7/6/2010

CONTENTS
• CONTEXT OF SOLAR ENERGY
DEVELOPMENT OF LARGE DEVELOPMENT
SCALE SOLAR ENERGY • RISKS
PROJECTS • RISK MITIGATION
• ADB’S POSSIBLE ROLES AND
Seethapathy Chander
ASSISTANCE
Chair, Energy Committee
Asian Development Bank

CONTEXT OF SOLAR
ENERGY DEVELOPMENT RISKS
IN ASIA
• RISKS
• ENERGY DEMAND – Sponsor Risks
– New Demand vs Substitution • Land Acquisition, Offtake Arrangements
• ACCESS TO ENERGY • Offtake Creditworthiness
– Supply
pp y to Remote Locations • Regulatory
• ENERGY SECURITY • Specification Risks
– Relative Costs of Grid Connected Energy – Government Risks
– Access to Hydrocarbons • Public Acceptability – Costs, Procurement Method,
• LOAD DEMAND CHARACTERISTICS Subsidies
– Increasing Cooling and Charging Loads • Land, Transmission, Water Use
Due to Increasing Affluence and – Financier Risks
Industrialization • Overall Project

RISK MITIGATION RISK MITIGATION

• SPECIFICATION RISKS
• LAND ACQUISITION
– Best done by Governments
– Ensures Specificity of Purpose
– Greater Acceptibility by Public
– Saves Time
• OFFTAKE ARRANGEMENTS
– Can be Done by Sponsor, But More Efficient if
Done by Government/ Purchasing Utility
• Need to Specify Insolation Levels to Optimize Site
and Obtain Competitive Proposals
• However, Long Term Quality Survey Data Not
Available in DMCs
• Crucial for Project Economics, Especially During
the First Few Years
• Could be Mitigated Through a Guarantee That
Pays Sponsor the Difference Between Specified
and Actual For (say) First Five Years of
Commercial Operations
• Guarantor Could Be Government or
Independent Entity

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 7/6/2010

POSSIBLE ADB
RISK MITIGATION
SUPPORT
• PUBLIC ACCEPTIBILITY • PUBLIC SECTOR/ GOVERNMENT
– Current Higher Costs Need to be Explained in – Preparatory Activities
Terms of Lower Future Costs – Bid Documentation
– Energy Security – Offtake Arrangements
– Sharing of Burden Between Regions, – Assistance for Regulatory Reforms
Countries – Evaluation of Proposals
– Competitive and Transparent Procurement – Contract Negotiations
– Subsidies/ Grants need to be Time Based,
Targeted and Explicit

POSSIBLE ADB
SUPPORT
• PRIVATE SECTOR
– Small Equity
– Long Term Debt THANK YOU
– Specification Risk Guarantee
– Political Risk Guarantee