“SOLAR THERMAL INDUSTRY IN INDIA – DEVELOPER’S PERSPECTIVE”

1. “SOLAR THERMAL INDUSTRY IN INDIA – DEVELOPER’S PERSPECTIVE” J.P.TIWARI Chief Executive Officer GODAWARI GREEN ENERGY LIMITED GODAWARI GREEN ENERGY LTD.

2. JAWAHARLAL NEHRU NATIONAL SOLAR MISSION (JNNSM)“the next new stimulant for the Indian power sector” • One of the eight National Missions laid out in India’s National Action Plan on Climate Change (NAPCC) that has raised large business opportunities in the country . • Aims to incentivize the installation of 22,000 MW of on- and off-grid solar power using both PV and CSP technologies by 2022 as well as a large number of other solar applications such as solar lighting, heating, and water pumps. • ‘Renewable Purchase Obligation (RPO)’ and tradable ‘Renewable Energy Certificates (REC)’ to facilitate inter-state trade so that RPOs can be met. • To aid the development of the solar industry, solar-specific RPOs and RECs have also been instituted. GODAWARI GREEN ENERGY LTD.

3. JAWAHARLAL NEHRU NATIONAL SOLAR MISSION (JNNSM)“the next new stimulant for Indian power industry” • Mission Targets • Projects under the Mission have been awarded on preferential feed-in-tariffs determined through a reverse bidding mechanism wherein, discount bids have been invited on CERC determined benchmark tariffs through the trading arm of India’s largest power producer NTPC- NTPC vidyutVitaran Nigam Ltd (NVVN). GODAWARI GREEN ENERGY LTD.

4. GODAWARI GREEN ENERGY LTD.DEVELOPER OF 50 MW CSP PROJECT UNDER JNNSM PHASE-I Godawari Green Energy Limited (GGEL) is a flagship company of HIRA group of Industries in the renewable energy sector based at Raipur, Chhattisgarh, India. Successfully bid as one of the seven developers under Phase I of the National Solar Mission for a 50MW solar thermal plant with an aim to be the first to execute and commission the project. The project is being implemented at the Naukh village, Jaisalmer district in Rajasthan (72.16ON, 27.60OE) and has signed a Power Purchase Agreement with NTPC VidyutVyapar Nigam (NVVN). GODAWARI GREEN ENERGY LTD.

5. INTRODUCTION – DEVELOPER OF 50 MW CSP PROJECT UNDER JNNSM PHASE-I UNDERLYING THEME OF GGEL’S MISSION STATEMENT : “COMMIT OURSELVES TO IMPROVING THE QUALITY OF LIFE OF COMMUNITIES WE INFLUENCE, BY STRIKING A BALANCE BETWEEN PROFIT, PEOPLE & PLANET”. GODAWARI GREEN ENERGY LTD.

6. WHY SOLAR ENERGY ? Growing Dependency on electricity Changing environmental conditions due to conventional industrial activities Holistic approach towards sustainable energy security. Depleting fossil fuel with increasing Demand for power with development Infinite availability of Solar energy & ability of direct exploitation GODAWARI GREEN ENERGY LTD.

7. WHY SOLAR THERMAL TECHNOLOGY FOR GENERATION OF POWER ? Several advantages over solar-photovoltaic projects. Typically built on a much larger scale, and historically their costs have been much lower. New technologies being tested have strong potential to make up the gap created by lowering cost of thin films PV. Able to generate more units per square km of the land area as compared to PV. Best able to match a utility's electrical load due to size and stability. Works best when it is hottest and demand is greatest. The heat they generate can be stored, so the output of a solar-thermal plant does not fluctuate as wildly as that of a photovoltaic system. Moreover, since they use a turbine to generate electricity from heat, most solar-thermal plants can be easily and inexpensively Supplemented with natural-gas boilers, enabling them to perform as reliably as a fossil-fuel power plant. GODAWARI GREEN ENERGY LTD.

8. 50 MW GGEL CSP PROJECT HIGHLIGHTS LOCATION : Village Naukh, District Jaisalmer, Rajasthan CAPACITY : 50 MW with out Storage TECHNOLOGY : Parabolic Trough license SBP – Germany DATE OF PPA : 10th January 2011 COD AS PER PPA : 9th May 2013 FINANCING : Completed on 7th July 2011 PROJECT COST : 7900 Million INR PRIMARY LENDER: Bank Of Baroda LENDING TERMS: 70% Debt, 30% from own resources EPC CONTRACTOR: Lauren Engineers & Constructors IMPORTED ITEMS: Mirrors, Receiver Tubes, HTF, SG, STG - 45% INDIGENOUS ITEMS: Solar Frames, BOP, Piping, Civil, Build – 65% (only GGEL achieved this %) GODAWARI GREEN ENERGY LTD.

9. 50 MW GGEL CSP PROJECT PROGRESS LAND AQUISITION: Completed in 3 months on 24th May 2011 from Government of Rajasthan (400 Acres) CLEARANCES : Water allotment, Transmission agreement, Consent to Establish, ROW for Raw water pipeline, Layout Approval from Government of Rajasthan with in 6 months by 16th July 2011. EPC CONTRACT : Signed with Lauren on 20th August 2011 SITE PROGRESS : a. 100% Engineering Completed (as on 31st October 2012) b. 95% Procurement Completed c. 45% Construction Completed d. 95% Civil work completed e. 100% of HTF line erected f. 60% of Solar frames received at site g. 11% of Solar frames erected h. Major Components like SG, mirrors, HCE tubes on site & STG reaching port on 10th November 2012. COMMISIONING: Expected With in the given time frame (9.05.13) GODAWARI GREEN ENERGY LTD.

10. 50 MW GGEL CSP PROJECT PROGRESS ERECECTION OF HEADER & BRANCH PIPING GODAWARI GREEN ENERGY LTD.

11. 50 MW GGEL CSP PROJECT PROGRESS SOLAR COLLECTOR ASSEMBLY BUILDING GODAWARI GREEN ENERGY LTD.

12. 50 MW GGEL CSP PROJECT PROGRESS ERECTION OF SOLAR COLLECTOR FRAMES GODAWARI GREEN ENERGY LTD.

13. 50 MW GGEL CSP PROJECT PROGRESS UNLOADING & ERECTION OF STEAM GENERATORS GODAWARI GREEN ENERGY LTD.

14. 50 MW GGEL CSP PROJECT PROGRESS STG Foundation Ready for Equipment Erection GODAWARI GREEN ENERGY LTD.

15. 50 MW GGEL CSP PROJECT PROGRESS RAW WATER POND & INTAKE WELL GODAWARI GREEN ENERGY LTD.

16. CHALLENGES FACED DURING PHASE – I EXECUTION 1.SOLAR RESOURCES NON AVAILABILITY OF ACCURATE DATA Predicted Annual Sum Of DNI – 2000 TO 2100 Kwh/m2 Year 2011 Ground Measured DNI - 1750 TO 1900 Kwh/m2 QUALITY • Peaking instead of Flat Curve like Spain & US for the Day. • Large number of Bad Solar Days in the year with unsteady & sudden DNI variations especially in summers on account of sand storms in Rajasthan. • This forces the design to keep larger solar multiple as compared to Spanish & US plants and hence larger mirror area and hence more cost GODAWARI GREEN ENERGY LTD.

17. CHALLENGES FACED DURING PHASE – I EXECUTION GODAWARI GREEN ENERGY LTD.

18. CHALLENGES FACED DURING PHASE – I EXECUTION • 1. SOLAR RESOURCES SOLUTION: Storage to take care of variations and to store during the peak DNI hours and dispatch during lean DNI hours. But during phase-I, taking more exposure on account of storage over & above the risks associated with the New Technology in India being implemented for the first time based upon uncertain Solar resources was beyond the risk appetite of GGEL & its Lenders. Also the Base load tariff plan of JNNSM doesn’t incentivize the sale of stored power. GODAWARI GREEN ENERGY LTD.

19. CHALLENGES FACED DURING PHASE – I EXECUTION 2. FINANCING • The understanding of Solar Sector was less and hence more time taken for project evaluation which increased the risk associated with the time frame of completion. • Non recourse funding was a challenge and investors were forced to furnish corporate guarantee of their existing companies. • Intent of the Government and its policy was not appreciated by the Lending Banks as they did not consider CSP Projects viable. Many of them still harbor this doubt. (Since there is no penalty on the purchaser for their exit from the PPA) GODAWARI GREEN ENERGY LTD.

20. CHALLENGES FACED DURING PHASE – I EXECUTION 2. FINANCING • Indeed the cost of the project estimated was put to doubt owing to Non-Awareness of technology and majority of the equipment being imported. • The present project itself has seen a exchange rate escalation of around 25%. Could have been appeased by Foreign funding. (they require more time for diligence) • Limited time frame in the policy to achieve closure post signing of PPA did not allow developers to negotiate good rates on debts from lenders. • Paying capacity of State Discoms and payment security. GODAWARI GREEN ENERGY LTD.

21. CHALLENGES FACED DURING PHASE – I EXECUTION 3. POLICY & REGULATORY ISSUES • Competitive bidding takes care of optimization of resources in all the front and hence defining any limit on any of the resources seems to be a bad idea. Because of the limitation set on land area, high potential cost reducing technologies are restricted. Say for example, Tower Technology (Brightsource, Gemasolar ). • Time limit set on Financial Closure needs to be relooked. Time limit for project commissioning should also be based on size of the project and factor number of actual working days and availability of decision making officials in India. • No incentives defined for Storage & adopting environmentally benign technologies like Air Cooled Condenser. GODAWARI GREEN ENERGY LTD.

22. CHALLENGES FACED DURING PHASE – I EXECUTION 3. POLICY & REGULATORY ISSUES • Procedure to avail duty exemption is lengthy. Single window clearance of the cases may solve this issue. • Excise duty exemption though available to the developer is not available to the manufacturer on the raw material purchased by them and hence they factor the burden in the cost which is transferred back to the developer with a net zero benefit to the project. • No incentives for indigenous sourcing of items more than the limit prescribed on account of high interest cost on local funding. With imports developers have an option to get exim funds at lower interest rates. • No Incentives defined to motivate developers to commission the plant ahead of schedule. • Clearance of permission to visit the site by foreign nationals require more than 100 days, which is a big issue at the moment for completion of project in time. GODAWARI GREEN ENERGY LTD.

23. CHALLENGES FACED DURING PHASE – I EXECUTION SUPPLY CHAIN & SOURCING • Key CSP components like Bend mirrors for parabolic trough was to be imported. Technologies like tower require straight mirrors that can be easily manufactured in India • Monopolizing by HTF suppliers affected a number of projects. We too had to pay 5.67 USD per kg instead of 4.0 USD being paid by Spanish developers. • SOLUTION : Adopt technologies that are less monopolistic. GODAWARI GREEN ENERGY LTD.

24. BENEFITS POST PHASE – I EXECUTION • Developers having experience in phase-I will have an added advantage. • Awareness of challenges listed before. • Established supply chain would prepare us better for future projects and hence build more confidence amongst lenders. • Tax exemption issues shall be streamlined. • Availability of Trained manpower to execute with more efficiency in future projects. GODAWARI GREEN ENERGY LTD.

25. LOOK AHEAD FOR PHASE-II • LENDERS TO DISPLAY GREATER CONFIDENCE & WILLINGNESS FOR LEVEL PLAYING IN SOLARPROJECTS.  • GOVERNMENT / RBI MAY ISSUE DIRECTIVES TO INDIAN BANKERS FOR COMPLIANCE IN LETTER & SPIRIT • PROVIDE SINGLE WINDOW FACILITY FOR TAX RELATED ISSUES.  CLEARANCE FROM THE STATE CAN BE DISPENSED WITH • GIVE IMPETUS FOR INDIGENIZATION OF CSP EQUIPMENTS.  • INCENTIVE FOR USING DRY COOLING CAN BE IMPLEMENTED AT THE PPA STAGE GODAWARI GREEN ENERGY LTD.

26. CONCLUSIONS: • NEED TO OBTAIN RELIABLE METEROLOGICAL DATA PARTICULARY DNI. • LAND ACQUISION SHOULD BE SIMPLIFIED IN A TIMEBOUND MANNER BY REVENUE DEPARTMENT. • ECB NORMS BE MADE ACCESSIBLE TO SOLAR PROJECT PROPONENTS. • INDIAN BANKS SHOULD CONSIDER CONCESSIONAL RATE WITH PRIORITY ALLOCATION OF FUND FOR SUCH PROJECTS WHEN IT IS MANDATORY TO SOURCE A CERTAIN % OF ITEMS INDEGENOUSLY GODAWARI GREEN ENERGY LTD.

27. RECOMMENDATIONS • MINISTRY OF NEW & RENEWABLE ENERGY (MNRE) SHOULD COORDINATE WITH STAKEHOLDERS TO DEVELOP STRATEGIES FOR ATTRACTING INVESTMENT. • GOVERNMENT SHOULD CONSIDER TO DEVELOP RPO ENFORCEMENT POLICIES AND RECs MARKET. • MNRE SHOULD FACILITATE COLLECTION & SHARING OF ACCURACY OF DIRECT IRRADIANCE (DNI) DATA. • THERE SHOULD NOT BE ANY % FIXATION FOR MANDATORY INDEGENOUS SOURCING. ULTIMATELY THE PRIMARY GOAL OF EVERY STAKE HOLDER IS TO BRING DOWN THE COST. DEVELOPERS SHOULD BE FREE TO SOURCE FINANCE AND EQUIPMENTS AS PER THEIR CHOICE. GODAWARI GREEN ENERGY LTD. GODAWARI GREEN ENERGY LTD.

28. THANK YOU! GODAWARI GREEN ENERGY LTD.