sidbi presentation
TRANSCRIPT
ESCO Financing : Opportunities and ESCO Financing : Opportunities and Road blocksRoad blocksRoad blocksRoad blocks
January 25, 2017 at IIT Madras Research Park
http://prsf.sidbi.in/
Sustainable Initiatives of SIDBI
EE and ESCO Scenario
Partial Risk Sharing Facility for Energy Efficiency
Product Details
Presentation OverviewPresentation Overview
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Product Details
Basic eligibility criteria for PRSF coverage
Schema of PRSF
Role of various stakeholders
SIDBI’s initiatives in Sustainable DevelopmentSIDBI’s initiatives in Sustainable Development
Introduced schemes for financing Energy Efficiency (EE) & Cleaner Production projects in MSME sector.
Entered into strategic partnership with BEE, TIFAC, The World Bank, DFID, JICA, KfW, GIZ & AFD for promoting & financing clean & EE investments in MSME sector.
Created a dedicated team of experts housed at “Energy Efficiency
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Created a dedicated team of experts housed at “Energy Efficiency Centre” for focused approach.
Besides financing, also actively pursuing various developmental initiatives including WB-GEF Project, 4E scheme, PRSF project etc.
Conducted awareness campaigns, focused group meetings, energy audits, pilot interventions in MSME clusters.
SIDBI’s EE assistance/Initiatives: HighlightsSIDBI’s EE assistance/Initiatives: Highlights
Sanctioned Assistance of around Rs.5900 crore to more than 6800 MSME units.
Sanctioned more than Rs. 400 crore in RE Projects
More than 1043 Million units of electricity saved
Thermal energy savings of 650,000 million kCal
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Thermal energy savings of 650,000 million kCal
Resulted in reduction of around 1 million t of CO2 annually
Financed Green Buildings/Energy Efficient buildings aggregating to an amount of more than Rs. 100 crore
Reached more than 100 industrial clusters and have created awareness on EE
Commitment to reduce the CO2 emissions intensity by 33-35% by 2030 from 2005 levels.
Increased thrust on Energy Efficiency, RenewableEnergy, Cleaner Production, etc.
India’s Intended Nationally Determined Contributions (INDCs): Key points
India’s Intended Nationally Determined Contributions (INDCs): Key points
Investment of USD 2.5 trillion required for meeting India’s climate change actions.
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Energy Efficiency Largest & Lowest Source of Emission Reduction
Top priority of Indian Government – initiating various program
Demand Despite huge EE potential most end users unable to implement EE project
because lack of understanding / technical capability to execute the projects
Opportunities for ESCOOpportunities for ESCO
because lack of understanding / technical capability to execute the projects
Role of Intermediary (ESCO) ESCO plays a key role – helps clients overcome key EE market barriers
ESCO – offers EE technologies / services with guaranteed savings
ESCO – establish credibility through ESPC – guarantees the host entity certainlevel of energy savings
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• China’s energy savings are more than half ofthe energy savings worldwide.
• ESCO market in China More than 5,000 registered ESCOs
ESCO Market in ChinaESCO Market in China
Annual business turnover – US$10 billion
Many other countries also have thriving ESCObusiness.
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• ESCO market in India Around 139 registered ESCOs. Only a few are
active. Annual business turnover – very small
Some major barriers are :
ESCO Market in IndiaESCO Market in India
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Some major barriers are : Limited awareness amongst the Host entities Weak financial position of ESCOs Limited access to bank finance due to asset &
security coverage issues M&V disputes No standard templates of ESPC, TRA, etc. Dispute resolution mechanism
What is PRSF
PRSF is a guarantee program (risk sharing mechanism)
Objective
to kick-start market for energy efficiency projects implementedby ESCO through performance contracting
To demonstrate viability of ESPC market for scaling up EEprojects
To reduce the risk perceived by commercial bank in providing
PRSF – Overview PRSF – Overview
To reduce the risk perceived by commercial bank in providingcredit to Energy Efficiency projects / to ESCOs
To address barriers faced by ESCOs in availing finance
Project Components
Component 1 - Risk Sharing Facility (USD 37 Mn)
Component 2 - Technical Assistance (USD 6 Mn)
Project Duration
15 Years
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PRSF – Guarantee product detailsPRSF – Guarantee product details
Eligible Hosts / Sectors
• Large industries (excluding thermal power plants)
• MSMEs • Municipalities• Buildings
Eligible EE Loans
• Loan to ESCO or host entity falling under Micro & Small Category
• Min. 75% of loan towards EE investment
Eligible ESCOs
• BEE-Empanelled ESCO
• JV / Consortium allowed
• Other entities are also eligible subject to grading by rating agency
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agency
Extent of Coverage
• 75% of loan or o/s• Min. loan – Rs.10
Lakh • Max. loan – Rs.15 cr. • Max. exposure to a
single Host / ESCO – Rs. 45 cr. (Grade 5 – Rs. 40 cr.)
Guarantee Tenure
• 5 Years or loan tenure, whichever is lower
Guarantee Fee
• Slab-Wise & based on the grading of ESCO
PRSF – Guarantee Fee StructurePRSF – Guarantee Fee Structure
Guaranteed Loan
Amount or outstanding,
which-ever is lower (INR)
Non-Refundable Annual Guarantee Fee
For Grade 1 to Grade 3
ESCOFor Grade 4 ESCO
For Grade 5
ESCO
Up to Rs. 500 Lakhs 1.00% subject to a
maximum of Rs. 5.00 Lakh
1.00% subject to a
maximum of Rs. 5.00
Lakh
1% subject
to maximum
of Rs. 15.00
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Lakh of Rs. 15.00
lakh
Above Rs. 500 lakhs and
uptoRs. 1000 lakhs
Rs. 5.00 lakhs plus 0.50%
on the amount above 500
Lakhs subject to a
maximum of Rs. 7.50 lakh
Rs. 5.00 lakhs plus
0.75% on the amount
above 500 Lakhs
subject to a maximum of
Rs. 8.75 lakh
Above Rs. 1000 lakhs and
up to Rs. 1500 lakhs
Rs. 7.50 lakhs plus 0.25%
on the amount above 1000
lakhs subject to a
maximum of Rs. 8.75 lakh
Rs. 8.75 lakhs plus
0.50% on the amount
above 1000 lakhs
subject to a maximum of
Rs. 11.25 lakh
• Energy saving project
• EE to be implemented by an ESCO
• ESCO to be empanelled with BEE or graded by
rating agencies
Basic Eligibility Criteria for PRSF CoverageBasic Eligibility Criteria for PRSF Coverage
• Project Beneficiary - i) MSMEs, ii) Buildings, iii)
Municipalities, iv) Large industries (excluding
thermal power plants)
• Borrower should be a Micro / Small Enterprise
• ESPC between host and ESCO12
• Escrow / TRA mechanism
• Key clauses covering to be captured in the Loan
Agreement
Basic Eligibility Criteria for PRSF CoverageBasic Eligibility Criteria for PRSF Coverage
Agreement
• right to access the site,
• ERMF compliance,
• sanctionable practices, etc.,
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PRSF – Overall SchemePRSF – Overall Scheme
ESCO and Host initiate discussion on ESCO project
DEA / Identification of energy saving opportunities
Decision on Shared / Guaranteed Saving
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Decision on Shared / Guaranteed Saving
Contract signing (ESPC)
Borrower approach PFI / SIDBI for loan
PRSF – Overall SchemePRSF – Overall Scheme
Appraisal & loan sanction considering PRSF req.
PFI to submit PRSF guarantee application
Evaluation of guarantee application
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Evaluation of guarantee application
Issuance of PRSF guarantee
Payment of Guarantee fee within 30 days
PRSF – Overall SchemePRSF – Overall Scheme
Effectiveness of the guarantee
Quarterly report by the PFI
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Payment of annual guarantee fee
Loan closure – guarantee coverage comes to an end
Interactions between stakeholdersInteractions between stakeholders
Risk Coverage
PFIFinancing
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SIDBI
PFI
Borrower
Project
ESCO Host
For PRSF SuccessFor PRSF Success
PRSF
PFI
HostPEA PRSF Host
ESCO
PEA
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• Sign MoU with PEA and fulfill preparatory activities
• Sign Master Guarantee Agreement
• Sanction the loan and sign loan agmt. (key clauses)
• Sign TRA / ESCROW Agreement
• Apply for PRSF Guarantee
Role of PFIsRole of PFIs
• Apply for PRSF Guarantee
• Submitting information on periodic basis to PEA
• Monitoring and follow-up of the loan
• M&V exercise through a third party agency hired by PEA
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• Conduct detailed energy audit in the Host facility
• Sign ESPC with the Host
• Approach Bank for loan with required documents
• Sign the Escrow / TRA agreement
• Undertake installation, commissioning, operation, maintenance
Role of ESCOsRole of ESCOs
of energy savings projects
• Undertake training of Host personnel, as necessary
• Resolve the technical underperformance of the implementedenergy savings project, if any
• Conduct Environmental Safeguards Due Diligence (ESDD)
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• Support ESCO for preparation of IGEA, ESPC and M&V Plan
• Sign ESPC with the ESCO
• In case of guaranteed savings, approach Bank for loan withrequired documents
• Sign the Escrow / TRA agreement
• Deposit monetized value of energy savings as per the schedule
Role of HostsRole of Hosts
• Deposit monetized value of energy savings as per the schedule
• Comply with ERMF guidelines & ESDD report
• Extend cooperation to ESCO in resolving technicalunderperformance
• Provide access to lender/ESCO/PEA or their representatives forM&V
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• Act as the nodal agency for the guarantee facility
• Sign MoU and MGA with PFIs
• Develop a common platform in the form of dedicated website forPRSF operation
• Provide guarantee approval for eligible EE projects
Role of PEARole of PEA
• Process the guarantee claim and in eligible cases release theeligible guarantee
• Due diligence / M&V of projects on sample basis
• Conduct of M&V where claims have been lodged
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• Marketing & outreach activities
• Standard documents viz. ESPC, TRA, etc.
• Appraisal / due-diligence tools for EE projects (underdevelopment)
Role of PEA - Support to PFIsRole of PEA - Support to PFIs
development)
• Training of PFIs on EE financing
• E-Learning modules on EE financing (under development)
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• Market development
• Improved availability of finance
• Standard templates of IGDPR, ESPC, TRA, etc.
Role of PEA - Support to ESCOsRole of PEA - Support to ESCOs
• Standard templates of IGDPR, ESPC, TRA, etc.
• Matchmaking and loan syndication support for the initial fewprojects
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PRSF Website - http://prsf.sidbi.in/PRSF Website - http://prsf.sidbi.in/
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• Matchmaking platform in PRSF website
• E-learning module to train Banks/FIs and ESCOs
• Interactive meets with ESCOs/PFIs/Hosts
On going TA Activities for promoting ESCO marketOn going TA Activities for promoting ESCO market
• Training of Banks/ FIs / NBFCs
• Marketing of PRSF
• Due diligence tool for PFIs
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SIDBI & PFI Officials Training ProgramsSIDBI & PFI Officials Training Programs
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SIDBI & PFI Officials Training ProgramsSIDBI & PFI Officials Training Programs
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SIDBI & PFI Officials Training ProgramsSIDBI & PFI Officials Training Programs
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Interactive Meet with ESCOs and PFIsInteractive Meet with ESCOs and PFIs
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PRSF Website Up gradationPRSF Website Up gradation
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