567207 - SEGEF Moser Baer

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Summary of Proposed Investment

Project Number

567207

Date SPI Disclosed

May 28, 2009

Country

India

Industry

Agribusiness and Forestry

Projected Board Date

Jun 30, 2009

Status

Completed

Sector

Solar - Renewable Energy Generation

Department

Sustainable Business Advisory Dept

Environmental Category

B - Limited

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.

Sponsor / Cost / Location

Development Impact

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 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.

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.

Contacts

For Inquiries About the Project, Contact

Mr. Dinesh Narang
Sapphire Industrial Infrastructure Pvt. Ltd.
213 B, Okhla Industrial Estate, Phase-3
New Delhi-110020
Tel: + 91 11 4762 4105
Fax: + 91 11 4762 4229
www.mbcel.com

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Local Access of Project Documentation

Sapphire Industrial Infrastructure Pvt. Ltd.
213 B, Okhla Industrial Estate, Phase-3
New Delhi-110020
Tel: + 91 11 4762 4105
Fax: + 91 11 4762 4229

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. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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