Find out how PwC India successfully steered the Madhya Pradesh Urja Vikas Nigam Limited’s mission to expand its solar energy capacity in a cost-effective manner.
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The Madhya Pradesh Urja Vikas Nigam Limited (MPUVNL), which promotes off-grid applications for power and heating through its programmes, had initiated several campaigns from 2010 to 2015, following the launch of the National Solar Mission. Its efforts, however, resulted in a modest 2 MW of rooftop solar capacity. The renewable energy services company (RESCO) project in MP was implemented in this larger Rooftop Solar Programme of Government of India. In 2016, MPUVNL was given the target to establish a solar energy capacity of 2,200 MW within six years. The company appointed PwC to help it meet this target.
Our approach
PwC India adopted a transformation approach which:
- sought to understand the needs of stakeholders (users, investors, developers, lenders and relevant government officials)
- facilitated policy formulation and design of the programme, identified target users, and established the transaction and contracting model.
The project at a glance
- Designed the programme framework.
- Helped identify and aggregate demand.
- Drafted risk mitigation plans and an allocation model for the bidding process.
- Simplified processes and improved transparency with measures, including seasonality index, reduced entry barrier, and performance guarantees without financial instruments.
- Marketing outreach through pre-bid conferences, webcasts and roadshows.
The result was a plan that satisfied investors’ requirements, protected consumers’ interests and met the needs of the policy and industry in an efficient manner.
Only 7% of the Government of India’s target for solar rooftop installations (40 GW by 2022) was met due to high initial costs for individual consumers and independent power producers (IPPs) as well as the lack of an enabling framework to build a scalable business model. PwC consultants worked with the (New and Renewable Energy department) NRED team to deliver an innovative programme, working with them from ideation to roll-out.
The design targeted consumers who stood to benefit the most but could not afford the upfront investment. The team reimagined the traditional RESCO model with state support to reduce the risks and attract private investment.
The transaction model was designed to lower costs by enhancing the data room to minimise information asymmetry, bundling multiple installations to achieve economic scale, and offering payment security. To maximise participation, the pre-bid conference was held as a live webcast by the International Solar Alliance (ISA) for its 121 member countries.
The first batch of the RESCO transactions was a tender for 35 MW in 2018. It attracted 31 international and domestic (including public sector entities) bidders, who oversubscribed the issue by 6.3 times and offered a 74% discount on the utility’s conventional power tariff. The second transaction issued after a month also saw an oversubscription of 6.28 times and a discount of 79%.
The programme involved implementation at 643 project sites, primarily at social institutions such as colleges, hospitals, police stations, schools and universities. The successful bidders would install the solar panels with their own capital and the beneficiaries (social institutions) paid just one-fourth of the current power tariff, thus saving on their electricity bills and reducing their carbon footprint.
To ensure speedy completion, PwC India helped the NRED programme manage the transaction closure event, which involved 427 contracts with unique counterparties. The success encouraged NRED to embark on a follow-on procurement in October 2018, which led to further investments.
Our impact
- Delivered a cost-effective (INR1.38 per kWh; about one-sixth of extant power costs) and sustainable power source where cost savings directly reach socially relevant institutions. This transformative model that can be replicated in other parts of India and other developing countries.
- Helped the client attract robust solar rooftop investments and increase the share of renewable energy.
- The client received recognition for innovative ideas and effective implementation.
- Process improvement led to MPUVNL achieving a higher level of customer satisfaction and an increase in turnover.
- The client was presented with the Skoch Platinum Award and Solar Quarter Award.
- The model facilitates significant reduction in transmission and distribution losses and helps decongest some capacity of power networks.
- Other states have also adopted this model.
