Financing of Solar PV projects in India

Financing Solar PV Projects in India:

Solar Projects installations in India begin in year 2008. Most of the projects are located in the State of Rajasthan and Gujarat. Indian solar market is regulated by Government FIT, Own consumption and REC mechanism.Financing a Solar PV project is a challenging job for any financial consultancy firm. Wherein following options may be availed:

• Corporate Financing
• Lease Financing
• Project Financing

Decision Matrix criterions for Lender institutions……Screening of a Solar PV project:

Following parameters to be simulated for minimum DSCR for different FIT and irradiations.

• Calculation of minimum promoter’s equity required to achieve minimum DSCR
• Calculation of maximum Capex required to achieve minimum DSCR.
• Light business approach with minimum DSCR as key parameter
• Maturity 5-8 years
• Standard down payment 20%-30%
• Mandatory insurance coverage as per banking policy
• Mandatory O&M agreement
• Due diligence by external appraisers
• Performance monitoring agency

How do we structure debt/equity deals for our clients:

• Screening of EPC contracts with various standard and subjective parameters
• Screening of Govt. schemes and FIT regulations
• Payback calculations with FIT, Depreciation benefits, Cost of Debt, Equipment sourcing etc.
• We validate each transaction with a separate financial evaluation team representatives.
• Project financing bankable set of finance contracts with a set of covenants as standarised by Banks and Rating agencies.
• Financial Model goes through several audit checks.

Authored by :

CA Yogesh
Director
BWPM Co.

visit us at : www.Yogesh-CA.blogspot.com