EQ Magazine September 2016 Part 2/3 by EQ Int'l Solar Media Group

Volume # 8 | Issue # 9 | September 2016 - Part 2 |

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CONT EN T

VOLUME 8 Issue # 9

50 Kempegowda International Airport: First Airport in Karnataka to go solar Part of larger vision of Sustainability and environmental benefits

India, US push for $30 mn energy storage research initiative

Master Plan for Making Chandigarh Model Solar City Prepared

Goa won’t be able to generate 150 MW solar power by 2021, says State Power Minister

Sungrow Wins 150 MW Contract With Mytrah Energy (India) to Supply Solar Central Inverters

The data and information presented in this magazine is provided for informational purpose only.neither EQ INTERNATINAL ,Its affiliates,Information providers nor content providers shall have any liability for investment decisions based up on or the results obtained from the information provided. Nothing contained in this magazine should be construed as a recommendation to buy or sale any securities. The facts and opinions stated in this magazine do not constitute an offer on the part of EQ International for the sale or purchase of any securities, nor any such offer intended or implied Restriction on use The material in this magazine is protected by international copyright and trademark laws. You may not modify,copy,reproduce,republish,post,transmit,or distribute any part of the magazine in any way.you may only use material for your personall,Non-Commercial use, provided you keep intact all copyright and other proprietary notices.If you want to use material for any non-personel,non commercial purpose,you need written permission from EQ International.

RESEARCH & ANALYSIS Advanced Energy Storage Systems Market Size to Exceed 11 GW by 2022, at Over 15% Growth: Global Market Insights Inc.

Satisfactory operating performance; reducing equipment costs provides respite for competitively bid projects, counterparty credit risk remains crucial

SunLink and Ganges Internationale Enter Into Joint Venture for Solar Development in India

POLICY & REGULATIONS

Grid Infrastructure Missing Link In India’s Solar Chain

MNRE: Policy for Repowering of the Wind Power Projects

Chandigarh Airport set to go solar with ReNew Power

INTERVIEW

with HUAWEI ALEX HE, General Mangaer Of Global Solutions & Sales, Huawei Technologies Co. Ltd.

O&M

Introduction of Remote Monitoring for healthy O & M activities of Solar installations

12 major ports propose 83 MW solar power plants

INTERVIEW with Wang Jin, DirectorProduct & Technology Department, TBEA

NTPC first Indian Corporate to offer Green Masala Bonds – raises INR 2000 crore through Rupee denominated bonds from international markets

42 INTERVIEW NTPC raises $300 mn with Green Masala Bond

with Steven Chen Director Of Indian Sales & Business Deveopment, JA SOLAR HOLDINGS CO., LTD.

52 QUARTER RESULTS

BUISNESS & FINANCE REGULATORY AFFAIRS Uttarakhand Electricity Regulatory Commission

Haryana govt to install 3,050 solar water pumps

Key Impact Factors And Risks Analysis For International Pv Project Finance Achievement

JA Solar Announces Q2 2016 Results & Achieves 50% YOY Growth in Shipments & Revenue HOLDINGS CO., LTD.

NEWS & ANALYSIS

Pg-08-29 WIND ENERGY

Operational Energy Yield AssessmentReview of the RealEnergy Production Data of Operating Wind Farms in Comparison to Former Energy Yields

Pg-32

Cover

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ENERGY STORAGE

Advanced Energy Storage Systems Market Size to Exceed 11 GW by 2022, at Over 15% Growth: Global Market Insights Inc. Technology development aimed for the development of new methods and storage systems by companies such as General Compression, GE Renewable Energy, and Halotechnics are considered to remain critical success factors for industry growth. Electric vehicles and their batteries are considered a viable option for energy storage during low demand and supplying during peak loads. Stringent regulatory compliance by DOE and EPA to control GHG emissions accompanied by automotive manufacturer efforts to make environment friendly products are likely to positively influence Industry growth.

Advanced Energy Storage Systems Market size may reach USD 7.17 billion by 2022; according to a new research report by Global Market Insights, Inc.Increasing power consumption, driven by residential, commercial and infrastructure needs in BRIC economies accompanied by favourable regulatory compliances to use electric vehicles are key factors stimulating global advanced energy storage systems market size growth.

A 10

sia pacific is forecast to witness highest gains at 15.8% CAGR up to 2022. Rising industrialization accompanied by enhanced consumer lifestyle in India and China are major reasons foster regional growth. Energy management in order to meet utility scale sized project grid demands are expected driving factors for fuel demand. These systems tend to manage energy resources flow effectively, hence reducing power plants set up which is ideal for remote locations. Moreover, high energy costs have resulted in shifting consumer preferences towards advanced energy storage system adoption allowing them to manage their electricity in real time using Load Shifting Technique. Battery based technology is set to witness highest gains at over 18% CAGR up to 2022. Breakthrough developments accompanied by declining costs are favorable factors to foster growth. Moreover, increasing application scope in renewable power storage and grid systems is another potential factor to drive advanced energy storage systems market size. Europe advanced energy storage systems market size was over 640 MW in 2014. Government initiatives across France and Germany to promote electric vehicle adoption to endorse clean technology should drive regional demand.

September 2016

Advanced energy storage systems market price trends are on the higher side owing to costs such as acquisition, space, installation, balance of plant and storage along with O&M including annual labor, parts, tax and insurance costs. These factors may also act as entry barriers new industry participants.

KEY INSIGHTS FROM THE REPORT INCLUDE: •

Global advanced energy storage systems market size registered installations of over 3.5 GW in 2014.

•

Thermal advanced energy storage systems market dominated the technology landscape and is forecast to surpass USD 4 billion by 2022. Reduced power consumption, improved efficiency and lower CO2 emissions make thermal technology ideally suited for installation in several applications.

•

Flywheel technology in the U.S. may register over 110 MW capacity with expected gains at above 18% CAGR. North America, influenced by the U.S. regulatory policies to control carbon emission dominated the regional industry.

•

Longer life, reliability, less maintenance, and more efficiency are the key properties driving R&D investment in flywheel technology.

•

Thermal technology in Germany advanced energy storage systems market was valued at USD 122.8 million in 2014. Increasing preference for electric vehicles along with environmental norms are major factors to drive regional demand.

•

Global advanced energy storage systems market share is moderately fragmented mainly driven by collaborations and amalgamation for technology innovation. Major industry players include LG Chem, Alevo, GE, Active Power, Samsung SDI Corp, ZBB systems, and Electrovaya Inc.

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ENERGY STORAGE

Trina BEST donates TrinaHome Energy Storage Systems to provide backup power in Kumamoto

rinaBEST (Trina Energy Storage Solution (Jiangsu) Co., Ltd) has announced that it donates five sets TrinaHome Energy Storage Systems to provide backup powerto Kumamoto second high school. The Trina Home allows students to have consistent and stable electricity in make shift class rooms and shelters in utility outage situation, and help to provide the backup power in postdisaster reconstruction after earthquake. Trina Home-F6515A can be used in areas where electricity is currently too expensive for occupants to use, or by people living in remote locations without electricity infrastructure.Japanese Electricity policy abides by the peak and off-peak price policy. The F6515A can charge according to the preset time period, and battery discharge to provide energy to loads during other period. This time shifting working mode of F6515Ais ideal for Japan market. The F6515A can achieve peak load shifting and off-peak filling, reduces the user’s cost of electric energy there by reducing the power grid reserve capacity effectively. It has important significance for improving the economic operation of the power grid via the entire social resources allocation level. The F6515A is backed by 10year product-warranty with excellent customer service support.

‘We appreciate Trina BEST’sassistance and their long term involvement in Japan’s community. Japan is an earthquake-prone country. These Energy Storage Systems can solve our electricity problem when the grid is unstable and causes black outs during earthquakes.’ Mr. Kinoshita, President of the Alumni Association of Kumamoto second high school. “We were shocked when we learnt of the earthquake in Kumamoto. The immediate thoughts which strike our minds are the people of Kumamoto and their families, Big earthquake always accompany with utility outage situation. We decide to ship 5 sets of TrinaHome F6515A immediately after hearing what happened in Kumamoto. It is our honor to provide some effort in helping students from Kumamoto Second high school. Trina BEST’s growth has been supported by many communities across the globe and we are determined to give back to the community in a meaningful way.” Frank Qi, General Manager of TrinaBEST 12

September 2016

India, US push for $30 mn energy storage research initiative India and the US have agreed on a $30 million public-private five-year research initiative for a joint research on smart grid and energy storage technology.

“Smart grid and storage technology will transform how we produce and consume electricity, which has the potential to decrease carbon pollution by scaling up renewable energy deployment, Working collaboratively with India will accelerate solutions to drive down technology costs and improve grid resilience and reliability in both countries,”

- Ernest Moniz, US Secretary of Energy

nder the US-India Partnership to Advance Clean Energy Research (PACE-R), the US Energy Department (DOE) and the Indian Ministry of Science and Technology (MST) will each commit $1.5 million per year for five years to the expanded research effort, subject to congressional appropriations. The US and Indian private sectors will match the respective government commitments, resulting in a combined $30 million public-private research investment over the next five years, a statement said. In 2009, the two countries launched Partnership to Advance Clean Energy (PACE) to support research and deployment of clean energy technologies. PACE is the core mechanism of bilateral energy R&D collaboration between the US and India. Since its launch, the countries have agreed to expand the initiative, which has three main areas of activity: Research (PACE-R), Deployment (PACE-D) and Access (PEACE). In 2012, the two countries committed to jointly funding PACE-R with a combined $50 million in government funding over five years to launch three initial research consortia, focusing on solar energy, energy efficiency in buildings, and next-generation biofuels. The latest announcement provides resources for a fourth consortium under PACE-R that will focus on smart grid and energy storage for grid applications. The new consortium will enable counterparts in the United States and India to leverage the technological research capabilities of both countries. The new consortium will be officially established when an award selection is made – anticipated in 2017, the statement said. Source:PTI

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ROOFTOP SOLAR INVERTERS & OFFGRID “3,050 solar water pumps of 2 horsepower (hp), 5 hp and 10 hp will be installed with 10 per cent farmer’s share and the remaining 90 percent cost be shared by the central and state government as financial assistance. This will result in solar capacity addition of 14.64 MW,” - Dr. Banwari Lal,

Minister of State New and Renewable Energy, Haryana

Haryana govt to install 3,050 solar water pumps In order to encourage farmers to use renewable energy, Haryana government announced that 3,050 solar water pumps will be installed in current financial year in the state with 90 per cent subsidy.

escribing renewable energy as the “energy of future”, he said the state government is committed to promote renewable energy in line with the national goal of 1.75 lakh MW capacity addition by year 2022. The minister addressed additional deputy commissioners of the districts through video conferencing and gave them necessary directions to promote renewable energy in their respective areas. Speaking on the occasion Director, New and Renewable Energy, Ashima Brar said during the current financial year, the state government would spend an amount of about Rs 27 crore on renewable energy and energy conservation programmes. She said the department has set a target of installation of rooftop solar power projects of 70 MW in the state with 30 per cent subsidy with maximum limit of Rs 20,000 per kilowatt. Source:PTI

RESEARCH & ANALYSIS

Vestas, GE Energy, Siemens, and Gamesa Rank as Top Wind Turbine Manufacturers in Navigant Research Assessment

new Leaderboard report from Navigant Research examines the strategy and execution of 12 original equipment manufacturers (OEMs) active in the wind turbine market, providing industry participants with an objective assessment of these companies’ relative strengths and weaknesses in the global industry. The global wind market is one of the fastestgrowing energy markets in the world, and a rapid scale-up of wind turbine technology over the past decade has resulted in more efficient machines and a sophisticated, large-scale supply chain. In this increasingly competitive space, today’s wind turbine OEMs must constantly work to meet and exceed expectations in a range of criteria.

“Wind turbine manufacturers are primarily ranked in terms of total megawatts installed in a given year, but a more interesting story looks at differences in strategy and execution, product offerings, geographic diversification, and a mix of qualitative factors at play in this competitive and dynamic marketplace, today’s top-tier vendors are excelling by showing brisk activity throughout many global markets and have an exceptional command of manufacturing, supply chain, and business relationships.” Jesse Broehl, Senior Research Analyst with Navigant Research Trailing the top-tier vendors are a number of strong contenders that, while proven, successful, and wellrespected, may have smaller global business footprints and narrower product offerings, according to the report. Ranked behind these companies are a few large and very capable Chinese wind turbine vendors that rely predominantly on their domestic market but show mixed or limited success in other international markets. The report, Navigant Research Leaderboard Report: Global Wind Turbine Vendors, examines the strategy and execution of 12 OEMs that are active in the global wind turbine market. The vendors are rated on 12 criteria: vision; go-to-market strategy; partners; production strategy; technology; geographic reach; sales & marketing; global market share, 2015 capacity; product quality & reliability; product portfolio; cumulative installations; and staying power. Using Navigant Research’s proprietary Leaderboard methodology, vendors are profiled, rated, and ranked with the goal of providing industry participants with an objective assessment of these companies’ relative strengths and weaknesses in the global wind turbine market.

5 Trends That Will Shape the Global Solar Market for the Rest of the Year

ccording to GTM Research’s latest edition of its quarterly Global Solar Demand Monitor, global solar installations are expected to grow by 43 percent this year, increasing to a total of 73 gigawatts. The first half of this year saw a major spike in demand driven by an unprecedented volume of installations in China and the U.K. in advance of waning and expiring incentives. The U.S. installed its millionth solar system in the first half of this year, which further substantiated the market’s No. 2 position in global demand. Meanwhile, India’s solar market continues to mature, with 2 gigawatts installed in the same time frame. The second half of the year will see a drop in installations, led primarily by China, raising concerns of a demand imbalance for the year overall. The U.K. and Japan will mimic that trend, even as India and the U.S. will maintain course. Here are the most important global solar trends that GTM Research expects to see in the second half of this year.

China’s Feed-in Tariff Pullback Earlier this year, China surpassed Germany as the world’s No. 1 solar market in terms of cumulative PV installations. First-half installations surged due to developers rushing to meet the June 30th feed-in tariff drop deadline. The month of June alone had over 10 gigawatts installed, close to half of what is expected for the entire year. However, lower feed-in tariffs and a halt on new installations in three leading provinces will pull back demand sharply in the second half of this year.

U.K.’s Decline The U.K. experienced a record-breaking first quarter, with 1.5 gigawatts installed in advance of the expiration of Renewable Obligation Certified incentives. But that trend will not continue — GTM Research expects a major drop in demand for the remainder of the year, with no new utilityscale projects coming on-line and a quarterly cap on feed-in tariffs for residential and commercial capacity.

India’s Tender Pipeline According to the report, India will grow 127 percent this year, displacing the U.K. as the No. 4 solar market globally. India’s pipeline of auctioned projects has ballooned to 25 gigawatts, and GTM Research anticipates 3.8 gigawatts of it to come to fruition in the second half of the year, more than twice what came on-line in a successful first half.

Japan’s Slowdown

In Japan, new government rules and regulations around feed-in tariffs are expected to eliminate close to 30 percent of the nation’s 56-gigawatt pipeline of approved projects. This will mean a sharp negative turn for the market in 2016, which GTM Research expects to shrink by 12 percent year-over-year.

U.S. Project Spillover While the extension of the federal Investment Tax Credit helped solidify the U.S. as a top-three market through 2021, one of the side effects is project spillover. In fact, GTM Research has revised its 2016 forecast downward to 14.5 gigawatts. However, that demand has shifted to 2017 — where 60 percent of utility PV capacity additions are expected to come from projects that were initially set to come on-line this year. Source:Greentech Media

September 2016

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RESEARCH & ANALYSIS

Installed Distributed Energy Resources Capacity Is Expected to Total $1.9 Trillion in Investment from 2015 to 2024

recent report from Navigant Research analyzes the global market for distributed energy resources (DER) technologies, with forecasts for installed capacity and revenue, through 2024.Increasing investment in DER represents a major shift away from the centralized, one-way electrical grid that has been the status quo for the past century. DER developments are challenging incumbent grid operating models, requiring a more dynamic and flexible network with advanced communications and orchestration to ensure stability, efficiency, and equality among diverse resources.

“Rapidly expanding DER investment has generated concern and optimism throughout the power industry as regulators and grid operators work to understand the evolving landscape, the shift away from centralized generation is going to require grid operators to develop more innovative technologies and solutions.” Mackinnon Lawrence, Senior Research Director with Navigant Research In the coming decade, most countries are expected to see more DER capacity additions– largely in the form of solar PV, generator sets, and energy storage–with the ratio of DER capacity deployment compared to centralized generation expected to reach 5:1 by 2024. According to the report, North America, Europe, and Asia Pacific are all anticipated to see high levels of growth in new DER resources.

The report, Distributed Energy Resources Global Forecast, provides a quantitative analysis of the global market for DER technologies and assesses the key regional market developments and technology trends. The technologies and solutions covered include distributed solar PV (<1 MW), small and medium wind turbines (<500 kW), microturbines, stationary fuel cells, diesel and natural gas generator sets (<6 MW), distributed energy storage systems, microgrids, electric vehicle (EV) charging, and demand response. Installed capacity and revenue forecasts for 10 leading countries, as well as their respective regions, extend through 2024. This report also provides a comparison of DER and conventional generation deployments over the next decade.

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RESEARCH & ANALYSIS

IEA data shows global energy production and consumption continue to rise eflecting the IEA’s increasingly global perspective, for the first time the Agency’s OECD and non-OECD Energy Balances and Statistics reports have been merged into two comprehensive global reports on energy data. World Energy Balances and World Energy Statistics will contain detailed data on over 150 countries and regions and will be released in full at the end of August 2016.

hese reports show that world energy production reached 13 800 million tonnes of oil equivalent (Mtoe) in 2014, up 1.5% from 2013. Fossil fuels accounted for 81% of this production – 0.4% lower than in 2013 – in spite of rising oil (+2.1%), coal (+0.8%) and natural gas production (+0.6%), as production of renewables grew even faster. For example Hydro production was up 2.5% and accounted for 2.4% of global production while wind and solar PV continued their fast growth (+11% and +35% respectively), and accounted for around 1% of global energy production. Among non-fossil sources, biofuels and waste accounted for 10.2% of world energy production in 2014 and nuclear slightly increased its share to 4.7%. While restricted to primary fossil fuels, preliminary 2015 global country level production data show a clear slowdown in the growth of fossil fuel production, only 0.5% higher than in 2014. While crude oil and natural gas production increased at a higher rate than in 2014 (+3.0% and +1.6% respectively), a 3.1% fall in coal production over the same period resulted in an overall slowdown in growth.The reports also highlight the significant changes in regional energy demand that have taken place over the past 40 years. In 1971 OECD (including Japan and Korea) and the rest of Asia (including China) together accounted for almost three quarters of energy usage, with OECD demand four times greater than that of Asia. Yet while the combined energy share of these regions remained at around three quarters of the global total in 2014, the proportions changed drastically; OECD and Asia became broadly comparable, at 38% and 35% respectively. This drop in the OECD’s share of global total primary energy supply – or TPES, a measure of total energy use both in transformation and final use – from 61% in 1971 to 38% in 2014 reflects the fact that since 1971,

• Globally, total consumption more than doubled between 1971 and 2014. However the sectoral breakdown of energy use did not change dramatically. Industry remained the largest consuming sector in 2014, only one percentage point lower than in 1971 (37%), followed by transport (28%), a 5% increase on 1971 figures, and residential (23%). • Looking solely at OECD countries, where provisional data are available for 2015, energy production hit 4 164 Mtoe in 2015, a 0.5% increase on 2014 figures, and the highest level since the IEA was founded in 1974. Exports were also the highest

September 2016

annual average growth in TPES in Asia was above 5% for all fuels except biomass – significantly above the average global increase. This increase in demand for energy in Asia has been driven by consumers, with final consumption in the region increasing five-fold over four decades. Coal remains the most consumed fuel, with approximately the same share in 1971 and 2014 (29% and 28% respectively). However the rest of the mix is seeing rapid change. The share of oil in total final consumption almost doubled (from 15% to 28%), while electricity rose from 3% to 19%. Following a seven-fold increase, industry was by far the greatest energy consuming sector in Asia in 2014, representing 42% of the region’s total final consumption, largely fueled by coal. The residential sector followed industry in energy use, having seen a 120% increase between 1971 and 2014. Traditional biomass was still the main fuel consumed by households, while electricity and natural gas consumption also increased significantly. Energy consumption grew 12-fold in the transport sector, and continued to rely mainly on oil.

ever recorded at 1 790 Mtoe (+5.5% from 2014). Following three consecutive years of decline, imports increased by 3.2%, with net imports remaining broadly stable in the region compared to 2014. OECD total primary energy supply remained stable in 2015, coming in at 5 269 Mtoe, only 0.1% less than in 2014. • In terms of the fuel mix, the OECD increased its use of oil (36% of TPES, +1%) and natural gas (26% of TPES, +2%) in 2015. Nuclear (10% of TPES) remained stable, with Asia-Oceania increasing its use while Europe decreased. Other sources (10% of TPES) increased by 2%, mainly due to renewables. Significantly, there was a drop of 15% in the United

States of coal use over 2014 figures. In 2015, more than 200 TWh of electricity came from natural gas, driving a 6% decrease in the OECD region’s overall coal demand. • With production increasing more than energy use, the level of self-sufficiency (defined as production/ TPES) in the OECD increased to 79% in 2015, a figure comparable to the high levels of 1985. Notably, in 2015, OECD Americas became self-sufficient for the first time since the IEA was founded, with the United States not far behind at 93%. This is in contrast with the levels observed in OECD Europe and OECD Asia Oceania, both coming in at below 60%.

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BALANCE OF SYSTEM

Solar-Log™ Now Monitors 250,000 PV Plants World-Wide

INDIA

Master Plan for Making Chandigarh Model Solar City Prepared

Source: Solare Datensysteme GmbH

Solare Datensysteme GmbH (SDS) is one of the leading companies for solar monitoring, smart energy and feed-in management. The Solar-Log™ data logger product range now monitors over 250,000 PV plants world-wide.

n impressive number! A few days ago the number of PV plants monitored by the Solar-Log™ was exactly 250,000. Today, there are already 335 more PV plants being monitored by the Solar-Log™. This continuous growth confirms the system’s high level of recognition from EPC/ installers and PV plant operators. With the Solar-Log™, SDS offers a professional energy management system: Structured and expert monitoring ensures flawless operation of PV plants. Moreover, the Solar-Log™ WEB “Commercial Edition” web portal provides the option to centrally manage all of the settings and functions along with data visualization. Inverter-independence is an essential and unique selling point of the SolarLog™ system. The Solar-Log™ is now compatible with inverters from 100 manufacturers, offering EPC/installers and PV plant operators a high degree of flexibility. Additionally, integrated components such as heat pumps, battery storage, meters, heating rods, combined heat and power (CHP) and string combiner boxes can be configured and visualized. The Solar-Log™ is the perfect solution to ensure the continuous flawless operation of PV plants, to increase the efficiency of self-consumption and to manage customized feed-in reductions.

September 2016

hri Piyush Goyal, Minister of State (IC) for Power, Coal, New & Renewable Energy and Mines recently informed the Lok Sabha in a written reply that master plan for making Chandigarh a Model Solar City under the ‘Development of Solar Cities’ programme of Ministry of New and Renewable Energy has been prepared. The solar city cell has also been established. The Minister further said that UT Administration, Chandigarh has empaneled 48 Solar Power Aggregators from whom any resident of Chandigarh can install Rooftop Solar Power Plant and can avail 30% subsidy. Solar rooftop power plants of aggregate 7.70 MWp capacity are installed on 145 Government buildings till May, 2016 in this city.

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September 2016

19Â

INDIA

First Solar Connects 130 MW of Utility-Scale Solar Power to the Grid in India

irst Solar, Inc. Indian subsidiary First Solar Power India Pvt. Ltd. recently announced the successful commercial operation of 80 MW AC and 50 MW AC capacity in Andhra

Pradesh and Telangana respectively. These projects are part of the 260 MW AC project portfolio wholly owned by First Solar in India.

“After achieving a recent milestone of 1GW of PV solar capacity footprint in India, we are delighted to add 130 MW AC of UtilityScale Solar Power to the Grid, growing our portfolio of operational solar assets to a cumulative capacity of 150 MW AC. With the commissioning of these plants we have once again demonstrated our strong execution capabilities, and with First Solar’s module performance and reliability, the plants will provide the best possible return on investment.”

he 130 MWAC plants collectively will produce enough energy to power approximately 227,500 average homes in India, and will displace over 204,000 metric tons of carbon dioxide per year. The project will be powered by more than 1.4 million First Solar modules, offering highly predictable energy in all climates and applications. The modules have been independently tested to pass accelerated life and stress tests beyond industry standards. With both a superior

Sujoy Ghosh, First Solar’s Country Head for India

temperature coefficient and superior spectral response, they have been independently certified for reliable performance in high temperature, high humidity, extreme desert, and coastal environments. The electricity from the projects will be purchased by the Southern Power Distribution Company of Andhra Pradesh and The Telangana State Southern Power Distribution Company Limited under 25 year power purchase agreements.

1.3 GW solar power generation capacity added in April-July India has added around 1,300 MW of solar power generation capacity in the April-July period this fiscal, Parliament was informed . “Solar projects are set up both by a large number of private companies and government-owned entities in the country. As on July 31, 2016, solar projects of 8,062 MW Piyush Goyal, Minister, MNRE have been set up.”

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ew & Renewable Energy Minister Piyush Goyal said in a written reply the Lok Sabha. According to the statement, India’s solar power generation capacity was 6,762.85 MW at the end of last fiscal i.e. March 31, 2016. Thus the country added roughly 1,300 MW of solar power generation capacity till July-end this fiscal taking the cumulative capacity to 8,062 MW. The minister stated that the 3,018.88 MW solar power generation capacity has been added during the last fiscal compared to 1,112.07 MW in 201415. The minister also stated that the trend from the last few years has shown fall in prices of solar photovolatic modules in the country. The cost of solar PV modules per MW as per the Central Electricity Regulatory Commission’s order for the determination of benchmark capital cost has come down to Rs 3.28 crore for the current fiscal from Rs 3.65 crore and Rs 3.32 crore in 2014-15 and 2015-16, respectively.

September 2016

Earlier this week, the minister hdd told Rajya Sabha that tenders for solar projects worth 20,766 MW have been issued so far, out of which power purchase agreements have been signed for 8,482 MW. Out of the 20,766 MW capacity, letter of intent has been issued for 3,392 MW while financial bids have been opened for 1,930 MW. Presently, tenders have been floated for 6,962 MW for which bids are yet to be opened. Government is hopeful of adding around 10,500 MW solar power generation capacity during the current fiscal. It has an ultimate objective of adding 100 GW of solar power generation capacity by 2022. The Minister had told the House that during 2016-17, a capacity addition target of 4,000 MW and 12,000 MW has been proposed for wind and solar, respectively. Source: PTI

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INDIA

Goa won’t be able to generate 150 MW solar power by 2021, says State Power Minister

oa will not be able to achieve the target of producing 150 MW of solar power by 2021 due to unavailability of flat lands required to set up plants, State Power Minister, Milind Naik said in the Legislative Assembly on Thursday.

“As per Central government guidelines, Goa will have to produce 150 MW of solar power by 2021, but we will have problem to fulfill the obligations due to unavailability of suitable land required to set up the plants.”

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He said state government has been working towards increasing the share of solar power generation. “We get only 22 per cent results with solar energy generation in Goa. We don’t have flat lands, due to hilly terrain it is difficult, to produce solar power in Goa.” Naik said the electricity department is in talks with Water Resources department to install solar power panel on the canals (irrigation projects) to generate solar power. Another BJP MLA Nilesh Cabral suggested that the solar electricity generated by individuals in their houses should also be calculated to the grid. To which, Naik replied that as per new Solar Policy, if anyone produces energy at his place, he can use it and transfer the additional power to the grid.

Milind Naik, State Power Minister, Goa

“We are working on making such arrangement to transfer the additional power generated through solar powers by individuals.” Source: PTI

September 2016

BUISNESS & FINANCE

NTPC raises $300 mn with Green Masala Bond

tate-owned energy major National Thermal Power Corporation (NTPC) raised $300 million (Rs 2,000 crores) with a 7.48 per cent annual yield with the launch of its ‘Green Masala Bond’ on the London Stock Exchange (LSE) on Thursday. NTPC’s bond issue was described as the first-ever Indian quasi-sovereign to issue a Masala Bond. The proceeds from it will be invested in the renewable energy market as it seeks to add more wind and solar power projects to its portfolio.

“NTPC’s landmark independently certified green Masala bond listing, the first Masala bond by an Indian quasi-sovereign issuer, represents another historic event for Indian finance. We are honoured to have been chosen to support NTPC access rupee-based financing in London’s international capital markets, reinforcing India’s ambitions to generate 175 GW of renewable energy by 2022. LSE has in recent weeks hosted landmark Indian issuances by Axis Bank and HDFC and today we are delighted to host the world’s first independently certified green Masala bond by NTPC, he added. This cements London’s position as the listing venue of choice for a variety of Asian issuers, from quasi-sovereign to supranational institutions, municipals and private companies. We are excited about continuing to build this market with Indian partners and authorities over the long-term, underlying the success of the India-UK Financial Partnership.” - Nikhil Rathi, Chief Executive Officer of LSE plc and Director of International Development at the LSE Group.

The listing follows the visit of the Indian Power Minister Piyush Goyal to the UK earlier this year to strengthen the UK-India collaboration on power and renewable energy. It also builds on the announcements made by the Prime Minister Narendra Modi to list $1 billion equivalent of Masala bonds in the UK, made during his visit here in November, 2015. Masala bonds are rupeedenominated bonds issued to overseas buyers. As many as 30 offshore Indian rupee bonds have listed in total on the LSE, raising equivalent to approximately $3.5 billion, according to one of the world’s leading stock exchanges. Source:PTI

ORIX: Announcement Regarding Issuance of Indian Rupee Denominated Secured Non-Convertible Debentures in India

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RIX Corporation , a leading integrated financial services group, announced recently that its subsidiary in India, ORIX Leasing & Financial Services India Limited, has issued Indian Rupee denominated secured nonconvertible debentures in the India market under the conditions indicated below. Issuer: ORIX Leasing & Financial Services India Limited Amount: INR 1.2 billion (Approximately JPY 1.8billion) Coupon rate: 8.70%p.a. Issue price: 100% of face value Settlement date: August 3, 2016 Maturity: August 2, 2019 (3 years) Rating: AAA (Stable) India Ratings & Research (Fitch Group) Others: No guarantee by ORIX Corporation

September 2016

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SOLAR &INVERTERS ROOFTOP OFFGRID

Chandigarh Airport set to go solar with ReNew Power

eNew Power Ventures Private Limited, India’s leading renewable energy company, announced that it has signed a Power Purchase agreement (PPA) with the Chandigarh International Airport (CHIAL) for solar installations. The agreement duration for the project is 25 years and was signed after a competitive bidding process, in February 2016, for 5MW installation at the airport. Once completed the project will help CHIAL generate 8.4 million units of power annually and offset over 8,000 tonnes of Carbon emissions annually. The power generated by the installations will be utilized for captive consumption of the airport and will reduce the cost of energy by 20%. CHIAL is a subsidiary of Airports Authority of India (AAI) and this was one of the first bids under RESCO (Renewable Energy Service Company) model conducted by the AAI. As an innovation driven enterprise which is committed to deliver value to stakeholders, ReNew Power will introduce a tracker facility for this project. The 5MW PV plant will use a single axis tracker technology that will maximize output from the plant. The horizontal single axis tracker with tilted module is a unique approach that leads to increase in yields from the plant.

“At ReNew Power, we are firm believers that institutions such as the AAI have to lead and show the way to individuals on reducing green-house gas emissions. We are therefore delighted to be selected as partners in the Chandigarh International Airport Limited’s attempts to reduce their carbon footprint. As their technology and innovation partners, ReNew will bring best in class expertise in project management and execution besides introducing the tracker technology to help CHIAL maximize its yield.” Mr. Sumant Sinha, Chairman and CEO, ReNew Power ReNew Power has over 40 MW of commissioned and under-construction project capacity in distributed solar with marquee customers from various industry sectors like automobile, textile, IT and ITES, hospitality etc. In addition, ReNew has over 1,200 MW of commissioned utility scale assets and another 1,800 MW under construction.

4604 DDG Projects Sanctioned for Covering 4745 Villages & Hamlets

inistry of Power is implementing Decentralized Distributed Generation (DDG) under Deen DayalUpadhyaya Gram JyotiYojana (DDUGJY) through Rural Electrification Corporation to provide access to electricity to unelectrified villages/habitations where grid connectivity is either not feasible or not cost effective. As on date, 4604 DDG projects for a total project cost of Rs.1470.64 crore have been sanctioned covering 4745 villages/hamlets (3,586 UEVs) in various States across the country. This was stated by Shri Piyush Goyal Minister of State (IC) for Power, Coal, New & Renewable Energy and Mines in a written reply to a question in the Rajya Sabha. The Minister further stated that DDG can be from conventional or renewable sources such as biomass, biofuels, biogas, Mini hydro, solar etc. DDG scheme provides a subsidy towards 60% (85 % for special category states) of the project cost. However, an additional subsidy of 15% (5 % for special category states) is applicable subject to timely completion of DDG projects, the Minister added.

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September 2016

BUISNESS & FINANCE

NTPC first Indian Corporate to offer Green Masala Bonds – raises INR 2000 crore through Rupee denominated bonds from international markets NTPC Limited (NTPC), the largest power generating company in India, raised INR 2,000 crore through rupee denominated ‘Green Masala Bonds’ from the offshore markets on 3rd August,2016.

TPC launched the transaction at Asia open on 3rd August,2016 with an initial target to raise Rs.1000crore. On the back of strong investor support, the order book built to over Rs.2900crore with participation from more than 60 accounts. The company upsized the issue to Rs.2000 crore and priced the bond at an annual yield of 7.48% with 5 year tenure. The bond priced 20 bps inside the 5 year AAA Bond yields which closed at 7.68% on 3rd August,2016. A notable feature of the bonds is that they are ‘Green’ bonds with third party assurance and Climate Bonds Initiative certification. The proceeds would be used to finance the renewable energy projects of the company. Investors from Asia contributed 70% to the transaction with the rest from Europe and Middle East. The Notes were distributed to high quality fixed income accounts: 80% to fund managers, Insurance companies and sovereign wealth funds, 15% to banks and 5% to others.

Mr.Kulamani Biswal, Director (Finance) said “We are proud to have issued the first Green Masala Bond from India. The bond scores several firsts for us, it is the first Masala Bond of the company, first green masala bond with certification from Climate Bonds Initiative, first 5 year masala bond from an Indian corporate and first with dual listing, at SGX and LSE.

“NTPC is marching ahead to increase its renewable portfolio to 10GW, in furtherance of the Government of India target to achieve 175GW of renewable capacity by 2022. We are the largest power generating company in India; the offering of Green Masala Bonds with third party assurance and Climate Bonds Initiative certification, reflects our commitment to renewable energy in the times ahead.

Gurdeep Singh, CMD, NTPC We were keen to tap a new investor base for our renewable energy programme and avail of offshore financing without the associated exchange risks, both objectives we could achieve with this offering. We are grateful for the strong investor support at attractive yields leading to a satisfactory outcome. Axis Bank, MUFG, HSBC and Standard Chartered Bank were the joint book-runners and lead managers for the transaction.

Axis Bank, MUFG, HSBC and Standard Chartered Bank were the joint book-runners and lead managers for the transaction.

Amtech Announces Next Generation Solar PECVD Order in July; PECVD Backlog Now Totals 1.4GW and Includes PECVD/ALD Package Solution for PERC Cells Amtech Systems, Inc., a global supplier of production equipment and related supplies for the solar, semiconductor, and LED markets,recently announced its solar subsidiary, Tempress Systems, Inc., has received an order in July of approximately 400MW for its next generation solar PECVD systems. 24

September 2016

he order is from a top tier solar cell manufacturer in Asia and is expected to ship within the next six to nine months. Amtech reports that its backlog of PECVD systems now totals approximately 1.4 gigawatts of cell capacity. The backlog also includes an order from a top tier cell manufacturer for Amtech’s high efficiency PERC package solution that combines Tempress’ PECVD and SoLayTec’s ALD systems.

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BUISNESS SOLAR &INVERTERS FINANCE

Sungrow Wins 150 MW Contract With Mytrah Energy (India) to Supply Solar Central Inverters

ungrow, the world’s leading PV inverter manufacturer, has been awarded a contract to supply solar central inverters for around 150MW of solar projects by Mytrah Energy (India) Private Limited. Sungrow will help with the design, engineering, manufacture and assembly of central inverters for Mytrah’s Solar projects in the states of Telangana and Punjab in India. Sungrow’s SG2500 Turnkey Solution employed in this project features high yields with its maximum system efficiency reaching up to 99%. The 10 feet container design enables the SG2500 to be easy for deployment, saving time of installation. “High efficiency, ease of installation & manitenance design of Sungrow central inverters, in addition to their local technical support and global acceptance were some of the important aspects of why Sungrow was selected as the inverter supplier. We would be happy to be associated with Sungrow for our future projects as well.

-Mr. Girish Gelli, Director, Mytrah Energy (India) Pvt Ltd. “Sungrow is very pleased to be a part of Mytrah for supplying inverters to their esteemed projects. We are delighted and overwhelmed to receive this contract from Mytrah and it leverages the intellectual capital in the design and supply of inverters for large scale energy generation assets. This contract gives us enormous momentumfor solar inverter business in India

-Prof.Renxian Cao, President of Sungrow

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Tesla and SolarCity to Combine Now is the right time to bring our two companies together: Tesla is getting ready to scale our Powerwall and Powerpack stationary storage products and SolarCity is getting ready to offer next-generation differentiated solar solutions. By joining forces, we can operate more efficiently and fully integrate our products, while providing customers with an aesthetically beautiful and simple one-stop solar + storage experience: one installation, one service contract, one phone app.

ust over a month ago, Tesla made a proposal to purchase SolarCity and recently we are announcing that the two companies have reached an agreement to combine, creating the world’s only vertically integrated sustainable energy company.Solar and storage are at their best when they’re combined. As one company, Tesla (storage) and SolarCity (solar) can create fully integrated residential, commercial and grid-scale products that improve the way that energy is generated, stored and consumed. We expect to achieve cost synergies of $150 million in the first full year after closing. We also expect to save customers money by lowering hardware costs, reducing installation costs, improving our manufacturing efficiency and reducing our customer acquisition costs. We will also be able to leverage Tesla’s 190-store retail network and international presence to extend our combined reach. Here are some key terms of today’s announcement: this is an all-stock transaction with an equity value of $2.6 billion based on the 5-day volumeweighted average price of Tesla shares as of July 29, 2016. Under the agreement, SolarCity stockholders will receive 0.110 Tesla common shares per SolarCity share, valuing SolarCity common stock at $25.37 per share based on the 5-day volume weighted average price of Tesla shares as of July 29, 2016. After comprehensive due diligence in consultation with independent financial and legal advisors, the independent members of the Tesla and SolarCity boards of directors approved this transaction. Tesla’s financial advisor was Evercore, and Wachtell, Lipton, Rosen & Katz was its legal advisor. The financial advisor to the special committee of SolarCity’s board of directors was Lazard and its legal advisor was Skadden, Arps, Slate, Meagher & Flom. As part of the agreement, SolarCity has a 45-day period known as a “go-shop”, which runs through September 14, 2016. This means that SolarCity is allowed to solicit alternative proposals during that time. Each company today filed a Form 8-K with the SEC that provides additional details regarding the transaction. While today’s news is a big step, it isn’t the finish line – we expect the transaction to close in the fourth quarter of 2016. Before then, the deal must be approved by a majority of the disinterested shareholders of both Tesla and SolarCity voting at each shareholder meeting. We also need to obtain regulatory approval and meet other closing conditions.

September 2016

BUISNESS & FINANCE

SunLink and Ganges Internationale Enter Into Joint Venture for Solar Development in India SunLink Corporation and Ganges Internationale Private Limited have entered into a joint venture to accelerate solar deployment in the rapidly growing Indian market.

s part of a SunLink White House commitment announced last month to deploy 1.4GW of solar in India over the next five years, SunLink has partnered with Ganges Internationale to support the country’s 175GW renewable energy goal. Under the agreement, Ganges Internationale will manufacture, install and provide O&M support for SunLink TechTrack singleaxis trackers in India. SunLink will provide not only its proven technology but also PowerCare engineering services and VERTEX software platform to Ganges and its customers.

“India Prime Minister Modi’s goal of 175GW by 2022 is ambitious and requires a fast-track for successful implementation, As I shared with Mr. Modi when he visited the U.S. in June, we believe that the combination of local, respected experts like Ganges Internationale with SunLink’s internationally deployable tracker technology and engineering excellence provides precisely the formula for success he is seeking. Our technology is proven, Ganges ability to implement is proven, and with our combined forces, we’re tackling projects at an accelerating rate.”

The two companies are currently collaborating on a tracker project located Northwest of Bengaluru in the Indian state of Karnataka, with several more in the design stages.

“Ganges has demonstrated a commitment to solar energy by diversifying our business to become a major provider of fixed tilt systems in India, Integrating SunLink’s tracker technology with our well-established manufacturing capabilities promises to bring not only more local jobs but increased solar capacity to help meet our country’s clean energy goals.” - Vinay Goyal, CEO, GANGES INTERNATIONALE

- Michael Maulick, CEO, SUNLINK

Lanco Infra in slump sale of 35 MW solar asset

anco Infratech Ltd has entered into an agreement for sale of solar power undertaking of the company through a slump sale to Lanco Property Management Company Pvt Ltd, a wholly-owned subsidiary of the company. The solar power undertaking has 35 MW of solar power capacity which registered a turnover of Rs.

September 2016

76.99 crore and loss of Rs.11.78 crore and has a net worth of Rs.32.7 crore, according to a regulatory statement made to the BSE. The diversified cashstrapped infrastructure company has indicated that the transaction is proposed to be completed before September 30. The consideration will be in the form

of allotment of equity shares by LPMCPL to the company. This is a case of slump sale and the matter is a related party transaction. The sale is aimed at securitising the cash flows and ring fence the debt servicing part of the solar power undertaking, the company informed the BSE. Source: The Hindu Business Line

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BUISNESS SOLAR &INVERTERS FINANCE

E BHEL bags EPC order for 30 MW Solar Photovoltaic Power Plants Bharat Heavy Electricals Limited (BHEL) has secured an order for setting up 30 MW (3×10 MW) of Solar Photovoltaic (SPV) Power Plants on Engineering, Procurement and Construction (EPC) basis.

Connected more than 750 MW in India and counting!

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arlier this year, BHEL bagged EPC orders from Neyveli Lignite Corporation and Bharat Electronics Limited for setting up of a 65 MW SPV Power plant at Neyveli (Tamil Nadu) and a 15 MW SPV Power Plant at Ordinance Factory Premises, Medak (Telangana) which are currently under execution. In the previous year also, BHEL bagged EPC orders from NTPC for 50 MW Solar Power plants each at Ananthpur (AP) and Mandsaur (MP). While the Ananthpur project has been commissioned, the Mandsaur project is currently under execution. BHEL manufactures solar cells and modules at its Electronics Division unit in Bengaluru, while space-grade solar panels using high efficiency cells and space-grade Battery panels are manufactured at its Electronic Systems Division, also in Bengaluru. BHEL’s solar business is backed by a dedicated R&D team at the company’s Amorphous Silicon Solar Cell Plant (ASSCP) in Gurugram. BHEL offers EPC solutions for both off-grid and grid-interactive solar PV power plants and has set up Solar Plants in various locations in India including the Lakshadweep Islands for island electrification.

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POLICY & REGULATIONS

“The Government proposes to implement utility-scale solar photovoltaic power plant projects at various major ports across the country. The funds for establishment of solar power projects are arranged by the major ports from their own resources and no funds have been released from the ministry.” - Shri Pon Radhakrishnan, Minister of Shipping , India

12 major ports propose 83 MW solar power plants

India’s 12 major ports plan to set up 83 MW solar photovoltaic power plant projects from their own resources, Parliament was informed.

West Bengal plans new solar policy The West Bengal government is planning to introduce a new solar policy to meet the Centre’s revised target of generating 4,500 MW solar energy by 2022 in the state. .”We will bring a new solar policy, 2016 to encourage investment in the sector. The old policy has failed to boost solar power generation in the state,” - Shobandeb Chatterjee , State Power Minister, West Bengal

He said at an interactive session with the Bharat Chamber of Commerce.

September 2016

draft policy has been submitted and the same will be submitted with the government after public feedback is received.Chatterjee said that the Centre decided to scale down the solar power generation target for West Bengal from 5,200 MW to 4,500 MW.

inister of State for Shipping Pon Radhakrishnan said in a written reply. Of the 82.64 MW capacity, Vizag, Mumbai, Chennai, Kolkata and New Mangalore ports have set up 6.84 MW projects so far, he said. The step is part of the Green Port Initiative launched by the Ministry of Shipping, Radhakrishnan informed the Lok Sabha. Its objectives include contributing to reduction in carbon emissions and consequently improving environment besides reducing cost of power purchased from grid by utilisation of solar power for power generation. India has 12 major ports — Kandla, Mumbai, JNPT, Marmugao, New Mangalore, Cochin, Chennai, Ennore, V O Chidambarnar, Visakhapatnam, Paradip and Kolkata (including Haldia) which handle approximately 61 percent of the country’s total cargo traffic. Source:PTI He said the state government did not want the power tariff to go up and for the same it was cautious on grid connected solar projects.”We do not want the power tariff to rise due to solar energy. Mamata Banerjee wants that there should be no tariff hike for consumption of upto 300 units,” Chatterjee said. The state commission (state electricity regulatory commission) is asking us to raise tariff every quarter, he said.Already the government is spending Rs 500 crore in subsidising poor electricity consumers.However, the state is carrying out several solar projects in the state including electrification of school buildings and government offices.In Turga of Purulia, the state is planning to install a 1200 MW solar plant to feed 1000 MW pump storage hydel power plant. Source:PTI

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POLICY & REGULATIONS

NITI Aayog to unveil National Energy Policy in 3 months

ITI Aayog is likely to unveil the new National Energy Policy in the next three months with a focus on air quality issue, renewable energy, natural gas, universal electrification and clean cooking fuel. The policy will replace Integrated Energy Policy that envisioned a road map for sustainable growth with energy security over a reasonable period of time. It was approved by the Union Cabinet in December 2008 during UPA regime.

“The work on National Energy Policy is in advance stages. NITI Aayog would be able to bring out the policy in 10-12 weeks, the policy will replace the earlier Integrated Energy Policy. In addition to the areas covered under the existing policy, the new document will focus on air quality issue, renewable energy, natural gas, universal electrification and - NITI Aayog Senior Official clean cooking fuel.”

The new policy will also incorporate energy modelling, which in other words is computerised simulation of a building or complex that focuses on energy consumption, utility bills and life cycle costs of various energy related items. It is also used to evaluate ‘payback’ of green energy solutions like solar panels and photovoltaics, wind turbines and high efficiency appliances. NITI Aayog is also working on a platform that will host all the data related to energy sector in the country including oil & gas, coal, solar & thermal energy etc. The official said that it will take three to four years to develop this New Energy Data Agency. Aayog is in the process of inking a Memorandum of Understanding (MoU) with US Energy Information Administration (EIA) for this purpose. In its run up to unveiling detailed road map for country’s energy security, NITI Aayog is organising National Conference On Energy Data: Management, Modelling and GIS Mapping on next Wednesday. During the conference, US Ambassador and UK High Commissioner will talk about India’s collaborations with USAID and Department of Energy & Climate Change (UK). Aayog is also working on geospatial map related to energy infrastructure to boost renewable sources. Source: Moneycontrol

“Earlier policy did not cover natural gas exhaustively as the prices were very high in 2006-07. Secondly, the government is pushing renewables which would be covered under this. Since the government wants to provide electricity and clean cooking fuel to all. It will provide an outlook on these subjects,” he said. The official also said that the policy will also make a case of “polluter pays” in view of deteriorating air quality, industrial emission and vehicular pollution.

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Featured

IHS Markit Names Trina Solar, SunPower, First Solar, Hanwha Q-cells and Jinko Solar as Leaders in PV Module Supplier Scorecard 2016

n a new scorecard reviewing the solar photovoltaic (PV) module sector, Trina Solar, SunPower, First Solar, Hanwha Q-cells and Jinko Solar were all identified as this year’s industry leaders. Each of these companies garnered above average scores for both market presence and market momentum, according to the ranking from IHS Markit (Nasdaq: INFO), a global business information provider.

“IHS Markit evaluated the largest module suppliers based on nine different metrics to arrive at the overall scores, this scorecard takes into account a company’s current market and financial position, as well as its potential to cope with the next wave of challenges faced by the solar industry.” - Edurne Zoco, Senior Manager, Solar Research at IHS Technology According to the 2016 IHS Markit PV Module Supplier Scorecard, Trina Solar scored highest in market presence, receiving high scores in nearly all categories due to its leading global market share, completeness of its product offering, strong position in all major regions and brand perception. Hanwha Q-cells and Jinko Solar also scored highly in market presence, recording consistently elevated scores in most categories. Looking to the future, First Solar ranked first in market momentum, mainly due to the rapid growth within its regional market, spending on research and development,

and market-share growth. First Solar ranks lower on market presence, due to its limited regional presence and limited breadth of its product offering. Trina Solar ranked second in market momentum, thanks to the company’s marketshare growth, regional growth position and technology innovations. Among the solar PV module industry leaders, Sunpower also received high scores for market momentum because a high proportion of the company’s revenues are spent on research and development. Other keys to its high score were its regional growth and technology innovation score. REC Solar and GCL System scored highly for market momentum, largely due to technology innovation and regional growth, but their market presence score was restricted by lower ratings on current regional presence and lower global market share. Both companies were placed, jointly with LG Electronics, within the group of “Challengers” in the scorecard report - which indicates higher scores on market momentum than on market presence and relates to their potential to become leaders within the solar industry. Although Canadian Solar was not categorized as a leader, due to a relatively low score for market momentum, the company recorded the second-highest market presence score - largely due to its broad regional presence, strong brand, and the wide breadth of its product offering, both upstream and downstream. The IHS Markit PV Module Supplier Scorecard addresses a need for a holistic review of the PV module supplier base. The results reward companies that are well established in a wide range of markets, with strong brands and strong financial results and that are well positioned for growth in the future.

Tenders for 20GW solar power projects issued so far: Government OF INDIA

enders for solar projects worth 20,766 MW have been issued so far, out of which power purchase agreements have been signed for 8,482 MW, Parliament was informed today.New and Renewable Energy Minister Piyush Goyal said in a written reply in Rajya Sabha said that out of the 20,766 MW capacity, letter of intent has been issued for 3,392 MW while financial bids have been opened for 1,930 MW. Presently, tenders have been floated for 6,962 MW for which bids are yet to be opened.Government is hopeful of adding around 10,500 MW solar power generation capacity during the current fiscal. It has an ultimate objective of adding 100 GW of solar power generation capacity by 2022. At present, the country’s solar power generation capacity is over 8,000 MW.

“Wind power projects are mainly developed by the private sector under various modes including power purchase agreement, captive use, third party use etc. No Union Government project is under construction in wind energy sector,” He added a total of 315 MW have been installed under the solar roof top scheme and power generated from these projects is being used for both domestic and captive use. The Minister said during 2016-17, a capacity addition target of 4,000 MW and 12,000 MW has been proposed for wind and solar respectively. -Shri Piyush Goyal

Source: PTI

September 2016

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Featured

Jinko Solar: 2016 Q1 Solar Module Company Championship Jinko Solar climbed to No.1 position in solar modules for the first quarter of 2016, viewed by shipment (1600MW), revenue (RMB 5.47 billion), gross margin (21.3%), and net profit (RMB 313.3 million).

O&M

Introduction of Remote Monitoring for healthy O & M activities of Solar installations - BY Gurdeep Singh Juneja, Business Developer – India, Webdyn SA

Renewable energies represent less than 12 % of the total production in India. However, in its commitments to UNO, India assures that it want to raise from 12 % to 40 % of its solar electricity on the horizon 2030”. The solar production of the country should achieve 100 GW on the horizon 2022!

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September 2016

ccording to the electricity need, the solar plant could be of different sizes. It consists grid-connected PV systems of the following size classes: • Residential rooftop (typically less than 10 kW) • Commercial and industrial rooftops and shade structures (10 kW to 1,000 kW) • Ground-mounted systems (often greater than 1,000 kW) In order to reach the objective announced to UNO, India needs to optimize the output, the quality of service and the profitability of all its PV systems, whatever is their size. And to reach there, it is crucial to follow the best practices of the Operation and Maintenance (O&M). The health of the Solar PV systems should be monitored continuously for their better performance and maintenance. For PV systems installed at Urban or even rural locations, remote monitoring capabilities provide the information in advance when system performance is degraded or is likely to fail. Based on this information, preventive maintenance can be carried out to improve the performance and life of the system, thereby reducing the overall operating cost.

To enable this, it is necessary to collect 3 main levels of data: • Meters that provide the exact status of the production or consumption and working information • P arameters and alarms that come from the central device of installation, like inverters in a solar plant, to have a better view of the equipment situation • Environmental information coming from sensors (irradiance, temperature, hygrometry, wind speed, etc)

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O&M Case Study 1) - Metro City (Urban Area)

1.5 MWp grid-tied Solar PV system was installed on the rooftop of the TVS Lucas, Chennai. The performance monitoring system for the installation is provided by Webdyn. The system is supported by Webdyn‘s latest developed version of WebdynSun in France. 2 numbers of WebdynSun were installed on to the site since the SCB units were far apart from Inverter & Meter. TMEiC inverter over TCP MODBUS & Secure energy meter over MODBUS RTU were connected in single WebdynSun to monitor their data & performance based on the custom frequency, similarly all the Strings were connected through SCB onto another WebdynSun in order to monitor individual Module as that helps to reach the particular module in case of any error or an event. Complete information is being transfered to the Portal of the Cleanmax for the deeper analysis. The main USP here with WebdynSun is that it can work with any portal suitable to process CSV file formats & hence more deeper analytics like Performance Ratio, Specific yield, Reduction in CO2 & Real cost saving etc. can easily be calculated.

Case Study 2) - Rural Area

6KW off grid battery based Micro grid Solar PV system was installed in the very remote village named Bhatipara in Jawhar district of Maharastra the local tribes there are not having any grid supply, no clean water, no approaching road & hardly any 2G signal of Vodafone connection. So it is very hard to reach the site for the Microgrid developers in case of any minor fault / event & cost them a lot in terms of time & money. That system is supported by Webdyn‘s latest developed remote monitoring version of WebdynSun in France. One WebdynSun with Vodafone 2G SIM card & extended GSM antenna for better signal reception was installed onto this microgrid site to monitor the crucial information about Batteries, Total Generation through Inverters, Active forward energy from Energy Meter & most of the relevant parameters from the Inverters to track the events & errors remotely. The data in the form of zipped CSV files are being transferred onto the FTP server of CES, Pune & they are providing the relevant analyses to Gram Oorja to monitor their site on regular basis remotely. This practice has not only saved their time & lot of money to visit the Microgrid every time for any unknown reason of fault but is also providing them a lot more crucial information on to the battery system like: temperature, gravity, charging, discharging etc. along with the Grid Supply information. Hence setting up best O & M practice as above with Webdyn that also gives you the freedom to choose the devices (Inverters, Meters, Sensor, SCBs & other Modbus devices) & the Portal of your choice based on the project requirements contributes greatly to reduce power failures and make solar plants operational nearly 100% of the time. The output and the quality of service are strongly increased.

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September 2016

WIND ENERGY

Operational Energy Yield Assessment-

Review of the RealEnergy Production Data of Operating Wind Farms in Comparison to Former Energy Yields - By B.S. Nivedh, UL India Pvt Ltd, Bangalore, India & Till Schorer, UL International GmbH, Germany

The prediction of the site specific energy yield of wind turbines plays an important role for financial agreements especially under consideration that the energy productions differ from site to site. Avalidation of energy yield prediction son the basis of real produced energy of the wind farms after a considerable time of productionis an important step in order to understand the current performance of the wind farm, for the revenue forecast and financial planning. Furthermore a review of the former EYA in comparison to the real produced energy is imperative for advisors to check for the consistency of applied procedures and uncertainties when performing energy yield assessments and to enhance the quality and accuracy of the same. 34Â

September 2016

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WIND ENERGY

METHODOLOGY For the comparison of former energy yields with the real produced energy of the wind farms, the production data and availability information are necessary. To ensure a comparison with energy yield predictions, the real production data has to be corrected to 100% availability and possible outlier¬ values need to be excluded from the investigation.Further more it is necessary toper form a long-term correction of the real production due to the long-term given values in former EYA.

RESULTS The Tab. 1 shows the results of the comparison of the p50 from the original EYA to the corrected real production for the different services considered. The average of all 190 wind farms shows that the corrected real production is 8% below the EYA. The given uncertainty in the former EYA is around 13 % within the service EYA and 3rd party EYA and 5% higher within feasibility studies. 8% uncertainty is given as a mean value for EYA based on production data, what means that initial EYA was performed after the commissioning of the wind farm based on the real production. These EYA based on production data shows an underestimation concerning the prediction versus the corrected real values of only 3%.

Once the real production is corrected to 100% availability and to a long-term value, this long -term value is then compared to the calculated value from the former EYA. This comparison is done with the long-term corrected energy yield (p50value) and under consideration of the given uncertainties in the former EYA. Under consideration of the uncertainty the probability values, the p75 and the p90 values from the former EYA are also to be compared with the results of the performed work.

Since 1998 UL- DEWI performed more than 3600 Energy Yield Assessments worldwide in the form of:

Tab. 1: Results of the comparison showing the average Delving deeper into these comparison results, present a wellbalanced distribution of hits and over estimation of the real production as well as low grade of under estimation. The results are shown in Fig. 1. For the classification of the comparison, a deviation of +/- 5% is defined as “hit”. The classification over-/under estimation were given for more than 10% deviation compared to the former result.

P50 Deviation

• Feasibility Studies • Energy Yield Assessments (EYA) • Review of 3rd Party EYA • EYA based on production data (Wind farm already in operation)

ith the above experience, UL-DEWI performed the first comparison in 2008, followed by a further comparison of the predicted energy yield of 190 wind farms located in France and Germany with the real production of the wind farms. The uncertainty of the former assessments was taken into account and a comparison of the probability values with the corrected real production was additionally performed. The main focus of the presented work lies within the following key questions: • Are the calculation results (P50) within the “expectations”, are they over- or underestimating the sites? • Do the assessed uncertainties correspond to the reality? • Are there any general trends or rules / guidelines derivable from this data analysis?

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FIG. 1: Deviation of the corrected real production compared to the predicted p50

September 2016

WIND ENERGY

ue to the fact that performing an EYA is connected with several uncertainty sources, the uncertainty has to be taken into account while performing a comparison of the prediction with the real production. For considering the uncertainty the given p75 and p90 values in the former EYA were compared with the corrected real production. The following graph (Fig 2) is showing that there is on an average no deviation between the calculated p75 and the real energy production. That is showing that uncertainties are very important to consider and that within the performed investigation the p75 value is showing a confidence match with reality.

FIG. 2: Calculated p75 Vs the real energy production

As an important point it has to be viewed more in detail, especially the timing of the EYA performed. As it is shown in the following graph (Fig 3) there is a constant improvement in the assessments concerning the ratio between calculated and real production. FIG. 2: Long-term production Vs Calculated Energy Yield p50

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WIND ENERGY

DISCUSSION AND CONCLUSION

iven a large number of possible reasons on why a prediction is fulfilled or not, several aspects need to be considered for a comparison of predicted energy yields with the longterm corrected real energy production. With respect to the real production, aspects technical availability, strong connectivity to O&M, deviations concerning the used power curve for the EYA and the reality, and possible limitations in the operation, e.g. due to high turbulence are possibly not considered in the former EYA. Further more elimitation of the grid connection and especially later wind farm extensions can lead to lower production than predicted. Concerning the models used we can see a slight but still not statistically significant tendency of over estimating the production of large wind farms and on the other hand of under estimating the production of turbines with large

Organised By

I N T E R N AT I O N A L

hub heights. Especially considering large hub heights, it is observed that this underestimation mainly is caused by a high difference between turbine hub height and height of the reference (e.g. met mast) and can be reduced by keeping the vertical distance low or covering the vertical distance with remote sensing devices such as LiDAR. Dealing with former assessments,

deviations to the real production could becaused by topo graphical in put data, calculation models, changed working procedures, measurement equipment used or different long-term correlation. As these described reasons are not always connected with the accuracy of the former energy yield it is not only for advisors necessary to check their former results to improve quality but as well important for operators to have a closer look on the current performance to update revenue planning with operational assessments and to leverage the IRR of their assets. As an important part of the continuous improvement program of UL-DEWI, we continue to perform this review in a frequent manner in orderto check for the consistency oft he applied procedures and uncertainties when performing energy yield assessments and to enhance the quality and accuracy of the same.

INTERViEW

Interview with

HUAWEI ALEX HE, General Mangaer Of Global Solutions & Sales, Huawei Technologies Co. Ltd.

How much Inverters have you supplied to India till now? What is the target/expectation in 2016?

AH: In 2015, Huawei signed a 100 MW contract with Waaree Energies. In 2016, Huawei sees India an essential inverter market. Our goal is 1GW and we are already in stage of closing some big contracts with key players in Indian market.

What is your view on the GOI target of 100GW Solar Power by 2022? What’s your commitment towards the solar sector in India?

AH: According to forecast by Mercom Capital Group, the PV power capacity planned for India in 2016 will be increased to over 4GW and the market scale will double. The PV market in India will maintain rapid growth. By 2022, PV power target yield will increase from 20GW to 100GW. Huawei will bring more advanced and useful products and solutions to the Indian market to contribute to the prosperity of the PV industry in India.

September 2016

Present some noteworthy projects, case studies of solar plants built using your solar Inverters?

AH: Huawei has already executed more than 16GW capacity of plants using their Smart PV string solution not only in plain ground regions but also in remote and extreme locations like mountains, sea coasts, etc across the globe. Some special projects in Japan like floating plant on the river using their string inverters are unique in itself, projects on agricultural fields, fisheries, etc themselves states the usefulness of Huawei’s products in terms of quality, O&M and performance.

What are your plans for manufacturing set up in India, the opportunities and challenges in manufacturing in India?

AH: Huawei understands the importance of local manufacturing set ups and challenges related to it. In 2011, Huawei started local manufacturing of telecom related parts in Chennai, India. So we have already created base for any future strategy to start for solar products. There are more than 5700 employees in India, and 2700 of them dedicated to R&D. We have one Technical Assistant Call Center, four Service Centers and six Spare Part Center in India from north to south. In this case we can provide better services for our local customers. Solar industry is in its growing phase in India and definitely in the near future if this trend continues then Huawei will not hesitate to have local manufacturing set up for solar inverters in India as well.

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INTERViEW

EQ:What are the trends in new manufacturing technology equipment, materials, processes, innovations etc…? AH: Huawei 1500V smart PV solution features simple structure, minimizing DC nodes and arc risks. The five-level architecture minimizes component loss and improves efficiency to more than 99%. Traditional 10MW power plants have 10 MPPTs based on the formula of one MPPT for one 1MW array. Each Huawei smart string inverter has four MPPTs. A power plant of 10 MW capacities has 630 MPPTs (more than 60 times when compared with that of traditional inverters), minimizing impact of PV string mismatch and improving the power yield. In addition, costs in engineering and cables are saved, bringing more profits with the same investments. Huawei recently launches additional feature as IV curve of each string which can be obtained through Huawei smart ACU 2000 and NetEco web software and mobile app.

The recent aggressive bidding by various developers keeping Solar Tariffs in the price range of Rs.4.34 – Rs.5 per kWh in various Solar Tenders. What’s your view on the viability, Costs & timeline pressures, Resource Challenges (Materials, ManPower, Execution, Grid Connection, Land Possession) etc…

AH: Healthy competition is always good for any industry but it has to be backed up by new technology and innovative methods of reducing overall costs and making it a viable business. Huawei has already taken steps in this direction and is committed to revolutionize solar industry by introducing Smart PV solution and using its globally known innovative digital technology in string inverters in order to increase generation with lower or same CAPEX and better LCOE.

What is the size of your company in terms of manufacturing capacities, growth chart, future expansion plans, revenues, shipments, ASP’s, financial figures?

AH: Huawei solar has shipped 10.5GW string inverter solutions globally in 2015. There will be a huge growth in 2016. We have aggressive expansion plans to maximize the Huawei string inverter market share. And our main focus is on China, Japan and India market. As China market may saturate in coming years and India solar market is all set to take a strong growth, Huawei is fully committed to support the growth. Huawei already has a manufacturing platform in Chennai; if market gives promising results we may consider option of expanding manufacturing in India.

Tariff cut down seems to be based on expectation that prices of key components will come down. As the timeline for any project to be executed is 18 months so, developers are relying on new technologies and revised pricing for components, which seems to be a big challenge. Resource challenges like land, manpower, material, etc also gets addressed by using string solution in utility projects as it requires less land, man power and material for installing, commissioning the plant. Hence, if industry moves in a right direction then surely even lower tariffs will generate reasonable profits.

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In India market we supplied 100MW to Waaree energies in 2015, and current financial year some big projects are under contract signing stage, by the end of year we may be able to secure over 1GW project in India.

September 2016

NEWS & ANALYSIS

According to latest report released by IHS and GTM Research, Huawei won the Global No.1 Shipment. As we know Huawei became the inverter supplier for only 3 years, but the market ratio is growing rapidly. Why Huawei can become the No.1?

AH: Yes, this is true. Huawei has won the Global No. 1 inverter shipment award; here is the list of current inverter supplier raking for 2015. We believe to continue this trend in coming years by increasing the market share. Huawei as a company believes in innovating new technologies and serving market needs with high production volumes. In 2015 we shipped total 10.5 GW string inverters with more than 2GW to other countries than China. Huawei market share is growing exponentially because of our conviction to promote string inverter as future technology replacing conventional central inverter solution by simplifying design and installation, which reduce initial CAPEX and significantly improves solar plant uptime to 99.9%. Equivalent CAPEX as central inverter, higher yield up 2%, simple O&M saving maintenance cost, and safe and reliable system are the key reasons for our rapid growth. We believe to continuously upgrade and innovate our product offering as per the market need.

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September 2016

TABLE : WORLD PV INVERTER SUPPLIER MARKET SHARE ESTIMATES SHIPMENTS (MW) 2015 COMPANY NAME 1 2 3 4

HUAWEI SUNGROW SMA SOLAR TECHNOLOGY ABB

TMEIC

TBEA SUNOASIS

WUXI SINENG

SCHNEIDER ELECTRIC

POWER ELECTRONICS

SOLAR EDGE

Source : IHS

@ IHS 2016

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BUISNESS & FINANCE

Key Impact Factors And Risks Analysis For International Pv Project Finance Achievement Project financing techniques date back to at least 1299 A.D. when the English Crown financed the exploration and the development of the Devon silver mines by repaying the Florentine merchant bank, Frescobaldi, with output from the mines.

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he Italian bankers held a one-year lease and mining concession, i.e., they were entitled to as much silver as they could mine during the year. In this example, the chief characteristic of the project financing is the use of the project’s output or assets to secure financing. The basic premise of project finance is that lenders loan money for the development of a project solely based on the specific project’s risks and future cash flows. As such, project finance is a method of financing in which the lenders to a project have either no recourse or only limited recourse to the parent company that develops or “sponsors” the project (the “Sponsor”). Non-recourse refers to the lenders’ inability to access the capital or assets of the Sponsor to repay the debt incurred by the special purpose entity that owns the project (the “Project Company”). In cases where project financings are limited recourse as opposed to truly non-recourse, the Sponsor’s capital may be at risk only for specific purposes and in specific (limited) amounts set forth in the project financing documentation. Because solar energy technologies historically have had high upfront costs and low operating costs, and they are able to provide long-term benefits, financing is critically important to the solar market. A wide variety of federal, state, and local incentives

-By María Garrido García, Renewable Energy and Environment Business Development

have helped make solar more affordable and competitive, but some of these incentives have also had a significant impact on how solar projects are financed . Project Finance is a commonly used financing structure for large infrastructure projects which offers companies and investors many benefits over traditional corporate finance. While it has certain limitations and requirements, project finance can be used to raise a large amount of funds in an efficient manner. In traditional corporate finance a company can raise capital by offering an equity ownership stake in the company itself – and a claim to any distribution of cash the company may make. A company can also raise corporate debt, providing interest payments and a claim to the company’s assets should a default occur. To assess these investment opportunities equity and debt holders look to the health of that company and its ability to generate a return. Project finance, on the other hand, is a method in which a company, often referred to as a project sponsor, raises capital through a special purpose vehicle (SPV)—essentially a “shell” holding company— and equity and debt holders rely on the cash flows of the assets in this entity to recover their investment. The SPV is owned by the project sponsor and other investors, all of which in turn own the project.

September 2016

n order to validate the low levels of project risk, equity and debt provider typically perform a large amount of due diligence so they can better understand the risks associated with a project. Standardized documents and operating procedures and independent project evaluation can minimize transaction times and create more transparency. Due to the various parties involved in a project finance transaction a key risk mitigation strategy is properly structuring each contractual agreement between participants. In this sense, from a technical perspective for a photovoltaic project, a good technical advisor should identify potential risks and give corrective o mitigating solutions to any contingency. The main topics to be reviewed are: site and solar resource, technical aspects, environmental aspects, contracts and technical inputs of the financial model. Matters as enough solar resource (global radiation) and reliability of the registered data, adequate environmental conditions such a ambient temperature and wind, availability of sufficient land and adequate orography, adequate access infrastructures for construction

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September 2016

and supply, evacuation point proximity (cost and electrical losses), no significant environmental affections, social and political support and a reasonable cost are highly important to determine red flags for a solar project finance. In regard with technical aspects, a certified technical advisor will assess a proven technology with a limited technical risks, revision of technical specifications, warranties and references of all the main equipments (modules, inverters, transforms and structure), guarantee of supply, technical review of civil works and electrical infrastructure for evacuation with sufficient capacity and stability, feasible implementation deadlines chords with the financial base case and a technical evaluation of references and contrasted capacity of the contractors.As an example the capital expenditure (CAPEX) of a photovoltaic plant with a one-axis tracker is approximately 7%-8% higher with regard to a fixed tilted system, from $1.77/W to $1.91/W. However, due to the increase of production of the PV plant that can reach up to 27%, the LCOE of a single axis PV Plant is improved in 12%-20%.

Nevertheless, the production and economic values presented are ought to remain advisory in nature. In order to obtain accurate data, it is advisable consulting a technical company.

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BUISNESS & FINANCE

join analysis between the legal and technical advisor the environmental aspects of the project should be revised, the Environmental Impact Authorization should include all the elements of the project (plant, electrical infrastructures up to the dumping pointâ&#x20AC;Ś), the project should coincide with the presented in the application procedures or have non-relevant modifications from the environmental point of view , may exist conditions that significantly affect the project: modifications in the positioning of the equipment, temporal limitations in the construction or operation due to noise, collisions with birds. Special attention should be place in a exhaustive technical audit to the construction, operation and maintenance and power purchase agreements. For the construction contract the key point to revise are the scope, price, provisional and final acceptance tests and guaranties in milestones, manufacture and performing as well as the penalties to compensate the lost profit. Similar aspects will be revise for the operation and maintenance contract, scope, price, term, performance ratio guaranty, penalties for noncompliance with the guarantees to compensate the lost profit, external maintenance contracts analysis and the operational and maintenance plans to determine if the plant will be well operate and its useful life is cover.

Vital importance has the power purchase agreement, in these transactions, a renowned technical advisor will at least take into account and review that the buyer should have enough credit quality, obligation of purchase the generated energy, long term agreement, energy price and sales conditions (tariff timetable, take or pay,â&#x20AC;Ś), technical obligations and compensation in case of anticipated resolution.

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To secure a profitable project finance of a solar photovoltaic project a coordinate work between the legal, financial and technical advisor is recommendable.

September 2016

43Â

INTERViEW

Interview with

Steven Chen 1 EQ: Kindly enlighten our readers on the performance of your modules in India in various geographic locations, customer feedback,. SC: By exclusively using high efficiency cells and with anti-PID ratings, we provide modules that can be used in different types of locations and conditions. Using tests such as ammonia resistance, salt mist corrosion, and thresher tests, we and our customers can understand the capability of our module to perform in a range of weather conditions. We utilize this strategy around the world, and feedback from Indian customers confirms their appreciation of our approach. We offer a variety of types of modules, which are tailored for various geographic areas; the modules are highly cost competitive in their respective technology segments.

September 2016

How much modules have you supplied to India till now, what is the target / expectation in 2016-17

SC: We have supplied more than 300MW in India and we expect sales of more than 500MW in 2016-2017.

The recent aggressive bidding by various developers keeping Solar Tariffs in the price range of Rs.4.34 – Rs.5 per kWh in various Solar Tenders. Whats your view on the viability, Costs & timeline pressures, Resource Challenges (Materials, ManPower, Execution, Grid Connection, Land Possession) etc…

SC: Tariff/price is stabilizing, and has not dropped dramatically in recent bids. Recent PPAs for solar projects are priced at similar levels to conventional power. In fact, the cost of solar power is now competitive and further cost reductions are no longer necessary to make project economics work. Since the central government is promoting solar power and is providing solar parks for upcoming bidding rounds, resource challenges are being reduced. Due to prompt support and infrastructure facilities provided by the Indian government, especially in solar parks, IPPs can streamline their costs, leading to relatively stable IRR projections at lower tariffs.

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INTERViEW

Director Of Indian Sales & Business Deveopment, JA SOLAR HOLDINGS CO., LTD.

Present some noteworthy projects, case studies of solar plants built using your solar modules

SC: a. Universal Mine Development and Service Provider Pvt Ltd 57.6 MW spread across Tuticorin and Virudnagar dist of TN b. Edison Energy India Pvt Ltd 17 MW in Tamilnadu c. SunEdison Aditi, Bheem, Dominicus, Madhya Pradesh, Arushi, and Green Flash projects d. JBM Haryana 23 MW project etc

What is the size of your company in terms of manufacturing capacities, growth chart, future expansion plans, revenues, shipments, ASP’s, financial figures

SC: JA Solar adopts a selective vertical integration model, covering silicon wafer, cell and module production, as well as photovoltaic power plant investment, development, construction, operation and maintenance. It has eight production facilities worldwide. Its silicon wafer, cell and module production capacity has reached 2 GW, 5.5GW and 5.5GW respectively. In 2015, shipments grew to approximately 4.0 GW, compared to shipments of 3.1 GW in fiscal year 2014. Net revenue was $2.1 billion, compared to net revenue of $1.7 billion in fiscal year 2014. To date, JA Solar has a cumulative shipments of over 15 GW.

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Please describe in brief about your company, directors, promoters, investors, its vision & mission.

SC : JA Solar Holdings Co., Ltd is a world leading manufacturer of high-performance solar power products that convert sunlight into electricity, for residential, commercial and utility-scale power generation. The company was founded in May 2005 and publicly listed on the NASDAQ in February 2007. JA Solar, the world’s leading cell producer since 2010, has firmly established itself as a tier 1 module supplier. Capitalizing on its strength in solar cell technology, it is committed to provide modules with unparalleled conversion efficiency, yield efficiency, and reliability to enable customers to maximize the returns of their PV projects. With its leading industry experience, continuous effort on R&D, customer-oriented service and sound financial conditions, JA Solar is the most trustworthy long-term partner in the industry.

What are your plans for India, your view on the GOI target of 100GW Solar Power by 2022

SC: Since we already have leading market share in several geographies, over the long term we intend to be a top tier supplier-- and hopefully the #1 supplier—in the Indian market, once prices stabilized. Due to the 100 GW installation target, we have already seen rapid growth in installation activities in the past two years. Growth is further accelerating in 2016, and will likely again in 2017. We fully expect the government target to be achieved by 2022.

How much is your R&D budget as % of your sales / profits

SC : In the first quarter of 2016, R&D expense was $ 6.1milion, equivalent to 1.1% of total revenue.

September 2016

INTERViEW

EQ: Solar Trade Wars : What are the benefits to Indian manufacturers SC: We see India as a significant market with a high growth rate. In order for a project to be sustainable, the whole value chain must be secured. We plan to support India similarly, by establishing dedicated manufacturing facilities locally to cater to the demand and provide tailored solutions. Our opinion is that due to high demand in India, supply must come from foreign as well as domestic manufacturers. Cooperation between domestic and foreign manufacturers to achieve the government installation target is a better path to success than rivalry between different manufacturers based on location. We feel a cooperative approach will still create healthy competition and technological advances.

Kindly highlight your product, technology & company USP’s, distinctive advantages etc…

SC: JA at one time was the biggest cell supplier in the industry, and supplied its cells to almost all the top module manufacturers in the world. JA is renowned for its high efficiency solar cell, and works to maintain its leading position in efficiency. The efficiency of PERC is greater than 20.8%, and is expected to be higher than 21% by the end of 2016.

Do you also bring financing solutions for your customers?

SC: JA will help clients to develop projects in several different ways. Financially, we have strong relationship with tier one international banks, as well as good relationships with leading trading insurance companies, such as Sinosure. These relationships can help clients to solve most of their financing needs.

What are the trends in new manufacturing technology equipment, materials, processes, innovations etc…

September 2016

Whats your commitment towards the solar sector in India

SC: JA is committed to be the Number 1 supplier in Indian market in the mid to long term.

What are the top 5 markets for your company in the past, present and future

SC: In 2015, our top 5 markets were: China, Japan, US, India and Asia-Pacific. In 2016 and 2017, we believe the top 5 markets for JA will be China, Japan, US, India and Latin America.

As a manufacturer, kindly share your plans to foray as developer or equity investor in solar pv power projects.

SC: JA has its own EPC team and has already developed several significant solar projects in China. Given the capital intensive nature of development, JA plans to build 200MW of solar projects every year, which is relatively conservative compared to our peers. The solar industry is replete with formerly solid companies that over extended themselves in project development, causing great financial challenges. In order to avoid a similar fate, JA maintains a solid balance sheet that enables it to honor its 25 years of module warranties.

Please share information of some new orders in hand.

SC: We have already signed several significant orders for the 2nd half and have already completed installation of the needed manufacturing capacity.

SC: The core values of PV are efficiency, availability and reliability. The industry continually seeks to improve on these values. To drive progress, manufacturing equipment is now highly automated. Our new 1.5 GW factory in China is quite advanced, and produces leading PERC technology. Customers are now requesting evermore volumes of double glass and PERC modules with better reliability and energy output.

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INTERViEW

Technology road map in terms of 1500V , Double Glass, BiFacial Cells, PERC/ PERT Technologies, upcoming game changes technologies

SC: JA has already commercially launched the 1500V(framed and unframed) and double glass module, while the Bi-facial cell is still in the R&D phase. Our business plan will depend on market conditions. JA believes PERC

will lead the high efficiency solar module market because of its cost effectiveness. JA shipped 100MW by the end of 2015, and plans 1.4GW of PERC capacity to be complete by the end of 2016. Here is the roadmap of our product:

For the next generation of solar technology, JA takes a prudent approach. We dedicate abundant resources to R&D, including (but not limited to) N-type, bi-facial, MWT, HIT, and PERC. JA will launch a product to market only after the demonstration of a solid business case.

As a module manufacturer provided 25 years warranties , is it backed up by warranties by cell manufacturer, materials manufacturers ?

SC: As one of the biggest module manufactures in the world, we are supported by our suppliers for warranties. For quality assurance, we have commitments from our suppliers to provide the best service and assistance to support our long-term quality warranty.

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What will be the cost, technology trends in solar pv modules SC: For large utility scale projects, cost is of critical importance. We expect costs to continue decreasing in the future:

September 2016

47Â

T&D

Grid Infrastructure Missing Link In India’s Solar Chain

Buoyed by the positive response from the industry and the proactive approach adopted by various state governments, India is now making rapid strides in the solar segment. The country’s solar power generation has gone up 14 times in a span of just five years from 0.5 MW in 2011 to 7 GW now. As a result, the revised solar target of 100 GW by 2022 looks distinctly achievable.

By Hartek Singh, CMD, Hartek Power Pvt Ltd

n an ideal situation, this shift to renewable energy should provide a ready answer to the power woes of the country, which is blessed with abundant sunshine throughout the year, but the situation in India is not so ideal because the transmission system is not growing in sync with the increase in solar power generation. If left unaddressed, this yawning gap could leave us with a lot of catching up to do later, putting immense pressure on the existing transmission lines, eventually leading to system collapse. The fact remains that our transmission lines are not geared up to receive the kind of solar power being injected into the grid. Given the high stakes in the solar sector, we cannot afford to have breakdowns. As the first and foremost step, we should upgrade our transmission and distribution lines. The way the solar sector is growing, it becomes imperative for every state which has jumped on to the solar bandwagon to upgrade its T&D system accordingly. The failure to do so may create a difficult situation, in which states like Punjab find themselves today. Having gone into a solar overdrive, Punjab is now well on its way to achieving an installed solar capacity of 1 GW by the end of this financial year. But the T&D system in the state has not been upgraded adequately to withstand this additional load of electricity. While the Power Grid Corporation of India Ltd has been asked to build separate transmission lines to evacuate green energy, it is expected to build only inter-state transmission lines, at least in the initial stages. Within the states, the local governments have to invest in capacities.

September 2016

Lack of an efficient and reliable T&D infrastructure is one of the biggest obstacles in the way of realising India’s solar potential. Our existing transmission capacities are grossly inadequate. Millions of kilowatt hours of electricity is lost due to inter-state transmission congestion. High T&D losses make solar power generation a highly unviable proposition. Though the government, in association with the NTPC and the Power Grid Corporation of India Ltd, is focusing on upgrading its substations and T&D lines to reduce T&D losses, this needs to be done on a war footing. The situation calls for urgent corrective action. We cannot afford to operate with the same network of poles and wires. The answer lies in constantly upgrading the grids and coming up with new ones to match the outflows created by new solar projects. The example of Andhra Pradesh is worth emulating here. Whenever the Andhra Pradesh government comes up with a plan to set up new solar projects, it has a parallel plan on T&D ready. Let’s enable the utilities to acquire the financial firepower to invest heavily in grid infrastructure and make large-scale green electricity purchases. India needs to gradually upgrade its grid ring system from 440 KV to 765 KV to 1,200 KV so that maximum power can be transferred to the central ring and suitably distributed among power-deficient areas of the country. The upgrade from 66 KV to 132, 220 and 440 KV should take place simultaneously. At the end of the day, each unit generated must reach its rightful destination. If we cannot achieve this one thing, the entire purpose will get defeated.

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POLICY & REGULATIONS

Scheme for Development of Solar Zones in India Background

ndia, with its large population and rapidly growing economy, needs access to clean, cheap and reliable sources of energy. India lies in the high solar insolation region, endowed with huge solar energy potential with most of the country having about 300 days of sunshine per year with annual mean daily global solar radiation in the range of 4-6 kWh/m2/day. Solar power projects can be set up anywhere in the country, however the scattering of solar power projects leads to higher project cost per MW and higher transmission losses. Individual projects of smaller capacity incur significant expenses in site development, drawing separate transmission lines to nearest substation, procuring water and in creation of other necessary infrastructure. Also it takes a long time for project developers to acquire land, get change of land use and various permissions, etc. which delay the project. It is

now proposed to develop solar zones in the country. Solar zone may be defined as “A zone of land having good solar radiation and having around 10,000 hectares of government or privately owned wasteland, uncultivable land or fallow land etc. in one or more than one patches for setting up of solar projects and with the possibilities of developing transmission/evacuation systems for evacuation of power in an economically feasible manner”. The difference between solar zone and solar park would be that while Government will acquire land in case of a solar park, land acquisition will be facilitated by the Government in a solar zone but Government will not acquire the land. While transmission is provided for every project in a solar park, in a solar zone several inter-connection points will be created where developers can connect at their own level in such a manner so that no developer has to build a line for more than 25 kms.

Proposal

NRE through this scheme plans to set up 10 solar zones, each zone having daily average insolation of over 4 kWh per meter square and having around 10,000 hectare of contiguous or near-contiguous government owned or privately owned wasteland, uncultivable land or fallow land in one or more than one patches. Farmers’ Co-operatives may also be encouraged for creating land pool. Each Solar Zone will have at least one Solar Radiation Resource Assessment (SRRA) Station, one Nodal Office with adequate staffs (up to five staffs) to facilitate Solar Project Developers in setting up of solar power projects. The land for setting up Nodal office for each solar zone is to be provided by the State Government. Central Transmission Utilities (CTU) and the State Transmission Utilities (STUs) will be involved to

build transmission infrastructure to provide the evacuation from the areas declared as Solar Zones based on the proposals from the State Governments. The Solar Zones may be included in the next phase of the Green Energy Corridor programme so that adequate funding for power evacuation facilities is available for development of these Solar Zones. Independent Power Producers (IPPs) would be free to select and acquire land in the solar zones as per existing rules for setting up of solar projects on case to case basis. MNRE will have no direct role in acquiring of land. Feed-in Tariff (FIT) or bidding based projects can come up in the solar zones. Solar Manufacturing Units may also come up in the proposed solar zones.

Techno-Economic Pre-Feasibility Study

he solar zones will be developed in collaboration with the State Governments & their agencies. The State Government would first conduct a technoeconomic pre-feasibility survey, through a suitable agency. Thereafter, the State Government shall identify an area having daily average insolation of over 4 kWh per meter square and having around 10,000 hectares of government owned or privately owned wasteland, uncultivable land or fallow land in one or more than one patches to be declared as Solar Zone. Based on the survey, the State Government shall commission a techno-economic feasibility report which inter alia addresses the following: Demarcation of the proposed area. Details of land i.e. whether the land is Government land, assigned land, unassigned land or private land etc. Available transmission infrastructure and transmission infrastructure required for evacuation of solar power from the proposed solar zone.

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The Central Financial Assistance (CFA) of up to Rs. 10 Lakhs will be provided by this, Ministry for carrying out techno-economic pre-feasibility survey and preparation of feasibility report. Based on the outcomes of the feasibility report, the State Government will submit a proposal along with the feasibility report to this Ministry for creating Solar Zone. After the proposal is approved by this Ministry, the State Government will take up further activities. A Detailed Project Report (DPR) for each Solar Zone will be prepared by the State Government or the agency identified by the State Government. The DPRs will include surveys data, availability of water, roads, nearest evacuation facilities available and transmission infrastructure required for evacuation of solar power from the proposed solar zone etc. These solar zones will be set up within a span of 5 years commencing from 2015-16 and the solar project may then come up as per demand and interest shown by developers. At the State level, the solar zones will enable the States to

September 2016

POLICY & REGULATIONS

bring in significant investment from project developers, meet its Solar Renewable Purchase Obligation (RPO) mandate and provide employment opportunities to local population. The State will also reduce its carbon footprint by avoiding emissions equivalent to the solar zone’s installed capacity and generation. Further, the State will also avoid procuring expensive fossil fuels to power conventional power plants. The solar zone will provide a huge impetus to solar energy generation by acting as a flagship demonstration facility to encourage project developers and investors thereby helping the country in achieving its target of 1,00,000 MW by 2022. These solar zones will also display areas of synergy with other renewable energy sources for hybridization, such as of wind and solar. Out of the total solar potential in the solar zone, 25% area will be set apart for deployment by manufacturers of ingots, wafers, solar cells and modules etc. to promote ‘Make in India’, 25% area for small and medium enterprises,

farmers and unemployed youth and 50% area for solar project developers. This however, is an indicative allocation and may be changed with approval of this Ministry.

Applicability All the States and Union Territories are eligible for benefits under the scheme.

Capacity Land with at least 10,000 hectares of government owned or / and privately owned wasteland, uncultivable land or fallow land in one or more than one patches and with daily average insolation cf over 4 kWh per meter square may be declared as Solar Zone.

Implementing agency

The Implementing Agency as identified above, shall undertake following activities:

The solar zones will be developed in collaboration with the State Governments & their agencies. The States applying under the scheme will have to designate an agency for the development of solar zone. The MNRE Nodal Agency would be Solar Energy Corporation of India (SECI) on behalf of Government of India (GOI) for handling this Scheme. SECI will also handle funds to be made available under the scheme on behalf of GOI. SECI will administer the scheme under the directions from MNRE. SECI will first evaluate the techno-economic feasibility report carried out by the State and recommend this Ministry for further approval for preparation of DPR.

Detailed Project Report

T •

•

• •

•

he Detailed Project Report (DPR) for each Solar Zone will be prepared by the State Government or the agency identified by the State Government. The DPR shall contain the following information: Identification of wasteland, uncultivable land or fallow land, Government owned or privately owned land in one or more than one patches having at least 10,000 hectares of area. Details of land i.e. whether the land is Government land, assigned land, unassigned land or private land etc. and their proposed cost of acquisition of land. Details regarding conversion of land utilization for setting up solar power projects. Statutory & non-Statutory clearances required for setting up solar power projects in the Solar Zone. To ensure that no disputed land is covered under the Solar Zone. To make solar resource assessment data available for the proposed solar zone and to ensure the average insolation is over 4 kWh/m2 /day.

September 2016

Identification of wasteland, uncultivable land or fallow land, Government owned for privately owned land in one or more than one patches having at least 10,000 hectares of area. Carry out techno-economic pre-feasibility survey and preparation feasibility report. Preparation of DPR. Setting up Nodal office with staff for the proposed solar zone. Setting up Solar Radiation Resource Assessment (SRRA) Station if necessary and its Operation & Maintenance. Other activities as envisaged under the Scheme. • • • • • •

•

• •

• • •

Study on availability of canals, ponds or ground water. Availability of approach roads. Rain fall study for the last 50 years. Topographical survey, contour survey of land and soil testing etc. Study on evacuation facilities already available. Study on transmission infrastructure required for evacuation of solar power from the proposed solar zone etc. Proposed location of several inter-connection points where the developers can connect solar project at their own level in such a manner so that no developer has to build a line for more than 25 km. Scope of setting up of solar equipment manufacturing facility within the solar zone. Requirement of necessary evaluation of environmental and social impacts of utility scale solar deployment as per law. Details about local employment generation. Details about solar power projects already installed or in pipeline. Any other relevant information under the Scheme.

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POLICY & REGULATIONS

MNRE support

he State Government will first nominate the implementing agency for techno-economic pre-feasibility survey, preparation of feasibility report and the Detailed Project Report (DPR). The implementing agency will identify a nodal officer to deal the subject. It will then send a proposal to MNRE for approval along with (or later) the name of the implementing agency for preparation of the techno-economic pre-feasibility survey, feasibility report and DPR. The implementing agency may be sanctioned a CFA of up to Rs. 10 Lakh (Rupees Ten Lakh only) for carrying out techno-economic pre-feasibility survey and preparation of feasibility

report. Based on the outcomes of the feasibility report, if the proposal is approved by this Ministry, then CFA of up to Rs. 50 Lakh will be provided (Rupees Fifty Lakh only) for preparing Detailed Rpoject Report (DPR) for the Solar Zone. Thereafter, Central Financial Assistance (CFA) will also be provided for setting up of one nodal office, SRRA Station in each Solar Zone. The State Government (where the Solar Zone is located) will also appoint up to five staffs in each Solar Zone to facilitate Solar Project Developers in setting up of solar power projects. The salary of the staffs (upto around Rs. 50,000/- per month) will be borne through Central Grants for five years. The grant will be managed and released by SECI on behalf of MNRE for which SECI will be given a fund handling fee of 1%.

Sl. No.

Based on above, the estimated cost for the proposed 10 Solar Zones has been worked as under:

Central Grant (Rs. In Crore)

Activity

Cost of techno-economic pre-feasibility survey and preparation of feasibility report for 10 Solar Zones (@ Rs. 10.00 Lakh per Solar Zone)

1.00

Cost of DPR preparation for 10 Solar Zones (@ Rs. 50.00 Lakh per Solar Zone)

5.00

Cost of 10 SRRA Stations (@ Rs. 30 lakh per station) in 10 Solar Zones including O&M for Five years

10 Nodal Offices for 10 Solar Zones (@ Rs. 1.00 Crore per solar zone)

Salary of Five staffs of each solar zone (@ Rs. 50,000/- per staff per month) for 5 years

Training, consultancy & other related Expenditure

Sub-total

1% fund handling fee for SECI on above amount

0.39 39.39 or 40.00 (approx.)

Total

Pattern of release of Central Grant Sl. No.

Release of the Central Financial Assistance (CFA) for approved projects will be made as per the following pattern:

Milestone

% of CFA to be disbursed

Initial release along with the sanction order for techno-economic prefeasibility survey and preparation of feasibility report.

50% of CFA for techno-economic pre-feasibility survey and preparation of feasibility report i.e. up to Rs. 5.00 Lakh

On submission of feasibility report and acceptance by this Ministry

Balance of actual cost for preparation of the feasibility report with an upper limit of 50% of CFA for DPR i.e. Rs. 5.00 Lakh

Release of CFA along with the sanction order for preparation of DPR

50% of CFA for DPR i.e. up to Rs. 25.00 Lakh

On submission of DPR and acceptance by this Ministry

Balance of actual cost for preparation of the DPR with an upper limit of 50% of CFA for DPR i.e. Rs. 25.00 Lakh

Land acquisition for setting up Nodal Office for Solar Zone

50% of CFA for setting up Nodal Office i.e. up to Rs. 50.000 Lakh and 100% of CFA for SRRA Station i.e. Rs. 30.00 Lakh

Completion of Nodal Office, setting up of SRRA Station and recruitment of 50% of CFA for setting up Nodal Office i.e. staffs for the Nodal Office. Rs. 50.00 Lakh

Release of salary of staffs in Nodal Office of Solar Zone on submission of documentary evidences of release of salary to the recruited staff.

Timelines The DPR is to be submitted within 6 months from the date of release of first installment of the Central Grant by this Ministry. Thereafter, Nodal Office and Solar Radiation Resource Assessment Station will be established by the implementing agency within next six months.

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Quarterly release of Rs. 50,000/- per staff for 5 staffs in each solar zone.

Power to remove difficulties If there is need for any amendment to this Scheme for better implementation or any relaxation is required in the norms for Solar Zones due to operational problems, MNRE will be competent to make such amendments with the approval of Secretary, MNRE.

Monitoring progress of Scheme MNRE will appoint a Nodal Officer in the Ministry to help, guide and closely monitor progress of the scheme to ensure that timeliness as envisaged for completion for development of the Solar Zones are adhered to.

September 2016

51Â

SOLAR PROJECTS

Part of Larger Vision of Sustainability and Environmental Benefits

Location: Bangalore, Karnataka Capacity: 500kWp Type of system: Mix of RCC and metal roofs Type of modules: Polycrystalline Type of inverters: String Annual generation: 7.5 lacs units annually Carbon dioxide abated: 708 ton kgsannually Date of commissioning: March 2016 52Â

September 2016

THE SOLAR PARTNERSHIP BIAL was actively looking to partner with a solar developer to meet its objective of building a sustainable airport. Around the same time, Solar Energy Corporation of India (SECI) empaneled CleanMax Solar as a channel partner, to help develop solar power plants for government installations. CleanMax has developed the 500 kWp plant, as a part of the commitment and arrangement with SECI.

Highlights of the overall journey of going green â&#x20AC;˘ Developing solar plant at a sensitive location

irport being a sensitive area (security wise and constant mass movement), required very strict regulations to be followed while working. It posed challenges for CleanMax Engineers in terms of limited access to buildings,upper cap on the number of people working on site, restricted movement of material within the premises etc. CleanMax overcame these challenges by highly efficient workers, who completed the construction within 2 months of signing the Power Purchase Agreement.

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SOLARINTERViEW PROJECTS

Taking a step forward as a part of PMO’s 100 GWp solar target by 2022, Kempegowda International Airport, Bengaluru (also known as Bengaluru International Airport Ltd - BIAL) became the first airport in Karnataka to go solar. ‘Sustainable progress’ is a thought that sets the direction for the airport. As a role model for sustainable progress, the journey has been marked by measurable achievements and inspiring stories. One such story includes BIAL adopting solar power. It marked a completely new journey for BIAL as it has gone green, without any capital expenditure, while saving electricity costs at the same time.

Metric Equivalent Unit CO2 emissions 708 ton offset Cars taken off 208 Nos the road Diesel use 18,75,000 litres avoided Average Indian 850 Nos homes powered

About Bangalore Airport

empegowda International Airport is an international airport serving Bangalore, the capital of the Indian state of Karnataka. Spread over 4,000 acres, it is located about 40 kilometres north of the city near the village ofDevanahalli. It is owned and operated by Bangalore International Airport Limited (BIAL), a public–private consortium. The airport opened in May 2008 as an alternative to increased congestion at HAL Airport, the original primary commercial airport serving the city. It is named after Kempe Gowda I, the founder of Bangalore.

• Maximise the potential of rooftop

he installation happened at 6 different buildings, a combination of RCC and metal roofs. CleanMax helped them convert their 6000 sq. m. idle rooftop to a money-saving piece of land by providing complete turnkey solutions.

• Going green with immediate reduction in electricity bills

nder our BOO (Build-Own-Operate) model, BIAL saw a reduction in their electricity bills right from the commissioning of the solar plant. BIAL is expected to save more than 20 lac rupees annually. That’s the cost it is “paying” (read: saving) for going green.

• Aesthetically appealing roof with low maintenance

angalore airport is known for its architectural design. The structure creates a grand, dynamic presence and solar power plants seamlessly blend in the grandeur. They add to the overall aesthetics of the airport and need very little maintenance.

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September 2016

QUARTER RESULTS

JA Solar Announces Q2 2016 Results & Achieves 50% YOY Growth in Shipments & Revenue JA Solar Holdings Co., Ltd. one of the world’s largest manufacturers of high-performance solar power products, today announced its unaudited financial results for its second quarter ended June 30, 2016.

Second Quarter 2016 Highlights »

Total shipments were 1,380.8 megawatts (“MW”), consisting of 1,229.3 MW of modules and cells to external customers, and 151.5 MW of modules to the Company’s own downstream projects. External shipments were up +55.5% y/y and up +18.4% sequentially

Shipments of modules and module tolling were 1,134.2 MW, an increase of +58.1% y/y and an increase of +23.4% sequentially

Shipments of cells and cell tolling were 95.1 MW, an increase of +29.6% y/y and a decrease of 20.0% sequentially

Net revenue was RMB 4.1 billion ($619.0 million), an increase of +51.9% y/y and an increase of +18.6% sequentially

Gross margin was 15.3%, a decrease of 110 basis points y/y and a decrease of 130 basis points sequentially

Operating profit was RMB 188.0 million ($28.3 million), compared to RMB 156.1 million ($23.5 million) in the second quarter of 2015, and RMB 223.3 million ($33.6 million) in the first quarter of 2016

Net income was RMB 164.1 million ($24.7 million), compared to RMB 136.0 million ($20.5 million) in the second quarter of 2015, and RMB 158.0 million ($23.8 million) in the first quarter of 2016

Earnings per diluted ADS were RMB 2.87 ($0.43), compared to RMB 2.26 ($0.34) in the second quarter of 2015, and RMB 2.74 ($0.41) in the first quarter of 2016

Cash and cash equivalents were RMB 2.0 billion ($303.0 million), a decrease of RMB 321.0 million ($48.3 million) during the quarter

Non-GAAP earnings1 per diluted ADS were RMB 2.04 ($0.31), compared to RMB 1.67 ($0.25) in the second quarter of 2015, and RMB 2.33 ($0.35) in the first quarter of 2016

September 2016

“Second quarter results were in line with our expectations, with shipments and revenue growing over 50% yearover-year. We are also encouraged by our downstream project development achievements as we successfully connected approximately 250 MW of solar projects to the grid in the quarter. As expected, China was our strongest market in the quarter, driven by accelerated activity ahead of subsidy reductions that occurred this summer. While regulatory change should slow the domestic Chinese market in the second half of the year, we believe our balanced global footprint and flexible business model will allow us to adjust to evolving market conditions. We are carefully controlling capital expenditures and staffing, and selling effort is focused on more robust markets outside of China. Our project business provides flexibility in our business model, since we can accelerate or slow down activity in order to balance demand for our modules. The JA team remains focused on executing our business strategy to provide our customers with high-quality products in 2016 and beyond.”

- Mr. Baofang Jin, Chairman and CEO of JA Solar

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QUARTER RESULTS

» All shipment and financial figures refer to the quarter ended June 30, 2016, unless otherwise specified. All “year over year” or “y/y” comparisons are against the quarter ended June 30, 2015. All “sequential” comparisons are against the quarter ended March 31, 2016. » Total shipments were 1,380.8 MW, largely in line with the low end of the previously announced guidance range of 1,400 to 1,500 MW. External shipments of 1,229.3 MW increased 55.5% year-over-year and increased 18.4% sequentially.

External shipments breakdown by product (MW) Modules and module tolling Cells and cell tolling Total

2015Q2 717.4 73.4 790.8

2016Q1 919.4 118.9 1,038.3

2016Q2 1,134.2 95.1 1,229.3

QoQ% 23.4% -20.0% 18.4%

YoY% 58.1% 29.6% 55.5%

External shipments breakdown by region (percentage) China APAC ex-China Europe Americas Others

2015Q2 45.3% 31.9% 14.8% 0.6% 7.4%

» Net revenue was RMB 4.1 billion ($619.0 million), an increase of 51.9% y/y and an increase of 18.6% sequentially. » Gross profit of RMB 628.3 million ($94.5 million) increased 41.4% y/y and increased 9.2% sequentially. Gross margin was 15.3%, which compares to 16.4% in the year-ago quarter, and 16.6% in the first quarter of 2016. » Operating profit was RMB 188.0 million ($28.3 million), compared to RMB 156.1 million ($23.5 million) in the year-ago quarter, and RMB 223.3 million ($33.6 million) in the first quarter of 2016. Operating margin was 4.6%, compared with 5.8% in the prior year period and 6.4% in the previous quarter. » Interest expense was RMB 68.8 million ($10.4 million), compared to RMB 58.6 million ($8.8 million) in the year-ago quarter, and RMB 67.3 million ($10.1 million) in the first quarter of 2016.

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2016Q1 59.6% 26.7% 5.6% 4.5% 3.6%

2016Q2 63.9% 12.0% 3.7% 9.3% 11.1%

QoQ(pp) 4.3 pp -14.7 pp -1.9 pp 4.8 pp 7.5 pp

YoY(pp) 18.6 pp -19.9 pp -11.1 pp 8.7 pp 3.7 pp

The change in fair value of warrant derivatives was gain of RMB 47.4 million ($7.1 million), compared with RMB 35.1 million ($5.3 million) in the year-ago quarter, and positive RMB 23.4 million ($3.5 million) in the first quarter of 2016. The warrants were issued on August 16, 2013 in conjunction with the Company’s $96 million registered direct offering, and expired on August 16, 2016. The non-cash gain was mainly due to a decline in the time value of the warrants as they approached expiry. In addition, the value of the warrants was impacted by the decline in the price of the company’s ADS during the quarter.

LIQUIDITY As of June 30, 2016, the Company had cash and cash equivalents of RMB 2.0 billion ($303.0 million), and total working capital of RMB 1.1 billion ($162.2 million). Total short-term borrowings were RMB 2.8 billion ($426.6 million). Total long-term borrowings were RMB 3.3 billion ($489.3 million), of which RMB 630.3 million ($94.8 million) were due in one year.

Business Outlook

or the third quarter of 2016, the Company expects total cell and module shipments to be in the range of 1,200 to 1,300 MW. For the full year, the Company reiterates its prior shipment guidance of 5.2 to 5.5 GW, including 250 to 300 MW of module shipments to the Company’s downstream projects. Revenues will not be recognized for the modules shipped to the Company’s downstream projects as required by U.S. GAAP.

Earnings per diluted ADS were RMB 2.87 ($0.43), compared to earnings per diluted ADS of RMB 2.26 ($0.34) in the year-ago quarter, and earnings per diluted ADS of RMB 2.74 ($0.41) in the first quarter of 2016.

September 2016

INTERViEW

Interview with

Wang Jin EQ: Kindly enlighten our readers on the performance of your Inverters in India in various geographic locations, customer feedback. WJ : TBEA inverter has around 1GW applications in India. The earliest grid-connected inverter has 5 year’s operating experience. Right now, we have our own colleagues working in 4 cities and after-sales service engineers stayed near the project site, stand by for customer requirement.

How much Inverters have you supplied to India till now, what is the target/ expectation in 2016-17

WJ: Currently, TBEA has supplied more than 1GW in Indian inverter market. Our target: 2GW for 2016, 5GW for 2017.

The recent aggressive bidding by various developers keeping Solar Tariffs in the price range of Rs.4.34 – Rs.5 per kWh in various Solar Tenders… Whats your view on the viability, Costs & timeline pressures, Resource Challenges (Materials, ManPower, Execution, Grid Connection, Land Possession) etc…

WJ: At present, the PV cost is less than before. The main target of all parts, not only the supplier, but also the system design, is reducing the cost. And it is also the trend in the future. In the meantime, cost reduce does not mean lower quality or efficiency, but the technology of inverter will be upgraded and optimized.

September 2016

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INTERViEW

What is the size of your company in terms of manufacturing capacities, growth chart, future expansion plans, revenues, shipments, ASP’s, financial figures,

WJ: Our annual manufacturing capacity is more than 10 GW now. The estimated sales value of TBEA inverter is 6 GW in 2016.

5 DIRECTOR- PRODUCT & TECHNOLOGY DEPARTMENT, TBEA

Please describe in brief about your company, directors, promoters, investors, its vision & mission

WJ: TBEA Xi’an Electric Technology Co., Ltd., located in Xi’an HI-TECH district, is a branch of TBEA. As a national high and new tech enterprise, it is specialized in the development of solar photovoltaic grid-connected control equipment and new energy charging and transmission devices. With the R & D and manufacturing experience of electrical devices in the past 70 years inherited from TBEA, the company also owns a professional R & D team which is mainly formed by PhDs and masters. Firmly focusing on the development of photovoltaic grid-connected control equipment, the company works under a concept of ecofriendliness, reliability and efficiency. And now, in the cooperation with Hami, the company has established an R & D Center and a production base for G W products in Xi’an with an annual output of more than 10 GW. Through consistent effort, the company now has accomplished the development of the full range of the 3kW-2000kW gridconnected inverter, and the products have passed the authoritative certification and testing of CQC new energy standard, TUV, VDE, CE, G95, BDEW, SAA, UL, and ZVRT of national grid. In the future, the company will uphold the development concept of innovation and diversification, and will insist the development mode of science innovation. Aiming to provide green energy resource of high quality and high efficiency to the society and with the goal of becoming the world-class electronic and photovoltaic gridconnected control equipment supplier, the company will make continuous effort to improve itself and to reach its goal.

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What are your plans for India, your view on the GOI target of 100GW Solar Power by 2022

WJ: We will finish the responsible sales and technical colleague in main cities. And then, arrange the workshop in cities to bring our latest technology and R&D result for the customer. India market is one of the emerging and hopeful market, and also the key market for TBEA. Within the support of the local government, 100GW will be reached sooner than 2022.

What are your plans for Manufacturing set up in India, the opportunities and challenges in manufacturing in India

WJ: Local manufacturing is under feasibility research process and this is also our near future target. Local manufacturing can help us bring better and sooner support to the customer. And also can help local job market, enhance TBEA international brand.

Briefly describe the various technologies and its suitable applications such as Central Inverter, String, Micro Inverter, 1500V, Outdoor, Container solutions etc..

WJ: 1) Central inverter: 1. Conventional central inverter: flat terrain (PV modules: consistent dip angle, consistent orientation, non-sheltered), slowly varying terrain (PV modules: different dip angle, different orientation, non-sheltered) 2. Modular and parallel central inverter: slowly varying terrain (PV modules: different dip angle, different orientation, non-sheltered), abrupt terrain (PV modules: different dip angle, different orientation, sheltered) 2) String inverter: Slowly varying terrain (PV modules: different dip angle, different orientation, non-sheltered), abrupt terrain (PV modules: different dip angle, different orientation, sheltered) 3) Micro inverter: Household solution 4) 1500V : New DC side degree, not only for the central inverter, but also the string inverter. That means 1500V inverters can be designed for different terrain.

September 2016

INTERViEW

EQ: Kindly highlight your product, technology & company USP’s, distinctive advantages etc… WJ : TBEA Inverter: Advantage: 1. High upload capacity which can help reduce the initial cost of PV station. 2. High power density, and the power generation of PV system can be promoted. 3. Modularized design and front – door maintenance design adopted, maintenance cost of the power plant effectively reduced. 4. Wide temperature and humidity working range, suitable for a variety of harsh environment 5. Good compatibility to a variety of grid standards.

How much is your R&D budget as % of your sales / profits

WJ: More than 50 million RMB are used in the technological innovation and R&D innovation each year.

Technology road map in terms of 1500V , micro inverters, upcoming game changes technologies

WJ: The trend of 1500V inverter is large capacity of single inverter (like 1MW), high conversion efficiency (>99%), wide MPPT working range.

Do you also bring financing solutions for your customers

WJ: It will depend on the project. We are open to talk this.

What are the trends in new manufacturing technology equipment, materials, processes, innovations etc…

WJ: In order to acquire the high performance and low cost of inverter, the inner structure and thermal design of inverter will continue to be optimized. Additionally, the principal material of inverter will also continue to be innovated.

September 2016

What are the top 5 markets for your company in the past, present and future

WJ: China, India, USA, South-East Asia, South Asia

Kindly comment of Energy Storage as a game changer, its technology, cost trends etc…

WJ: The technology of energy storage is still developing, and the cost will still be considerable high within a period of time.

What’s your commitment towards the solar sector in India

WJ: We would like to offer the high quality, high efficiency and eco-friendly solar inverter to India market.

What will be the cost, technology trends in solar inverters

WJ saidCost: The cost of inverter will continue to be decreased. Technology trend: large capacity of single inverter, high conversion efficiency, high power density, high voltage.

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REGULATORY AFFAIRS

UTTARAKHAND ELECTRICITY REGULATORY COMMISSION In the matter ofUttarakhand Renewable Energy Development Agency

his Order relates to the Petitions filed by Uttarakhand Power Corporation Limited (hereinafter referred to as “UPCL” or “Petitioner” or “licensee”) seeking carry forward of Renewable Purchase Obligation for FY 2014-15 amounting to 526.8 MU (Non-Solar) and 2.5 MU (Solar) and also carry forward of Renewable Purchase Obligation for FY 2015-16 amounting to 699.6 MU (Non-Solar) and 8.1 MU (Solar) as per the provisions of UERC (Compliance of Renewable Purchase Obligation) Regulations, (hereinafter referred to as “RPO Regulations, 2010”).

The Petitioner had in its Petition dated 21.09.2015 submitted that the Commission vide its Order dated 12.09.2014 allowed carrying forward of unmet RPO of FY 2012-13 & FY 2013-14 to be complied along with the RPO for FY 2014-15. Further, it was submitted that the Petitioner has fulfilled its RPO up to 2013-14. The status of unmet RPO of FY 201415 as submitted for carry forward is reproduced below:

The Petitioner had submitted that the financial burden for purchasing the RECs equivalent to unmet RPOs of 2014-15 was around Rs. 79.89 Crore and UPCL could not purchase the RE Certificates due to financial constraints. UPCL vide its Petition dated 21.09.2015 and 27.04.2016 requested the Commission to allow the carrying forward of its unmet renewable purchase obligation for the two financial years, i.e. 2014-2015 and 2015- 2016.

1. Background

he Commission had vide its letter dated 01.05.2015 asked UPCL for submission of a comprehensive report on status of RPO compliances up to FY 2014-15 along with action plan to fulfil shortfall in RPO. UPCL was required to submit its reply by 01.08.2015. A meeting was then held with UPCL in the matter of shortfall in RPO. UPCL informed that a petition for carrying forward of RPO would be filed by it. UPCL vide its reply dated 21.09.2015 submitted that it has achieved RPO of FY 2012-13 & FY 2013-14 but it could not manage to achieve the RPO of FY 2014-15.

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Subsequently, in its Petition dated 27.04.2016 for carry forward of RPO for 2015-16, UPCL submitted that RPO for 2014-15 has already been met. The Petitioner also submitted the status of unmet Renewable Purchase Obligation for FY 2015-16 as under:-

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REGULATORY AFFAIRS

Further, the Petitioner also submitted the projected Renewable Purchase Obligation for FY 2016-17 as under:-

It was also submitted that the Petitioner issued the LoI to M/s Tata Power Trading Company Ltd. for purchasing the 24 MW per month non-solar energy from 21-Septmeber 2016 to 31-March-2017, from which approximately 150 MU will be received by UPCL. After including 150 MU, UPCL will have a deficit of around 900 MU (approx.) at the end of FY 2016-17. Further, it was also submitted that as per the Tariff Order for FY 2014-15 as well as for FY 201516, the Commission had approved the power purchase cost from Renewable Energy as Rs. 4.75/kWh.

UPCL again submitted that the financial burden on the Petitioner for purchasing the RECs equivalent to unmet RPOs of 2015-16 was around Rs. 104 Crore and it could not purchase the RE Certificates due to financial constraints. It was submitted that during FY 2015-16, UPCL had already started efforts for achieving the unmet Non-Solar RPO for the remaining period of FY 2015-16 and also the Non-Solar RPO target for FY 2016-17. A tender has been floated on dated 1409-2015 for purchasing 148 MW of Non-Solar power. The rates quoted by the firms are as follows:

Subsequently, UPCL had issued the LoI to M/s Tata Power Trading Company Ltd. for purchasing the 24 MW non-solar power from 01-October 2015 to 20-Sep-2016, from which approximately 200 MU will be received by UPCL. The Petitioner submitted that it is making continuous efforts to achieve the Renewable Purchase Obligation and in pursuance of the same UPCL has again floated a tender on dated 26-022016 for 120 MW (1051 MU approx.) short term purchase of Non-Solar energy. The rates quoted by the firms are as follows:

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The Petitioner requested the Commission to consider all the efforts being made by it for compliance of RPO. The Petitioner is purchasing deficit of RE power from RE sources to fulfil its RPO. It was also submitted that RE power is not readily available in open market and more so the availability at the rate of Rs. 4.75/kWh as approved by the Commission is even lower and hence, there was a genuine difficulty in complying with its Renewable Purchase Obligation. UREDA vide its letter dated 30.10.2015 submitted that it is in the process to increase the installed capacity of non-solar by installation of cogeneration and MSW power projects in the coming years by which UPCL will fulfil their Nonsolar RPO compliance under the Regulations. In response to UPCLâ&#x20AC;&#x2122;s Petition dated 27.04.2016, UREDA vide its letter dated 20.05.2016 submitted that being a Nodal Agency under Uttarakhand Solar Power Policy, 2013 it has done all its efforts in development of Solar PV Power Projects in the state of Uttarakhand. During FY 2015-16, 27 Solar PV power projects (SPP) of cumulative capacity 34.463 MW have been installed in the State. The installation of 34.463 MW of SPP was enough to meet the Solar RPO of 12.32 MUs as stipulated by the Commission for FY 2015-16. However, there was a cumulative shortfall of 8.15 MUs in FY 2015-16 which may be due to regular shutdown of substations during the day time. After hearing all the stakeholders the Commission admitted the Petitions filed by UPCL. Since these two Petitions are similar in nature, the Commission decided to club the same.

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REGULATORY AFFAIRS

COMISSIONS VIEW

ection 86 (1)(e) of the Electricity Act, 2003 provides the following as one of the function of the State Electricity Regulatory Commission:

“Promote co-generation and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licence;” Accordingly, the Commission in its RE Regulations, 2013 had specified the Renewable Purchase Obligation (RPO) to be met by the Obligated Entities. However, in case the obligated entity or the distribution licensee (UPCL in this case) fails to meet its RPO obligation through procurement of generation from renewable energy sources for meeting its electricity requirement then the Regulations provides for supplementing the RPO through purchase of RECs, which is a valid instrument for discharge of the mandatory obligation of the obligated entity. The relevant provision in this regard specified under Regulation 4(1) of RPO Regulations, 2010 is reproduced below:

“Subject to the terms and conditions contained in these regulations the Certificates issued under the CERC (Terms and Conditions for recognition and issue of Renewable Energy Certificate for Renewable Energy Generation) Regulations, 2010, shall be the valid instruments for the discharge of the mandatory obligations set out in these regulations for the obligated entities to purchase electricity from renewable energy sources. Provided that in the event of the obligated entity fulfilling the renewable purchase obligation by purchase of certificates, the obligation to purchase electricity from generation based on solar as renewable energy source can be fulfilled by purchase of solar certificates only, and the obligation to purchase electricity from generation based on renewable energy other than solar can be fulfilled by purchase of non- solar certificates”.

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hus, from the above reading of the Regulations, it is amply clear that UPCL has to purchase a minimum percentage (RPO) of its total electricity requirement (in kWh) from renewable energy sources during each financial year as specified by the Commission and the REC shall be the valid instruments for the discharge of the mandatory obligations set out in the Regulations for the obligated entities to purchase electricity from renewable energy sources in case of shortfall in meeting the PRO requirement. Further, it is also to be noted that on the request of the licensee, the Commission had reviewed the RPO targets specified in RE Regulations, 2013. Accordingly, the Commission vide amendment dated 09.09.2015 revised the RPO targets on the grounds of less than envisaged development of renewable energy resources in the State and the same has already been deliberated by the Commission in the Statement of Reasons for the UERC (RE) (Fourth Amendment) Regulations, 2015. The relevant extract of Para 5.1 of the SOR is reproduced hereunder: “However, as far as UPCL’s submissions to revise the RPO of non-solar technology is concerned, the Commission observes that the same has basis as the development of non-solar power generation in the State has not taken place as was envisaged as a result of which UPCL is not able to meet its RPO requirement for non-solar sources from generators within the State and there is a substantial gap in the unmet RPO. Moreover, in the near future no substantial development in the non-solar sources is foreseen as a result of which the gap in unmet RPO of non-solar sources is bound to increase with the increase in RPO and also the increase in demand of UPCL. Commission therefore decides to change the RPO of non-solar sources for FY 2016-17 and FY 2017-18 and keep it at the same level as that specified for FY 2015-16, i.e. at 8%.”

PCL submitted that the development of non-solar power generation in the State has not taken place as was envisaged as a result of which UPCL is not able to meet its RPO requirement for non-solar sources from generators within the State and there is a substantial gap in the unmet RPO and because of the weak financial position of UPCL, it could not purchase RECs to fulfil the obligation. It has already been discussed in detail by the Commission in its Order dated December 19, 2012 that the financial condition of the company is not an acceptable reason to exempt it from fulfilling the duties and obligations cast upon it under the Act and the Regulations. The Commission, in its Order dated 19.12.2012, had held that any financial implication on purchase of RE certificate and RE energy, if prudently incurred, would be allowed as pass through in the ARR, despite this UPCL did not comply with the Regulations/ Orders of the Commission. In this regard, Regulation 7(1) of RPO Regulations, 2010 specifies as under: 7.1 If the Obligated Entity does not fulfil its commitment towards Renewable Purchase Obligation during any year as provided under UERC (Tariff and Other Terms of Supply of Electricity from Co-generation and Renewable Energy Sources) Regulations 2010, and also does not purchase adequate certificate for meeting the shortfalls, the Commission may direct the Obligated Entity to deposit into a separate RPO Fund such amount as the Commission may determine on the basis of the shortfall in units of RPO, Preferential Tariffs applicable in the State and forbearance price as decided by Central Commission: Provided that the responsibility of intimating such shortfall within one month of close of that year shall be that of State Agency Provided further that the fund so created shall be utilised only after approval of the Commission for purchase of certificates or as may be directed by the Commission: Provided further that the Commission may empower an officer of the State Agency to procure from the Power Exchange the required number of certificates to the extent of the shortfall in the fulfilment of the obligations, out of the amount in the fund: Provided, also that the Obligated Entities shall be in breach of provisions of these regulations if it fails to deposit the amount directed by the Commission within 15 days of the communication of the direction.

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REGULATORY AFFAIRS

Further, Regulation 7(2) of the RPO Regulations, 2010 specifies as under :“Where any obligated entity fails to comply with the obligation to purchase the required percentage of power from renewable energy sources or the renewable energy certificates, it shall also be liable for penalty as may be decided by the Commission under section 142 of the Act notwithstanding its liability for any other action under prevailing laws:...”

he RPO Regulations, 2010 stipulates that the obligated entity is required to deposit into a separate RPO Fund such amount as the Commission may determine on the basis of the shortfall in units of RPO based on either “Preferential Tariffs applicable in the State” or “forbearance price” as decided by Central Commission. The financial implication on preferential tariffs on UPCL would be Rs. 338 Crore and on forbearance price the implication would be Rs. 235 Crore. However, the price of non-solar REC’s are trading in the exchange at Rs. 1500/MWh for the period upto May, 2016. Hence, it is again noted that it would be unfair on UPCL to ask it to deposit the aforesaid amount immediately into the Fund so as to enable State Agency to procure RECs on licensee’s behalf as provided in the Regulation considering the fact that for the past many months price of these certificates is equivalent to the floor price which translates into the cost impact of around Rs. 108 Crore to UPCL. Further, the intent of the Regulation is to enable the obligated entity to ensure that its RPO targets are met either by way of purchase of energy from RE sources or through purchase of REC’s by the obligated entity itself or by any officer of the State Agency so authorised by the Commission. With regard to delay in achievement of RPO compliances by the Licensee for FY 2014-15, the Commission is of the view that since the solar and non solar RPO have already been complied with by the Petitioner, the Commission approves the delayed fulfilment of RPO for FY 2014-15 by the distribution licensee (UPCL). While appreciating the fact that the adequate RE based projects have not been added during the past years in the State of Uttarakhand as was envisaged at the time of fixing RPO targets for obligated entities, the Commission also cannot ignore representations received from RE based project developers contending loss of generation and revenue from their projects on account of inadequate evacuation system and frequent breakdown of UPCL’s distribution system in separate proceedings. Few generators have also claimed deemed generation on account of frequent trippings and other evacuation bottlenecks in the system of UPCL. For instance as contended by one

of the generator (M/s UBHP), Sarju-III SHP is generating at about half of the installed capacity and Sarju-II SHP’s commissioning was delayed due to inefficiency of UPCL. UREDA, the State Agency has also submitted that shortfall in RPO compliances is also on account of loss of generation from existing RE based/small hydro projects due to enormous breakdowns in evacuation lines/ sub-stations of the Petitioner. Payment of deemed generation under the RE Regulations is somehow ensuring the recovery of revenue to the generators for the energy which could not be generated due to licensee’s fault. Hence, in effect UPCL does not only compensate the generators by way of deemed generation charges (which is not allowed to UPCL as pass through) but also has to resort to purchasing power from other sources to meet the demand. Thus, for a unit of electricity which is lost/could not be generated due to UPCL’s fault, UPCL has to incur additional payment for procuring the electricity besides compensating the generator. Therefore, the licensee is required to work proactively for planning and strengthening of its evacuation system in advance not only to achieve RPO compliances but to obviate demand supply gap and contribute towards better utilisation of the available natural resources in the State. UPCL cannot be allowed to continue carrying forward of all the unmet non-solar RPO since, as discussed above, it has failed to tap the available power due to its own dilapidated distribution system for evacuation of power. Accordingly, the licensee is directed to procure non-solar RECs equivalent to 7.50% of unmet non-solar RPO upto FY 2015-16 latest by 31.07.2016 and submit compliance of the same immediately. Further, with regard to the balance unmet non-solar and solar RPO upto FY 2015-16, the Commission allows UPCL to fulfil the same alongwith its obligation for FY 2016-17. The Commission directs UPCL to meet the overall RPO as arrived above either through purchase of energy from RE sources or through purchase of RECs equivalent by March, 2017, noncompliance of which may attract action against the officers responsible for compliances of regulations under Section 142 of the Electricity Act, 2003. Further, UPCL is also directed to comply with the Regulations, Commission’s orders and directions in letter and spirit.

SUMMARY UERC Maintains its tough stand for non compliance of RPO. In a recent order the Uttarakhand Electricity Regulatory Commission has directed UPCL to procure non-solar RECs equivalent to 7.50% of unmet non-solar RPO up to FY 2015-16 latest by 31st July’16. UPCL had submitted the following unmet RPO data to the commission:

The Commission has directed UPCL to meet the overall RPO FOR 2016-17 which is 8% for non solar and 1.5% for solar, either through purchase of energy from RE sources or through purchase of RECs equivalent by March, 2017. The Commission has denied UPCL to continue carrying forward of all the unmet non-solar RPO since, it has failed to tap the available power due to its own dilapidated distribution system for evacuation of power.

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Also as mentioned in the order, Non-compliance of RPO will attract action against the officers responsible for compliances of regulations. Earlier in year 2014, UERC had considered UPCL’s non-compliance as willful contravention of the direction of the Commission and had imposed penalty of Rs.20, 000/- on the Managing Director of UPCL. Thus this seems to be a strict order but in a positive direction which will help in streamlining the REC market overall.

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POLICY & REGULATIONS

MNRE: Policy for Repowering of the Wind Power Projects Ministry of New & Renewable Energy (Wind Energy Division)

Policy for Repowering of the Wind Power Projects

Support To Be Provided By States

Ministry of New & Renewable Energy hereby releases the Policy for Repowering of the Wind Power Projects for information of the stakeholders and general public.

The repowering projects would be implemented through the respective State Nodal Agency/Organisation involved in promotion of wind energy in the State. In case augmentation of transmission system from pooling station onwards is required the same will be carried out by the respective State Transmission Utility. In case of power being procured by State Discoms through PPA, the power generated corresponding to average of last three yearsâ&#x20AC;&#x2122; generation prior to repowering would continue to be procured on the terms of PPA in-force and remaining additional generation would either be purchased by Discoms at Feed-in-Tariff applicable in the State at the time of commissioning of the repowering project and/or allowed for third party sale. State will facilitate acquiring additional footprint required for higher capacity turbines. For placing of wind turbines 7D x 5D criteria would be relaxed for micro siting. A wind farm/turbine undergoing repowering would be exempted from not honouring the PPA for the non-availability of generation from wind farm/ turbine during the period of execution of repowering. Similarly, in case of repowering by captive user they will be allowed to purchase power from grid during the period of execution of repowering, on payment of charges as determined by the regulator.

Introduction Major share of renewable power capacity in India is from wind energy. India started harnessing of the wind power prior to 1990. The present installed capacity is over 27 GW which is fourth largest in the world after China, USA and Germany. Most of the wind-turbines installed up to the year 2000 are of capacity below 500 kW and are at sites having high wind energy potential. It is estimated that over 3000 MW capacity installation are from wind turbines of around 500 kW or below. In order to optimally utilise the wind energy resources repowering is required.

Objective Objective of the Repowering Policy is to promote optimum utilisation of wind energy resources by creating facilitative framework for repowering.

Eligibility Initially wind turbine generators of capacity 1 MW and below would be eligible for repowering under the policy. Based on the experience, Ministry of New & Renewable Energy (MNRE) can extend the repowering policy to other projects also.

Incentive For repowering projects Indian Renewable Energy Development Agency (IREDA) will provide an additional interest rate rebate of 0.25% over and above the interest rate rebates available to the new wind projects being financed by IREDA. All fiscal and financial benefits available to the new wind projects will also be available to the repowering project as per applicable conditions.

Financial Outlay No additional financial liability to be met by the MNRE for implementing the Repowering Policy. The repowering projects may avail Accelerated Depreciation benefit or GBI as per the conditions applicable to new wind power projects.

Review

Implementation Arrangements The repowering projects would be implemented through the respective State Nodal Agency/Organisation involved in promotion of wind energy in the State.

The Repowering Policy would be reviewed by the Government as and when required.

Scheme Sanction for 1,000 MW CTU Connected Wind Power Projects in the Country

overnment has sanctioned a scheme for setting up of 1,000 MW Central Transmission Utility (CTU) connected Wind Power Projects in the country. This was stated by Shri Piyush Goyal Minister of State (IC) for Power, Coal, New & Renewable Energy and Mines in

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a written reply to a question in the Rajya Sabha today The Minister further said that this Scheme will be implemented by Solar Energy Corporation of India (SECI) and the wind power projects will be selected through transparent e-bidding process.

Shri Piyush Goyal, Minister, MNRE EQ

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RESEARCH & ANALYSIS SOLAR POWER GENERATION SECTOR:

Satisfactory Operating Performance; Reducing Equipment Costs Provides Respite For Competitively Bid Projects, Counterparty Credit Risk Remains Crucial

Synopsis »»

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After witnessing record capacity addition of around 3 GW in FY16 (refers to the period April 1 to March 31), 1 GW in Q1 FY17 and bids of around 6 GW awarded over the last 6 months or so, the solar sector is on a strong growth path. According to various estimates, India is set to become the 4th largest solar market globally in 2016 behind only to China, USA and Japan, primarily on account of Government of India (GOI’s) thrust on significantly enhancing the installed solar capacity to 100 GW by 2022. This has attracted serious interest from various players, domestic as well as overseas. The sector is witnessing increased

September 2016

participation from large overseas investors and developers, such as ADIA, CLP, EDF, ENEL, Engie, Fortum, First Solar, Goldman Sachs, etc. Furthermore, major Indian business houses have also laid down ambitious plans for solar capacity addition. Also, with the wind sector facing certain head winds in the recent times primarily due to diminishing additional benefits such as reduced Accelerated Depreciation and expiry of Generation Based Inventive (GBI) after FY17 and preferential feed-in-tariffs paving the way for competitive bidding, some of the prominent wind IPPs have also made foray into the solar power sector. The recent M&A

activity, viz, Tata Power Renewable acquiring 1.1 GW of capacity (including 994 MW solar capacity) from Welspun Group, as well as CLP India’s acquisition of 49% stake in Suzlon’s 100-MW SPV setting up a project in Telangana is reflective of the growing confidence of bigger players in the sector. »»

In line with the ambitious plan to scale up the solar capacity to 100 GW (including 40 GW solar rooftop capacity) by 2022, the GoI has also increased the solar Renewable Purchase Obligation (RPO) trajectory upwards from 3% to 8% by FY22. Stricter enforcement by states for RPO compliance by the Discoms is crucial for the sector.

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RESEARCH & ANALYSIS Furthermore, built up of evacuation infrastructure and timeliness in land acquisition would have important bearing on the capacity addition. CARE expects capacity addition of around 5.2 GW in FY17 and around 8 GW in FY18. »»

The solar PV project costs have witnessed a sharp decline over the years which has led to shift from preferential feed-in-tariffs to competitive bidding in the sector. Apart from decline in solar PV project costs, entry of various players has led to significant increase in competition which has led to significant decline in solar tariffs as visible from the trends in the completed bids over the last 9-12 months. The bids for NTPC/ NVVN and SECI projects (including in solar parks) have been more aggressive as compared with state policy projects. However, aggressive bidding in few projects has Solar Energy Generation Sector – Trends & Outlook raised viability concerns. The impact on returns based on various project variables has been highlighted in the subsequent sections. Weighted average tariff for the bids which came up during FY16 stood at Rs.5.26/unit (excluding DCR projects, and including VGF bids), which may decline further to around Rs.4.5-4.8/unit in FY17, with increased competitive intensity and decline in costs. During January till

July 2016, the Chinese crystalline module prices have witnessed a decline of around 9%, and with the slowdown in Chinese demand and oversupply situation in the near term, the module prices could soften further, which is expected to result in reduced cost for the developers who are tying up the supplies in the near term. »»

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The ability to manage cost efficiently, secure longer tenure and cheaper debt are the key factors which will have bearing on the bids, returns and viability of the projects. The larger players with strong financial risk profiles could bid more aggressively for projects with a strong counterparty credit profile, higher irradiation zones and also for higher capacities to have economies of scale and resultant lower cost. Since significant amount of capacity has been bid out/will be bid out under various state schemes, the counterparty credit risks would come more into play given the weak financial risk profiles of number of Discoms. Therefore, structural reforms for the discoms including improvement in operating efficiencies, impact of UDAY scheme on the various Discom’s financial health are crucial for the sector. Also, standardization of PPAs and addressing of key issues, such as cap on maximum power

purchases, termination conditions and payments, deemed generation, mitigation of risks pertaining to delayed payments need to be dealt with appropriately for making the projects tight on bankability perspective and achieving the growth targets for the long-term. »»

The operating performance of the CARE-rated solar SPVs has been fairly comfortable with Capacity Utilization Factor (CUF) achieved broadly within the expected levels across various states. The payment pattern from various utilities observed for most of the CARErated SPVs has also been largely satisfactory so far and a significant number of SPVs have contracted with relatively strong counterparties such as GUVNL and NVVN.

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CARE has rated 61 solar SPVs (excluding those having unconditional and irrevocable corporate guarantees for the loan tenure from sponsors), out of which 55 SPVs are in the investment grade band. This note also delineates the rating dispersion of the CARE-rated SPVs as well as key credit risk assessment factors while rating these solar projects. CARE expects the credit profile of the rated-SPVs to be stable, given the long-term revenue visibility and demonstrated satisfactory operating performance track record.

STRONG GROWTH OUTLOOK:

Capacity addition of around 5.2 GW expected in FY17

ut of total installed renewable energy capacity of 42.75 GW as on March 31, 2016, the share of solar energy increased to 15.82%, as against 13.8% last year. As per the National Solar Mission Scheme, cumulative solar installed capacity was projected to reach 20 GW by 2022; however, the same has been significantly revised to 100 GW (including 40 GW rooftop projects) by 2022 by the GoI. Various state governments such as Andhra Pradesh, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh, Orissa, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh, etc, have come out with state policies for awarding solar power projects.Also, government entities like NTPC, SECI,etc,have come out with tenders of large capacities in GW size, including those in solar parks. The table below gives a snapshot of various large projects which have come up for bidding since January 2015 till July 14, 2016:

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RESEARCH & ANALYSIS

Source: Respective SERCs, SECI, MNRE, CARE Ratings

CAT II under Karnataka state bid refers to category reserved for Karnataka-based solar module manufacturers CAT I and CAT II under Jharkhand state bid refers to two categories on the basis of solar capacities, viz, below 25 MW (CAT I) and above 25 MW (CAT II) CAT I and CAT II under Telangana NTPC bid refers to two categories, viz, Open (CAT I) and DCR (CAT II)

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RESEARCH & ANALYSIS

As can be seen from Table 1 above, since January 2015, there has been award of more than 10-GW capacity, with bids under various state power policies constituting 53% while remaining 47% were under JNNSM scheme (NTPC 25% and SECI 22%). However, during CY2016 (till July 14, 2016), 65% of the bids were for JNNSM schemes projects (NTPC 27% and SECI 39%), while remaining 35% were under various state solar schemes.

* Ghani Solar Park, Kurnool District in the state of Andhra Pradesh being developed by AP Solar Power Corporation Pvt Ltd (JV Company of SECI, APGENCO and NREDCAP) ^ Bhadla Solar Park in the state of Rajasthan being developed by Rajasthan Solar Park Development Company Ltd, a subsidiary of Rajasthan Renewable Energy Corporation Ltd. (RRECL) & Respective Solar Park in Jalaun, Allahabad, Mirzapur and Kanpur Dehat district of Uttar Pradesh being developed by Lucknow Solar Power Development Corporation Limited (JV Company of SECI and UPNEDA) @ Pavagada Solar Park, Tumkur district in the state of Karnataka being developed by Karnataka Solar Power Development Corporation Pvt Ltd (JV Company of SECI and KREDAL) # Ananthapuramu Solar Park, Ananthapram district in the state of Andhra Pradesh being developed by AP Solar Power Corporation Pvt Ltd (JV Company of SECI, APGENCO and NREDCAP) $ Charanka Solar Park, near Charanka village, Patan district in the state of Gujarat

Recently, the JNNSM bids in the state of Gujarat saw a muted response with total bids received for 160 MW of projects as against tendered capacity of 250 MW. The reason for such a response was due to relatively higher solar park charges (Charanka Solar Park) of Rs.0.96 lakh/MW than seen in other states like Rajasthan and AP.

Typical average time taken from bid award till commissioning of the capacity is around 18 months; however, there have been few cases wherein there were delays in signing Letter of Intent and PPAs as well as land acquisition, which could result in shift of capacity addition by another quarter or so. Most of the above capacities are expected to get commissioned by mid of FY18. During FY17, till June 30, 2016, there has been capacity addition of 1.03 GW. CARE expects capacity addition of around5.2 GW in FY17.

SHARP DECLINE IN SOLAR PROJECT COSTS The capital cost for setting up solar PV project has been coming down over the years. CERCâ&#x20AC;&#x2122;s benchmark project solar PV cost has come down from Rs.6.1 crore/MW for FY16 to Rs.5.3 crore/MW for FY17, with cost of modules declining marginally while civil and other costs have witnessed higher fall.

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Over the years, as visible from Table 2, apart from module costs, cost of balance of systems (BoS) and other ancillary costs have witnessed a sharp decline as well.

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RESEARCH & ANALYSIS

Module cost continues to form significant portion of the total cost of a solar PV project. The average crystalline module (China) spot rates are hovering around 48 USD cents/watt (source:PVInsights), and players with larger orders have been able to source at around 42-45 USD cents/watt based on negotiations with suppliers. Notably, the module prices after remaining stable over the last 6 months, have started to witness softening over the last one month or so, primarily on account of softening of demand resulting in oversupply situation in China as well as depreciation of the Chinese currency. Also, incremental capacity addition in USA is expected to be relatively lesser in 2017 as compared to 2016. While overall, USA and China would continue to have major share of demand, some of the top module suppliers have also announced expansion in capacities (Source: FraunhoferISE report, June 2016); therefore, it appears that the module prices could have a downward bias in the near term.

SHARPER DECLINE IN TARIFFS • During FY16, for the solar bids of slightly more than 7.3 GW, weighted average tariff stood at around Rs.5.26/unit (excluding projects under DCR category). More recently, the weighted average tariff has come down further to around Rs.4.91/unit as visible from the bids completed in YTD FY17 (refers to the period April 1 to July 14, 2016, excluding projects under

September 2016

DCR category). Decline in tariffs has been primarily due to reduction in project costs led by decline in module and BoS costs, larger size of projects leading to economies of scale, as well as projects bid with lower returns to gain entry into Indian market/expand market share. • Furthermore, it was observed that majority of foreign investors had bid aggressively

for the solar park bids wherein the land acquisition and developmental risk is not involved and the counterparty is either NTPC or SECI. • Average trend in tariffs along with developer interest (in the form of subscription) for major bids completed in last 1.5 years is shown in the following chart:

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RESEARCH & ANALYSIS

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The first solar bid of FY16 under state solar policy saw lowest tariff being quoted by Canada based Sky Power in the state of Madhya Pradesh winning 50-MW capacity at a tariff of Rs.5.05 per unit. Later in the year, the solar tariffs hit a new low when US-based Sun Edison and SB Energy (JV between Soft Bank, Bharti and Foxconn) won bids at then record low tariff of Rs.4.63 per unit in the state of Andhra Pradesh under JNNSM Phase II, Batch II, Tranche I for 500 MW and 350 MW, respectively. However, these tariffs were bettered when Finland-based Fortum Finnsurya quoted a tariff of Rs.4.34/unit in the state of Rajasthan in January 2016 for 70 MW capacity. Since then, tariffs have again moved slightly in upward direction but remained lower than Rs.5/ unit for the JNNSM scheme bids (not considering the DCR category), and around Rs.5/unit (including the VGF average bid). The average tariffs remained upward of Rs.5/unit in the states of Haryana, Karnataka and Jharkhand under their respective state solar schemes. The most recent bid completed in Rajasthan in July 2016 for 130 MW saw low tariffs of Rs.4.35-4.36/unit range despite the project not being a part of solar park, due to relatively higher solar irradiations in the state of Rajasthan and strong

off-taker, NTPC. Of the projects being bid out since November 2015 (non-VGF), around 2.8 GW have been bid out at tariffs below Rs.5/unit, of which projects bid out at less than Rs.4.8/unit stood at around 2.5 GW. Most of these bids were for NSM projects, with perceived government support, cost rationalization and lower developmental risks due to solar park mechanism as well as projects coming up in higher irradiation zones. »»

It is not totally correct to compare the lowest tariff bid to be a new benchmark since there can be various considerations for the bids (higher irradiation potential, lower costs of projects being part of solar parks with land and evacuation infrastructure in place, strong balance sheet and access to cheap finance with few of the biddersetc.). However, given the softening of the costs, the competitive intensity is expected to remain moderately high and there might be participation from newer players, since the existing players have huge pipeline to be completed. For the JNNSM bids, the tariffs could continue to be lower than Rs.4.8/unit (depending upon the irradiation in state), and for the state specific bids, could be slightly upwards of Rs.5/unit as well, depending upon the discom’s credit profile and irradiation levels

of the sites. »»

The key risks for slowdown in future capacity addition rates are land acquisition issues, insufficient evacuation infrastructure, delays in financial closure, especially for projects bid out with wafer-thin returns and huge pipeline of projects to be developed with the developers which might lead to delay in setting up projects beyond scheduled timelines.

»»

Solar rooftop has a huge potential given the distributed nature, cost competitiveness with respect to power generated from Diesel gensets and high HT rates for commercial and industrial customers. However, policy framework and net metering guidelines have to be rationalized and streamlined across the states. Also, the lack of availability of funds, high cost of debt and lower lending activity had been impacting the growth of the sector. Recently, World Bank board has approved USD 650 mn loan to support GoI’s grid-connected rooftop solar PV capacity addition plans. • Also, classification of subRs.15 crore loans under priority sector and increased budgetary allocation for rooftop projects is encouraging, which is expected to propel growth in the rooftop segment.

RESEARCH & ANALYSIS

Credit risk profile and return ratios to remain moderately comfortable at current levels of tariff and project cost In this section, we have illustrated different scenarios of project cost and tariff and their impact on the returns and debt service coverage. Apart from these, there are other moving parts (viz, interest rate, CUF, loan tenure, etc) which will have bearing on the project’s viability.

»»

Assuming project cost of Rs.6 crore/MW (AC side, considering 20% higher capacity on DC side), rate of interest at 11%, debt-equity ratio of 75:25, repayment tenor of 15 years (including moratorium period of 1 year with structured payments) and CUF of 20.50% for the first year with annual degradation of 0.5%, average DSCR is expected to remain around 1.24x, minimum DSCR of 1.17x and equity IRR at around 13.28% for a tariff of Rs.5/unit. At a tariff of Rs.4.8/unit, the

coverage moderates with average DSCR at 1.19x, min DSCR of 1.12x and equity IRR at 11.7%. »»

»»

Assuming a decrease in interest rate by 50 bps to 10.5%, equity IRR would improve to around 14% and average DSCR would improve to 1.26x at a tariff of Rs.5/ unit. In case of sites with relatively lower irradiation, at CUF of 18%, the equity IRR would be very low at 8.6% and average DSCR would be 1.1x at a tariff of Rs.5/unit and

project cost of Rs.6 crore/MW. In case the tariff for such location increases to Rs.5.3/unit, the equity IRR increases to around 11% and average DSCR to 1.16x. »»

In case the loan tenure is higher at 18 years (including 1 year of moratorium period with structured repayments), the average DSCR improves to 1.3x, min DSCR of 1.24x and equity IRR to around 13.4% at a tariff of Rs.5/unit. At a tariff of Rs.4.8/unit, the average DSCR is 1.25x, min DSCR is 1.19x and equity IRR is 11.5%.

As can be seen from Table 5 above, the project cost reduction from Rs.6 crore/MW to Rs.5.8 crore/MW can increase the equity IRR from 13.3% to 14.6% at tariff of Rs.5/unit. Therefore ability to manage costs and source modules at competitive rates remains important. Given the present scenario of module costs coming down to close to USD 42 cents/watt (for bulk orders) as compared to CERC’s benchmark module cost of USD 48 cents/watt, the saving in project cost is close to 40 lakh/MW, which can increase equity IRR to upwards of 15%.

September 2016

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RESEARCH & ANALYSIS

»»

Illustrative sensitivity analysis for average DSCRs and equity IRRs under different scenarios for project cost and tariff are summarized in the tables below:

»»

Along with reduction in the costs, as mentioned earlier if the loan tenure is higher at 18 years, the debt service coverage indicators would improve.

»»

Furthermore, the energy generation levels can increase by around 15-18% in case of deployment of trackers depending upon terrain) with an increase in project cost by around 10%, which can increase the returns.

RPO COMPLIANCE & BUILT-UP OF SUFFICIENT EVACUATION INFRASTRUCTURE CRITICAL • Through the amendments made in National Tariff Policy in 2016, the government increased its focus on renewable energy, especially solar. As per the amendments, the solar RPO target for FY22 has been increased to 8% of the total electricity consumption (excluding Hydro power) as against 3% earlier, which will act as an enabler for the solar power sector. However, enforcement of RPO and compliance of the same remains a key challenge as most of the states have been

unable to meet the targets in recent years owing to poor financial health of majority of the state discoms. • Till June 2016, 13 states have signed the MoU under the UDAY scheme. Structural reforms for the discoms including the impact of the UDAY scheme on the operating performance and financial health of discoms would have an important bearing on the sector. • The sector’s growth and developer’s returns could be negatively impacted

in case of curtailments or energy loss due to lack of transmission infrastructure to absorb the largely infirm renewable capacity addition. Therefore, investment in augmenting evacuation infrastructure to be abreast with the pace in renewable energy capacity coming up every year is very important. Investments and timely implementation of Green energy corridor, solar parks, success of the solar/wind hybrid policy in efficiently utilizing the transmission infrastructure are crucial.

Some of those include the likes of Tata Power, Shapoorji Pallonji, Adani Power, Aditya Birla Group, Hero Group etc. Besides these players, participation from existing major players like ACME, Azure, Renew Power, etc. continues. • The recent M&A activity, viz, Tata Power

Renewable acquiring 1.1 GW of capacity (including 994 MW solar capacity) from Welspun Group, as well as CLP’s acquisition of 49% stake in Suzlon’s 100MW SPV setting up a project in Telangana is reflective of the growing confidence of various players in this sector.

INCREASED M&A ACTIVITIES • Apart from participating actively in the various biddings in the solar segment, international as well as large domestic players are also looking to enter/grow their portfolio in Indian market through inorganic route which can provide ready access to operational/ pipeline of projects. Some of the recent transactions announced/concluded are shown in the table below:

• There is likely to be more activity in the M&A space given the entry opportunities in the market and need for raising growth funds with players.

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RESEARCH & ANALYSIS

Operating performance satisfactory so far, generation in-line with projected levels

CARE’S RATING DISPERSION

• Solar technologies have been evolving worldwide over the last decade or so. The adoption of solar on a large scale is still in a relatively nascent stage in India (track record of around 5 years), though the speed in the capacity addition has been very strong, largely on account of Government’s impetus on solar capacity addition. India has an attractive geography for solar energy. Solar radiation is about 5,000 trillion kWh/year and most parts enjoy 300 clear sunny days a year. Though there is still relatively lesser track record of technology performance in Indian conditions, some of the SPVs rated by CARE have a track record of generation of more than 4 years and performance in terms of Capacity Utilization Factor (CUF)has been satisfactory.

• CARE has rated 61 solar SPVs as on June 30, 2016 (excluding those having unconditional and irrevocable corporate guarantees for the loan tenure from sponsors) forming more than 1128 MW of capacity, out of which 55 solar SPVs are in the investment grade band forming around 1086 MW of capacity. CARE expects the credit profile of the rated-SPVs to be stable, given the longterm revenue visibility and satisfactory demonstrated operating performance track record. • From a credit perspective, the positive factors for solar projects are that they have relatively lower execution risks, stable long-term cash flow visibility with long-term off-take arrangements at a fixed tariff and minimal O&M requirements. However, concerns emanate from the fact that these projects are capital intensive, exposed to technological and climatic conditions as well as counter-party credit risks. The long-term performance of modules (largely imported) in Indian conditions is one critical factor, though the performance on the generation front has been largely satisfactory for CARE rated credits. Furthermore, another major factor driving the rating movement is the credit profile and payment pattern of the off-taker.

In the Chart 1 below, analysis is presented on the actual average CUF and actual versus expected CUF for the CARE rated solar SPVs, which have a track record of at least 2 years of operations.

*CUF data for FY16 varies from 6 to 11 months

The CUF levels vary according to the technology deployed, efficient engineering &system design, DC capacity, irradiation of the site as well as the quality of construction and other material used. From the portfolio of CARE rated SPVs, there are 26 entities which are operating in the above 4 states. Apart from the above states, the generation levels (though track record available is relatively shorter) have been close to the envisaged levels in Telangana, Andhra Pradesh, and moderately lower in Punjab. More or less, the generation levels across the states and CARE rated SPVs have been fairly comfortable so far. Some of the factors which have impacted the generation negatively are stabilization issues in the initial period of operations, cloud covers over elongated period, heavy rains which led to flooding at some sites, as well as grid evacuation issues for some period in few cases. Furthermore, extreme heat can also impact performance of the modules. The track record of utility scale solar projects in the country though satisfactory, still remains relatively moderate and going forward the ability of the projects to maintain the operating performance (after considering the envisaged degradation levels) over the long-term remains critical for achieving the desired cash flows. As these projects are required to maintain the operating performance over a long period; the performance warranties for major components such as modules and invertors from financially strong suppliers would continue to be looked at more favourably from a credit perspective.

September 2016

Off-taker credit profile and payment pattern to have key bearing on the ratings • Currently, a large proportion of CARE rated solar projects have relatively stronger counterparties in the form of Gujarat UrjaVikas Nigam Ltd. (GUVNL, rated ‘CARE A+/ CARE A1+’) with 12 entities, NTPC VidyutVyapar Nigam Ltd. (NVVN) with 11 entities as well as SECI with 13 entities. • Payments for solar projects selling power to GUVNL, NVVN and MPPMCL are being received in about a month’s time (as per PPA terms payable period is 30 days from receipt of invoice), whereas projects selling power to SECI have been recently commissioned (mostly in FY16) due to which there is limited track record with payments being received in around 2 months (due

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RESEARCH & ANALYSIS

date is 30 days from date of receipt of invoice). While SECI’s position as a GoI enterprise having strategic role in promoting solar energy sector provides comfort, the payment track record has been relatively shorter. Also, there have been procedural delays in release of Viability Gap Funding by SECI to some of the projects, though subsequently addressed. • Receivable cycle for projects based in Punjab has increased compared to last year (payments were being received in less than 30 days), though still received in less than 2 months’ time. The Karnataka discoms have been making payments in 30-45 days (30 days as per PPA terms), whereas there have been few delays in HESCOM and GESCOM, particularly in the initial period of operations. Payment pattern for Telangana discoms (though there is short track record of operations for those SPVs) has also been satisfactory so far. • In view of the sharp decline in tariffs, there is a perceived threat of PPA negotiation for projects which were contracted with higher preferential feed-in-tariffs in the earlier years when the market was emerging. The preferential feed-intariffs were high as the project costs were high and also to incentivize developers for investments in the sector. Such eventuality materializing could impact the growth of the sector, and dampen investor confidence. However, the said risks are low for projects contracted with counterparties,

NVVN (subsidiary of NTPC, GOI entity) as well as Gujarat UrjaVikas Nigam Ltd. (GUVNL, rated ‘CARE A+/CARE A1+’). In the overall scheme of power purchase by these off-takers, considering their financial profiles as well as ruling by GERC and APTEL (for non-reduction in contracted tariffs, as was claimed by GUVNL), the possibility of negotiation of old high tariff PPAs appears relatively low. In a scenario of PPA termination by GUVNL, the termination payments (as per PPA terms) should cover substantial amount of debt, given most of the projects now have operational track record of more than 4 years and the debt levels have also come down. • As more and more projects are being set up under state policies, the state discom’s credit risk profile and payment pattern, amongst other factors, would have significant bearing on the rating and the rating movements going forward. Since fundamentally the credit risk profile of the most of the discoms is relatively weak to moderate, continuity of timely payments over the long term remains to be seen. Also, of-late delays in making payments to the wind SPVs has been observed in some of the discoms like MSEDCL, MP, and Rajasthan (there has been huge wind capacity addition in these states in FY15 and FY16), which increases the payment delay risk towards solar projects also going forward. Therefore, built- up of liquidity through DSRA, working capital lines, etc, is crucial from the credit perspective.

KEY CREDIT RISK ASSESSMENT FACTORS The most critical factors while assessing credit rating of an operating solar project are bulleted in the table below:

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Rabindra Kumar Satpathy - CEO-Renewable Power Emami Power Ltd

K Subramanyam Former CEO Tata BP Solar Shaji John ChiefSolar Initiatives L&T Ravi Khanna - CEO Solar Power Business Aditya Birla Group

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