Financial uncertainty to determine future of CSP in India?

India’s concentrated solar projects have faced countless hurdles since the National Solar Mission (NSM) was launched in 2010. However, setting up finance for the seven bid winning projects under Phase I of the NSM has proved to be the greatest challenge for local developers. This barrier is a result of the high capital cost of CSP, as well as the uncertainty surrounding the rate of return for banks and financial institutions. 

Coupled with this is the continued legacy of the global financial crisis and the shadow this cast over investment in renewable energy projects. The recent turmoil seen in the debt markets has raised further concerns about the prospects of new large-scale solar plants in India, due to the high capital needed to develop CSP.

Reports surrounding what projects have now achieved financial closure in Phase I of the NSM have been misleading, but what is clear is that only two developers provided financial closure details by the given deadline in July 2011. To date projects have continued to progress, with key components now ordered and project construction beginning to take shape. However, there is still ambiguity surrounding the methods used to finance these plants, and whether through project finance or private equity it is crucial that the capital is in place to bring all CSP projects to completion.

It now comes down to how many projects are successfully completed and funded in Phase I. If a large number of plants do not meet their completion deadline in May 2013, and were unable to raise the capital needed, then this will be a clear indication from the markets that CSP is not bankable in India. The bankability of Phase I projects will inevitably have a knock on effect  for Phase II of the NSM and many experts believe that a new course correction will be required to renew confidence in the financial community.

To combat this uncertainty surrounding the future financing of CSP projects in India, CSP Today have announced this week that IREDA, the World Bank and leading financiers will participate at the 3rd CSP Today India Summit 2012 (New Delhi, 14-15 March). The risks associated with CSP technologies in India and the challenges faced to secure project finance ahead of Phase II will form a critical part of the discussion in New Delhi. In addition experts from KPMG, KfW Bankengruppe and PwC will assess how increasing competition from photovoltaics has impacted solar financing, and what initiatives must be taken to maintain financial backing for CSP.

Other confirmed participants include the Ministry of New and Renewable Energy, Central Electricity Regulatory Commission, Solar Energy Centre, Torresol Energy, Abengoa, Godawari Power and Ispat, Siemens, Reliance power and many more leading CSP players.

The event is set to take place on 14-15 March in New Delhi, with over 350 delegates in attendance. For more details about the summit go to the website: www.csptoday.com/india

Or contact:

Jack Ahearne
CSP Today
jack@csptoday.com