Clean Max Equity

completed

Clean Max Enviro Energy Solutions (“CMES” or the “Company”) founded in 2010 is a renewable energy service company providing solar solutions for commercial and industrial customers in India through both onsite and off-site facilities.  The company installed its first 1.5MWp Solar Plant in FY 2014 and has grown rapidly since then to have installed over 51 MW of cumulative capacity across onsite/rooftop (45 MWp) and offsite/solar farm (6 MW) in 10 states for ~40 distinct clients.  The company has adopted Solar PV Poly Crystalline Technology for its solar plants, which has an operational lifetime of 25-30 years, after which the PV cells can be recycled and refabricated.IFC is proposing to invest US$15 million in the form of Compulsory Convertible Debentures in CMES.   The company plans on commissioning more than 250 MW of solar plants over the next three years.  The proceeds of the IFC investment will be used to fund the construction of green field solar plants (the “Project”) across India.  Till date about four ground mounted solar projects have been initiated by CMES.  For the purposes of corporate due diligence, IFC reviewed and visited two    greenfield solar plants in the states of Karnataka (30 MWp) and Tamilnadu (30MWp) in order to identify associated environmental, health and safety and social (E&S) risks and mitigation measures.  Salient features of these plants are presented in the following paragraphs:1) 30 MWp Solar plant in Tamilnadu: CMES has signed a 25 year Power Purchase Agreement (PPA) with Tata Communication Ltd (“TCL”) for this plant, which provides for an expansion to 50 MW at the discretion of TCL. The plant is being developed through a SPV named KAS On-Site Solar LLP in which TCL will have a 26% interest and the balance will be held by CMES.  CMES has already purchased about 175 acres (around 71 ha) of land at Eluvanampatty and Viralpatty villages in Nilakottai Taluk of Dindigul District in the State of Tamilnadu.  The site was majority owned by a leading textile yarn manufacturing company which used the site for plantation purposes.  Construction work started in November 2016 and the plant is scheduled for commissioning by March 2017.    The power evacuation infrastructure requirement is minimal as the Public Utility Company owned substation is located across the road from the site and hence no transmission lines are proposed.  2) 30 MWp Solar plant in Karnataka: In Karnataka, CMES has entered into a limited liability partnership (LLP) with Harsha Abakus Solar Private Limited to construct and operate the plant. As of November 2016, the company had partially commissioned (11MW) the solar plant and scheduled for full commissioning by May 2017.  The solar farm is to be developed on 175 acres (71 ha) of land and about 103 acres of land has already been purchased. Land procurement process is ongoing on a willing buyer-willing seller basis for the remaining part of lands. To date, 20 MW of PPAs have been signed with private sector enterprises.  Power evacuation is approved through the public grid via the existing 66 kV ID HALLI Substation located approximately 5 km away. Both the 5km long transmission line and a 16 kVA onsite Pooling Sub-station has been developed and maintained by CMES.  The power plant is expected to generate approximately 57,800 MWh / annum.