Europe India Chamber of Commerce, Spain

INVESTMENT OPPORTUNITIES IN INDIA IN THE SOLAR ENERGY SECTOR

Gour Saraff, Director EICC Spain

Incredible INDIA

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4th Largest Global Economy

Fastest Growing Free Market Democracy

IT & Engineering Superpower

Rich Mineral Base

Vibrant Capital Market

Large Infrastructure–

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2nd largest Rail network

5th largest power market

334 airports, 12 major & 87 minor ports

400 Million telephone connections

US

$ b

n

167

7965 65 63

3622

8 6 4

80

40

160

120

Strong focus to drive infrastructure growth200 Infrastructure Investment (2007-12)

~ US$ 500 bn

0

Source: Planning commission (XIth five year plan)

Government is putting lot of emphasis on infrastructure investment andgrowth

Positive regulatory reforms remain a key driver of growth

Power being the major thrust area

Infrastructure investment may be doubled (~1 trillion) in 12th fiveyear plan (2012-17)

Source EstimatedPotential(GW)

Installed(GW)as31Mar’11

WindPower

48.5 13.18

Biomass&WastetoEnergy

23.7 2.67

SmallHydro

15.0 2.95

SolarPower

30~40MW/sq.km

0.03

India has a large potential for RE

Wind energy constitutes largest commercially exploited RE source in India.

RE capacity is 10-11% of total grid installed capacity base

Barely 20-22% of the total potential has been tapped excluding solar energy

Solar power is merely 0.2% (32.4 MW) of Grid interactive RE power

But potential of Solar power in India is far more thanother RE sources

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RE Potentialin India

(Source: MNRE, Annual report 2010-11)

Installedcapacity – 18.8 GW (as 31Mar’11)

Small Hydro Power15.7%

Wind Power70.0%

Biomass & Wasteto Power14.2%

Solar Power0.2%

(Source: MNRE, Annual report 2010-11)

153

575

778Power Requirement (GW)

425

306

220

POWER HUNGRY ECONOMY

2006-07 2011-12 2016-17 2021-22 2026-27 2031-32

(Source: Integrated Energy Policy - Planning Commission Report 2006)

• There has been a continuous shotage of power to the tune of average 10~12%

• Economic growth derives for increse in the demand

• Expected demand, at current growth rate of 8%, to cross 750 GW in 2031~32

• A major part of this demand to be fulfilled by Renewable Energy

Blackout a harbinger of power needs to come?

Back

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India Solar Radiation map

• Every Sq. km of area can generate

40 MW power

• Rajasthan and Gujarat has

abundant and desert and unfertile

land with no other alternative

usage

• 35,000sq. km of desert area set

aside for solar power can generate

14 Lakh MW of power – Equivalent

to 8 times of current generation

capacity

Solar Power PotentialHigh Solar Isolation levels in IndiaThe North Western Partof India(Gujarat & Rajasthan) gets highlevelsof solarradiations, almostthroughouttheyear.

Solar Radiation Map of India

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GeographicFit

solar irradiation.• 250 to 300 clear sunny days.• Equivalent energy potential is about 5000 trillion

KWh` per year.

• Enabling Policy Framework in place – NationalSolar Mission.

• “Power for all” by 2012 –stated goal of GOI.

Solar Power– Natural Fit for India

• India located in the equatorial belt with high

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Company history

Source:http://www.oksolar.com/abctech/images/world_solar_radiation_large.gif

Policy Fit

Socio-economic

Fit

• Fossil fuels have finite life – Solar has potential toreduce large energy import bill in the long run.

• Energy security – critical for national security• 10% of solar capable land will reduce emissions

equivalent to 5909 mtoe/year.

• Large areas of barren land in underdevelopedparts of the country ideal for solar power plants.

• Large parts of rural India have no access toelectricity grid.

• Job creation potential high.• Huge potential for manufacturing – can become

global leader in adoption of solar technology.

Jawaharlal Nehru Solar Mission

National Action Plan on Climate Change:• Solar Mission envisaged to give boost to solar power – launched

on 11 January 2010• Large-scale solar power generation an identified thrust area

Solar Mission Aim:• Rapid and large-scale diffusion of solar power generation

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technologies• Building local manufacturing, R&D and human resource

capability• Reduction of cost to move towards grid parity.

Proposed targets (2022):• 20,000 MW grid-power installed capacity• 2,000 MW off-grid power• 20 mln. sq.m thermal collectors

Cumulative targets under Solar MissionIndia is endowed with vast solarenergy potential:

-About 5,000 trillion kWh/yearenergy is incidentover India’s land

Source: Jawaharlal Nehru National Solar Mission: Towards Building Solar India

AnnualSolarMarketOff-take(MW) 17-18

18-19

19-20

20-21

21-22

Grid-connectedSolarPotential

ResidentialRooftop 1024

1356

3600

5341

7677

UtilityScaleSolarPower(CSPandPV)

1043

2229

3570

5084

8146

Off-gridSolarApplicationPotential

Solar-poweredAgriculturePumpsets

268 563 3969

4639

6730

Solar-poweredTelecomTowers 318 380 414 562 612

TotalAnnualSolarMarket 2653

4528

11553

15626

23165

Tremendous growth projected in Off-Gridsegment

(Source: KPMG in India’s The Rising Sun, May 2011)

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With decrease in cost of solar power, the residential rooftop and agriculture will be fastest growing segment

Solar power, with its ability to provide day time power, can meet the agriculture power demand from the farmerswithout being connected to grid

Solar power is already competitive with the effective price of diesel based power for Telecom towers. It haspotential to replace ~30% of diesel consumption.

Grid parity in next 10 yearsLevelizedCost Comparisonof Utility-scale PV and ConventionalPower at Grid

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(Source: KPMG’s Solar Grid Parity Model*Note that the CDM benefit of INR 0.60 / KWH has been factored in the Solar Costs)

In India grid parity to happen in 2019-20 when the levelized tariffs from solarpower are comparable with the levelized tariffs of grid power

The Energy Sector Institutional Structure at Centre...

Government of India

PlanningCommission

Ministry of Coal

Ministry ofPower

Ministry ofPetroleum &Natural Gas

Ministry of NewandRenewable

Department ofAtomic Energy

Ministry ofEnvironment &

Forests

CERC / CEA / BEE

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India is the only country worldwide to have a dedicated ministry for promotion ofrenewable energy– Ministry of New and Renewable Energy(MNRE)

Central PollutionControl Board

IndianRenewableEnergyDevelopment Agency

Upstream / DownstreamCompanies

Energy

Utilities / NTPC / NHPC/ POWERGRID / PTC /

PFC / REC

Source: Clean Energy: An Exporter’s Guide to India (2008)

…And the RE Institutional Structure at the State Level…

State Government

State RenewableDevelopment Agency

State Electricity RegulatoryCommission

Department ofEnvironment

State PollutionControl Board

Department ofPower

State Utilities / GENCOs /DISCOMs / TRANSCOMs

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ElectricalInspectorate

Most States have State Nodal Agencies (SNAs) to oversee their respectiveimplementationof renewable energyprograms

Source: Clean Energy: An Exporter’s Guide to India (2008)

Provide the Overall RE Institutional Support Structure

IREDA

Solar Energy Centre /Other R&D Institutes

Ministry of New &RenewableEnergy

(MNRE)

SERCs

CERC / CEAPlanning Commission Ministry of Power / REC Ministry of Finance

Banks / NBFCs /Multilaterals

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Policy Flow R&D Flow Fund Flow Implementation Flow

NVVN

SDREDAs / SNAs / NGOs /Akshay Urja Shops

State Utilities / GENCOs /DISCOMS / TANSCOMSSolar Cells, Modules &

Systems Manufacturers

End Users & Producers:: Individuals / Corporates/ Government/ IPPs

Source: Framework Adapted from India: Renewable Energy Report (APCTT-UNESCAP); Analysis

Cu

mu

lati

ve

Sola

r C

ap

aci

ty (

GW

)

An

nu

al S

ola

r M

ark

et

(G

W)

India will be the next solar capital of the World

2.02.7

23.2

0.75.2

13.1

44.8

15.6

68.0

10

20

50

40

70

60

80

5

1530

10

25

20

30

35

9

00

2011-12 2014-15 2017-18 2020-21 2021-22

Annual Solar Market

(Source: KPMG’s Solar Market Potential Model)

Till dategrowth was in EuropeCAGR of ~ 60% for both CSP & Solar PVtechnology in the last 5 years in the world

Source: REN21

Cumulative Solar Capacity

Next growth will be in India.By 2021-22, cumulative Solar capacity will be 68 GW

Key DriversStrong Government supportDecreasing cost of Solar powerHuge Off grid requirement of Agriculture/Rural segment

EICC

How can you participate:

Joint venture with Indian partner

FDI

Participate in any area of the value chain:

Production to EPC to Financing to Maintenance

EICC

Gracias y Namaskar.