Solar Photovoltaics Project in India

A fellow from India writes: “We are going to start a solar energy project of 16 MW and are desperately looking for investment. Can we get assistance from your people with respect of funding?”

I thought I’d publish what I wrote him (along with notes in italics I added later) as I think it’s of general interest.

Sure.  (There is some chance this project would be attractive to investors, albeit infinitesimally small.  But there’s no reason to be nasty with people.  I cut and paste my standard questions, processing this in about 30 seconds.)  Please send the business plan, and let me know:

• Is there any remaining development work to be done: engineering, permitting, etc?  (Most of these projects are nowhere near “shovel-ready,” and investors will not pay to get them there.)

• How much have the partners invested themselves? (Most of these projects are attempts to use “OPM” – other people’s money, and that’s a non-starter.)

• How much additional liquidity do the partners have? (Projects CAN be financed if the partners have significant liquidity.)

• Who is the off-taker in the PPA (power-purchase agreement)?  (Projects can ALSO be financed if there is a binding PPA with a credit-worthy off-taker.)

• What is the IRR (internal rate of return) for the investor?  How was that calculated?  (If it’s not in the high teens or better, that’s another non-starter.)

I have relations with a few parties to whom I can send this if the answers are positive.  But obviously, there is a whole bunch of due diligence that will need to be performed before anyone with any sense would move forward with a project like this.  I rate the chances of success here to be about one in a thousand, but again, there’s no reason to be nasty with people.