SEGEF Moser Baer

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	567207
Company name	Moser Baer India Limited
Country	India
Sector	Other (For Non-Investment Projects)
Environmental category	B
Department	Environment & Social Development
Status	Non-Invest Proj

Date SPI disclosed	May 28, 2009
Projected board date	June 30, 2009

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The project is to build and operate a grid-connected 5MW solar PV demonstration plant, which will be integrated into the grid network in the state of Tamil Nadu. The project would be implemented by Sapphire Industrial Infrastructure Pvt. Ltd. (“SIIPL”), a wholly owned subsidiary of Moser Baer Clean Energy Ltd, The project site identified is in Sivaganga district in Tamil Nadu which has substantial insolation. The estimated average annual net electricity generation from the 5 MW project is expected to be approximately 8,000 MWh, which corresponds to an Annual PLF of about 18%. The output of the PV demonstration plant will contribute to the peaking power supplies of the adjacent region, within the state of Tamil Nadu, over a twenty five year period or longer.

Anticipated development impact of the project

This project is designed to be a catalyst for development of a self-sustaining Indian grid-connected renewable electricity market. This demonstration project will be a case study of the benefits and challenges to the grid of PV distributed generation, during steady operation state and transient analysis. Besides contributing towards reduction of the energy supply-demand gap in India’s power sector, the Project would help in reducing the CO2 emission levels in India which are estimated at 1,250 million tonnes per annum. Assuming that the project will displace coal based power generation by generating approximately 8,000 MWh/year of “green energy” it is estimated that the CO2 reduction will be approximately 6,600 tonnes per year. Additionally, a 5 MW solar power plant is expected to generate 40-80 jobs during construction and operation.

IFC's expected development contribution

IFC has a strong role to play in the project through supporting Moser Baer's plans to participate in downstream operations within the solar generation sector in India. While developers in India have been able to attract significant interest from banks in conventional and other renewable energy projects, IFC is in a unique position today to provide concessional funding and long term debt. To our knowledge, this solar PV project (amongst the roughly 10 awarded so far) is expected to be among the first to be constructed with IFC having a major role in achieving this result.

IFC's concessional financing along with the sponsor's commitment are expected to produce a strong demonstration effect on the market as this project will be one of the first grid-connected solar projects to be developed in India and one of the largest solar farms in emerging market countries. Furthermore, the project is expected to help lead the way in the scaling-up of the domestic solar market in India which has the potential to become one of the largest markets for PV among the emerging economies once the grid-tied market segment takes off.

Through its knowledge management component, the project would help educate various stakeholders on:

- appropriate regulatory and tariff structures required to support grid-tied solar PV in India;
- cost-effectiveness and performance of grid connected solar PV projects including with respect to an electric utility’s distributed generation benefits; and
- the effectiveness of the pilot feed-in tariff for grid connected solar PV projects to be jointly supported by the central and state governments.

Environmental and social issues - Category B

The pilot project will produce significant environmental benefits through reduction of greenhouse gas emissions. The project sponsor is an existing IFC client and is familiar with IFC's social and environmental requirements. The company will, within a timeframe agreed with IFC, complete a social and environmental assessment (SEA) and implement social and environmental management/mitigation measures consistent with IFC’s Performance Standard provisions.

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