Adani was the first to trade green bonds on the India International Exchange
India now has its own green bond trading platform. The Bombay Stock Exchange (BSE)’s international arm, India International Exchange (India INX), recently announced its exclusive green listing and trading platform called Global Securities Market (GSM). GSM Green will serve as a platform for fundraising and trading green, social, and sustainable bonds exclusively.
The green bond taxonomy followed by India INX is per International Capital Market Association’s (ICMA) Green Bond Principles and Climate Bonds Initiative, which provides a platform for global investors to invest.
The Green Bond Principles were established in 2014 by a consortium of investment banks: Bank of America Merrill Lynch, Citi, Crédit Agricole Corporate and Investment Bank, JPMorgan Chase, BNP Paribas, Daiwa, Deutsche Bank, Goldman Sachs, HSBC, Mizuho Securities, Morgan Stanley, Rabobank, and SEB. ICMA is monitoring and providing development guidelines for the Green Bond Principles.
The Climate Bonds Initiative provides green definitions that are sector specific, developed by scientists and industry experts. These fall into eight broad categories (energy, transport, water, buildings, land use, and marine resources, industry, waste and Information and communications technology (ICT)) under the taxonomy. Sector-specific standards are used for certification.
India INX is committed to facilitating fundraising for green commercial projects and promotes ESG standards through GSM Green Platform.
Adani was the first company to register its bonds on the platform and raise funds. India INX MD and CEO V. Balasubramaniam mentioned, “We welcome Adani Green’s $ 500 million issue. It is special to us as this is the first non-banking private sector issuer on India INX platform. Further, with a dedicated green platform, issuers, investors and traders will find it more convenient to list and trade green, social, and sustainable bonds. BSE has long been part of Sustainable Stock Exchange initiative, so it is only apt that at India INX we encourage more green funding which is in line with the Government of India’s initiative of sustainable development.”
Adani Green Energy Chief Financial Officer Ashish Garg said, “We are excited that a platform like Global Securities Market with a dedicated green segment is being offered now at India INX in India’s very own International Financial Services Center. This was a long pending gap and will encourage more green financing in the country.”
Mercom previously reported that Adani Green Energy Limited (AGEL), the renewable energy arm of Adani Group, had said it was going to raise $500 million through green bonds. The proceeds will be utilized to repay its respective external commercial borrowing loans, and the balance of the net proceeds for capital expenditure, other project related liabilities or for on-lending to other subsidiaries of the company.
Previously, Tata Cleantech Capital Limited (TCCL) also raised ₹1,800 million (~$25.62 million) through green bonds from FMO, the Netherlands Development Finance Company. The funds will be utilized to grow Tata Cleantech’s renewable energy portfolio. The company mainly focuses on renewable energy, energy efficiency, and water management. This funding would also help FMO reach its long-term emission reduction targets.
I’ve been noticing a lot of plastic clothing all over the place lately. Clear PVC shoes. Bags. Jackets. Hats. Not only do these guys make your toes hella sweaty, they also look weird since they turn yellow fast. Also, they’re non-biodegradable. Which means, once they go out of fashion and you toss your stuff away, they either collect dust at the back of your closet, doing nothing, or they add to toxic waste that’s already choking Momma Earth. Between consumerism that’s becoming a fast-spreading epidemic to fast fashion that brands like H&M, Zara and Forever 21 (and our bloggers with a major cult following) promote, we’re forgetting that we’re making our lives super hard. Soon, we won’t have clean air to even get by.
One way in which you can actually keep the earth from this literal choking is by maybe considering sustainable fashion. There are seven forms of this, according to Green Strategy:
Now, eco fashion happens to be an excellent way to minimize waste – fabric that comes from jute, or muga silk, or even banana stems and pineapple leaves, for example. So much waste is produced anyway when you use unsustainable materials like cotton which actually take up a lot of manual labor, chemicals and not to mention, pollution from factories. Now, banana stems and pineapple leaves produce fabric which you can transform into clothing and they look amazing. Could these someday compete with cotton? (Read about this fascinating article here.) Organic and clean fabrics that won’t harm anything or anybody? Yes, please.
If you’re in India, and you have a wedding coming up, why not – instead of wasting a crazy amount of money on a lehenga that you probably won’t wear again – opt for a rented one? Flyrobe has a ton of designer outfits you can rent, and customize as per your needs. You also pay literally only a fraction of what your outfit would cost you otherwise. They’ve got a lot of designers to pick from, including Sabyasachi.
The other thing you can do to actually minimize waste, like the chart said earlier, is to recycle your old clothing. For example, you’ve been handed down your sibling’s old sweater – you could DIY the heck out of it. It would be something new without actually being new, and you wouldn’t have to spend much to wear a new outfit to school. There’s a YouTuber that posts a lot of DIY videos. Her name is Orly Shani and she’s someone that’s inspired this post. If you’re someone that’s into crafting and DIY, take a look at her channel The DIY Designer. Not only does she look like a snack (a snack named Sandra Bullock), she’s also extra fun to watch.
What’s your take on fashion? Do you believe in sustainable fashion? Do you also have a vintage piece you’ve inherited from one of your parents that you’ve actually worn and loved to death?
Suchie Sarkar is the one and only Lit Biwi, do check out her blog for more great content.
Featured Image Source: http://fabrikbrands.com/sustainable-fashion-brands/
While the situation in the industry had improved for the better briefly, things seem to have deteriorated again
Payment delays are becoming a problem again for solar and wind project developers in India especially in Andhra Pradesh, Tamil Nadu, and Telangana. Some instances in Madhya Pradesh and a DISCOM in Karnataka are also being blamed for long payment delays to developers.
Payment delays were a persistent problem a couple of years ago, and Mercom reported on this topic in March of 2017. The situation improved briefly but has now deteriorated again.
States with payment delay problems – Andhra Pradesh, Tamil Nadu, and Telangana are major solar markets which have about 9 GW of large-scale operating solar projects between them according to Mercom’s 2018 Q4 & Annual India Solar Market Update.
Solar and wind tariffs are well below the ₹3/kWh mark with the lowest solar tariff in India reaching ₹2.44 (~$0.038)/kWh and wind tariffs touching the lowest-ever mark of ₹2.43 (~$0.037)/kWh. Government agencies are benefitting from low tariffs and procuring power at record low prices. However, for developers, these extremely low tariffs mean no margin for error.
In this scenario, payment delays are a huge risk for developers. The chance of default in the case of a long payment delay increases dramatically when a developer is unable to service the bank interest, and in the long-term, this could lead to non-performing assets.
A top executive at one of the major private renewable energy conglomerates said, “All of us, both big and small players, are facing payment delay problems and this issue is escalating day by day. Andhra Pradesh, Tamil Nadu, and Telangana are the main culprits. In Tamil Nadu, there has been a delay of about more than a year. In Telangana, the delay has been about ten months, and in Andhra Pradesh, the delay is about seven to eight months. These delays are for payments of both solar and wind power projects.”
Mercom reported on curtailment issues in Karnataka, Andhra Pradesh and, Tamil Nadu back in November.
A mid-sized developer told Mercom last month that they haven’t received payments for their Madhya Pradesh projects over the previous 4 to 6 months.
Even the country’s largest power generator, the National Thermal Power Corporation (NTPC) has been affected by this issue. Mercom recentlyreported that DISCOMs in Andhra Pradesh, Telangana, and Karnataka owe NTPC ₹18.84 billion (~$262.6 million) in dues for solar power supplied by projects under the National Solar Mission.
Talking to Mercom, an NTPC official said, “Payment delays are a big setback as capital gets stuck and it affects the workings of our companies. If it is for one or two months, it is understandable, but here the delays are for months upon months, and one has to approach higher authorities and do a lot of arm twisting to make these DISCOMs pay. We supply thermal power along with renewable energy, so we (at NTPC) have a better leverage point when it comes to making DISCOMs clear dues, but for other firms that are only involved in the renewable energy segment it is a tough ask, as they are dependent on the whims of DISCOMs and even the process of relief through CERC or SERC is time-consuming, putting projects and profits in danger.”
The Ujwal DISCOM Assurance Yojana (UDAY) program was supposed to help some DISCOMs stuck in a debt-rut. However, looking at the non-payment of dues, it does not look like UDAY has helped the financial situation of DISCOMs. When asked about the reason behind payment delays in the light of implementation of the UDAY program, the top executive at a the major private renewable energy conglomerates said, “UDAY has been a failure as plans were not put into operation in time; the regulatory body did not implement tariff changes on time, and now this has led to the current backlog of dues by DISCOMs.”
When contacted over the issue, Manoj Gupta of Fortum said, “Our company doesn’t have any power purchase agreements with state-owned DISCOMs, so we aren’t facing any payment delays. But the issue exists in the sector and is a huge bother for generators that have entered into PPAs with state-owned DISCOMs.”
When contacted to shed some light on the issue, an executive at a large solar firm said, “The largest project developers in the country – including NTPC – have been facing payment delays for over a year now. They have the wherewithal to survive and keep on executing new projects, but the smaller fish will die. They will have to sell their projects in order to survive and to execute new projects as banks charge higher interest rates in India due to this being a high-risk sector known for payment issues amongst others.”
A top executive at another large private green company in India said, “In Tamil Nadu, the payment has been pending since July 2018. Karnataka is a bit irregular in payments at times; the only exception being HESCOM that is a known defaulter. On top of all this, curtailment is not helping. In Tamil Nadu, we are facing curtailment. In Karnataka too, there was some curtailment in the past.”
Recently, the Ministry of Power constituted a new committee to study and submit recommendations into the issue of delayed payments by DISCOMs to power generating companies and independent power producers. The final results are yet to be published.
Addressing the financial woes and payment issues in Andhra Pradesh and Telangana, India Ratings and Research in its note said,“ The increasing dependence on the subsidy has rendered Andhra Pradesh DISCOMs vulnerable to the finances of the state. A significant part of the subsidy for FY19 was supposed to be raised through bonds guaranteed by the government of Andhra Pradesh and was raised on April 23, 2019. It is likely that a large quantum of pending dues to generation companies, including renewable projects, will be cleared from the proceeds of these bonds. However, the lack of clarity about timely funding of the subsidy continues to pose uncertainty over the cash flow position of the DISCOMs in Andhra Pradesh, as well as of projects that sell power to the DISCOMs in the state.”
If the payment issue continues or gets worse the ability of solar developers to bid for new projects will decrease. Already many developers are already reluctant to bid for projects in auctions that have aggressive tariff caps where the margins are very tight. Add payment uncertainty to it and projects become a very risky bet.
“There are already a plethora of challenges that face developers like import duties, GST, land and transmission issues in the country. Long payment delays on top of this are devastating to many companies that have taken risks to invest and generate clean power in India, especially smaller developers. A payment guarantee mechanism for solar and wind developers is a must and cannot wait,” said Raj Prabhu, CEO of Mercom Capital Group. “Clean power generators should be encouraged and incentivized not pushed to financial distress.”
Wind is now the cheapest source of energy in India
India’s wind energy sector has come a long way since the introduction of reverse auctions. In 2016, the Solar Energy Corporation of India (SECI) carried out the first-ever wind auction in India. The sector has benefitted immensely ever since. To date, 10.6 GW of wind projects has been auctioned and awarded in India.
The reverse auction mechanism was introduced in the sector after witnessing solar bids plummet in its reverse auctions. Before reverse auctions were introduced, wind projects were mostly developed by private companies for captive consumption or for sale to the state; the process was not transparent. But all of this changed in 2016 when the reverse auction was introduced.
The first batch of the auctioned interstate transmission system (ISTS)-connected wind energy projects were commissioned in India in August 2018.
Wind is now one of the cheapest sources of energy in India. In December 2017, wind power tariffs dropped to a record-low level of ₹2.43 (~$0.038)/kWh quoted in the Gujarat Urja Vikas Nigam Ltd. (GUVNL) 500 MW auction in Gujarat. This is lower than the lowest solar tariff of ₹2.44 (~$0.037)/kWh quoted in the Bhadla Solar auction in May 2017.
Reverse auctions have caused tariffs to plummet and tariffs have remained at levels below ₹3 (~$0.043)/kWh. An increasing number of state agencies have even introduced wind tenders to meet their non-solar renewable purchase obligations (RPOs).
Government support in the form of wind resource assessment and identification of potential sites through the National Institute of Wind Energy, the waiver of interstate transmission charges, and concessional customs duty exemption on certain components of wind electric generators have all helped.
As wind tariffs fell below solar, it also enabled the government to come up with wind+solar hybrid policies and regulations. Recently, a tariff of ₹2.67 (~$0.03794)/kWh was quoted in India’s first-ever wind+solar hybrid auction conducted by SECI.
After the decline in wind tariffs, the government began exploring the possibilities of offshore wind as India has one of the longest coastlines in the world. Recently, the MNRE issued draft offshore wind energy lease rules which are aimed at spurring activity in offshore wind, which has until now remained dormant. In June 2018, the MNRE established a short-term installation target of 5 GW of offshore wind capacity by 2022 and a long-term installation target of 30 GW of offshore wind projects by 2030.
However, not everyone is thrilled with reverse auctions and the direction of tariffs especially after the introduction of tariff caps.
When contacted, a top executive at one of the leaders in the Indian wind energy sector said, “Yes, we have come a long way since 2016 and the commissioning of the first batch of auctioned wind projects marks the completion of a circle that the sector has turned. Tariffs have gone down and there are tenders galore, but all’s not well.”
“As it happened with solar, the low tariff bug has bit the implementing agencies in the wind energy sector too. Once the tariff went to ₹2.43 (~$0.038)/kWh in a GUVNL auction, implementing agencies started fixing upper tariff ceilings way below the ₹3 (~$0.043)/kWh mark in tenders. This is a huge negative as the same tariff cannot be achieved in other locations. Implementing agencies need to understand the potential of the areas they are tendering for, as the height of windmills plays a huge role in the cost of projects,” added the executive.
An executive at a wind project development firm said, “As of now, everything is fine, but the mad dash for low tariffs can ruin the progress made in the past three years. Another issue that is being faced is curtailment in windy states.”
Speaking about the tariff issue, a government official told Mercom, “Our aim is to provide cheap, green power to Indian citizens. Technologies are getting cheaper, and that’s why we are reducing upper tariff caps. We are not just doing it on a whim but after due diligence. Firms always keep profit paramount, even they must change their attitude a bit and work for the betterment of India, not just filling their coffers. Tariffs around the ₹2.60 (~$0.038)/kWh mark will still be profitable for them if we look at the low of ₹2.43 (~$0.038)/kWh.”
Low tariffs are a bone of contention between the stakeholders, and the government agencies.
“The reverse auction procurement system in solar and wind was designed to award the projects to the lowest bidder. What we have now is a reverse auction where opening bids are set and can only go in one direction – down. Government agencies need to consult with developers and investors and strike a balance between tariff, project quality and profits,” said Raj Prabhu, CEO of Mercom Capital Group.
In 2018, investments in the Indian solar sector totaled approximately $9.8 billion compared to 2017, in which almost $11.5 billion flowed into the Indian solar sector. 2018 witnessed a decline of 15% in investments year-over-year (YoY). These findings were revealed in Mercom India’s recently released 2018 Q4 and Annual India Solar Market Update.
Even though downstream investments fell YoY due to a decrease in solar installations and decline in system costs; the total investment reached almost $10 billion as the upstream activity increased due to investments in new manufacturing facilities.
2018 was a challenging year for the Indian solar market with GST rate issues, the imposition of safeguard duty on solar cells and modules from China and Malaysia, and the cancellation of more than 4 GW of auctions by government agencies citing high tariffs, leading to the first decline in installations since 2014.
The Indian solar market added 8.3 GW in new large-scale and rooftop installations in the calendar year 2018.
However, the imposition of safeguard duty also led to manufacturing capacity addition domestically.
Few Noteworthy Deals
In January 2018, ReNew Power raised ₹22.35 billion (~$352 million) to be used for its expansion and loan-payment plans. ReNew Power raised the amount through Non-Convertible Debentures (NCD) which were issued in two parts. The company raised ₹14.75 billion (~$232 million) through a multi-issuer cross-collateralized rupee bond. The remaining ₹7.6 billion (~$120 million) was raised through a credit enhanced NCD and has a tenor of 17 years.
In the same month, solar firm Orb Energy raised over $14 million (~₹954 million) in equity and debt to expand its in-house finance facility of rooftop solar projects for Small- and Medium-sized Enterprises (SMEs) in India. The Netherlands Development Finance Company (FMO) provided $4 million (~₹254 million) in equity funding, the Overseas Private Investment Corporation (OPIC) provided $10 million (~₹636 million) as long-term debt.
Mahindra Renewables, a wholly owned subsidiary of Mahindra Group, achieved financial closure for a 250 MW solar project in the Rewa District of Madhya Pradesh. YES Bank will provide financing in the form of to ₹7.5B ($115.5 million) in project debt, and other financial institutions will provide up to ₹2 billion ($30.8 million). In January 2018, the International Finance Corporation (IFC), a member of the World Bank Group, had announced it will provide $50 million (~₹3.2 billion) as senior or IFC-A loan to Mahindra Renewables. Back then, the IFC had also announced, “Apart from loaning the $50 million (~₹3.2 billion), the IFC will also assist in mobilization of the syndicated parallel loan of up to $100 million (~₹6.4 billion).”
Vector Green Energy completed the refinancing of two solar projects with 223 MW of combined capacity in Telangana. The refinancing was initially sought after the company acquired the projects from First Solar. IndusInd Bank and L&T Finance together sanctioned more than ₹10 billion (~$156 million) to Vector Green toward the acquisition of the First Solar portfolio.
In May 2018, Sunsure Energy, a solar turnkey solutions provider, raised zero-collateral based debt capital worth $2.2 million from TATA Cleantech Capital, L&T Finance, and cKers Finance to be used as working capital to construct solar photovoltaic (PV) projects up to 100 MW in FY 2019.
In June 2018, Indian renewable energy project developer Azure Power raised $135 million in debt financing from a consortium of development finance institutions. The line of credit was led by International Finance Corporation, a member of the World Bank Group and attracted the participation of leading institutions, including FMO – the Dutch development bank, Société de Promotion et de Participation pour la Coopération Economique (Proparco) – the French development finance institution, and Oesterreichische Entwicklungsbank AG (OeEB) – the development bank of Austria.
The same month, Fourth Partner Energy, a distributed energy management company, raised a $70 million investment from The Rise Fund, a global impact investment fund managed by TPG Growth.
In August 2018, Cygni Energy Private Limited, a solar DC and microgrid solutions provider, raised $6.4 million in funding through a combination of equity and debt funds. The equity funding was provided by Endiya Partners, a leading early-stage venture capital firm that invests in product start-ups. The debt funding was made possible by IndusInd Bank, a leading private bank in India.
In November 2018, Freyr Energy, a Hyderabad-based rooftop solar company, raised ₹270 million (~$3.81 million) through a mix of equity and debt investments. The round was led by C4D Partners, a Netherlands-based Impact Investment Fund.
Indian solar companies did not receive any significant venture capital or private equity investment in 2018.