A silent (so far) revolution has been pioneered for Indian renewable companies (RC) which is no less than the fad and hype of the technology sector. RCs need to explore sustainable renewable energy finance with IPOs, innovative structures like Yield Cos (Utility and commercial scale plants) as also investment plans (for residential solar - My power loans) The presentation essentially summarizes the renewables eco system in India, global solar experiences (US), IFRS/ US GAAP A/C issues for renewables sector, future of solar n grid parity, US IPO concepts n regulatory environment.

4. CAVarun Sethi
[CA, B.Com(H), CISA]
Key Skill Sets
1. Financial reporting under IFRS/US
GAAP and India GAAP.
2. End to end life cycle management
of several
• M&A deals and
• fund raising (IPO, and PE),
• Project finance deals
in sectors especially real estate, e-
commerce/retail and FMCG.
3. Design and reviews of financial
models, business plans, annual
operating plans.
4. GL management,Internal and
External audits, Process and risk
management,banking and taxes.
Expertise in
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

6. CAVarun
Sethi
09899766487
Solar Industry – The Business models
(Utilities/ IPP/NUG)
20156
Upstream
segment
•R&D
•Manufacturing of Solar Cells, Modules and Panels
Midstream
segment
• Racking and
• Hardware
• Inverters/ Batteries/ Storage systems
Downstream
segment
•End to end Installation - Utility/Commercial/
Rooftop customers
•Ownership,of Solar Energy Systems
•Operations and maintenance
1. Yingli Solar
2. First Solar
3. Trina Solar
4. SunEdison
5. SunPower
1. Enphase Energy
2. NRG Energy
3. Exide and SuKam
1. Solar City
2. Vivint Solar
3. XYZ Power
4. RenewPower
5. InoxWinds
BUSINESS MODEL
GLOBAL AND INDIAN
PLAYERS
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

7. CAVarun
Sethi
09899766487
Solar (Power) Industry –The Indian Ecosystem
20157
Indian Solar
(Power) Industry
Ecosystem
(Utilities/NUG/IPP)
MNRE
Electricity Act,
2003Regulators:
CERC/ SERC
Energy Exchanges
(IEX, PEI)
RPO/REC
Renewable
EnergyAct, 2015
National Power Grid
(PGCIL)
Regulators:
DIPP, RBI, CCI
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

9. CAVarun
Sethi
09899766487
Indian Solar (Renewables) Industry
Regulation and Policy
Investment and other subsidies
Foreign Direct Investment (‘FDI’)
Foreign Equity
• India permits FDI up to 100 percent in the sector under the automatic route in Renewable Energy
Generation and Distribution projects that are subject to the provisions of the Electricity Act of 2003.
• Under the Act, no prior approval of regulatory authorities is required.
External Commercial Borrowings/Medium term Notes/ FCCBs
• RBI has expanded the definition of infrastructure to cover sector such as Energy which in turn covers
sub-sectors such as Electricity generation/transmission/distribution,Oil pipelines,Oil/Gas/Liquefied
Natural Gas (LNG) storage facilities,Gas Pipelines (includes city gas distribution network).
• With a view to strengthen the flow of resources to infrastructure sector, RBI has also now permitted
raising ECB for project use in SPVs in the infrastructure sector under the automatic route/approval
route, as the case may be.
20159
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

10. CAVarun
Sethi
09899766487
Indian Solar (Renewables) Industry
Regulation and Policy
Under Indian Income tax Act, 1961 : Tax holiday under the domestic income tax law
• Undertakings engaged in the generation and/or distribution of power has been offered a 10-year tax
holiday for renewable energy plants if power generation begins before 31 March 2014.This date has not
been extended as there was a vote on account budget.
• However,the plants have to pay a minimum alternative tax at the rate of approximately 20 to 21
percent (based on the income),which can be offset in future years (6/10 years).
201510
Presentation for XYZ Power : CA Varun Sethi Private and Confidential
Operating subsidies
Feed-in tariff
Generation Based Incentives (GBI)
To attract foreign investors,the government has taken several initiatives such as introducing GBI schemes
to promote projects under Independent Power Producers (IPP) mode for wind and solar power.
Accelerated depreciation
Under the domestic income-tax law, companies involved in renewable energy such as solar and wind was
provided with accelerated depreciation at 80 percent. However, the government has restricted the
accelerated depreciation of 80 percent to windmills installed on or before 31 March 2012.

11. CAVarun
Sethi
09899766487
Indian Solar (Renewables) Industry
Regulation and Policy
Jawaharlal Nehru National Solar Mission (JNNSM)
The objective of JNNSM, which was launched in 2010, is to establish India as a global leader in
solar energy and to deploy 100,000 MW of solar power capacity by 2022.
Besides the national program, solar programs at the state level are also driving solar growth in
the country.
201511
Presentation for XYZ Power : CA Varun Sethi Private and Confidential
Quota obligations
Renewable Purchase Obligation (RPO)
The National Action Plan on Climate Change
(NAPCC) has recommended renewable purchase
obligation (RPO) target of 10 per cent by 2015 and
15 per cent by 2020 at the national level.
To meet RPO targets, REC market has been introduced and RECs started trading in Feb 2011.
Enforcement of RPO will create the volumes needed for the REC market.

12. CAVarun
Sethi
09899766487
Indian Solar (Renewables) Industry
Regulation and Policy
Carbon Credits and Clean Development Mechanisms (CDMs)
The Clean Development Mechanism (CDM) is an arrangement under the Kyoto Protocol.The mechanism
allows developed countries with a green house gas (GHG) reduction commitment to invest in projects that
reduce emissions in developing countries as an alternative to more expensive emission reductions in their
own countries.
India is the second largest seller of carbon credits.The country is also a leading destination among non-
Annex 1 countries with regards to CDM implementation. It has the highest rating of any CDM host
country,with 32 percent of the world total of 1,081 projects registered with CDM EB.
201512
Presentation for XYZ Power : CA Varun Sethi Private and Confidential
IndirectTax and fiscal incentives
The Central Government has given various incentives on setting up the renewable energy power project
which includes exemption from customs and excise duties on specific goods required for setting up the
renewable energy projects.
Furthermore,some of the state governments have provided the incentives in the form of aVAT at a
reduced rate (5 percent) whereas the other states levy aVAT of 15 percent.

13. CAVarun
Sethi
09899766487
Indian Solar (Renewables) Industry
Regulation and Policy
Tax planning and structuring
For investors based overseas, an entry strategy for India is highly important.To achieve tax
efficiency with regard to taxability of gains on sale of shares, many companies opt to route the
investments through an intermediate entity in a tax-friendly jurisdiction.
In addition, the renewable energy sector is capital intensive, so investing companies need to
carefully explore the options available for funding their projects and repatriating profits in a
tax-efficient manner.
201513
Presentation for XYZ Power : CA Varun Sethi Private and Confidential
EPC contracts
The procurement of goods and supply chain structuring play a vital role in the solar power
project costs, since the tax rates are different for procurement of goods from outside India,
from other states or from the same state.
Generally, the EPC contractor also undertakes the operation and maintenance of the power
plant.The taxability of an Operation and Management (O&M) contract has been the subject of
disputes in various decisions.

15. CAVarun
Sethi
09899766487
Solar Industry – Unique IFRS Accounting Issues for
Renewable Energy Companies
201515
IFRS A/c for
Unique
Accounting
Issues for
Renewable
Energy
Companies
1. Significant Government Incentives / FIT/RPO/REC
2. Long term contracts for the sale of electricity
3. Viability Gap Funding (VGF)/ Financial closures
4. Long term contracts for the sale of electricity
5. Sale-Leaseback structures – Utility and Non Utility generators
(IPP/NUG)
6. ARO: Obligations to remove plant and equipment at the end of
contract.
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

16. CAVarun
Sethi
09899766487
Understanding and identifying IFRS /US GAAP A/c issues
Effective
Yield / Tax Credit
Accounting
Consolidation
A/c
Equity Method
(ASC 810/ FIN
46R)
FairValue
Accounting
(ASC 825)
LeaseAccounting
Real Estate
Accounting
Numerous
IFRS/ US
GAAPA/c
issues.
16
IFRS /US GAAP A/c for Investor Level GAAP
Accounting
Investor Level GAAP Accounting
1. Variable interest entities.
2. Presentation of non-controlling interest (liability vs.
equity).
3. Equity methodVs. Hypothetical liquidation at book value
(HLBV) methodology
IFRS /US GAAP A/c for Project Level GAAP
Accounting
Project Level GAAP Accounting
1. Project finance structures.
2. Sources of financing (tax equity, RECs, grants, rebates,
sponsor equity, debt, etc.).
3. Investor exit strategies (flip, put, call provisions).
4. Generation based Incentives/ Production based rebates
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

17. CAVarun
Sethi
09899766487
Solar Industry – Revenue Recognition
& other Key Accounting and IFRS considerations
IFRS 15:
Revenue
Recognition
New standard
supersedes the
industry-specific
guidance on long-
term power sales
arrangements in
ASC 980, Regulated
Operations,
’NONUTILITY
POWER
GENERATION
ENTITIES’ will
apply the new
standard to these
arrangements.
1. The Company generates revenue through power purchase agreements,rebate
incentives,solar renewable energy certificates (“SRECs”) sales and solar energy
system sales.
2. The Company sells energy to customers through power purchase agreements or
leases solar energy systems to customers through leases.
3. The Company has determined that these contracts should be accounted for as
operating leases and, accordingly,solar energy systems are stated at cost, less
accumulated depreciation and amortization.
4. The Company considers upfront rebate incentives earned from such systems to
be minimum lease payments which are recognized on a straight-line basis over
the life of the long-term customer contracts
5. The Company applies for and receives SRECs in certain jurisdictions for power
generated by its solar energy systems.The Company typically sells them to other
companies directly, or to brokers,to assist them in meeting their own mandatory
emission reduction or conservation requirements.The Company recognizes
revenue related to the sale of these certificates upon delivery.
201517
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

18. CAVarun
Sethi
09899766487
Solar Industry – Key Accounting and IFRS considerations
IFRS A/c for
Deferred
Financing Costs
Costs incurred in connection with obtaining debt financing are deferred and
amortized utilizing the straight-line method, which approximates the effective-
interest method, over the term of the related financing.
IFRS A/c for
Deferred offering
costs
Deferred offering costs, which consist of direct incremental legal, consulting, banking
and accounting fees relating to the anticipated initial public offering (“IPO”),are
capitalized.The deferred offering costs will be offset against IPO proceeds upon the
consummation of the offering.
IFRS A/c for
Government and
other incentives
IAS 20 :
Deferred revenue includes rebates and incentives received from utility companies and
various government agencies which are recognized as revenue over the related lease
term of 20 years.
201518
IFRS A/c for
Asset
Retirement
Obligations
Asset retirement costs must be capitalized as part of the related property,
plant, or equipment when a liability for an asset retirement obligation is
initially recognized.
IFRS A/c for
Stock-Based
Compensation
Stock-based compensation expense for equity instruments issued to employees is
measured based on the grant-date fair value of the awards.The fair value of each
employee stock option is estimated on the date of grant using the Black-Scholes-
Merton option-pricing valuation model.
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

20. CAVarun
Sethi
09899766487
Solar Industry
Key Operating Metrics and Non-IFRS measures
SolarGridandNonGrid
-
KeyOperatingMetrics • Solar Energy System Installations, incremental and cumulative
Number of solar energy systems installed on customers’ premises/Self owned. as an
indicator of historical growth and as an indicator rate of growth from period to period.
• Megawatts Installed and Cumulative Megawatts Installed
Megawatts installed represents the aggregate megawatt nameplate capacity of solar
energy systems that have been installed during the applicable period.
Cumulative megawatts installed represents the aggregate megawatt nameplate capacity
of solar energy systems that have been installed.
• Estimated Nominal Contracted Payments Remaining
Estimated nominal contracted payments remaining equals the sum of the remaining cash
payments that our customers are expected to pay over the term of their agreements
with us for systems installed as of the measurement date.
• Estimated Retained Value (under energy contract + Renewal)
Estimated retained value represents the net cash flows, discounted at 6%, that we
expect to receive from customers pursuant to long-term customer contracts net of
estimated cash distributions to fund investors and estimated operating expenses for
systems installed as of the measurement date.
201520
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

22. CAVarun
Sethi
09899766487
Solar Industry –The technology and cost
201522

23. CAVarun
Sethi
09899766487
Solar Industry –The Falling costs – Grid parity
Source:
International Renewable Energy Agency,World Energy Future conference in Abu Dhabi Jan 2015.
Cost of Panels
and Modules
Panels to fall in price to $US0.50/watt
• Companies like SunEdison have publically targeted $0.40 cent per watt panels by the end of
2016, and manyTier 1 Chinese manufacturers are achieving sub $0.50/w already in 2014.
Installation
Costs
Installation costs will fall by one third in the US
• Cost reduction on the installation side will come primarily from scale benefits, and could fall
from $0.65/w to $0.45/w.
Energy storage
costs
Inverter and racking cost are also declining
• Inverter prices typically decline 10-15 per cent per year, Deutsche Bank says, and it expects this
trend to continue into the future.
• Racking and other balance of system costs given ongoing efficiency improvements, streamlining,
and potential advances in materials will lead to incremental improvements, from around $0.25/w
to around $0.17/w.
201523
CAC
Sales/Customer Acquisition Cost will fall even further
• Deutsche Bank sees substantial room for improvement over the longer term in cost per watt
terms – from $0.50/w to $0.20/w – as solar gains mainstream acceptance,
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

24. CAVarun
Sethi
09899766487
Solar Industry –The technology
http://reneweconomy.com.au/2015/graph-day-plunging-cost-renewables-49704
201524
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

25. CAVarun
Sethi
09899766487
Solar Industry – Global Experiences and Learnings
United States of America
Rooftop Solar
Energy:
American view
1. According to the Solar Energy IndustriesAssociation's (SEIA) Q3 2014 U.S. Solar
Market Insight Report, the U.S. residential solar market exceeded the 300 MW in a
quarter for the first time in history.
2. Residential continues to be the most reliable market segment,now growing 18 out
of the 19 quarters.
3. GTM Research forecasts it to exceed the non-residential segment in annual
installations for the first time in more than a decade.
Utilities too in
the race!
Several utilities in US, Germany andAustralia offer to supply solar deployment / lease
schemes to their consumers
Virgin/High
growth market
According to GTM Research, an industry research firm, the U.S. residential solar energy
market is expected to grow at a compound annual growth rate, or CAGR, of
approximately 37% from 2012 through 2018.Residential distributed solar has currently
penetrated less than 1% of its total addressable market in the United States.
201525
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

26. CAVarun
Sethi
09899766487
Solar Industry –Latest Solar news (2013 & 2014)
(Solar project
so large (4,000
mw),it would
dwarf all others
A deal was signed between the Indian Ministry of New and Renewable Energy, the
Ministry of Heavy Industries and Public Enterprises,and the Ministry of Power to set up
what they call an "ultra mega solar power project" in Rajasthan.At 4,000 MW of
capacity, it would be by far the world's largest.
7500 MW
solar project
• Record-shattering 5,000 megawatt & 2,500 megawatt solar projects get green light
in Indian state of Jammu and Kashmir
• 7,500 MW is about three-fourths of the entire solar power capacity in the United
States at the end of the 3rd quarter of 2013.
China
China added more solar capacity in 2013 than any other country ever has in a single
year (12GW)
The country expects to install 14 gigawatts in 2014.
201526
First global solar
plane flight to
stop in India,
Myanmar,U.S
Swiss pilots Bertrand Piccard and Andre Borschberg announced the Solar Impulse 2
aircraft will depart the United Arab Emirates on their historic adventure in late
February or early March, 2015 making a total of 12 planned stops.
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

27. CAVarun
Sethi
09899766487
Solar Industry – Emerging trends and latest Solar news
(2013 & 2014)
World Energy
Future
Conference
2015,Abu Dhabi.
The cost of solar was competing with traditional sources of energy, and would
not be derailed by the plunge in the oil price.
Cleantechnica.
com
(Accessed jan
2015)
Solar could extend its reach of “grid parity” to 80 per cent of global markets
within the next two years, assuming a 40 per cent cut in solar costs by the
end of 2017.
China
China added more solar capacity in 2013 than any other country ever has in a
single year (12GW)
The country expects to install 14 gigawatts in 2014.
201527
First global solar
plane flight to
stop in India,
Myanmar,U.S
Swiss pilots Bertrand Piccard and Andre Borschberg announced the Solar
Impulse 2 aircraft will depart the United Arab Emirates on their historic
adventure in late February or early March, making a total of 12 planned stops.
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

29. 29
CAVarun
Sethi
09899766487
Public Company Transformation
Preparedness – Pre IPO and Post IPO
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

30. SoX Act/
JOBS Act
SEC/PCAOB/FINRA
30
CAVarun
Sethi
09899766487
Public Company Transformation
US IPO – Governing legislation/ regulators
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

31. IFRS Reporting
SoX
Certifications
Form 10Q/ 6K
Form 10K/ 20F
FPI – Foreign private issuer
EGC - Emerging growth
company
31
CAVarun
Sethi
09899766487
Public Company Transformation
Concepts, Compliances and Reporting obligations
Pre and post IPO
Presentation for XYZ Power : CA Varun Sethi Private and Confidential

32. CAVarun
Sethi
09899766487
TYPICAL IPO TIMETABLE
Appointmentof(Aug)
IPOpreparednessteam
1.Realisticbusinessplan
2.Corporatepresentation
Month X,
15
X+3
1.AppointmentofInvestment/Merchant
bankers,meetingResearchanalyst,Org.meet
etc.
2.Lawyers(DiscussiononVDRetc)
3.IFRSAuditors
SuccessfulFloatation
X+5
X+7
1.IFRSAuditFY13,14,FY15
2.ESoPteam
3.DueDiligencebybankersand
lawyers
4.CorporateGovernance(CG)
compliances
Appointmentof
(Sept.)
3.Transaction
structuring(FPIs)
4.IFRSconsulting
• END TO END PROJECT MANAGEMENT including
setting up strong reporting function/ dealing with
regulators
• Pre IPO and Post IPO: Financial Reporting and
Investor relations support
IFRS financial reporting support.
CG support
X+8
KeyActivities:
1.RegistrationStatement/
DRHPFiling
2.SEC/SEBIqueries
3.Investorrelations
4.Investormeetings
•Investor
Roadshows
•Timingthe
market
•DRHP
amendments
•IPOPricing
X+9
32
Presentation for XYZ Power : CA Varun Sethi Private and Confidential