Rooftop Solar-Program by SBI and World Bank

Grid Connected Rooftop Solar PV Program
SBI-WORLD BANK
Presentation by- SBI

2
Presentation Overview
SBI at a glance
Background of the Program
SBI Commitment and Contribution
Business Models
Financing Modes
Eligible Projects
Benchmarks Parameters
World Bank Conditions

3
SBI AT A GLANCE
59000+ Pan-India ATMs
23.3 crore+ Debit Cards 2.55 crore+ e-banking users
103,565 Pan-India Village
coverage
64500+ Customer service
points
Largest Bank in India 30.12 crore + Customers
Rs. 32,00,000 crore+
Business size

Background of the Program
 GOI has set an ambitious growth target of installation of 175
GW aggregate capacity of renewable energy by 2022.
 Out of total 175 GW, target of 100 GW is set for Solar
Power under which 40 GW is to be achieved from GC RSPV.
 MNRE had approached SBI to develop a Program for
funding grid connected rooftop solar projects through WB
funds.
 As a result, SBI has prepared the Program for financing grid
connected rooftop solar projects.

SBI Commitment & Contribution
During RE-Invest 2015, 27 Banks gave commitment to
finance 78 GW of Renewable Energy projects.
SBI gave commitment of Rs 75,000 crore which would lead
to 15 GW of capacity addition.
The commitment given by the Bank translates to 19% of the
total commitment given by all the Banks.
Pursuant to the commitment, the Bank has sanctioned in
excess of Rs 7100 crore for 80 Renewable Energy projects
with a total capacity addition of 2435 MW as on September
30, 2016.

6
Business Models
Capex
Third Party

7
Capex Model
 The borrower sets up rooftop solar project with the intent to
reduce his own power costs. Residual power, if any, can be
feed to the grid.
 The Borrower would approach an EPC contractor for the
installation of the project. The O&M contract may be given to
the same EPC contractor or some other person.
 Debt servicing is dependent on the main business activity of
the Borrower.
 Financial appraisal would be like any other asset (e.g.
machinery) financing proposal.

8
Third Party Models
RESCO Model
AD Model

9
RESCO Model
 RESCO will develop the rooftop solar projects for its clients on the
agreed terms and conditions.
 RESCO would enter into a long term legally binding lease, right to
use or similar agreement for the roof on which solar project will be
installed.
 RESCO will also enter into a PPA for the supply of power. In this
model, the same RESCO is likely to take up multiple projects
consecutively and simultaneously across different locations.
 RESCO would be borrower in Bank’s books and liable for
repayment of loan.

10
Sub Models under RESCO Model
BOOT(Build, Own, Operate &
Transfer)
BOOM(Build, Own, Operate &
Maintain)
Rooftop Rental

11
BOOT
 The RESCO constructs, owns, operates and transfers the
ownership of the rooftop solar project after expiry of contract
period or as per agreed terms.
 Generally, transfer of ownership is made, once the RESCO has
recovered its cost of capital and a suitable rate of return.
 After the transfer of ownership, the rooftop owner is
responsible for O&M and he may choose to retain the services
of the original RESCO or he may make his own arrangements
for O&M requirements.

12
BOOM
 RESCO constructs, owns, operates and maintains the project.
 RESCO typically ensure that he is able to recover the cost of
his capital investment and O&M expenditures over time.

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Rooftop Rental
 RESCO will enter into lease agreement with the rooftop owner
and set up the solar system on his roof.
 The rooftop owner will get an agreed amount of rent from the
RESCO.
 The power generated can be either transmitted into Grid or
may be provided to private procurer on agreed tariff.

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AD Model
Repayment of
Loan
Operating
Lease
Loan
SBI AD Investor
Rooftop Owner
/RESCO
Lease
Payment
Version-1:

15
AD Model
Version-2:
Loan
SBI
Repayment of
Loan
AD
INVESTOR
ROOFTOP
OWNER/
DISCOM
PPA
Right to
use
Rooftop
EPC
COMPANY
EPC
Contract

16
AD Model
Version-3:
Loan
SBI
Repayment of Loan
AD INVESTOR
AGGREGATOR
Novation of PPA
DISCOM/PVT
Procurer
Operating Lease
PPA

17
Financing Modes
Program Mode
&
Project Mode

18
Program Mode
 Under this 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.
 The facility can be sanctioned to the Borrower based on
following indicative parameters:
Past financials of the Borrower
Experience in rooftop Solar PV projects
Number of projects executed in the past
Projected pipeline of the rooftop solar PV projects

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• A Master Loan Agreement (MLA) will be signed between the
Bank and the Borrower.
• MLA will have all legal terms and condition applicable for both
Master facility (for Line of Credit) and individual facilities (for
individual projects)
• Subsequently, individual loan agreements will also be signed for
individual loans (containing details about the project, tenor,
interest rate and condition precedents e.g. legal opinion on lease
agreement & PPA and all regulatory and environment approval).
• Individual loan agreements will refer to the Master Loan
Agreement and will not repeat all the legal clauses.

20
 Off-taker credentials should normally be assessed at the time
of sanctioning master loan facility. However, if the details of
future off-takers are not known at the time of sanctioning
master loan facility, than the off-taker credit risk shall be
analyzed at the time of appraisal of individual projects.
 In case of any deviation from sanctioned terms and conditions
of Master loan facility, the same would need to be approved by
the Sanctioning Authority that has sanctioned the master loan
facility.

21
Project Mode
 Borrower will develop a single project and avail funds for this
project only.
 The facility would be sanctioned by sanctioning authority and
a single loan agreement with all applicable terms and
conditions would be executed.
 Proposal will include projects from single roof owners only.
However, if the roof owner owns multiple roofs at the
same/multiple locations and want to install rooftop solar
project on all the roofs at a single time or in phases, then the
proposal shall fall under project mode.

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Eligible Projects
 Program fund will be available for Grid Connected Rooftop
Solar PV projects of commercial, industrial, and institutional
buildings-both public and private or any other structure in all
parts of India (excluding subsidy linked projects)
 Eligibility of the projects are as under:
 For Program Mode:
Proposal include aggregate multiple projects.
Minimum aggregate projects capacity to be submitted shall
be at 1 MWp.
Minimum capacity of sub projects under this mode shall be
20 kWp.

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 For Project Mode
Proposal include single project.
Minimum project capacity to be submitted shall be 100
kWp
In case of CAPEX model systems lower than 100 kWp
may be considered.

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Benchmark Parameters and Terms
& Conditions for Financing
Sr. No. Parameter Details
1 Target Group Sole Proprietorship Firm, Partnership Firm
including LLP and Company/SPV/NBFC.
2 Purpose To finance Grid Connected Rooftop Solar PV
projects
3 Authorized
Branches
CAG and MCG: All Branches
NBG: Identified Branches.
PFSBU (Mumbai & New Delhi Cell)
4 Type of Facility i) Term Loan
ii) Need based Working Capital against
receivables.
iii) Need based NFB (LC/BG) facility

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5 Eligibility Criteria a) Type of borrower and maximum exposure
 Sole Proprietorship – Max Exposure upto
Rs. 50 crore
 Partnership Firm –Max Exposure upto
Rs. 50 crore
 Corporate/SPV/NBFC- No Cap (subject
however, to laid down exposure caps)
b) In case of RESCO borrower, they should
possess at least 1 years’ experience/past track
record in power sector.
c) Borrower should have CRA rating of SB-10
& better and/ or ECR of Investment grade
(BBB-) and better.
[Note: External Credit Rating is mandatory for
exposure of Rs.10 crore and above].

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6 Debt : Equity Ratio 70:30
7 Upfront Equity At least 35% of agreed equity
8 ROI From MCLR + (from 20 to 90 bps )
9 Net Long Term Debt
/EBITDA )-Maximum
4:1
10 Loan Tenor
(Maximum)
Door to Door tenor at Max 15 Years
(comprising construction, moratorium and
repayment period).
11 Moratorium Maximum 12 months post DCCO.
12 DSRA Equivalent to 3 months’ principal and interest
(Minimum).

27
13 Fixed Asset Coverage
Ratio (FACR) in a year
Above 1.25
14 Collateral Security FACR : 1.25
Notwithstanding the security stipulated,
the Bank may where it is deemed
necessary, on a case to case basis,
stipulate such collateral security as
required.
15 Guarantee Sole Proprietorship /Partnership Firm/
Company: personal guarantee of
proprietor/ partners/directors to be
obtained.
SPVs/Associates/ Subsidiaries:
Corporate Guarantee of sponsor may be
explored.

28
16 Primary Security
(RESCO Model)
 Exclusive first charge on all fixed assets, both
present and future, relating to the
project/program.
 Exclusive first charge on all the movable
properties including plant and machinery,
machine spares, tools and accessories,
furniture, fixtures, vehicle and other movable
assets, both present and future, relating to the
project/program.
 Exclusive first charge on leasehold or sub-lease
hold rights OR Assignment of Leave and
License Agreement or wherever separate
agreement is not available, right to use should
be provided in PPA and should be assignable.

29
Sr.
No.
Para
meter
Details
 Exclusive first charge on the entire cash flows, current assets,
receivables, book debts and revenues of the project of
whatsoever nature and wherever arising, both present and
future.
 Assignment or creation of exclusive first charge on all rights,
titles, interests, benefits, claims and demand in project
documents (including without limitation the PPA, lease
agreements, sub-lease agreements), clearances, insurance
contracts, proceeds under the insurance contracts, relating to
the project, both present and future.
 Exclusive first charge on all project related accounts under the
TRA agreement and any other bank accounts relating to the
project, including a charge on all the monies, receivables from
the project and cash deposited therein.

30
Sr.
No.
Parameter Details
 Pledge of 30% shares of Borrower, if applicable.
 Non - disposal undertaking for the balance minimum
21% shares of the Borrower, if applicable.
17 Primary
Security
(Capex)
Option-1:
 First pari-passu charge on the land and fixed assets,
both present and future, of the Borrower.
 First pari-passu charge on all the movable properties
including plant and machinery, machine spares, tools
and accessories, furniture, fixtures, vehicle and other
movable assets, both present and future, of the
Borrower.

31
Sr.
No.
Parameter Details
 First pari-passu charge on the entire cash flows, current
assets, receivables, book debts and revenues of the
borrower of whatsoever nature and wherever arising,
both present and future.
 Assignment or creation of first pari-passu charge on all
rights, titles, interests, benefits, claims and demand in
project documents (including without PPA), clearances,
insurance contracts, proceeds under the insurance
contracts, relating to the project, both present and
future.
 First pari-passu charge on the on all accounts under the
TRA agreement (if available) and any other bank
accounts, including a charge on all the moneys,
receivables and cash deposited therein.

32
Sr.
No.
Para
meter
Details
 Pledge of 30% of the shares of Borrower, if applicable.
 Non - disposal undertaking for balance minimum 21 % shares
of the Borrower, if applicable.
Option-2:
 Exclusive first charge on the fixed assets and all the movable
properties including plant and machinery, machine spares, tools
and accessories, furniture, fixtures, vehicle and other movable
assets, both present and future, relating to the project.
 Approval from existing lenders to treat all the payments
relating to the facility including repayment, interest, other
monies etc. at par with the O&M expenses under the existing
TRA, if created. The same would require amendment to the
existing TRA and ICA so that priority is given to payments of
dues under this facility.

33
Sr.
No.
Parame
ter
Details
OR
Approval from existing lenders to treat all the payments relating
to the facility including repayment, interest, other monies etc. as
part of the O&M expenses, in lieu of reduction in electricity
charges due to facility, under the existing TRA, if created. The
same would require amendment to the existing TRA so that the
payments of dues under this facility are defined as part of O&M
expenses.
18 Building Commercial, Institutional and Industrial building should be
either owned or leased and in the possession of the
Borrower(s)/promoter(s) in case of CAPEX Model.
In case of Third Party, lease agreement /leave and licence
agreement/right to use for roof top with access rights, with the
owner of the building should be in place.

34
Sr.
No.
Paramet
er
Details
19 Insurance The Project Assets charged to the Bank shall be insured
comprehensively against appropriate risks, including force majeure
events both during and after the construction/erection period, till the
term loan is outstanding with the suitable bank clause incorporated.
An open/comprehensive workmen insurance policy is also to be
obtained for the workers engaged for installation as well as O&M at
the site. Also, third party insurance to cover any damage to third
party/public due to collapse/fire/accidents etc.
In case of need, the services of Lender’s Insurance Advisor (LIA) may
be retained at the cost of borrower.
20 Inspection
/
Informatio
n
At Quarterly intervals (more frequently during implementation period),
at the cost of the borrower. Borrower shall:
 afford all opportunity for representatives of the Bank and the World
Bank to inspect its premises, operations, the GRPVs investment,
and/or any relevant records and documents related to the loan; and
 prepare and furnish all such relevant information to the Bank or the
World Bank.

35
Sr.
No.
Paramete
r
Details
21 Irradiatio
n Data
Irradiation data is to be vetted by the Bank’s empanelled
consultants/LIEs. However, project upto 100 kw under Capex
model, may be waived on case to case basis on valid reasons
acceptable to the sanctioning authority.
22 Complian
ce of
Environm
ental,
Health,
Safety
and Social
(EHSS)
Impacts
Compliance of EHSS guidelines prescribed by World Bank is
to be ensured and to be vetted by Lender’s Independent
Engineer (LIE)/Bank Staff where LIE is not appointed. The
third party entity will claim their service charges from the Bank
and submit the report directly to the Bank. Bank subsequently
shall recover the cost from the Borrower concerned.

36
Sr.
No.
Parameter Details
23 Appointment
of LIE/ LIA
LLC) & other
consultants.
As per extant instructions of the Bank.
In case Bank’s exposure of Rs.50 crore and above or
Project cost is Rs.100 crore & above, appointment of LIE
is mandatory.
The third party entity will claim their service charges from
the Bank and submit the report directly to the Bank. Bank,
subsequently shall recover the cost from the borrower
concerned.
24 Statutory
Clearances &
PPA
The required project agreements (including PPA)
/clearances/ approvals (as applicable) should be in place,
before disbursement of 1st tranche for each individual
loans under the overall sanctioned credit facility. In respect
of any credit proposal sanctioned under Program Mode,
the first disbursement should be made only after execution
of all the required project agreements, clearance, approvals
etc.

37
Sr.
No.
Parameter Details
25 Track Record
of EPC
Contractor
The credentials of EPC contractor/equipment supplier
should be vetted by the empanelled sector consultant/LIE.
Liquidated Damages (LDs) offered in the EPC contract
should be adequate to cover any LDs payable by the
project developer to the off taker for delay in
implementation. The EPC contractor’s prior experience in
implementation of similar size projects should be one of
the criteria in appraisal.
26 Power
Purchase
Agreement
(Third Party
Model)
Long term off take arrangement with a Discom / a
procurer should be in place. In case:
i) PPA is executed with Discoms whose risk rating in the
grade ‘B and worse’ should be supported by sponsor/
promoter for debt servicing.
ii) PPA is executed with private procurer (offtaker) subject
to their evaluation based on the scoring model .

38
Sr.
No.
Parameter Details
27 Re-
imbursement
Compliance with the above mentioned parameters will be
verified for reimbursement of capital expenditure incurred
by a unit from its own resources during the period of
preceding 12 months, or upto 12 months from date of PPA,
whichever is later, in accordance with the Bank’s
instructions in this regard.
The expenditure should be supported by a certificate from
Statutory Auditor of the borrower and duly vetted by
Bank’s empanelled LIE.
All clearances/approvals required for the project are to be
in place.
All terms and conditions mentioned above are benchmark only. The
Sanctioning Authority may modify them as it deems necessary based on
the credit worthiness of the applicant and viability of the project.

39
World Bank Conditions
 Every individual contract awarded by the Borrower under the Program
should be less than below indicated thresholds:
 civil works, estimated to cost USD 115.00 million equivalent or more
per contract;
 goods, estimated to cost USD 75.00 million equivalent or more per
contract;
 non-consulting services and IT systems, estimated to cost USD 60.00
million equivalent or more per contract;
 consultants services, estimated to cost USD 30.00 million equivalents
or more per contract.
 No contract of any type shall be awarded to any firm or individual or any
other person who are debarred through the World Bank’s Debarment List.

40
 Maintain procurement records (contracts, orders, invoices, bills, receipts
and other documents) evidencing all expenditures incurred in the projects
financed by the Program until at least five years after the signing of the
loan agreement;
 Carry out the projects investment with due diligence and efficiency and in
accordance with sound technical, economic, financial, managerial,
environmental and social standards and practices consistent with the
requirements of the World Bank’s Anti-Corruption guidelines.
 Each borrower shall procure the goods and works to be financed out of the
loan proceeds under the program in accordance with well-established
private sector procurement methods or commercial practices,
 The Borrower and/or disclosed sub-contractors/providers, shall not be
listed in the temporary suspension lists of the World Bank.

 The borrower shall comply with the EHSS requirements prescribed
by the World Bank under the Program.
 Regularly provide utilization certificates in support of any
withdrawals of loan amounts providing name of suppliers/contractors
with contract values in excess to USD 5.00 million equivalent or
more;
 Enable the Bank and the World Bank to inspect its premises,
operations, the project investment, and/or any relevant records and
documents related to the loan facility.
 Prepare and furnish to the Bank and the World Bank all such
information as the Bank or the World Bank shall reasonably request
relating to the projects under the program.

 The borrower shall comply with all necessary licenses,
permits and/or clearances for the installation of the projects as
required by the law of the land.

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