debt-Equity Ratio – 70 : 30

9. Business Models
CAPEX Model
OPEX Model
Gross Metering
(Rooftop Leasing)
OPEX Model
Net-Metering
(Power Purchase Agreement)
Source: www.pvrooftop.in

10. Enablers of Financing
• Public Sector Banks instructed to extend loan for Grid
Interactive Rooftop Solar PV Plants as home loan/
home improvement loan
• Priority Sector Lending(PSL) status for renewable
energy(upto Rs. 15 Crores) by RBI
• Special loan programmes by IREDA, SBI and PNB

11. 1
• Rooftop Solar PV in India – An Overview
2
• Debt Funding Options for Solar Rooftop PV
3
• Bankability of a Solar Rooftop PV Project
4
• Typical Debt Terms and Covenants
5
• Takeaways
Agenda

12. Government of India Enterprise –
A Pioneer in lending to Rooftop
Solar PV Projects
SBI - $625 million from World
Bank
PNB - $500 million from ADB
Key Players
Clean Energy Focused NBFCs

13. Comparison of some options
Sr.No
.
Parameter SBI PNB IREDA
1 Eligibility Criteria Sole Proprietorship, Partnership Firm/ including LLP and
Company/ Special Purpose Vehicle (SPV)/NBFC
Public and Private Sector
Companies/ firms
2 Branches identified
for handling this
business
All Corporate Account Group Branches, Mid-
Corporate Group branches, and SME Branches
All Large Corporate Branches/Mid
Corporate Branches/Exceptionally
Large Branches/identified branches
IREDA, New Delhi
3 Loan amount Upto 75% of project cost. Upto 70% of project cost Upto 75% of project cost.
4 Type of Facility i) Term Loan, ii) Working Capital against receivables (Need Based) iii) Non Fund Based
(Letter of Credit/Bank Guarantee) facility
Term Loan
5 Pricing One year Marginal Cost of Funds Based
Lending Rate (MCLR) plus spread in the range of
20 bps to 50 bps
One Year MCLR upto a maximum
spread of 30 to 50 bps
Interest Rate - 10.05% to 10.90%
; Additional 0.5% till the date of
commisioning the project
6 Fixed Asset Coverage
Ratio (FACR) in a year
Above 1.25
7 Loan Repayment
Period
(Maximum)
Upto 15 years Upto 9 Years
8 Moratorium
12 months from the date of COD of the project.
9 Primary Security Exclusive first charge on fixed assets (present as well as future ) relating to the project/
program
Equitable Mortgage of
immovable properties
10 Guarantee
Personal Guarantee or Corporate Guarantee
Bank Guarantee
11 Debt Service
Reserve Account
(DSRA)
Equivalent to 6 months principal and interest. Minimum of 3 months principal and
interest

14. Modes and Models
Modes
• Program Mode
– Master Line of Credit/loan facility will
be sanctioned to the Borrower to
execute multiple rooftop solar
projects.
– Master Line of Credit is proposed
since normally rooftop solar projects
would be of small size and it would
be difficult for the Borrower to
approach for approval of all projects
at one go.
• Project Mode
– Single rooftop by a single borrower
Models
• Capex
– The borrower sets up rooftop solar
project with the intent to reduce his
own power costs.
– Debt servicing is dependent on the
main business activity of the
Borrower.
• Third Party
– RESCO/OPEX/PPA
• BOOT
• BOOM
• Rooftop Rental
– AD Model
Source: SBI

15. 1
• Rooftop Solar PV in India – An Overview
2
• Debt Funding Options for Solar Rooftop PV
3
• Bankability of a Solar Rooftop PV Project
4
• Typical Debt Terms and Covenants
5
• Takeaways
Agenda

16. Bankability
“Project or proposal that has sufficient collateral, future
cashflow, and high probability of success, to be acceptable to
institutional lenders for financing”
Source : www.businessdictionary.com

17. Bankability - Technical Factors
• Shadows/Structural Integrity of Roof
• IrradiationSite
• Optimized for Lifecycle, not just for Capital CostDesign
• Quality of Materials
• Bankability of SuppliersMaterial
• Quality of Construction
• Very little need for refurbishmentBuild
• Very low downtimes
• Ensure generation above estimatesO&M
Direct Impact on Cashflows

18. Bankability - Financial Factors
• All generated power should get paid - Either net-metering
or deemed generation(in case of RESCO model)Dispatch
• Credit Rating of asset owner and off-taker, and the power
supplierOff-take
• Debt Service Coverage Ratio(DSCR) of about 1.3Debt-Service
• In case of premature termination of contractTermination Values
• Protection against downward revision of tariff for the
contract, in the futureTariff
• A few months payment in the form of Bank GuaranteePayment Security

19. Bankability - Regulatory Factors
• Cross subsidy charges that might be imposed in
the future can reduce returns(IRRs)
Cross-Subsidy
Charges
• Very important for the viability of projects ,
especially in establishments which do not
operate on weekends and no deemed-
generation provision
Net-metering
• Possibility of Electricity included in GST regime
Changes in
Taxes

20. Bankability issues specific to RESCO model
• 25 Year PPAs – Business continuity risks
• Deemed Generation, in the absence of net-
metering
• Renegotiation of tariff a few years into the
contract
• Contract enforceability
• Termination and compensation
• Payment Security/Timely payments
• Access to site

21. 1
• Rooftop Solar PV in India – An Overview
2
• Debt Funding Options for Solar Rooftop PV
3
• Bankability of a Solar Rooftop PV Project
4
• Typical Debt Terms and Covenants
5
• Takeaways
Agenda

22. Typical Debt Terms and Covenants
Security Guarantees Covenants(Examples)
Primary
• Exclusive first charge on all
fixed assets, receivables,
movable assets, and
current assets, lease hold
rights, and project related
accounts, current as well
as future relating to the
project
• Assignment of Project
documents.
• Hypothecation
Collateral
• Conditional Collateral
security if FACR falls below
a certain limit(eg. 1.25)
• Personal Guarantee of
proprietor/
partners/directors -in
case of Sole
Proprietorship
/Partnership Firm/
Company
• Corporate Guarantee of
sponsor - in case of
Special Purpose Vehicles
(SPVs)/Associates/
Subsidiaries
• Total Debt/EBIDTA <= 2.5
• Total Outstanding
Liabilities/Total Net-worth
ratio <=2.0
• Minimum Debt Service
Coverage Ratio >= 1.10

23. 1
• Rooftop Solar PV in India – An Overview
2
• Debt Funding Options for Solar Rooftop PV
3
• Bankability of a Solar Rooftop PV Project
4
• Typical Debt Terms and Covenants
5
• Takeaways
Agenda

24. Takeaways
Rooftop PV Installation Target – 40 GW by 2022
Debt requirement ~ Rs. 1.12 Lakh Crores(~ US $ 25 Billion)
Dedicated Debt for rooftop Solar PV currently available – More than US
$1 Billion just between SBI and PNB
Focusing on key Technical, Financial and Contractual aspects will help
improve the bankability of the projects
Awareness of typical debt terms and covenants will help new players in the
space to secure debt quicker

25. Key Takeaway
With Millions of Dollars committed,
lack of Debt funds unlikely to be a
constraint for the right quality of
Rooftop Solar PV projects…
..but!!

26. Key Takeaway
… the Million Dollar question is
Will the cut-throat competition allow
the development of quality projects
worthy of debt funding?

27. Thank You!!
Madhavan Nampoothiri
Aspiration Cleantech Ventures
madhavan@aspcv.com
www.aspcv.com