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Background note

Strategic Investment to Drive India’s Renewable Energy

Revolution

about the authors

dr. arunabha ghosh Dr. Arunabha Ghosh is the Founder- Chief Executive Officer of the Council on Energy, Environment and Water (CEEW). Previously, he worked at Princeton, Oxford, UNDP (New York), and WTO (Geneva). He is the co-author/editor of four books and dozens of research papers and reports. He is a World Economic Forum Young Global Leader, appointed to WEF’s Global Future Council on Energy. He is an Asia Society Asia 21 Young Leader, and fellow of the Aspen Global Leadership Network.

Ms. kanika chawlaMs. Kanika Chawla is Senior Programme Lead at the Council on Energy, Environment and Water (CEEW). She manages CEEW’s work on renewable energy policy, finance, and jobs and skills. Prior to CEEW, she worked at the REN21 Secretariat in Paris, and was one of the authors of REN21’s Global Status Reports on Renewable Energy. She has also worked on distributed renewable energy, urban energy policy, and energy and climate policies in developing countries. She also previously worked with GIZ on sustainability reporting standards for industry.

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Strategic Investment to Drive India’s Renewable Energy Revolution

IntroductionThe world is in the midst of an energy transition as it seeks to decarbonise its growth trajectory. With electricity and heat production accounting for a quarter1 of global greenhouse gas (GHG) emissions, the decarbonisation of the power sector is critical for the success of global emissions reduction efforts. This is particularly true for developing Asian countries, where rapid economic growth and rising incomes are expected to translate into sharp growth in electricity consumption23. Thus, investments centred around clean and renewable energy infrastructure are essential for sustainable growth in Asia. As an organisation committed to improving social and economic outcomes in Asia and beyond through investments in sustainable infrastructure, the Asian Infrastructure Investment Bank (AIIB) has an important role to play in supporting clean and renewable energy deployment.

The centrality of energy-related investments in the AIIB’s overall portfolio is evident through the existence of the Sustainable Energy for Asia Strategy4, a dedicated sectoral strategy to guide the AIIB’s investments. Moreover, investments in clean and renewable energy infrastructure represent a confluence of the AIIB’s thematic priorities of sustainable infrastructure, cross-country connectivity and private capital mobilization, as described in this paper. In the lead up to the AIIB’s Third Annual Meeting in Mumbai, India, this paper examines the opportunities and challenges for clean and renewable energy investments from an Indian lens. Consistent with the Annual Meeting’s theme – ‘Mobilizing Finance for Infrastructure: Innovation and Collaboration’, the paper examines innovation at the regulatory level and in the means of mobilizing clean and renewable energy investments.

The first part of the paper focuses on the Indian renewable energy ecosystem, beginning with a stocktake of investment flows into the power sector, including the renewable energy segment. It further examines the factors that have driven the competitiveness of Indian renewable energy tariffs, highlighting the role of government policy, and the major drivers of capacity deployment in the country. The paper goes on to analyse the evolving nature of the regulatory framework in India – both power sector-related as well as well as financial regulation – and the implications of these for renewable energy investments in India. Further, the paper examines the evolving nature of risks for renewable energy investments in India. Besides the examination of the renewable energy sector at the national level, the paper also analyses the relative attractiveness of renewable energy investments in India at the state level.

The paper goes on to examine the segment-wise and geographical split of AIIB’s existing energy sector investments. Going forward, the paper identifies major segments that require investments in order to accelerate the clean energy transition in India and the broader Asia region. Lastly, the paper highlights the need for innovative approaches towards mobilizing finance – approaches

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targeted at crowding-in private capital though risk mitigation – in order to maximise the impact of financial interventions in the renewable energy sector.

Why are Investments Flowing into the Indian Power and renewables Sector?The Indian power ecosystem is undergoing a transformational change ranging from increasing proportion of Renewable Energy (RE) sources in the total energy mix and extending the grid to every household by March 2019.5 This is accompanied by efforts to reform electrical utilities and introduce electric vehicles (EVs) in a big way- 30 per cent EVs of the annual sales by 2030. The power sector (3.52 per cent) ranks second after the construction development sector (6.71 per cent)6 among infrastructure sectors in terms of Foreign Direct Investments (FDI) received in the form of equity since 2000.7 Sceptics might dismiss this as “normal” in the growth of a large developing economy such as India. But why has it not happened in other large developing economies such as Malaysia and Brazil?

However, one area within the power sector that has specifically caught the attention of foreign investors is RE generation. The percentage of FDI in RE generation has almost doubled from its average value since 2000 (1.7 per cent) to 3 per cent in the current fiscal year, with three months still left to go (See Figure 1). This is a big achievement for a sector that has only picked up pace in the last five years.8 This trend is expected to sustain given the ambitious Indian RE target of 175 GW by 2022 and 40 per cent of installed capacity from non-fossil fuels by 2030.910

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Figure 1: Share of FdI in renewable energy

Source: DIPP, CEEW Analysis

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India has one of the lowest re tariff in the World: By chance or By design?The Indian RE space is characterised by the competitiveness of its tariffs, with record-low utility-scale solar and wind bids registered in 2017 and 2018 being among the lowest in the world. Figure 2 illustrates the trajectories of competitively determined solar tariffs in India as well as those of wind tariffs. Prior to the commencement of competitively determined wind tariffs in February 2017, the figure displays the upper and lower bands of feed-in-tariffs as per the Central Electricity Regulatory Commission’s (CERC) tariff orders. These correspond to plants set up in wind zones with the least and the greatest wind power resource potential respectively.

The decline in RE tariffs in India has mirrored the trend of declining RE tariffs witnessed globally. This begs the question – is the decline in RE tariffs witnessed in India merely a reflection of the declines witnessed globally or are there additional factors at play?

Global factors have certainly had a role to play in the lowering of RE tariffs in India. Given the commoditized nature of PV modules and wind turbine generators, declines in their unit costs has benefited RE projects globally, including those in India. However, besides these exogenous factors, a number of favourable developments on the policy front also contributed to the lowering of RE tariffs.

overarching Policy Support for re

Dedicated Institutions for RE India’s RE growth has been characterised by considerable political will to support RE deployment. The existence of a dedicated Ministry for RE - the Ministry of New and Renewable Energy (MNRE)

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Figure 2: trajectory of Solar and Wind tariffs in India

Source: CEEW Analysis, CERC Tariff Orders

Note: Low and High wind resource potential tariffs refer to feed-in-tariffs in wind zones with the lowest and highest resource potential respectively.

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is one indicator of India’s commitment to RE. In addition, the existence of a dedicated financial institution for RE under the aegis of the MNRE, in the form of the Indian Renewable Energy Development Agency (IREDA), helped channel finance to the Indian RE ecosystem. This was particularly important in the nascent stages of India’s clean energy transition when RE generation was far less competitive than at present.

Beyond the dedicated policy making set up, the setting of India’s ambitious RE target of 175 GW by 2022, including 100 GW of solar and 60 GW of wind, was a statement of intent from the government. The clear signalling of the government’s commitment to the clean energy transition, provided greater predictability for the entire RE ecosystem with respect to a pipeline of future projects.

Aggressive Renewable Portfolio StandardsThe requirement for state distribution utilities (DISCOMs) and large consumers of electricity to offtake RE generation through the mechanism of renewable purchase obligations (RPO), renewable portfolio standards in the Indian context, complemented the RE targets in generating certainty of demand for RE generation at the state level. This was particularly important in the initial years of India’s clean energy transition when RE tariffs were significantly less competitive than present levels.

Going forward, existing regulation calls for states to embark upon a trajectory of aggressive increases in RPOs, with targets increasing from 11.5 per cent of electricity purchased in 2016-17 to 17 per cent in 2018-1911. In addition, RPOs for solar energy are to increase from 2.75 per cent in 2016-17 to 8 per cent by 2021-2212. These increases would help absorb the massive RE capacity addition planned over the same timeframe.

Dedicated Transmission Infrastructure for REIn order to realize its RE ambitions India needed to invest in strengthening its power transmission and distribution infrastructure to facilitate the integration of new RE generation capacity. In order to accomplish this, India initiated the Green Energy Corridor project in 201313. Envisioned as a dedicated transmission network for RE, the project bolstered both intra-state and inter-state transmission infrastructure in order to facilitate the evacuation of power generated in RE resource rich states to load centres located across the country. The multi-faceted policy support for RE inspired confidence among RE investors and developers to participate in large numbers in the RE space, translating into a vibrant, competitive market.

reverse-auction BiddingIncreased competition in the RE space translated into lower tariffs as India adopted a reverse-auction method of tariff determination. The adoption of competitive bidding for solar and wind beginning in 2010 and 2017 respectively facilitated tariff discovery reflective of a maturing RE sector and the underlying competition. It also brought in the much-needed transparency. Of course, besides the competition, the declining tariffs are also indicative of the declining risk perceptions of developers, driven to a large extent by favourable policy developments.

Mitigating offtaker riskOfftaker risk, stemming from delays in payments by DISCOMs has been a major concern for developers and investors. In order to ensure greater certainty of payments for developers, the Solar Energy Corporation of India (SECI), a central agency which tenders solar projects, was included as

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a party to an existing framework to lower the risk of payment delays or defaults by state DISCOMS in February 2017 14. State-run power producer National Thermal Power Corporation (NTPC) has been a party to a tripartite agreement between the central government, state DISCOMs and the RBI since 2002 and renewed the agreement in 201615. In cases of non-compliance with PPAs by state DISCOMs, the developer is compensated using funds that were due to be transferred from the centre to the state government. The lowering of offtaker risk for developers through this mechanism translated into more aggressive bidding activity and lower tariffs.

Solar ParksDifficulties in land acquisition and the inadequate availability of evacuation infrastructure have been hindrances for RE project developers. The government’s solar park scheme has helped address these issues for solar energy developers. Solar parks offer developers land parcels for setting up projects, with the necessary supporting infrastructure including evacuation infrastructure, in exchange for a fee.

other IncentivesThe provision of accelerated depreciation benefits to solar and wind developers has further contributed to a decline in tariffs. Given the competitiveness of RE tariffs, the government has lowered the ceiling for accelerated depreciation tax benefit for solar and wind projects to 40 per cent from FY 2017-18, down from the previous limit of 80 per cent16. India’s success in utility-scale deployment has not so far been reflected in distributed RE such as rooftop solar, where deployments have occurred at a slower pace. Though the deployment of RE in India has been biased towards utility-scale projects, the dynamism in policy making has translated into the rapid scaling up of RE deployment. Thus, the decline in utility-scale solar and wind tariffs is certainly not a chance occurrence - but the outcome of a carefully calibrated set of policies. These policies have lowered risk perceptions among investors and developers, translating into lower tariffs.

renewables are Here to Stay in IndiaThe case for investments in renewable energy in India is now more robust than ever. A combination of favourable policy support for RE, the need to service India’s vast latent demand for electricity in a cost-effective and sustainable manner and the competitiveness of RE tariffs means that renewables are here to stay in India.

India’s clean energy transitionThe Paris Climate Agreement underscored the global commitment to combating anthropogenic climate change. India emerged as one of the champions of the global clean energy transition with its ambitious Nationally Determined Contributions (NDCs) under the Paris Agreement. Committing to achieving 40 per cent cumulative electric power installed capacity from non-fossil fuel-based sources by 203017, the Indian government ensured that RE became an integral part of India’s power sector plans going forward. Renewable energy offers the perfect solution for balancing the need for servicing India’s vast latent demand for electricity with the imperative of combating climate change.

Vast untapped demand for electricityWhile India has made considerable progress in terms of electrification, the goal of universal access to electricity has not been reached yet. Launched in 2017, the Saubhagya scheme is aimed

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at addressing this lacuna by providing electricity connections to around 40 million18 unelectrified households by March 201919. In order to expedite the achievement of this goal, the scheme includes the provision of electricity connections free of cost to below poverty line households, while other unelectrified households are also eligible for electricity connections at a subsidised fee20.

With India rapidly closing in on the goal of universal electricity access, the demand for electricity from currently unelectrified households is set to increase rapidly. At the same time, per capita consumption from existing consumers will rise rapidly driven by rising income levels. Lastly, commercial and industrial demand will rise rapidly too, driven by India’s rapidly growing industrial base in the years to come. As a result of these factors, India’s electricity demand is expected to triple to 2499 terawatt hours (TWh) by 2030 from 2012 levels21. The competitiveness of RE generation vis-à-vis conventional generation means that RE deployment is a must to cater to India’s untapped demand for electricity.

competitiveness of re tariffsThe competitiveness of RE tariffs today, as described before, has bolstered the business case for RE investments. The decline in RE tariffs has been accompanied by an average annual growth rate of 7 per cent22 for grid tariffs over the past ten years. Thermal generation, which currently accounts for nearly two-thirds23 of India’s installed capacity, is exposed to risks seeded in fuel pricing, sourcing, availability, and import dependency. These risks could translate into higher financing costs for thermal projects going forward and thereby, higher project costs. In addition, these risks could also potentially expose thermal projects to higher fuel costs. As a result of potentially higher project and fuel costs, thermal power tariffs could rise going forward, which would translate into higher grid tariffs. On the other hand, RE project costs and consequently RE tariffs are not subject to risks pertaining to fuel availability. Given their competitiveness, an increasing proportion of RE generation in the electricity mix could moderate the increase in grid electricity going forward. It could in fact unleash the much-needed deflationary forces in retail electricity tariffs.

regulatory and Market designs evolving evolving electricity Market and regulatory design: Implications for Investments

Does must run Status Still Hold?RE tariffs were significantly higher than those from conventional sources of generation in the early years of India’s clean energy transition. In addition, RE generation is characterised by intermittency as well as lower predictability of generation compared to conventional sources of generation. However, better forecasting and scheduling techniques are changing that equation. These characteristics of RE generation were hindrances to their timely and optimal despatch by transmission system operators, which match the demand for electricity with generation.

Transmission system operators follow the principle of the merit-order despatch. As per this principle, when transmission system operators receive requests for power injection into the grid from DISCOMs, they prioritise the lowest cost sources for despatch. Given the high RE tariffs in years gone by, these would not have been despatched as per the rules. To deal with this issue, RE power plants (except biomass power plants with installed capacity of 10MW and above) are accorded ‘must run’ status under Indian electricity regulation24. Under this status, RE power plants are not subject to the merit order despatch mechanism and any scheduling regulations. The grid operators can only curtail RE sources in the case of technical constraints. The must run

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status ensures the offtake of RE sources and has played an instrumental role in scaling up the RE generation.

With the increased competitiveness of RE generation, policy support in the form of must run status for RE could be withdrawn with the despatch becoming completely market-determined, as outlined in the draft National Energy Policy released in June 201725. In addition, improvements in scheduling and forecasting capabilities at the generation side further bolster the case for the withdrawal of the ‘‘must run’’ status. The state of Madhya Pradesh withdrew ‘must run’ status for RE generation through a draft order in 2017, before re-instating it later in the year amid representations from the industry26. However, the re-instatement of ‘must run’ status for RE was accompanied by the removal of exemptions from wheeling and cross-subsidy charges. These developments are indicative of the potential for gradual withdrawal of the ‘must run’ status for RE as the market matures.

Waiver of Interstate Transmission ChargesSolar and wind resources are not uniformly distributed across India. The concentrated nature of the resource endowment implies that certain resource-rich states in India are more cost-effective for solar and wind generation than others. The interstate transmission of electricity allows RE generation to be transmitted from resource-rich states to fulfil the demand for electricity in resource-poor states. However, the sale of power across state lines is subject to interstate transmission charges. In order to encourage the deployment of RE projects in resource-rich states, thereby facilitating the lowering of RE tariffs, India offers a waiver on the interstate transmission charges for solar and wind energy projects. The current waiver is valid for projects commissioned up to March 31, 202227.

While this waiver has encouraged electricity buyers such as DISCOMs and large commercial and industrial customers to procure more RE, it upsets the level playing field in power generation since these charges are passed onto conventional generators. More importantly, it also gives an impression of non-competitiveness of RE. It is important that states (or the central government) provide this foregone amount from the budgetary support to the transmission companies, so that conventional energy tariffs are not impacted as a result of the waiver given to RE generation.

Financial regulatory evolution: Implications for reAccess to affordable finance is critical for the deployment of RE projects at scale. The sources of capital that RE companies are able to access are a function of the risk perceptions surrounding the RE sector as well as the sophistication of the Indian finance ecosystem. A range of regulatory measures have broadened the options available to the RE sector beyond bank credit to corporate bonds and newer financial instruments.

Bank Lending to re ProjectsBank lending traditionally has been the largest source of finance for RE projects in India. While the maturing of the RE market has increased banks’ comfort in lending to utility-scale segments, distributed renewable energy (DRE) segments such as rooftop solar, solar pumps and RE-based mini and micro grids still find it difficult to access credit.

Renewable energy was included in the priority sector lending targets of scheduled commercial banks in 201528. Priority sector lending provides for the flow of a certain proportion of bank credit to underdeveloped sectors such as agriculture and micro, small and medium enterprises

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(MSMEs), in order to facilitate the growth of these sectors. As banks separately allocate funds for their priority sector lending, this step was a welcome development for the RE sector. However, in order to channel credit to the underserved DRE sector, a dedicated sub-category within the priority sector lending category for RE could be considered for the DRE sector. Moreover, the RBI priority sector targets restrict lending up to a limit of INR 150 million29 for commercial and industrial RE projects borrowers and INR 1 million per borrower30 for individual households. Considering that capital costs for small-scale solar and wind projects amount to around INR 50-60 million per MW, these limits need to be revised upwards in order to meaningfully enhance the flow of bank credit to small-scale RE projects.

RBI guidelines permit scheduled commercial banks to internally determine sectoral limits for extension of credit31. Lending to the RE sector is subsumed under limits for power sector lending. As a result, RE projects compete with other power sector projects such as thermal power generation for bank credit. In order to support the government’s RE ambitions, the RBI could consider encouraging banks to maintain separate exposure limits for the RE sector, thereby ensuring that a greater share of bank lending is targeted towards RE.

However, bank lending as a source of capital for RE companies has its limitations. The tenure of these loans is usually 7-10 years32, considerably lesser than the useful lives of these projects, which span 20-25 years. This could require developers to go in for refinancing of existing loans to more closely match their debt obligations with project cash flows, thereby exposing them to refinancing risk. In addition, bank credit to corporates has dried up amid high levels of stressed assets on banks’ balance sheets33. These limitations of bank lending have prompted Indian RE companies to tap other sources of capital.

From Bank debt to Balance Sheet Level BondsThe traditional reliance of Indian RE companies on bank lending for their finance needs has largely been a consequence of underdeveloped corporate bond and private debt markets. In addition, sectoral regulators consider bonds with a minimum ‘AA’ rating as eligible for investment34, which effectively excludes most RE companies (with bond issues rated lower than ‘AA’) from accessing these sources of capital. However, recent regulatory developments are geared towards facilitating the development of the corporate bond market in India and enhancing access to the same for RE companies.

the regulatory Push for a Vibrant Bond Market

Strengthening the Overall Bond Market Measures taken by the Reserve Bank of India (RBI) to restrict the flow of bank credit to a single borrower have forced corporate borrowers to turn to the bond market. The RBI guidelines provide for enhanced provisioning requirements and the additional risk weighting for overall bank exposure to a single borrower if the incremental exposure of the banking system to the borrower crosses certain limits.

From the year 2017-18 onwards, if the incremental exposure to the banking system of a single borrower crosses 50 per cent of the aggregate sanctioned credit limit (ASCL) for that borrower, it would require provisioning of an additional 300 basis points for the incremental exposure35. In addition, it would require assigning an additional 75 basis points in risk weighting to the overall exposure of the banking system to the borrower, which has implications for banks’ capital adequacy requirements. Moreover, the ASCL will be progressively lowered from 2017-18 to period beginning

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April 1, 201936. By placing these constraints on banks’ ability to lend to single borrowers, the RBI is nudging large companies to tap the bond market for their capital raising needs. This could facilitate the development of India’s corporate bond market.

Adding to the measures taken by the RBI, the Union Budget 2018-19 announced additional measures that could stimulate the development of the broader corporate bond market. The Securities and Exchange Board of India (SEBI) will consider mandating companies, beginning with large corporates, to tap the bond market for a fourth of their financing needs37. The development of a vibrant bond market could make it easier for RE projects to access capital.

Channelling More Institutional Investment into Bonds Regulatory restrictions have curtailed investments by institutional investors into bonds rated below ‘AA’. The Union Budget 2018-19 promised that the government and regulators would take steps to make ‘A’ rated bonds eligible for investments by institutional investors. This could help channel investments by pension and insurance funds towards RE developers which meet such a credit rating.

New Market Instruments and Masala BondsBesides facilitating the development of the domestic bond market, Indian regulators have also taken measures aimed at encouraging Indian companies to raise money from foreign bond markets as well as innovative hybrid instruments. Masala bonds are rupee-denominated bonds issued in foreign markets. Masala bonds were earlier subject to both external commercial borrowing (ECB) and foreign portfolio investment (FPI) limits38. This proved to be a restriction on Masala bond issuance as FPI inflows from other sources curbed Masala bond issuance39. In October 2017, the RBI separated Masala bonds from the FPI limit, leaving it subject to only ECB limits. Under the RBI ECB guidelines, infrastructure companies as well as Non-Banking Financial Companies – Infrastructure Finance Companies (NBFC-IFCs) are allowed to raise $75040 million per financial year. This step stimulated renewed activity in the Masala bonds space41. Though the RBI also made requirements on minimum maturity period and yields of Masala bonds more stringent42 during 2017, these are unlikely to deter large corporates from raising capital. Thus, recent regulatory action should facilitate the flow of debt capital for Indian corporates.

InvItsInfrastructure Investment Trusts (InvITs) are financial instruments that facilitate investments in infrastructure assets which generate steady cash flows. An InvIT is formed when a parent company (sponsor) spins off a portfolio of operating assets onto a separate corporate entity, which is then listed on the capital markets. By separating the parent company’s operating assets from those under varying stages of completion, an InvIT’s assets are characterised by much lower risk as compared to the parent company’s overall portfolio. Thus, the risk-return profiles of InvITs are suitable for tapping sources of risk-averse low-cost patient capital such as pension and insurance funds. By offloading operating assets onto an InvIT, the parent company also frees up its balance sheet for investing in new projects.

InvITs are similar in structure to yieldcos, yield-based financial instruments used extensively by RE companies for raising capital in Western developed economies, particularly the U.S. However, InvITs are more regulated versions of their U.S. counterparts. Indian regulators perhaps learnt from the U.S. experience where yieldcos witnessed sharp declines in their valuations after their initial success. Though meant to be yield instruments, U.S. yieldcos factored in a substantial

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growth component in their underlying project portfolios. U.S. yieldcos were highly levered43 and promised excessively high dividend growth targets44. In order to guard against such eventualities, SEBI regulations limit InvITs’ investments in under-construction projects and net debt to 20 per cent45 and 49 per cent46respectively of the value of InvIT assets. Moreover, InvITs are mandated to distribute most of their net distributable cash flows (at least 90 per cent47 under SEBI regulations), that is cash flows from the underlying assets net of expenses such as debt repayments, income taxes and investment management fees, to unit holders.This helps maintain the yield-based instrument characteristics of InvITs.

uptake of Invits for raising capitalPost the establishment of the regulatory framework for InvITs in 2014, there was no activity pertaining to the listing of new issues till the year 2017. Investors’ concerns over returns from InvITs due to issues pertaining to the taxation of dividend distributions by InvITs was a major factor that held up new issues48. The exemption of InvITs from dividend distribution tax from June 201649 onwards altered investor expectations somewhat, with the year 2017 witnessing the listing of the first InvITs on the Indian stock markets – IRB Infrastructure Developers Ltd’s IRB InvIT and Sterlite Power Grid Venture Ltd’s India Grid Trust.

However, there have been some concerns regarding the apparent underperformance of InvITs, which were trading around 5 per cent50 and 15 per cent51 below their issue price at the end of February 2018, versus the broader stock market. There have not been any additional InvIT issues as of the end of February 2018. While the National Highway Authority of India (NHAI) and Central Public Sector Enterprises (CPSEs)52 could raise capital through the InvIT route, as outlined in the Union Budget 2018-19, there does not appear to be a substantial pipeline of private sector InvITs.

The lack of investor interest in InvITs could be attributed to unfamiliarity with these instruments and misplaced investor expectations with respect to returns53. Though comparisons with equity instruments have made returns offered by InvITs seem unattractive, these instruments are designed to offer high risk-adjusted returns and are more comparable with debt instruments. A correction in investor perceptions is needed to raise investor interest in InvITs.

A maturing RE ecosystem backed up by regulatory action has opened up new avenues of raising capital for RE companies. From being primarily dependant on bank debt for their financing needs to increasingly relying on balance sheet level bonds and new and innovative financial instruments, RE companies have changed the way that they raise capital. As the RE ecosystem matures further, non-recourse project-level bonds could become increasingly accessible to RE companies.

While investors’ comfort with utility-scale projects has grown considerably, the bankability of projects in the DRE sector remains a concern due to factors such as the disaggregated nature and small size of projects, the lack of an extensive technology performance track record and the creditworthiness of developers or offtakers. In order to address these concerns, the approach to DRE financing should rely on constructs that facilitate aggregation such as warehousing and credit guarantees to mitigate risk perceptions pertaining to creditworthiness of stakeholders. The deployment of these approaches could catalyse the development and scaling up of DRE market segments.

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the risks are Shifting for renewables delays in PaymentAs discussed above, the risk of offtakers (DISCOMs) delaying payments has been mitigated successfully for the projects bid out by central government agencies such as SECI and NTPC. This was made possible by inclusion of SECI and NTPC in the tripartite agreement among RBI, central government agencies such as SECI and NTPC, and state governments. The projects bid out by state government still face the risk of payment delays to the tune of 3-4 months.54 While a 3 to 4 months delay is the norm for private conventional generating plants, this risk could further go up for the expensive RE projects installed a few years back. This risk is not uniform for all the states. DISCOMs in states such as Gujarat and Uttarakhand are the highest rated DISCOMs in the country and are less likely to delay payments as compared to other DISCOMs in the country.55

Delays in payment lead to higher tariffs as developers have to provision for high capital buffers to absorb the delays in payment by DISCOMs. For example, a robust payment security mechanism (PSM)56 provided by the Madhya Pradesh government in the REWA solar project achieved the lowest tariff of INR 3.30 per kWh at that time.57 To achieve the lowest possible RE tariffs for their states and attract greater investment into their geographies, state agencies such as regulatory commissions need to take strict actions against the erring DISCOMs.

delays in Signing, renegotiations, and cancellation of PPasThe risk posed to the RE developers and investors from the delays in signing, cancellation and renegotiation of PPAs by DISCOMs is more severe and damaging than delays in payments. Falling RE tariffs in the last two years have incentivised DISCOMs to choose from these three tactics, to avoid procuring expensive electricity from RE plants installed a few years back. Similar to the risk of payment delays, this risk is virtually non-existent in the projects bid out by SECI and NTPC. It is mostly prevalent in projects bid out by state agencies.58 The Indian central government is mulling the imposition of penalties on DISCOMs that indulge in any of these tactics59. Some states have also cancelled the contracts on genuine grounds such as failure to set up projects in stipulated time. For example, the state of Madhya Pradesh cancelled one of its signed PPAs due to inability of the developer to complete the project in time. 60

Going forward, RE tariffs could decline to INR 1.92 by 2022 due to lower cost of modules and cost of capital61. Since RE tariffs are unlikely to decline as drastically as they have in the past (almost halved from INR 5 to INR 2.44 in 2 years), these risks are not applicable to the more recent PPAs. They are mostly limited to older PPAs, characterised by tariffs significantly higher than either the latest RE tariffs or the average pooled purchase price of the DISCOMs. However, even the risks to older capacities could deter international and domestic investors from investing in defaulting states. This risk, if left unchecked, could seriously derail the Indian RE journey and bring the investments in the Indian economy to halt since infrastructure investments are highly contingent upon the ability of a country to maintain the sanctity of contracts.

change in Law- Impact of antidumping/Safeguard duties on re equipment costsSimilar to other geographies such as Europe62 and the USA63, the Indian government has been contemplating trade restrictions in the form of anti-dumping duties (ADD) and safeguard duties on solar panels and cells, to safeguard domestic solar manufacturers for some time. The safeguard

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duty and ADD cases are subject to the regulatory jurisdictions of the Ministry of Finance and the Ministry of Commerce and Industry respectively. While the decision on the ADD is not yet out, the Ministry of Finance has proposed a safeguard duty of 70 per cent on solar modules and panels imported from China and Malaysia for 200 days, citing ‘threat of serious injury’ to the domestic industry.64 However, the Madras High Court has stayed it.65 No such cases have been filed for the wind sector since most of the wind manufacturing in India is indigenous. While the government has assured that these duties will be allowed to pass through66, such developments create a lot of uncertainty among the broader stakeholders and could stall the momentum created in the sector in the last four years. The ‘Change in Law’ provision in the Power Purchase Agreements (PPAs) should be articulated in a more transparent manner, in order to avoid the need for further clarifications from the government.

curtailment riskRE projects take relatively lesser time (12-18 months)67 to build compared to the supporting power transmission infrastructure that takes 3 to 5 years.68 This mismatch in the commissioning time could play a spoiler in the Indian RE revolution as most of the solar and wind projects are located far away from demand sources. The Indian authorities are implementing many transformative schemes such as the Green Energy Corridor to integrate the planned capacity of 175 GW of RE by 2022. However, issues such as right of way and land acquisition significantly delay the commissioning of the transmission infrastructure in India.69

In such a scenario, the risk of unavailability of transmission infrastructure or curtailment/backing down goes up significantly for the to-be installed RE capacities. The Indian federal government launched the Integrated Power Development Scheme to strengthen/upgrade the sub-stations and transformers in 2014.70 While this has been a welcoming move, instances of backing down have been reported in some parts of India.7172 Curtailment risk poses a significant threat to the receivables of developers and could severely impact project cash flows and debt repayment abilities of the developer if it manifests more than the assumptions factored in the project’s financial model.

Indian authorities have also provided for compensation in the case of backing down of generation under the revised tariff bidding guidelines for both solar and wind projects.7374 Better planning between the transmission-planning agencies and generation capacities-tendering entities along with the steps taken by the government would go a long way in ensuring that Indian RE journey remains shielded from curtailment risk.

States do MatterAs touched upon earlier in this paper, India’s RE deployment is not uniform but concentrated in certain states. This is a function of the attractiveness of that state for RE, encompassing RE resource potential, the availability of land and supporting infrastructure, including evacuation infrastructure, and the ease of regulatory processes and clearances. Table 1 illustrate the major states by installed solar and wind capacity.

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table 1: List of Indian States by Installed utility-scale Solar Power capacity

State Installed utility-Scale Solar Power capacity (gW)

Installed Wind Power capacity (gW)

Andhra Pradesh 2.28 3.62Gujarat 1.38 5.34Karnataka 2.74 3.75Madhya Pradesh 1.30 2.50Maharashtra 0.78 4.77Rajasthan 2.26 4.28Tamil Nadu 1.72 7.86Telangana 3.15 0.10

Sources: Solar installed capacity as of December 2017 – Mercom India Solar Market Update – Q4 2017

Wind installed capacity as of March 2017- Akshay Urja August -October 2017 Issue, MNRE

While Telangana and Karnataka clearly lead the pack in the installed solar capacities, Tamil Nadu and Gujarat lead in the installed wind capacities. But would this trend sustain going forward? As mentioned earlier section, risks are always shifting in Indian renewables. Could the current RE leaders in the standing remain leaders? This would depend on a multitude of factors - the regulatory structure for the increased penetration of renewables, future demand potential of electricity, extent of power supply shortage in the state, ability of the major electricity buyers such as DISCOMs and in turn, consumers to pay for the electricity consumed in a timely manner, a stable policy regime etc. This paper zeroed-in on five proxies to measure these parameters (See Table 2).

regulatory Structure for Increased Penetration of reThe Indian government mandated must-run status for RE sources and this could change going forward in the future. Also, while most of the states require RE developers to forecast and provide day-ahead and intra-day revisions for the day ahead-schedules for their generating units, statutory provisions that mandates this do not exist in every state. Only some states have notified these regulations while several states have drafted but not notified the same75. This will be a critical requirement for the increased penetration of RE sources in the states and in turn, the Indian grid (Column 2 in Table 2). Out of the RE-rich states, only Rajasthan, Karnataka, and Andhra Pradesh have notified these regulations. This single factor could change how these states stack up in terms of RE capacity addition going forward.

Stable Policy regimeIt is no secret that a stable policy regime facilitates greater investments. The biggest sub-component of a stable policy regime is contract enforcement. This becomes more important for infrastructure investments which are characterised by long-term contracts. Infrastructure projects entail huge capital costs and could easily become stressed if contracts are not enforced in time. Given the regulated nature of the Indian electricity market, this becomes a critical factor in attracting investments. RE tariffs have come down significantly in the last two years, incentivising many Indian electrical utilities to renege on/renegotiate the power purchase agreements signed at

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higher prices.76 While it makes economic sense to procure electricity at lower prices, such an action could singlehandedly halt the Indian RE run as investors lose confidence in the ability of states and regulators to enforce contracts. In the last two years, this has been observed in at least three states- Andhra Pradesh, Tamil Nadu, and Karnataka (Column 3 in Table 2).

Shortage of Power in the StateIndian states that are characterised by the shortage of power are more likely to commission electricity capacities. Alternatively, they could also procure from plants situated in other states. But to reduce transmission and distribution losses and avoid transmission charges, procuring electricity from nearby plants makes economic sense. Karnataka, Tamil Nadu and Maharashtra clearly have the major power deficits among RE-rich states (Last column in Table 2). Investors could look to invest in RE capacities in these states.

Future demand Potential of electricityInvestors would be better-off if they base their investing decisions on not just current deficit (point 3) but also on the future demand potential of electricity in a specific state. GDP per capita could be a good proxy to measure the extent of economic activity and the strength of industrial base in a state. These two, in turn, would decide the future demand potential of electricity. Karnataka and Maharashtra clearly lead the pack on this front (Column 5 in Table 2).

table 2: current leaders in re might not remain leaders in futureStates/ Parameters regulatory

framework Instances of PPas

renegotiation/ cancellation

credit rating of dIScoMs

State gdP per capita

(in millions Inr) for 2016-17

Power Deficit (in million units) for 2015-16

Andhra Pradesh Yes Yes A, B+ 122376 -70Gujarat No No A+ 151825 * -4Karnataka Yes Yes A, B, B+ 161058* -3331Madhya Pradesh No No B+, B, C+ 72599 0Maharashtra No No A 162238* -456Rajasthan Yes No B, C+ 93026* -212Tamil Naidu No Yes B 157116 -690Telangana No No B+ 158360 -306

*Projected data for 2016-17

ability of Bulk electricity Buyers to Procure electricityThe single most important factor in raising capital for infrastructure projects is the credit rating of the counterparty. State DISCOMs are the largest buyers of electricity and have different credit ratings. States such as Rajasthan that have high solar irradiation but poorly rated DISCOMs could achieve lower tariffs than achieved at present with an improvement in their credit rating. Madhya Pradesh, Rajasthan, and Tamil Nadu clearly need to work on improving the financial health of their DISCOMs to achieve lower RE tariffs and make their states more RE investment-friendly (Column 4 in Table 2).

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ability of the consumers to Pay for electricity While the ability of bulk buyers of electricity is very important in deciding where to invest, the ability of end consumers to purchase electricity from these bulk buyers is also important. Else, DISCOMs might not get into contract with any of the generating stations. The State GDP per capita is a good proxy to measure the income of consumers in a state and in turn for the ability of consumers to pay for the electricity consumed. Maharashtra and Karnataka clearly lead the pack on this parameter (See column 5 in Table 2). The above-mentioned factors are not comprehensive but capture the most important determinants for investors to invest in a specific state. Investors, depending on their risk profiles, need to assess these trade-offs and make decisions accordingly.

Where is the aIIB Putting its Money? How Much of Is It in energy?AIIB had approved around $4.2 billion77 in lending from the commencement of operations in January 2016 till the end of February 2018. These figures refer to the AIIB’s share of financing in the respective projects totalling $21.5 billion by the end of February 2018. Energy-related projects accounted for around $2 billion, or close to half of this lending portfolio, as summarized in Table 3.

table 3: aIIB Loans in energy-related Sectors ($Million)country gas-based

generationupstream,

Midstream & downstream

gas Infrastructure

Hydroelectric generation

renewable energy

generation

Power transmission

& distribution

non-industrial

energy Efficiency

India 0 0 0 0 260 0

Other Countries 80 910 360 210 165

Total 80 910 360 210 425 0

Source: AIIB Website

While some of the AIIB’s investments in power generation, gas infrastructure and power transmission and distribution have been projects aimed at improving the efficiency of existing installations, investments in non-industrial energy efficiency are conspicuous by their absence. The AIIB could consider investing in this area.

Besides the approved projects, there was another $700 million78 worth of lending proposed for energy-related projects out of the AIIB’s overall proposed lending portfolio of $2.4 billion at the end of February 2018. The concentration of the AIIB’s lending in energy-related investments is unsurprising, considering the strong alignment between the AIIB’s thematic priorities, particularly sustainable infrastructure, and investments in the energy sector. In addition, given the multi-dimensional impact of energy-related investments, from fulfilling the developmental imperative of energy access to energy security and combating climate change, energy is the only sector-focussed strategy of the AIIB. Going forward, India’s energy sector could provide a multitude of opportunities in line with the guiding principles of AIIB’s energy sector strategy.

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the road ahead for the aIIB – the role of Indian renewablesThe guiding principles of AIIB’s energy sector strategy offer a glimpse of the preferred course of the AIIB’s future investments. In its energy sector strategy, the AIIB has identified a range of sub-segments for financing future projects including power transmission and distribution, energy efficiency, RE investments and fossil fuel power investments. India offers a multitude of avenues for future AIIB investments, in keeping with the AIIB’s strategy. The following section highlights potential high impact areas for the AIIB’s involvement in India and the wider South Asia region.

utility-Scale re generation – the Integration challengeIndia’s commitment to the global clean energy transition is exemplified by the its commitments under the Paris Agreement. In order to boost the share of non-fossil fuel-based generation capacity to 40 per cent by 2030, India will rapidly scale up RE deployment. Given that utility-scale RE generation has firmly established its commercial viability in India, direct lending to RE projects need not be the priority investment area for the AIIB. However, given the pace and sheer scale of India’s upcoming RE deployment, the integration of variable RE sources of generation into the grid will be challenging.

Strengthening Transmission and Distribution InfrastructureThe unevenness in distribution of RE generation in India – largely concentrated in eight states with high RE potential – calls for a robust transmission and distribution network to evacuate power to non-RE rich states. In addition, the infrastructure at the substation level within states requires strengthening to facilitate RE integration. Moreover, in keeping with the AIIB’s thematic priority of cross-border connectivity and the guiding principle of promoting regional cooperation and connectivity, India’s grid could be connected with those of its neighbours to form a regional grid. This could enable power-deficit countries in the region to benefit from surplus generation in others, thereby boosting the region’s energy security as a whole79.

Besides boosting collective energy security, the formation of a regional grid in South Asia could enhance the capacity for absorption of renewable energy in the region, as exemplified by interconnected grid systems in Northern Europe80. While the RE deployment in India’s immediate neighbourhood is currently of the order of only a few gigawatts, most countries in the region do have long-term RE deployment goals and would benefit from an interconnected grid. Alternatively, these countries could offtake RE generation from India through grid interconnection, in order to increase the proportion of RE in their respective energy mixes (Table 4).

table 4: re deployment in India’s neighbourhoodcountry Installed re capacity Long term re target/ Policy

Afghanistan 50 MW81 350-450 MW by 203282

Bangladesh 437 MW83 3.1 GW by 202184

Nepal 45 MW85 To achieve universal access to clean, reliable and affordable renewable energy solutions by 203086

Sri Lanka 442 MW87 972 MW by 202088

Bhutan 25 MW by 202589

Myanmar 15 per cent-20 per cent share of RE in installed capacity by 202090

Note: Installed RE capacity figures for Afghanistan and Sri Lanka correspond to the year 2014 whereas those for Bangladesh and Nepal correspond to the years 2015 and 2016 respectively. Accurate installed capacity figures for Bhutan and Myanmar were not available.

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Regional grid interconnection is a fairly complicated process requiring the harmonization of grid codes, operating procedures and standards across countries. Given the AIIB’s influence and convening power in the region, it could take up the challenge of nudging countries in the region to facilitate grid interconnection for mutual benefit. It could build upon previous efforts at achieving grid interconnection, specifically, operationalizing the SAARC Framework Agreement for Energy Cooperation.

Improved Scheduling and Forecasting for RE Integration Besides grid interconnection, investments in IT-enabled forecasting and scheduling equipment could further facilitate RE integration. In addition to supporting the strengthening of transmission and distribution infrastructure, a portion of the AIIB’s investments should support the setting up of more robust scheduling and forecasting capabilities at the transmission utilities. Greater accuracy in scheduling and forecasting could lower the incidence of curtailment of RE generation, which has become a significant problem in India with increasing RE penetration91.

De-risking Private Investment through Financial InstrumentsFinancial instruments aimed at risk mitigation could be another means of facilitating grid integration. Insurance products or guarantees offer another means of mitigating the risks of RE curtailment, which would support greater private investment in RE generation.

Flexible Conventional Generation to Support RE Deployment Investments in clean conventional sources of generation are complementary to greater RE deployment. Pumped storage hydroelectric projects could play a role in facilitating RE integration into the grid. In case of thermal generation, emphasis should be placed on technologies that make the grid more flexible in order to complement increasing RE penetration. Reinvigorating gas-based generation and investing in technologies such as Automatic Control Generation (ACG) in the case of coal, could help achieve this objective.

new Paradigms of FinancingThe AIIB, in its first two years of operations, has done a commendable job as an Asia-focussed development bank, mobilizing financing for projects totalling $21.5 billion92 through its participation of $4.2 billion93. Around three-fourths94 of these projects were co-financed with other multilateral financial institutions, with the remaining financed on a standalone basis by the AIIB. While direct project financing certainly helps enhance the flow of finance towards the infrastructure sector, the deployment of capital through innovative means such as instruments geared towards risk mitigation could facilitate greater private sector participation. This could result in the mobilisation of much higher private sector capital per dollar invested as compared to direct project finance – increasing the impact of clean energy finance. A case in point is the Connecticut Green Bank, which mobilizes total investments of $9 for every $195 that it invests in renewable energy and energy efficiency projects through a mix of direct investment, co-investment, credit support, securitisation and incentives for specific market sub-segments targeted.

Green investment banks such as the Connecticut Green Bank are generally characterised by greater capacity to underwrite risks than multilateral development banks (MDBs), thereby facilitating greater private sector participation into underserved RE/EE markets. These institutions have been successful in enhancing the flow of finance to underserved RE/EE markets in a number of geographies including the US, the UK, Europe and Asia. The mandates and prudential

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frameworks applicable to MDBs could limit their capacities to make risky interventions in order to stimulate growth in underserved RE/EE market segments. In case of the AIIB, the bank’s articles of agreement allow for the AIIB to offer guarantees besides conventional lending and making equity investments 96. Such guarantees could facilitate the mobilisation of private sector capital through risk mitigation. However, these guarantees could be more effective in stimulating growth in underserved market segments if these are not constrained by market-based terms of pricing97. In order to have a greater impact in mobilising private sector capital in underserved or nascent RE/EE markets, MDBs need to enhance their capacity to underwrite risks.

Greater risk-taking capacity would enable MDBs to deploy financial instruments that address specific risks constraining market development. Besides underserved segments, such interventions could further de-risk more mature RE segments as well, supporting greater private investments into these segments. We present two financial instruments as examples of interventions aimed at risk mitigation that that can support growth in RE market segments.

common risk Mitigation MechanismThe Common Risk Mitigation Mechanism (CRMM) is an example of an instrument for financing and risk mitigation of solar energy assets developed under the aegis of the International Solar Alliance (ISA). The instrument is set to be deployed in 2018. The CRMM is a tool for pooling and aggregation of financing needs of solar energy assets across interested member countries and the mitigation of non-project specific risks through a common mechanism. Pooling and aggregation helps achieve diversification of project-specific risks, thereby lowering the costs of risk mitigation. The CRMM offers guarantees to eligible projects against currency risk, offtaker risk and political risk. The guarantee fund will be funded by development finance institutions (DFIs) and both developed and developing states. However, the CRMM achieves efficient risk allocation by transferring around 90 per cent of the risks to third parties through re-insurance and bearing the residual risk. As a result of the risk mitigation, through a $1 billion fund, the CRMM could mobilize $15 billion in overall investments.

grid Integration guaranteeThe Indian RE tariffs are one of the lowest in the world. However, with growing competition in the market, the extent to which developers factor in curtailment risk into their bids is unclear. When this risk manifests, banks, investors, and developers are often left with stressed assets. Mitigating this risk would further lead to lowered cost of capital for RE projects, effective resource utilisation of installed RE capacity, lower RE tariffs, and in effect, lowered GHG emissions. The Council on Energy, Environment and Water (CEEW) is designing an insurance product- Grid Integration Guarantee (GIG) to indemnify solar and wind generators against loss of revenue due to the curtailment of renewable power from the grid. Risk premiums on the GIG would further inform the policymakers about the feasible pace of renewable capacity additions and help quantify the cost of grid integration. Power systems across the world use sophisticated dispatch and communication systems. CEEW intends to design GIG by using the data generated in power systems operations to model and calculate premiums using a combination of actuarial methods and big data techniques. The GIG would cover the tail-end curtailment risk with market reflective pricing would be developed, with an implementation toolkit.

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conclusion The attractiveness of the Indian RE sector from investors’ perspective has increased considerably, as evidenced by trends in RE investment in India. The lowering of risks pertaining to the sector are reflected in the declines in auction-determined RE tariffs witnessed over the years. Policy level interventions have increased the certainty of demand, facilitated the setting up of supporting infrastructure, helped mitigate offtaker risk as well as offered preferential treatment to RE in the form of exemptions from interstate transmission charges as well as the ‘must run’ status of RE. Innovation in financial regulation has broadened the options for raising capital for RE companies in terms of the potential development of a more robust bond market as well as newer financial instruments such as InvITs.

While policy level interventions have created greater certainty in the RE ecosystem overall, there are considerable variation at the state level in terms of the supportiveness of regulatory frameworks, financial health of DISCOMs and the future demand potential for electricity. These differences differentiate states in terms of their attractiveness for RE investments. In addition, the evolving direction of policy measures at both central and state levels could have negative implications for RE investments. The uncertainty surrounding the potential imposition of duties on imported PV modules has hampered investment. In addition, the increased competitiveness of RE generation could set the stage for the removal of exemptions for RE generation such as its ‘must run’ status.

While RE capacity addition has increased over the past few years, in order to scale up deployment to a level that reflects the country’s ambitions, there is a need to further address both existing and evolving risks. Existing policy interventions could be further bolstered by structural reforms in the power sector. In addition, the planned RE capacity addition going forward must be accompanied by its effective integration into the grid. Strengthening transmission and distribution infrastructure, scheduling and forecasting capabilities and financial instruments aimed at mitigating curtailment risks could be effective in achieving this objective. In addition, new approaches are needed to scale up capacity addition in DRE segments, which have lagged behind their utility-scale counterparts. These segments require considerable de-risking in order to support the flow of private investment. Such interventions require the adoption of newer paradigms of financing – from direct lending to a greater focus on risk mitigation through financial instruments in order to crowd in private sector investment. MDBs such as the AIIB should consider taking on these riskier interventions in order to stimulate growth in underserved market segments.

endnotes

1 https://www.epa.gov/ghgemissions/global-greenhouse-gas-emissions-data2 ht tps ://www.iea .org/publ icat ions/freepubl icat ions/publ icat ion/WEO2017Specia lReport_

SoutheastAsiaEnergyOutlook.pdf3 http://www4.unfccc.int/ndcregistry/PublishedDocuments/India per cent20First/INDIA per cent20INDC per

cent20TO per cent20UNFCCC.pdf4 https://www.aiib.org/en/policies-strategies/strategies/index.html#strategies5 http://pib.nic.in/newsite/PrintRelease.aspx?relid=1711016 Construction Development includes Townships, housing, built-up infrastructure and construction-development

projects7 http://dipp.nic.in/sites/default/files/FDI_FactSheet_21February2018.pdf

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8 India’s National Solar Mission was announced in late 20109 http://www4.unfccc.int/ndcregistry/PublishedDocuments/India per cent20First/INDIA per cent20INDC per

cent20TO per cent20UNFCCC.pdf10 http://pib.nic.in/newsite/PrintRelease.aspx?relid=13322011 http://pib.nic.in/newsite/PrintRelease.aspx?relid=17483212 http://pib.nic.in/newsite/PrintRelease.aspx?relid=17483213 http://pib.nic.in/newsite/PrintRelease.aspx?relid=9942114 http://pib.nic.in/newsite/PrintRelease.aspx?relid=16175515 http://www.financialexpress.com/economy/ntpc-seeks-tripartite-pact-renewal-to-ensure-payments/126196/16 http://www.indiabudget.gov.in/budget2016-2017/ub2016-17/bh/bh1.pdf17 http://www4.unfccc.int/ndcregistry/PublishedDocuments/India per cent20First/INDIA per cent20INDC per

cent20TO per cent20UNFCCC.pdf18 http://www.indiabudget.gov.in/ub2018-19/bs/bs.pdf19 https://powermin.nic.in/sites/default/files/webform/notices/OM_SAUBHAGYA_SIGNED_COPY.pdf20 http://pib.nic.in/newsite/PrintRelease.aspx?relid=17110121 http://www4.unfccc.int/ndcregistry/PublishedDocuments/India per cent20First/INDIA per cent20INDC per

cent20TO per cent20UNFCCC.pdf22 CEEW Analysis23 http://www.cea.nic.in/reports/monthly/installedcapacity/2018/installed_capacity-01.pdf24 http://www.cercind.gov.in/2017/regulation/SOR131.pdf25 http://niti.gov.in/writereaddata/files/new_initiatives/NEP-ID_27.06.2017.pdf26 http://www.business-standard.com/article/economy-policy/mp-provides-must-run-status-to-renewable-energy-

but-imposes-extra-charges-117120500563_1.html27 https://powermin.nic.in/sites/default/files/webform/notices/Waiver_of_inter_state_transmission_of_the_

electricity.pdf28 https://www.bloomberg.com/news/articles/2015-04-23/rbi-widens-scope-of-priority-sector-lending-to-add-

renewables29 https://rbi.org.in/scripts/FAQView.aspx?Id=8730 ibid31 https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=987532 http://rayssol.com/solar-project-financing-in-india/33 http://www.livemint.com/Money/fXTztFG7JX4fvH5Ptzk9vI/Indian-corporates-find-saviour-in-bonds-as-loans-

dry-up.html34 http://www.indiabudget.gov.in/ub2018-19/bs/bs.pdf35 https://rbi.org.in/Scripts/NotificationUser.aspx?Id=10574&Mode=036 ibid37 ibid38 https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=11127&Mode=039 http://www.financialexpress.com/market/as-rbi-separates-masala-bonds-from-fpi-limits-three-firms-line-up-

for-issues/870741/40 https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=1020441 http://www.financialexpress.com/market/as-rbi-separates-masala-bonds-from-fpi-limits-three-firms-line-up-

for-issues/870741/42 https://rbi.org.in/Scripts/NotificationUser.aspx?Id=10994&Mode=043 https://www.fool.com/investing/2017/04/17/forget-solar-yieldcos-this-is-a-better-way-to-gene.aspx44 https://www.greentechmedia.com/articles/read/the-yieldco-boom-and-bust-the-consequences-of-greed

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45 https://www.sebi.gov.in/legal/regulations/apr-2017/sebi-infrastructure-investment-trusts-regulations-2014-last-amended-on-march-6-2017-_34691.html

46 ibid47 ibid48 https://economictimes.indiatimes.com/news/economy/policy/exemption-from-dividend-distribution-tax-will-

improve-potential-returns-for-investors-make-infrastructure-investment-trusts-attractive/articleshow/52571748.cms

49 ibid50 https://in.finance.yahoo.com/quote/INDIGRID-IV.NS?p=INDIGRID-IV.NS51 https://in.finance.yahoo.com/quote/IRBINVIT.BO?p=IRBINVIT.BO52 ibid53 http://www.livemint.com/Money/e4OLKm4IbNvDsNfz5elj2N/InvITs-suffer-from-a-case-of-misplaced-

expectation.html54 http://indianexpress.com/article/business/banking-and-finance/power-firms-ask-rbi-for-special-

dispensation-5102607/55 http://www.pfcindia.com/DocumentRepository/ckfinder/files/GoI_Initiatives/Annual_Integrated_Ratings_of_

State_DISCOMs/5th_rating_booklet_2017.pdf56 PSM is a three- tiered payment security mechanism- Irrevocable letter of credit equal to one month’s tariff, overdraft

of INR 480,000,000, and Government of Madhya Pradesh’s Guarantee Obligation57 CEEW Analysis58 https://economictimes.indiatimes.com/industry/energy/power/after-uttar-pradesh-jharkhand-manages-to-

renegotiate-solar-tariffs/articleshow/59976279.cms59 https://cleantechnica.com/2017/09/08/india-mulls-penalty-refusal-sign-solar-ppas/60 http://www.financialexpress.com/economy/madhya-pradesh-cracks-whip-cancels-solar-ppas-signed-with-

canadian-firms-india-unit-sky-power-solar/844434/61 Analysing the falling solar and wind tariffs: Evidence from India (upcoming) 62 https://www.theguardian.com/environment/2017/sep/08/solar-industry-says-eu-tariffs-chinese-imports-will-

raise-panel-prices63 https://www.nytimes.com/2018/01/22/business/trump-tariffs-washing-machines-solar-panels.html64 http://9.hollywoodlogin.com/Datafiles/cms/PDF/Preliminary per cent20Findings per cent20Solar per cent20Cells

per cent2005.01.18-Final.pdf65 https://economictimes.indiatimes.com/industry/energy/power/madras-hc-stays-safeguard-duty-on-solar-

equipment/articleshow/62595583.cms66 https://www.hindustantimes.com/business-news/govt-to-amend-solar-bid-rule-to-allow-pass-through-of-

import-duty-hike/story-pFr5joF2wvVvGPdXnyAzfM.html67 http://www.tnerc.gov.in/orders/commn per cent20order/2017/TANGEDCO per cent20-MPNo-10of2017.pdf68 http://ficci.in/spdocument/20311/power-transmission-report_270913.pdf69 ibid70 http://pib.nic.in/newsite/PrintRelease.aspx?relid=11162171 http://rerc.rajasthan.gov.in/Orders/Order444.pdf72 http://www.livemint.com/Industry/ASu58DZtfl5xnomADH13wL/Clean-energy-firms-worry-about-backdown-

by-discoms.html73 https://powermin.nic.in/sites/default/files/webform/notices/Resolution_on_wind_Bidding_Guidelines_

dated_8th_Decemeber_2017_Eng.pdf74 http://pib.nic.in/newsite/PrintRelease.aspx?relid=17024375 CEEW Analysis

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76 http://www.business-standard.com/article/economy-policy/tamil-nadu-govt-in-talks-with-adani-others-to-reduce-solar-power-price-117061901111_1.html

77 https://www.aiib.org/en/about-aiib/basic-documents/_download/AIIB-Presentation.pdf78 Source: AIIB Website79 http://pib.nic.in/newsite/PrintRelease.aspx?relid=11063280 https://www.agora-energiewende.de/fileadmin/Projekte/2014/nordic-german-integration-project/Agora_

Increased_Integration_Nordics_Germany_LONG_WEB.pdf81 http://aeic.af/assets/uploaded_files/ANREP per cent20Final per cent20Draft per cent20Nov per cent203.pdf 82 ibid83 https://www.iea.org/policiesandmeasures/pams/bangladesh/name-157149-en.php?s=dHlwZT1yZSZzdGF0d

XM9T2s,&return=PG5hdiBpZD0iYnJlYWRjcnVtYiI-PGEgaHJlZj0iLyI-84 ibid85 http://www.aepc.gov.np/docs/resource/rescenter/20160606165013_RE per cent20Subsidy per cent20Policy per

cent202016 per cent20(2073 per cent20BS)_Unofficial per cent20Translation_English.pdf86 ibid87 https://cleantechnica.com/2015/09/29/sri-lanka-considering-20-renewable-energy-power-generation/88 ibid89 http://www.terienvis.nic.in/index1.aspx?lid=1763&linkid=1261&langid=1&mid=490 http://www.burmalibrary.org/docs22/2015-12-Myanmar_Energy_Master_Plan.pdf91 http://www.energynext.in/renewable-integration-need-for-curtailment-risk-assessment/92 https://www.aiib.org/en/about-aiib/basic-documents/_download/AIIB-Presentation.pdf93 ibid94 ibid95 https://www.reenbank.com/economic-development-engine/96 https://www.aiib.org/en/about-aiib/basic-documents/_download/articles-of-agreement/basic_document_

english-bank_articles_of_agreement.pdf97 https://www.aiib.org/en/policies-strategies/_download/operation-policy/policy_operational_financing_new.

pdf

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