28053 - SunEdison

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Environmental & Social Review Summary

Project Number

28053

Company Name

SunEdison Energy Holding (Singapore) Pte Ltd

Date ESRS Disclosed

May 23, 2011

Country

World Region

Region

Global

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Nov 11, 2011
Signed : Mar 28, 2012
Invested : Jun 26, 2012

Sector

Solar - Renewable Energy Generation

Industry

Infrastructure

Department

Regional Industry - INF Asia & Pac

Project Description

The proposed project involves a multi-level, multi-region engagement and partnership with SunEdison LLC (the Sponsor and North America’s largest solar energy services provider) which currently has a significant pipeline of grid-tied solar PV projects (many with signed Power Purchase Agreements) in India and Thailand, and ambitions for further expansion across South & South-East Asia and Sub-Saharan Africa, as declining solar prices and improved regulatory environments create new market opportunities. SunEdison is a wholly owned subsidiary of MEMC Electronic Materials, Inc. (“MEMC”), a pioneer in the design and development of wafer technologies for 50 years.

IFC proposes to provide a portion of the equity financing of the as yet unnamed regional Asian/Sub-Saharan solar development business based in Singapore and with operational teams in Chennai, Bangkok and elsewhere (the “Development Company”) as well as a portion of the debt financing required for five grid-tied solar photovoltaic plants (1 in India and 4 in Thailand). All of the projects will be built by SunEdison’s EPC Company under a fully-wrapped EPC contract which is price and date certain and provides equipment and full-plant performance warranties for the first 2 years of operation. Beyond this the Operation and Maintenance (“O&M”) will be provided by SunEdison O&M Services arm which will provide plant availability warranties and module supplier will provide degradation rate warranties.

IFC is proposing to make up to 15% equity contribution to the needs of the Development Company, equivalent to approximately US$55 million over the coming 12-18 months. In addition IFC considers providing A Loans in the following amounts: US$20 million for 1 sub-project in India and US$26 million for the four small projects in Thailand. In India a 25MW facility is to be located in the newly announced Gujarat Solar Park (being built by Gujarat Power Corporation Ltd (“GPCL”)). The Solar Park is located near Charanka village, in Santalpur Taluka, in the Patan District of Gujarat. As for the Thai projects: SunWat 1, an 9.6 MW facility will be in Saraburi; Sunwat 2, a 7.2 MW facility in Sri Sa Ket; SunWat 3, a 9.6 MW facility in Sri Sa Ket; and SunWat 4, a 9.6 MW facility, will be located in Roi Et.

The expected total project cost will be approximately in the range of US$300 - 450 million for the five grid tied projects being debt-financed by IFC. In addition, IFC is considering supporting these projects with financing from the IFC Earth Fund, a platform of the GEF Earth Fund, and the Clean Technology Fund (a fund under the World Bank administered Climate Investment Funds) for the Thai projects.

Overview of IFC's Scope of Review

IFC’s review included meetings with MEMC/SunEdison’s management and staff in charge of environmental, social and health and safety (ESHS) issues based in India and Thailand; visits to a representative sample of solar power sub-projects in different stages of development; and interviews with representatives of relevant communities in India (3 sub-projects totaling 20 MW located near the Village of Dhama, in the district of Surendranagar in Gujarat) and Thailand (SunWat-1 9.6 MW in Saraburi and SunWat-2 7.2 MW and SunWat-3 9.6 MW located in Sri Sa Ket).

Numerous internal documents and records surrounding MEMC/SunEdison’s and the Development Company’s ESHS program, procedures, and standards that are applicable to global and local operations were discussed. Among others, these documents included: MEMC/SunEdison’s global ESHS corporate policies, manuals, and procedures; sub-project-level environmental and social assessments of multiple projects, including the 1 sub-project in India and 4 in Thailand being considered for direct investment; community engagement documentation; and key contractor’s ESHS management systems and procedures.

E & S Project Categorization and Applicable Standard

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence focused on the Company’s corporate-level ESHS management capacity and practices and issues related to the sub-project in India and 4 in Thailand to be directly financed under this operation in relation to the following Performance Standards: PS 1: Social and Environmental Assessment and Management System, PS 2: Labor and Working Conditions, and PS3: Pollution Prevention and Abatement.

Potential risks to the health and safety of surrounding communities (PS4: Community, Health, Safety and Security) are limited and mostly related to the construction phase and can be avoided or mitigated through basic ESHS practices. To date, all land acquisitions has been conducted through willing-seller/willing-buyer negotiated processes or through lease agreements with government agencies and no physical or economic displacement has taken place. However, the Development Company will develop a Land Acquisition Protocol in Line with PS5: Land Acquisition and Involuntary Resettlement for future sub-projects. There are no likely impacts from sub-projects included on this review related to biodiversity (PS6), indigenous peoples (PS7) or cultural heritage (PS8).

Going forward, the Development Company will ensure that its future sub-projects manage its risk and impacts in accordance with the provisions of IFC Performance Standards 1 through to 8. Applicability of specific Performance Standards in each sub-project will be established on a case-by-case basis as part of the sub-project specific environmental and social assessment process.

This equity investment in the Development Company and the direct financing of 1 sub-project in India and 4 sub-projects in Thailand are classified as Category B because a limited number of specific environmental and social impacts may result of any related construction and operation activities, which can be avoided or mitigated by adequate site selection and by adhering to generally recognized performance standards, guidelines and design criteria. Potential impacts in construction activities of solar power sub-projects and ancillary facilities (i.e. transmission lines and access roads), besides being mitigable, are likely to be limited to sub-project site and short term, and highly unlikely to impact natural sensitive areas. The project is otherwise of obvious positive benefit as it will generate electricity from a renewable resource that will contribute to GHG abatement.

Environmental and Social Mitigation Measures

The key aspects of relevance to this investment include: corporate-level environmental, social, health and safety management systems (ESHS-MS); adequate identification and mitigation of ESHS risks and impacts of each sub-project; site selection and land acquisition; community engagement; labor working conditions during construction and operation; water use; limited issues related to pollution prevention and abatement during construction and operation; and community health and safety.

The Development Company will ensure that the proposed investment will, upon implementation of the specific agreed measures, comply with: the regulations of India, Thailand and other host countries; MEMC/SunEdison’s corporate policies; IFC’s Performance Standards; and relevant WBG Environmental, Health and Safety (EHS) Guidelines. The information about how the Company will manage the ESHS risks and impacts of its operations is summarized in the paragraphs that follow.

PS 1: Social and Environmental Assessment and Management SystemsEnvironmental and social sustainability are at the core of MEMC/SunEdison’s mission and vision and the Development Company’s management is committed to adopting and implementing a robust corporate-level ESHS-MS for all its operations in India, Thailand and other emerging markets where it plans to operate based on: the regulations of the host countries; IFC’s Performance Standards; relevant WBG Environmental, Health and Safety (EHS) Guidelines; and MEMC/SunEdison’s corporate ESHS-MS and Worldwide Guidelines and Policies. The ESHS-MS will be designed in line with internationally recognized ESHS-MS standards (i.e. ISO 14000 and OHSAS 18000) and will include procedures for: identifying social and environmental risks and impacts of sub-projects; undertaking appropriate environmental and social assessments (ESIA) for all the sub-projects it (and/or its subsidiaries) implements; development and implementation of environmental and social management plans (ESMP); monitoring and internal/external audits; and development and implementation of a Community Engagement Framework (CEF). The Development Company will put in place an ESHS organization and make available adequate resources, including staffing with appropriately qualified social and environmental professionals, to ensure the adequate implementation of the ESHS-MS.

Currently, during the early stages of sub-project development, the Development Company identifies key risks for senior management and summarizes and recommend whether to pursue with a specific sub-project. Among other things, this early risk assessment process considers topics such as: key environmental and social issues; local permitting and licensing requirements; and site selection and land availability. The latter is one of the most crucial elements of the Development Company’s strategy to minimize risks and avoid adverse ESHS impacts of its projects. To this end, the Development Company has in place a Site Selection Screening Procedure through which, in addition to considering the adequacy of a specific site for solar power generation and issues such as topography, accessibility and distance from the grid, the Development Company also takes into consideration issues such as current land use and potential environmental and social impacts. The Development Company favors sites locations on wastelands or lands with low agricultural productivity in sparsely populated areas which would minimize ESHS risks and impacts.

Even though conducting Environmental and Social Impact Assessments (ESIAs) and the corresponding community engagement processes is not mandatory in India and Thailand for solar photo-voltaic (PV) sub-projects of the nature and scale being developed and planned by the Development Company, as part of its ESHS policies the Development Company has engaged experienced consultancy firms to conduct ESIAs and community engagement processes based on internationally recognized practices, some of them including IFC Performance Standards and WBG EHS Guidelines, for all relevant sub-projects. To date, no significant adverse risks and impacts associated to the construction and operation of PV sub-projects and ancillary facilities have been identified and adequate ESHS Management Plans (ESHS-MPs) have been developed, reflecting the outcomes of community consultations, to address those limited impacts that could not be avoided (e.g. nuisances to communities related to dust and noise during construction, water use, etc).

As part of its ESHS Policy, as part of the construction contractor bidding and selection process, the Development Company favors contractors with proven track record on ESHS and robust ESHS-MSs and ensures that all the applicable ESHS requirements and sub-project specific ESHS MPs are included in the contracts. Going forward, as part of its ESHS-MS, the Development Company will have in place a Contractor Monitoring Procedure and will require all contractors to follow IFC PSs and WBG EHS Guidelines.
Alpha (India): The 25 MW sub-project will cover a total area of 50.6 hectares that have been leased by the Development Company at the government-approved Gujarat Solar Park which is located on arid lands in the Patan District of Gujarat. All ancillary facilities (i.e. access roads, transmission lines, etc), services and regulatory permits are being provided and co-ordinated by the Gujarat Power Corporation Ltd (“GPCL”). As mentioned before, as per Indian regulations solar power projects are not required to conduct ESIAs or get Environmental Clearance from the regulatory authorities. However, the Development Company has in place measure to ensure compliance with rules and standards laid down under the umbrella environmental (Protection) Act, including the following: Noise (Regulation and Control) Rules, 2000 and Hazardous Waste (Management, Handling and Trans-boundary Movement) Amendments Rules, 2009. Additionally, the Company has commissioned an ESIA for this projects based on IFC PSs. Construction works have not started yet.

SunWat 1,2,3 & 4 (Thailand): These 4 projects total 36 MW and occupy a combined area of 126 hectares are located in 3 different regions of Thailand. The site selection was the result of the application of the Site Selection Screening Procedure and potential adverse impacts, including sensitive habitats, livelihoods or resettlement were avoided. As per its ESHS Policy, in 2009 the Company commissioned a recognized consultancy firm to conduct ESIAs and the corresponding community engagement processes based on local requirements and IFC PSs. Early construction works have started for SunWat 2 & 3 in Sri Sa Ket and works have not started yet at SunWat 1 & 4. No significant adverse ESHS impacts were identified for these sub-projects and adequate ESHS Management Plans have been developed for each one of them and have been included in the EPC Contracts.

PS 2: Labor and Working ConditionsThe Development Company presently employs around 93 staff based in the offices in India and 480 people through construction contractors and 16 staff in the offices in Thailand and 80 through construction contractors. The Development Company will develop its corporate-level Human Resources (HR) Policy and Procedures based on the existing MEMC/SunEdison HR Manual and IFC PS2 requirements, and additionally, will have in place country-specific HR Manuals adapted to local regulations for each one of its host countries. The HR Policy and Procedures will specifically include provisions on: non-discrimination and equal opportunity, wages and benefits, no engagement in forced or child labor, grievance mechanism and adequate working and living conditions. These procedures will be communicated to all employees in an appropriate manner. The Development Company will also implement a Contractor Monitoring Procedure to ensure and monitor contractor compliance with relevant labor laws and IFC PS2 on all construction sites.

It is expected that the proposed sub-project in India (Alpha) will generate about 250 short term jobs during construction and 10 permanent jobs during operations, and in the case of the 4 projects in Thailand (SunWat 1, 2, 3&4) a total of about 720 short term and about 32 permanent jobs. As per its ESHS Policy, hiring of unskilled workers from surrounding communities is maximized, with a goal of at least 70% of local hires in all sub-projects as feasible.

Occupational Health and Safety (OHS): MEMC/SunEdison has an excellent OHS Management System in place which includes a Zero Accident Policy. This management system will be the basis for the Development Company’s OHS component of its ESHS-MS.

In India, the Development Company has engaged a specialized firm to adapt MEMC/SunEdison’s OHS Manual – which is in line with international good practices - and include India policies and regulations. The Company will do the same for operations in Thailand and other host countries. In addition to general occupational health and safety risks and alignment with applicable WBG EHS Guidelines, the Development Company will in particular need to focus on risks including: working at height; working on live power lines and equipment; fire; exposure to chemicals; exposure to electromagnetic fields; and natural risks (e.g., snake bites etc.)

For the construction phase of sub-projects, while the contractor would be responsible for on-site workers accommodations, if any, the Development Company will ensure the adequacy of these provisions – through contract clauses as well as the Contractor Monitoring Procedure - in accordance with IFC PSs and internationally recognized guidelines (e.g. workers’ accommodations processes and standards by IFC and EBRD). In the case of India, the Development Company will take immediate corrective actions in relation to workers accommodation in its existing construction sites.

There will be a person responsible for OHS issues at the corporate-level of the Development Company, who will be supported by lead OHS coordinators responsible for operations in India and Thailand; each of them supported by OHS supervisors in each one of the sub-projects under construction. Additionally, construction contractors and some of the sub-contractors are contractually required to have on-site OHS supervisors for their operations. The OHS-MSs of the construction contractors currently working on sub-projects were found to be robust and in line with international good practices.

While during the visits to the different sub-project sites in India and Thailand the use of personal protective equipment (PPE) and safe work practices was generally adequate, use of appropriate PPE and safe work practices needs to be further enforced amongst workers and monitored on ongoing basis.
PS 3: Pollution Prevention and AbatementThis investment is expected to have largely positive environmental impacts as it will provide a renewable source of electric power and reduce air pollutants and greenhouse gases (GHGs). The planned sub-projects, including those being considered for direct lending in India and Thailand, will have registration done under CDM and are expected to reduce nearly 115,000 tonnes of CO2 per year.

In a typical solar power project, the activities associated will not generate emissions and effluent, and does include hazardous processes and adverse impacts on the surrounding communities, if any, are not envisaged. Significant quantities of hazardous materials and wastes are not expected to be generated during construction or operation. Nevertheless, the Companies will ensure that hazardous material and hazardous wastes handled/generated at site (both during construction and operation) are: stored under segregation and containment; handled/used with appropriate care and PPE; and disposed off through authorized entities. The Development Company will also ensure that: transformers do not use PCB containing oils and that ozone depleting substances banned/phased out under ozone depleting substances rules are not used.

Water use for construction and operation for the sub-project in India and the 4 sub-projects in Thailand, among other sub-projects, has been assessed as part of the ESIA process and has not been identified as significant issue. Water quantity and quality will vary from site to site, and the Development Company will continue assessing this issue as part of the ESIA process to ensure that no adverse impacts to water resources are generated as a consequence of this use and explore opportunities such as developing rain water collection schemes to meet part of the water requirement.

Wastewater generated will primarily be related to panel washing water during operation phase, and domestic sewage during construction and operation phases. Though its ESHS-MS and sub-project ESHS-MP the Development Company will ensure that site preparation activities do not alter the drainage patterns of the area by significantly elevating the land or blocking or altering natural drainage channels in the sub-project sites, and will put in place appropriate facilities for collection, treatment and disposal of sewage (septic tank and soak pit) both during construction and operation phases.
It must be noted that as a clear sign of the Development Company’s commitment to the environment, the offices in Chennai, India, are located in a LEED Platinum certified building; first building in South India to get this certification, and one amongst 3 in the country in the core-and-shell category. Additionally, the Development Company is planning to install a 20kW rooftop system at the building by the end of 2011.

Stakeholder Engagement

Community engagement is a key pillar of MEMC/SunEdison’s ESHS Policy and strategic vision and the Developing Company has been conducting consultation process with communities around its sub-projects as part of the ESIA process on a case-by-case basis.

As part of its ESHS-MS, the Developing Company will develop a Community Engagement Framework (CEF) based on MEMC/SunEdison ESHS policies and guidelines, host countries requirements, relevant experiences with existing sub-projects, and IFC’s PSs. For each new sub-project with potential impacts on local communities, the Development Company will develop and implement an appropriate Public Disclosure and Consultation Plan (PDCP) based on the CEF, to ensure that project-affected communities are provided with information and consulted on the risks, impacts and opportunities presented by each project and remain engaged on ongoing basis and provide a grievance redress mechanisms. If any future sub-project affects communities of indigenous peoples the PCDC will meet the requirements of IFC’s PS7.

Alpha (India): Since the project is located in government lands and away from communities, no direct community engagement has been conducted to date. As part of the ongoing ESIA process the Development Company will reassess the need to engage directly affected communities, if any are identified, and engage them accordingly.

SunWat 1,2,3 & 4 (Thailand): Even though these sub-projects are located in sparsely populated areas with few households in the sub-projects direct area of influence, in January 2009 the Development Company conducted consultation process with nearby communities as part of the ESIA processes. These processes were organized in coordination with the respective Sub-District Authorities and Village Chiefs, and no objections to the projects were recorded. Most inquiries from community members related to potential project benefits and clarifications regarding potential impacts on water resources. The consultation process was preceded by local disclosure of sub-project information and included site visits for interested community members to similar solar power projects to familiarize them with these types of schemes.

Corporate Social Responsibility (CSR): MEMC/SunEdison and the Development Company are committed to CSR and they are in the early stages of developing a comprehensive CSR strategy for its operations in India, Thailand and other emerging markets. Some of the key areas of action would include: education, energy conservation, environmental awareness, cultural conservation, and community safety, among others. Additionally, the Development Company is exploring sustainable business models for rural electrification of remote and poor villages in India through solar power.

Client Documentation

File Name	Actions
SunEdison_ESAP(v2).pdf

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

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