Development and Financing of Renewable

Energy Projects in India

A Perspective

By

K.S. PopliDirector (Technical)

Indian Renewable Energy Development Agency LimitedNew Delhi ( India )

World primary energy consumption

Source: BP Statistical Review of World Energy

World primary energy consumption fell by 1.1% in 2009 first time since 1982

and consumption of coal was the highest since 1970

Proven Oil Reserves

Source: BP Statistical Review of World Energy

Oil reserves in Asia-Pacific Region are the lowest at 3.5% and highest in the

Middle-East at 57%

Proved natural gas reserves

Source: BP Statistical Review of World Energy

Natural Gas reserves in Asia-Pacific Region are only 8.7% with highest

reserves in Middle East at 40%

Proved coal reserves

Source: BP Statistical Review of World Energy

Coal reserves in Asia-Pacific Region is 32%

Installed Power Capacity - India

Hydro

22%

Nuclear

3%

Renewables

11%

Thermal

64%

Total Installed Capacity : 1,71,926 MW

As on February, 2011

Thermal

111325 MW

Hydro

37367 MW

Renewable

18454 MW

Nuclear

4780 MW

GDP Growth : 8%

Energy Growth : 6%

Captive Capacity : 19.5 GW

Per Capita consumption : 730 units

Coal production – Coal consumption

Source: BP Statistical Review of World Energy

GDP Growth of 8-9 %

To maintain this growth, we require similar growth in availability of power

Present power mix dominated by coal based power plants with over 65% share

It is expected that Coal shall remain the mainstay in India’s power mix in the coming years

Issues and Challenges

More than 50% ATC losses

Inadequate generation capacity

Inadequate transmission and distribution network

Lower realisation by SEBs.

Therefore, need for reforms in Power Sector brought in by Electricity Act, 2003

Generation sector de-licensed

Non-discriminatory provision for use of transmission lines and distribution system

Captive users can access grid through open access

State transmission utilities to charge for open access and include surcharges for wheeling and cross subsidies

Power Sector suffering from huge inefficiencies

Electricity Act created a new Industry in India i.e., Power Trading

CERCs and SERCs entrusted with the responsibility of promoting power market

License required for entering into trading business

More than 30 licensed traders and 2 functional power exchanges

Current share of power being traded is 9% of total power generated

Power Market and Power Trading

SERCs to provide suitable measures for grid connectivity to RE projects

Specify percentage of total consumption from such Renewable sources in the area of distribution licensee (RPO)

Preferential tariffs to be determined for Renewable energy technologies on cost-plus approach till the time they can compete with conventional power

National Electricity Policy & Tariff Policy

Challenge for sustainable growth – GHG Emissions

India is 4th largest GHG emitter

In the Indian context, 40%

contribution in the emissions is

from the Power Sector (coal based

power plants)

To reduce GHG emissions and

address global concerns on climate

change with the GDP growth,

Government of India announced

the National Action Plan for

Climate Change (NAPCC)

National Action Plan on Climate Change

Outlines India’s strategy to meet the challenge of Climate Change

Eight National Missions, form the core of the National Action Plan,

representing multi-pronged, long term and integrate strategies for

achieving key goals in the context of climate change.

National Solar Mission

National Mission on Enhanced Energy Efficiency

National Mission on Sustainable Habitat

National Water Mission

National Mission for Sustaining the Himalayan Eco-system

National Mission for a Green India

National Mission for Sustainable Agriculture

National Mission on Strategic Knowledge for Climate Change

National Action Plan on Climate Change ( NAPCC )

Thrust on RE in NAPCC

National Action Plan for Climate Change envisages 4%

contribution by Renewable Energy in the Indian power

mix by 2010, to be increased by 1% every year to reach

15% by 2020

This would require cumulative installed RE capacity of

more than 100 GW to meet the 15% RPO target

RE Sector in India: Potential and Achievements[As on 31.12.2010]

Sector

Appx. Potential

(MW)

Installed Capacity

(MW)

Wind 45195 13065

Small Hydro (upto 25MW) 15000 2850

Bagasse Cogeneration 5000 1494

Biomass 16881 979

Waste to Energy 2700 72

Solar Power -- 17

Total 84776 18477

RE: Potential and Achievements in India [As on 31.12.2010]

45195

15000

5000

16881

2700

13065

28501494 979

720

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

Wind Small Hydro Bagasse Cogen Biomass Waste to Energy

Ranked 4th Globally in terms of Installed RE capacity

RE Installed Capacity in India

Sectors 07-08 08-09 09-10 10-11*

Biomass 606 703 866 997

Small Hydro 2180 2430 2735 2939

Wind 8757 10242 11807 13065

Cogeneration 800 1049 1334 1562

W2E 55 59 65 72

Solar - 3 10 18

TOTAL 12398 14486 16817 18654

Annual

Increment 2088 2331 1837

(*) Till Dec 2010 In MW

Ministry – MNRE

Financial Institution IREDA

Technical Institutions C-WET, SEC

Comprehensive Resource Assessment

Wind Atlas/ Solar Radiation Mapping/ Hydro Sites

Enabling Legislations

Renewable Power Obligations & Preferential feed-in-tariffs

Fiscal & Financial Incentives

RE Enablers

Wind Sector in India

70% of the installed RE capacity from Wind

5th Largest in terms of installed Wind capacity

Over 7500 MW of manufacturing capacity

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

china US Germany Spain India

Wind Installed Capacity (MW)

Wind Resource Assessment started during 1983-84

900 Wind Monitoring Stations

Setting up of Demonstration projects

Starting of Private participation in Power sector

Introduction of fiscal incentives

Indigenous wind turbine manufacturing facilities

Centre for Wind Energy Technology (C-WET)

Gross Potential - 45,000 MW

Wind Program in India

Stages of Wind Growth in India

Wind Capacity Addition

Preferential Tariffs determined on cost-plus basis

Financing at easy terms

Long term repayment at competitive interest rates

Loans upto 70% of project cost

Fiscal incentives

Accelerated Depreciation

Excise duty exemptions, Tax Holiday

Resource assessment by C-WET

Generation Based Incentive

Reasons for Success of Wind

Centre for Wind Energy Technology

To develop & support R&D programs for reliable and cost

effective technology

Preparation of Wind Energy density map, Wind Atlas and

reference wind data

To accord type approval/type certification for Wind Electric

Generators for installation & operation in the Country

Certification of wind data provided by wind monitoring studies

carried out by different Agencies

Consultancy services for feasibility studies, due diligence, micro-

siting & preparation of DPRs through State of Art Software Tools

Other RE Technologies

Biomass

Small Hydro

Cogeneration

0

500

1000

1500

2000

2500

3000

2007-082008-09

2009-102010-11

Small Hydro

Small entrepreneurs

Non-availability of hydrological data

Hydro development a state subject

Biomass

Fuel availability

Cost of fuel

Competing use

Issues with Hydro & Biomass

Solar Radiation in India

Most parts of India receive good solar radiation 4-7 kWh/sq. m.

Jawaharlal Nehru National Solar Mission

Under the National Action Plan on Climate Change 8 Missions wereproposed. In the Prime Minister’s words ‘Solar Mission was itscenterpiece’.

National Solar Mission is one of the major global initiatives inpromotion of solar energy technologies.

To deploy solar technologies on a large scale leading to cost reductionand aiming to achieve grid tariff parity by 2022

Mission Targets

Application Segment Phase - I Phase-II Phase- III

2010-13 2013-17 2017-22

Utility grid power 1,000-2,000 MW 4000-10,000 MW 20,000 MW

Off- grid Applications 200 MW 1,000 MW 2,000 MW

Solar Thermal

Collectors Area7 million Sqm 15 million Sqm 20 million Sqm

Manufacturing Base -- -- 4,000-5,000 MW

Solar Lighting Systems -- -- 20 million

Solar RPO 0.25% -- 3%

Regulatory Framework

Tariff for purchase of Solar Power

Bundling solar with thermal power

Competitive Bidding to select utility scale power projects

Solar specific purchase obligations beginning with 0.25%.

Interest & Capital Subsidies for Off-Grid Program

Grant support for R&D and technology demonstration

Status of Mission

Small Solar PV Projects – up to 2 MW

78 projects aggregating to 100 MW to be commissioned by Dec 2011

Large Solar PV Projects – 5 MW each (Total 500 MW)

13 projects aggregating to 54 MW to be commissioned by October 2011.

30 projects aggregating to 150 MW to be commissioned by March 2012.

Remaining 300 MW to be commissioned by March 2013

Large CSP project – 500 MW

10 projects of 500 MW to be commissioned by March 2013

Large CSP project – 500 MW 10 projects of 500 MW to be commissioned by March 2013

List of Projects:

Entity Capacity (in MW)

Lanco Infratech limited 100

KVK Energy ventures Private Limited 100

Rajasthan Sun Technique Energy Private Limited 100

Megha Engineering and Infrastructures Limited 50

Godawari Power and Ispat Limited 50

Corporate Ispat Alloys Limited 50

Aurum Renewable Energy Private Limited 20

Acme Telepower Limited 10

Dalmia Solar Power Limited 10

Entegra Limited 10

Status of schemes

Technology Usage Patterns in CSP

0

50

100

150

200

250

300

350

400

450

Solar Tower PTC CLFR Dish-stirling

30 MW

410 MW

50 MW

10 MW

Solar Thermal Capacity = 500 MW

Tariff

Tariff notified by CERC

PV – INR 17.91/ unit

Thermal – INR 15.31/ unit

Tariff discovered after bidding

Solar PV – INR 10.95 – 12.8 /unit

Solar Thermal - INR 10.49 – 12.24 /unit

State Specific Schemes States of Gujarat, Rajasthan, Madhya Pradesh, Punjab and Delhi have

announced respective Solar Policies

Gujarat is promoting the installation of 365 MW Solar PV and 351 MW Solar

Thermal projects. Total 34 developers have been shortlisted combined both

for Solar PV and Solar thermal.

Work initiated on Solar Park in Gujarat (Charanka) with following features:

First 500 MW solar power project in Asia

Investment of over US $ 3.5 Billion

3000 acres of land, comprising 1000 acres of government wasteland

Leasing of plots to companies on 30 year contracts.

Arrangements for water, electricity, roads and power transmission

Solar Manufacturing Capacity

Solar PV modules: 1000 MW

Solar Cells: 400 MW

Solar Energy Centre

* Setup in the year 1991

* National test and standardization

Centre for solar energy materials,

components and systems

* Joint collaborative research

* Advisory and Consultancy Services to

industry and users.

* Undertake systems design, engineering

and prototype development.

* Evaluate new and improved

technologies/products/ systems to

assess their adaptability to Indian

conditions.

IREDA – A developmental FI for Renewable Energy

Incorporated under the Companies Act on 11th March, 1987 topromote, develop and extend financial assistance for Renewable Energyand Energy Efficiency/ Conservation Projects.

Extend financial support to Renewable Energy, Energy Efficiency &Conservation projects

Operational Areas

Sectors being financed

Hydro Energy

Wind Energy

Bio-Energy

Solar Energy

Energy Efficiency & Energy Conservation

Administration of MNRE Programs

Wind GBI

Rooftop Solar

Solar Off-grid refinance scheme

Cumulative Performance

No of Projects Sanctioned : 1941 Projects

Total Loan Sanctions : 3400 Million US$

Loan Disbursements : 1746 Million US$

Sanctioned Power Capacity : 4280 MW

Commissioned Capacity : 1977 MW

Conventional Fuel Replacement : 1.3 M MTCR/Yr

As on March, 2011

Recent International Partnerships

KfW, Germany(4th LoC) :€ 200 Million

AFD (France) :€ 70 Million

Lines of Credit in Pipeline

JICA :$ 100 Million

ADB :$ 200 Million

EIB

NIB

Thank you