1. Emergent Ventures International
An Integrated Climate Change and Energy Company
Solar Projects – Financial Levers & Risks
Deepak Verma, Chief Operating Officer
January 27, 2010 1

2. Solar – intrinsics of power market makes compelling case
Serious Shortage in Supply
Low Penetration of Renewable Energy
Immense Solar Potential
Approximately 145 GW of power generating capacity installed
However only 55% of Indian households have electricity
Electricity demand expected to 10% - 12% p.a for the next 15 years
Huge gap between supply and demand
Renewable energy installations constitute only 9% of total power capacity
~160 GW of RE potential has been identified
92 % of available resources untapped as of now
Solar Potential in India greatly exceeds potential from other renewable energy sources
Good solar intensity 4 – 7 kWh/m2/d
More than 300 sunny days
However, solar has not taken off due to high capital costs; 2

3. Levers affecting investor returns
Project Cost
Financing Costs
Tariff & Incentives
Future: Renewable Energy Certificates
Solar PV
Panel costs have reduced substantially over the past couple of years due to the financial crisis and abundant stocks
Low-cost alternatives like thin-film are getting mainstream
Project cost expected to reduce further as technology improves
Tradeoffs between project cost, efficiency, reliability and bankability
Solar Thermal
Innovative techniques required to reduce projects cost
Indigenous manufacturing of components would help in reduction of project cost
5% reduction in Project Costs increases equity return by 1.5%-2% 3

4. Levers affecting investor returns
Project Cost
Financing Costs
Tariff & Incentives
Future: Renewable Energy Certificates
Domestic debt expensive
Rates ranging from 9%-12%
Banks still uncomfortable with financing solar projects
Government schemes available through IREDA and REC for lower cost financing;
However limited capacity available
Most project proponents would have to look at alternative means
International debt markets can provide cheaper rates
EXIM Financing - ~3%-4%
International Debt Markets – ~5%-6%
Refinancing guarantee via ADB
However long-term hedging is expensive (3-6% for 5-10 years)
1% reduction in Financing Costs increases equity return by .75%-1% 4

5. Levers affecting investor returns
Project Cost
Financing Costs
Tariff & Incentives
Future: Renewable Energy Certificates
National Solar Mission
Target of 20,000 MW by 2020
Base Tariff of INR for solar PV
However Tariff bidding reduced the actual tariff to INR – INR 12.76
150 MW allocated based on highest discounts offered
Gujarat State Policy
Phase 1 and 2 have a split tariff; INR 15 for 13 years INR 5 for the remaining 12 for solar PV
Evacuation infrastructure provided to all proponents
Over 900 MW of PPA’s signed with GUVNL
Small Solar Programme
Tariffs ranging from INR in various states
GBI to state electricity boards from IREDA
PPA signed for 100 MW
Rajasthan State Policy
Wasteland provided at 10% of DLC on long-term lease
An INR 1 increase in Tariff increases equity return by 2%-2.5% 5

6. Levers affecting investor returns
Project Cost
Financing Costs
Tariff & Incentives
Future: Renewable Energy Certificates
Renewable Energy Certificates (REC) announced by CERC
To be traded on the energy exchange
Separate solar specific REC set-up with floor price of INR 12 and cap of INR 18
Solar generators not availing preferential tariffs would be awarded RECs by a central regulatory body
Would be used to set-off Renewable Purchase Obligations (RPO) of various state electricity boards
However
as of date, there are no penalties to SEBs for not fulfilling RPOs;
Markets for RECs not developed
Can become a potential revenue stream ensuring project viability and returns
Achieving bankability with uncertain revenue streams will be challenging 6

7. Risks to Solar Projects
Aggressive bidding
Low Quality Imports
Financial Closure
Aggressive discounts on tariff have been provided by project proponents under NSM
Ground radiation likely to be lower than solar model forecasts
Project proponents would have to seek creative ways to ensure projects remain afloat
Low-cost international financing
Long-term financing / re-financing options
Lower costs through various means
Project Proponents may achieve only sub-par equity returns of 5%-8%
Discounted tariffs have reduced equity returns by 7%-10% 7

8. Risks to Solar Projects
Aggressive bidding
Low Quality Imports
Financial Closure
Investors may start looking at low quality imports to enhance returns; however:
Long-term guarantees from these vendors may not be bankable
Performance of plants may deteriorate
Additional expenditure would be required for replacements of modules and cells
Project Owners may also make design and engineering choices to reduce cost, which in turn could impact medium to long-term reliability 8

9. Risks to Solar Projects
Aggressive bidding
Low Quality Imports
Financial Closure
Domestic Banks still uncomfortable with the Solar growth story
Many projects which had signed PPAs in June 2010 are struggling to achieve financial closure
Transfer of government land is a very lengthy procedure – causes delays to financial closure
Solar Projects is not in the priority lending sectors
Awareness of international debt options still very low among the small project proponents
Options for carbon finance very limited
Small set of projects likely to receive non-recourse financing
Most of the projects in the NSM programme would be ineligible for non-recourse project financing 9

10. Opportunistic Investor/Operator Developer Independent Power Producer
Likely players
Speculator
Opportunistic Investor/Operator
Developer
Independent Power Producer
De-risked Long-term Investor 10

11. Emergent Ventures International
An Integrated Climate Change and Energy Company
Corporate Profile
January, 2010 11

12. Emergent Ventures International (EVI) An Integrated Climate Change and Energy Company
A pioneer in the field of climate change mitigation with business interests in:
Climate Change and Sustainability
Clean Technologies
Established in 2004, EVI has grown from a carbon advisory to offer comprehensive solutions that contribute to the key vision of the company “Sustainable Solutions for The Environment”.
Currently, EVI has more than 120 consultants working on over 300 client engagements in over 15 countries across 5 continents.
Carbon Advisory
Sustainability Advisory
Clean Energy Business 12

13. Partnership with Clients
Our Clean Energy Business We help organizations develop clean energy solutions
We partner with Clients to provide end-to-end services for the development of renewable energy projects across a variety of technologies (Wind, Solar, Biomass, Waste). We believe in maximizing the Client’s returns and work towards this goal. Our aim is to provide a one-stop shop for Clients wanting to enter / expand in the Renewable Energy Domain.
Renewable Energy Project Development
Engineering Services – Renewable Energy
Clean Energy Generation
Technical Experience
EVI and its Affiliates are engaged in developing ~ 150 MW of bio-mass based power plants, 300 MW+ wind energy plants, 50 MW+ solar power plants, and 200,000 acres+ of plantations.
Partnership with Clients
EVI partners with the Clients to provide end-to-end services. Some of the services include project feasibility analysis, policy support, site selection, resource assessment, basic engineering design, project management, etc.
Projects
Biomass: 132 MW in Bihar; 11.5 MW in Sri Lanka
Waste-to-Energy: 5.6 MW in Haryana
Wind: 300 MW projects in Tamil Nadu
Solar: 50 MW in Rajasthan and Andhra Pradesh 13

14. Clean Energy Business Key Service Offerings
Renewable Energy
Project Development
Engineering Services – Renewable Energy
Clean Generation
Prefeasibility analysis & survey;
Techno-economic viability study
Policy Support
Site analysis / selection
Power Sale / PPA
Vendor relations / development
Financial closure / Syndication
Carbon asset management for in-house projects
Engineering, procurement & construction services (EPC)
Overall management of projects (Owners’ engineer)
O & M of project (Management lease)
Has identified attractive generation projects under development; includes biomass, waste to energy and wind farms
Technologies include: Biomass, Waste-to-energy, Gasification, Solar PV, CSP and Wind
Projects are diversified across fuel source and geography to build a balanced portfolio 14

15. Thanks Emergent Ventures International
5th Floor, Universal Trade Tower, Sec-49, Gurgaon, India
@EVItweets
Thanks 15