De-centralized grid-connected business models for rooftops

and IP Sets

Swarup Mavanoor

• Contract enforceability – (Residential)

• Low consumer tariff• User dependent revenue

De Centralized Generation Business Models - Basics

2

Model Basics and Enablers• End user purchase of PV System• Net-metering policy• Effective warranty and QoS

• Developer owned + operated system/ leased system

• FiT policy / Split tariff scheme• Contract enforcement mechanisms

1

Solar as a service

2

System Sale – User owned

Key Challenges• Up-front capital cost• Cost of consumer finance• Tariff subsidy provided by utilities

Financing options and models for rooftop systems

• Cash Purchase• Bank LoanSelf Financed

• DISCOM Loans - On-bill financing• DISCOM Lease – Generation financingDISCOM Financed

• Developer Lease• Power purchase agreements (PPA)Solar Service

• Roof Rental• Community GenerationOther

3

Financing options and models for IP sets

4

• Cash Purchase• Bank LoanSelf Financed

• DISCOM Loans - On-bill financing• DISCOM Lease – Generation financingDISCOM Financed

• Developer Lease• Power purchase agreements (PPA)Solar Service

• Roof Rental• Community GenerationOther

X X

X

X

X

Self Financed Models – Loan based

5

Key Challenges – Commercial systems

• Reaching grid parity for commercial systems (10kW – 1MW)

• High up-front capital investment• Low IRR (<6-9%)

Key Challenges – Small systems

• High effective tariffs for small systems (<10kW)

• Rs.8.0 –12 / kWh Vs. DISCOM tariff• Expensive loans• High end-user risk• Long/ Uncertain payback

DISCOM Financed

6

Key Challenges

• Capital availability• Interest rate and tariff setting• Payback and assured generation?

Service Model - Lease

7

Key Challenges

• Net savings > Lease Payments• Exposure to consumer risk• Variability in savings with net metering

Service Model - PPA

8

Key Challenges

• Legal Framework – Repossession, Collection, Contract enforceability

• Effective Tariff – Savings + Inflows > Cost

9

66/11kV

PTC

DTC DTC DTC DTC

C2

CN

1 2 3 N

F1

C1

66/11kV

MUSSMWp PV Plant

P2

P3

P1

PN

IN

CN

Community Generation Model

Utility

FIT

Key Challenges

• Legislation• Policy• Technology

Developer

Investment

Key enablers to drive adoption

Policy

Legislation

Tariff

Technology

Access to finance

10

a

a

a

!

Tariff

• Gross Generation - Distributed generators compensated for energy generated

• Eliminates revenue variability associated with net-metering• Increased ability to bring in developer finance – predictable IRRs for

developers• What is the right tariff?

• Gross generation + feed-in incentive ( Hybrid tariff model)• Potential model for residential and IP sets• Gross generation compensated for at APPC/Cost-to-serve• Additional tariff for net-generation

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Net Vs. Gross Metering

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Source: Forum of Regulators

References and Sources

• Solar PV Business Models and Key Policy Considerations, Sopitsuda Tongsopit, Ph.D. University of Chulalongkorn - Link to file

• Photovoltaics Business Models, L. Frantzis, S. Graham, R. Katofsky, and H. Sawyer, NREL - Link to file

• Models for rooftop Solar (PV) Development, Dr. Omkar Jani, GERMI - Link to file

• Forum of regulators working group - Link to file

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