India Smart Grid Summit - Towards Sustainable Energy Solution- Presented by: Pawan Kumar Agrawal Executive Director & Regional Business Leader, Infrastructure Banking Group, Wholesale Banking February 12, 2014

2Strictly Confidential Agenda What is Smart Grid? Why Smart Grid? Financing Smart Grid Bank Finance Financing Structures/Incentives

3 What is “Smart Grid”? “A smart grid is an electrical grid with automation, communication and IT systems that can monitor power flows from points of generation to points of consumption (even down to the appliances level) and control the power flow or curtail the load to match generation in real time or near realtime ” - Source : Smart Grid Vision “ Electrical System with Internet Connection ”

4 Why Smart Grid? Energy Demand Management Optimizes Resources & Improves Efficiency Reliable Integrates Renewable Energy Strives towards utilization of dispersed generation sources Strictly Confidential Why Banks/FIs will Finance Smart Grid? Expect the Smart Grid to spur the kind of transformation that the internet has already brought to the way we live, work, play and learn. Source : US Department of Energy

5 Financing Smart Grid Strictly Confidential External Grants  Distribution Reform, Upgrades and Management (“DRUM”) project jointly designed by MoP and USAID Policy Support Extended by the Government  Restructured Accelerated Power Development and Reforms Program (R-APDRP) – focused budgetary support for Smart Grid Private Participation  Planning Commission projects outlay of INR 95 Bn in XIIth plan period in transmission infrastructure  Public Private Participation

6 Bank Finance - What will make Smart Grid Viable Proposition Long Term Improvement in Creditworthiness of Discoms  Lower power purchase costs  Integration of renewable energy sources – to assist compliance with RPO  Reduced distribution losses Greenfield Smart Grid Projects  Smart Grid projects in greenfield projects like DMIC will be prune to issues afflicting distribution sector  Integral for reliable supply of power and encourage investment Bankable Structures for private participation  Assured return linked to improvement in AT&C losses  Non-Penalizing Termination Clauses ( for events beyond licensee’s control ) Strictly Confidential

7 Financing Structures/Incentives Structures Project Financing Balance Sheet Funding Funding with Credit Enhancement schemes ( by state/central govt ) Partnership with Nodal Agencies/Multi-lateral Agencies Vendor Financing Strictly Confidential

8 Thank You Strictly Confidential