Public-Private Partnership Stories India: Vadodara Solar The state of Gujarat has been at the forefront of the solar energy revolution in India, successfully bringing on line over 800 Mega Watts (MW) of ground based solar PV plants under a state program. In 2010, the government of Gujarat sought IFC’s assistance to develop an innovative 5 MW rooftop solar public-private partnership (PPP) project in the state capital of Gandhinagar outfitting government buildings with solar panels. The success of this project has helped prove the potential for rooftop solar in India. To help attain its green energy vision, the government looked to replicate the project, but this time with the participation of its citizens, and sought IFC’s assistance to structure a new project in the city of Vadodara with private citizens adopting the rooftop solar concept. Madhav Solar (Vadodara Rooftop) Private Limited (the “Concessionaire”) won the 25- year concession for a 5 MW rooftop solar project in the city of Vadodara. Under the concession, the Concessionaire will install solar photovoltaic panels on the rooftops of primarily privately-owned properties such as commercial buildings, homes and indus- trial units, and sell the energy generated to the local utility. The Concessionaire will offer a lease rental to the owners for accessing and using their roofs. Besides attract- ing $8 million in private investment, the project is expected to result in 9,000 people receiving increased access to power and a reduction of 6,000 tons of GHG emissions annually. The project agreement was signed in June 2014. This series provides an overview of public-private partnership stories in various infrastructure sectors, The project was implemented with financial support from the Norwe- where IFC was the lead advisor. gian Trust Fund for Private Sector Development and Infrastructure, IFC Advisory Services in Public-Private Partnerships the Canada Climate Change program, and the South Asia Infra- 2121 Pennsylvania Ave. NW Washington D.C. 20433 structure Facility. ifc.org/ppp BACKGROUND IFC also recommended a transaction structure and managed The state of Gujarat, located in western India, pioneered the solar the tender process, including preparing bid documents, investor energy revolution in India. The government of Gujarat successfully consultations, and evaluating bids. IFC also lent support for: brought on line over 800 MW of ground mounted solar power • Knowledge building and training workshops on the rooftop capacity to introduce renewable energy to its predominantly fossil solar concept for staff of Gujarat state distribution utilities. fuel based energy mix. However, the government was keen to push the envelope and launch a rooftop solar initiative in the capital • Creation of a website to provide knowledge and information city of Gandhinagar, for which it sought IFC’s advisory services. to citizens on the rooftop solar project, and how they could Being a sunrise sector in India, many technical, regulatory participate. and commercial challenges were anticipated. The project was structured with the selected developer undertaking to install TRANSACTION STRUCTURE 80% of the rooftop capacity on pre-identified government owned IFC recommended a 25-year concession on a build, own, operate buildings, while the balance capacity was to be developed on (BOO) model. Under the agreement, the selected developer would private rooftops. The project was successfully bid out in 2012 and install solar panels on hundreds of rooftops throughout the city of is an operational success. Vadodara with an aggregate capacity of 5 MW. As per the terms With the rooftop solar concept proven, the government of of the concession, the large majority of these installations are Gujarat looked for opportunities for its citizens to participate in required to be on private rooftops whose owners would receive its mission of promoting green energy. This objective could be rental income for their previously unused rooftop space. The achieved by expanding the rooftop solar concept to other cities developers would connect these individual systems to the local where the large majority of buildings were privately owned. grid and sell the power generated to the local distribution utility. The government sought IFC’s expertise to structure and bid Total project cost is estimated at US$8million, all of which would out a 5 MW rooftop solar project in the city of Vadodara where be financed by the winning bidder. the developer is responsible for identifying all the rooftops, including homes, commercial buildings and industrial facilities. BIDDING Successful implementation of the project would help the Interest in the project was strong, with over 40 firms purchasing government showcase the potential of rooftop solar, ensuring the bid documents. Madhav Solar (Vadodara Rooftop) Private large participation of its citizens in green energy generation, while Limited won the 25-year concession and the power purchase also providing additional valuable power to the grid and reducing agreement with the distribution utility was signed in June 2014. GHG emissions. The project is expected to be operational in 2015-16. IFC’S ROLE EXPECTED POST-TENDER RESULTS IFC was appointed lead transaction advisor by the Government of Gujarat owned Gujarat Power Corporation Limited, to structure • Improved access: 9000 people will benefit from and bid out the Vadodara Solar project. Besides providing improved energy services at affordable prices. transaction advice, IFC’s role included technical, legal and, • Mobilization of private sector investment: : the analytical support, including: transaction will attract $8 million in private invest- • Conducting a detailed technical study including an on- ment to the state. ground survey of large available rooftop spaces, creating • Climate change: reduces GHG emissions by 6,000 a database of satellite images of all available rooftop space tons of carbon dioxide equivalent annually. and estimating the feasible rooftop capacity which could be installed by a solar developer in Vadodara. • Public benefit and participation: provides rooftop owners economic benefits from their previously • Reviewing social, legal and commercial issues related to unused rooftops by way of rent from the developer. renting rooftop space from residential, industrial and Further, this allows private citizens to partake in commercial buildings and developing terms for the rental the state government’s green energy vision. agreements. • Supporting discussions with the client and the local state- 02/2015 owned distribution company, Madhya Gujarat Vij Company Limited, on the design of the power purchase agreement.