Enercon Financial Consultancy Private Limited

Enercon Financial Consultancy Private Limited (EFCPL) is a 100% subsidiary of Enercon (India) Limited (EIL). The entity has been set up with an objective to organize through innovative financial structures for meeting the long term funding requirement for setting up of wind energy projects.

We tailor make optimum financial solutions for Enercon’s IPP projects in India and abroad, as well as for the EPC customers of EIL. These non-conventional & innovative financial solutions result in optimizing the cost of borrowing and the corresponding tenor of the debt raised.

In its endeavour to achieve the above said objectives, EFCPL has a team of specialists with a blend of engineering talent and financial acumen. EFCPL presently operates from Mumbai and New Delhi and will soon have a presence in the southern part of the country.
We have successfully achieved cumulative financial closures with long term project funding of more than One thousand cores by using –

  • Revival of financial leasing:-A leading power financial institution was approached by EFCPL with a leasing proposal to revive leasing as a financing option for a capital-intensive product like wind energy projects. The FI owned and leased out the wind energy assets to a SPV. This resulted in the FI claiming the accelerated depreciation benefit and increasing its yield. The FI could also trade the CER’s generated out of the project thus creating another stream of revenue. The SPV on the other hand could raise the debt of a quantum far more than the normal vanilla structure and completed and commissioned the project with just about 18% of the project cost as its equity investment.

  • Third Party Stand by Power Purchase Agreement In order to minimize the offtaker’s/borrowers risk of default from the PPA’s it executed with the state power utility, EFCPL came out with the unique idea of signing the stand by Power Purchase Agreement with a AAA rated third party. This PPA will be invoked only in the event of default by the state utility thereby ensuring a definite revenue line resulting for servicing the lenders. This also resulted in fine-tuning the interest rate. This concept was successfully implemented for the first time in the country and EFCPL could achieve the financial closure of the largest wind based power project of the country.

  • A product called “TWIST” In order to meet the requirement of a large triple AAA rated client for cheaper power with lowest possible investment, a product called TWIST was founded and launched by EFCPL. “TWIST” in short means
    • Setting a Green Energy Project at Zero Equity Investment
    • Project Assets Owned from day 1 and accelerated depreciation of 80% would be available to the customer – i.e. over 25% of the Project Cost in cash available in year 1 without any equity investment – Tax Saving
    • Payment in Fixed Monthly Installments – effectively resulting in the cost of power lower than Present SEB Tariff
    • Receivables calculated on a monthly basis – fixed delivered units multiplied by a specific tariff (less than the current tariff for high-tension users) fixed for ten years less operating expenses
    • Pre-determined Monthly Installments for an initial period of 20 years, i.e. the rated life of the project – Complete Insulation From Inflation
    • EPC / O&M / Generation Risks entirely assumed by Enercon - customer actually pays for Delivered Energy and would concentrate on its core business
    • As the owner of the asset the customer can claim 80IA Tax Holiday by maintaining a separate undertaking.


  • Securitization of Private Party PPA receivables. Enercon also has power purchase agreements signed with private parties wherein Enercon has established the power projects and are supplying the power to private parties, which are having a triple AAA rating. EFCPL successfully managed to securitize the receivables due from the sale of power to the private parties.

  • Traditional funding.This is especially applicable to customers with small requirement of funds and is investing in wind based power projects with a limited view to avail the tax benefits and to a certain extent in some cases, saving in power cost. A leading financial institution is specifically mandated to fund renewable energy projects, therefore EFCPL has successfully tapped them for financing various wind power projects.
Applicability
  • We can apply this financing structure to projects without any state bias
  • Similarly both captive power plants and independent power producing plants can come under this structure
  • A company with good balance sheet
  • Profit making company for the last three years
  • The total debt : equity ratio of the customer should be below 3 : 1
  • The customer should not have defaulted to any bank/FI
  • No limitation on project cost
Methodology
  • The customer will set up a wind power plant in the debt equity ratio of 70 : 30
  • Enercon will be the EPC and O&M contractor

Trading In The Carbon Emission Reduction Certificates ( CER’s )

Since 18th Century there is progressive increase in the Volume of Green House Gas (GHG) due to human activity on earth leading to Global Warming. United Nations Framework Convention on Climate Change (UNFCCC) was established in 1992, to reduce the emissions of GHG and the resultant Global warming effect. In Kyoto, Japan, in 1997 GHG emission reduction was set for a large number of countries. The Kyoto protocol announced a targeted reduction in the GHG emission with reference to the Emission level of 1990 during the First Commitment Period i.e., From year 2008 to 2012. The countries were given a targeted reduction of 5% to 8% by the end of the First Commitment Period with reference to the1990 level of production of the relative countries GHG’s. All signatories to the Kyoto Protocol EXCEPT Australia and USA have ratified the Treaty accepting the responsibility of reducing GHG emission level by either reducing the production of GHG’s in their country or by financing projects in another country using clean energy which results in the reduction of GHG’s in that country by purchasing CER’s from that project. Due to awareness of the global warming effect and to meet the target given under the KYOTO protocol the trading in the Carbon Emission Reduction Certificates ( CER’s ) has become very popular and remunerative. Enercon has successfully managed to get a couple of it’s projects registered with the Executive Board of the UNFCC thus facilitating the generation of revenue from the sale of these CER’s. EFCPL actively helps its clients to tap the additional revenue through sale of the CER’s
EFCPL is also working on developing and designing new products in the area of wind insurance and grid insurance. These products once fully designed will bring down the borrowing cost resulting in to increase investments.
EFCPL closely interacts with various financial institutions and banks both in India and abroad. We also plan to enter into the insurance consultancy and brokering business. We continue our efforts through radical and non-conventional thinking to bring about effective long term financial solutions to Enercon's customers because we believe


"...People who dwell on past glories will lose the future"

 

Awards



News
Enercon India Limited

Testimonials
They have a dynamic, dedicated and professional team to take care of the investors...
Case Studies
We are very happy and would like to appreciate the joint efforts...