DCS India – Module 6: Business Models & Finance

In this module, you will learn how district cooling projects become bankable and financially sustainable through well-designed business models, tariff structures, and financing mechanisms. The module explains how ownership and service models—from fully public utilities to Public–Private Partnerships (PPPs), utility concessions, and Cooling-as-a-Service (CaaS)—determine who invests, who operates, and who carries financial and performance risk.

You will explore how cash flows, risk allocation, and tariff design shape project viability, and how instruments such as Viability Gap Funding (VGF), the India Infrastructure Project Development Fund (IIPDF), and blended-finance solutions support investment. The module also outlines India’s PPP ecosystem, showing how policy, finance, and service delivery models come together to attract private capital and ensure affordable, reliable cooling.

By the end of this module, you will be able to compare ownership and service models, map financial and contractual flows, and select financing pathways suited to different project contexts, enabling DCS that are bankable, performance-driven, and scalable across Indian cities.

Learning Objectives

By the end of this module, you will be able to:

• Explain why robust business models are critical for enabling investment, operational efficiency, and long-term sustainability in DCS.
• Identify and compare ownership and service delivery models—including Public, Private, Public–Private Partnership (PPP), Cooling-as-a-Service (CaaS), and Energy Service Company (ESCO) approaches—and understand their implications for financing, governance, and risk.
• Analyze the continuum of ownership and risk transfer, recognizing how responsibility, financing, and control evolve from public to private participation.
• Interpret contractual structures used in DCS projects and describe how ownership, utilities supply, tariff setting, revenue sharing, and termination are managed through well-designed agreements.
• Map cost flows and risk allocation across the project lifecycle, identifying “who pays for what” and how financial and operational responsibilities are distributed among stakeholders.
• Evaluate financing pathways and instruments—public, private, and blended—including Viability Gap Funding (VGF), the India Infrastructure Project Development Fund (IIPDF), green bonds, credit enhancement, and results-based finance.
• Understand tariff design principles and regulatory approaches, including the structure of connection, capacity, and consumption charges, and the roadmap toward developing a standardized tariff-setting framework for India.
• Apply India’s PPP policy and institutional framework to structure viable, bankable district cooling projects that align with national and state-level infrastructure priorities.
• Assess real-world case studies to draw lessons on financial structuring, risk sharing, and tariff mechanisms from successful DCS implementations in India and internationally.
• Synthesize and apply module knowledge through practical exercises, allocating costs and risks, matching financing instruments, and evaluating PPP readiness for district cooling development.