Merchant Markets in Egypt Nov 2018
Clean Max: Asia’s largest C&I solar developer • Installed base of 500 WMp, entirely for commercial and industrial customers • Includes ~350 MWp of wheeling based solar farms and ~150 MWp of rooftop solar plants • Ranked #1 Solar Developer since the inception of Bridge to India’s “India Solar Rooftop Map” with market share of 20-25% over the last 5 years • Customers include MNCs, government facilities, universities etc. Sources: • http://www.bridgetoindia.com/wp-content/uploads/2017/07/India-Solar-Rooftop-Map-2017.pdf • https://en.wikipedia.org/wiki/Solar_power_in_the_United_Arab_Emirates | 1
Merchant markets are where customers can choose their power generators In traditional markets , generation, transmission, and distribution are typically bundled together leaving the customer with no choice of generator or power source GENCO CUSTOMER TRANSCO DISCOM Govt utility In merchant markets , customers can engage bilaterally with generators, and use the Transco & Discoms as essentially ‘highways’ of power Bilateral Agreement GENCO CUSTOMER TRANSCO DISCOM Govt utility Private Supplier | 2
Solar is unique as it allows for decentralisation of power generation Net Metering Wheeling Location • Solar PV system located remotely • Solar PV system and at a solar farm; injecting power located on-site of structure into the grid consumption • Grid allows consumers to offset • Excess power fed to their consumption against solar grid for energy credit generation as per bilateral PPA Typical • 200 kWp to ~5MWp • Tens or hundreds of MWp Plant size • Restricted by roof size • Restricted by market size, grid- stability study, land availability • Monetisation of rooftops • Significant capacity realisation • Daytime peak shaving through solar • Long term reduction in Benefits transmission and distribution infrastructure | 3
Benefits of a vibrant merchant market • Contributes to energy self sufficiency by channeling private enterprise to generation • Natural demand-supply adjustment; private plants typically have a much shorter project cycle than mega power plants • Decouple electricity costs from fossil fuel prices • Daytime electrical peak-shaving reduces burden and cost on utility infrastructure • Competitiveness and efficiency drives down cost of power over the long term Load Profile Solar PV system Costs Solar output Base Load 2014 2015 2016 2017 2018 Solar output matches daytime peak in MENA region | 4
Metal roofs | 5
Concrete roofs | 6
Carport based solar power plant | 7
Off-site solar farms for wheeling projects 30MWp farm in Dindigul,TN 30MWp farm in Tumkur, KA | 8
Catalysts for Merchant Markets | 9
Market Proposition: Driven by C&I need to reduce energy cost in the face of rising grid tariffs Grid vs Solar Tariff movement in India Grid vs Solar Tariff movement in Dubai (INR/kWh) (AED/kWh) 10 0,6 0,4 5 0,2 0 0 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Grid Tariff Solar Tariff Grid Tariff Solar Tariff Grid Tariff movement in Egypt (EGP/kWh) 1,2 1 0,8 0,6 0,4 0,2 0 2013 2014 2015 2016 2017 2018 Grid Tariff | 10
While driven by private enterprise, merchant markets need conducive regulatory frameworks to thrive • Clear and granular net metering and wheeling policies with Ø eligibility criteria for participation Ø exhaustive list of permissions with single nodal authority; ideally not the discom Ø clarity on land acquisition, for wheeling projects Ø exhaustive list of charges Ø implementation guidelines for discom/transcom officials Ø timelines on policy applicability | 11
Financing private PPAs unconventional but possible with robust contracts, green capital and local equity • Large base of credit worthy offtakers essential – MNCs, large local groups etc • Local lending critical to exponential growth – portfolio style lending lines, local bank distribution backed by DFIs/IFIs tends to work best. ”Priority sector” lending also useful to catalyse market. • Local private equity very important since - Primary source of funding till banks enter the fray - Private PPAs almost local currency denominated • Comfort factors for lenders/investors (in addition to regulatory factors) - high quality offtakers and PPAs - pooled risk across multiple projects/offtakers | 12
Q&A | 13
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