Renewable Energy Market in IndiaRenewable Energy Market in India

Fi di f d b P C l iFindings from a study by Prayag Consulting

March 2010

Outline

Takeaways

Global energy

• Policies and regulations

Indian energy scenario

P t ti l f bl i I diPotential of renewable energy in India

Focus on each renewable source/ opportunities

• Wind• Solar• Small Hydro• Biomass

Takeaways

• India’s sustained efforts in the past two decades are now bearing f i bl d i b fi d dfruit as renewable energy and its benefits get accepted and acknowledged– Emphasis on decentralized energy

G id i t ti bl j t b d i d• Grid-interactive renewable power projects based on wind power, biomass, small hydro and solar are mainly private investment driven, with favorable tariff policy regimes established by State Electricity Regulatory Commissions (SERC)g y ( )

– Almost all-renewable power capacity addition during the year has come through this route

• India has more mature capabilities in Wind Energy and Small Hydro, while Solar technology is still in the nascent stagewhile Solar technology is still in the nascent stage

• The State Electricity Regulatory Commission (SERC) mandated Renewable Purchase Obligation (RPO), an obligation on States that renewable energy should form some minimum part of the totalrenewable energy should form some minimum part of the total power consumption

World power report

• The maximum power consumed worldwide at any given moment is about 12.5 trillion watts (terawatts, or TW), according to the U.S. Energy Information Administration

– Much of it is powered through coal and other sources

• A shift towards renewable or clean energies appears to be a viable option in the long runthe long run

• Examples where renewable energy has made a difference

– Wind farms in Denmark generate about 20% of the nation’s electricity

– The solar PV (photovoltaic) industry reached more than 2 GW in 2006, making the solar manufacturing and installation industry worth nearly $16 billion

– More than half of Americans live in states that have mandated that their utilities generate a specified percentage of electricity (in many cases up to 20% or 25%) from renewable sources such as solar, wind, biomass, and geothermal by a specific target year

Did you know? Germany and Spain rank first and second, respectively, in world wind Did you know? Germany and Spain rank first and second, respectively, in world wind power productionpower production

Energy Scenario in India

India’s total installed power capacity stands at 1,47,402.81 MW

Thermal –93,392 MW

Hydro –36,647.76 MW

Renewable energy –13,242.41 MW

Nuclear sources –4,120 MW

While some progress has been made, renewable energy gyhas still a long way to go to make significant impact

Renewable energy in India

• India established the world’s first government department for non conventional energy in

Grid-interactive renewable power

Estimated Potential (MW)

Cumulative Achievement (MW)

Wind Power 45,195 10,242.50

S l P 50 / k 2 12 / k for non conventional energy in 1982, updated to a ministry in 1992 and has the largest renewable energy program in the world

Solar Power 50 /sq.km. 2.12 /sq.km.

Small Hydro Power (up to 25 MW)

15,000 2,429.67

Bio Power (Agro 16,881 703.30• The current 8,000 MW of

installed capacity is expected to reach 20,000 MW by 2012 (2008)

residues & Plantations)

Cogeneration-bagasse 5,000 1,048.73

Waste to Energy (Urban & Industrial)

2,700 58.91& Industrial)

Did you know? The Indian Did you know? The Indian market for clean energy is estimated at $600 million

with an annual growth rate of 25 percent (2008)

market for clean energy is estimated at $600 million

with an annual growth rate of 25 percent (2008)

Policies to promote renewable energy

• Preferential tariffs are being reviewed by the State Electricity Regulatory Commissions (ERCs)Commissions (ERCs)

– Andhra Pradesh, Madhya Pradesh and Maharashtra have announced promotional policies through their respective ERCs

• Renewable Purchase Obligation (RPO) is the obligation mandated by the• Renewable Purchase Obligation (RPO) is the obligation mandated by the State Electricity Regulatory Commission (SERC) under the Act, to purchase minimum level of renewable energy out of the total consumption in the area of a distribution licensee

• This concept has the potential to develop into a marketplace for renewable energy so that states with higher potential can supply power to states with lower or no potential

Renewable Energy Certificate (REC)

• Renewable Energy generators will have two options– Either to sell the renewable energy at preferential tariff fixed by the concerned

CElectricity Regulatory Commission or

– To sell the electricity generation and environmental attributes associated with RE generation separately

• On choosing the second option the environmental attributes can be• On choosing the second option, the environmental attributes can be exchanged in the form of REC

• The Central Agency will issue the REC to RE generatorsTh REC ill b h d l i th P E h d b• The REC will be exchanged only in the Power Exchanges approved by CERC within the band of a floor price and a forbearance (ceiling) price to be determined by CERC from time to time

• The distribution companies, Open Access consumer, Captive Power PlantsThe distribution companies, Open Access consumer, Captive Power Plants (CPPs) will have option of purchasing the REC to meet their Renewable Purchase Obligations (RPO)

The government is launching numerous initiatives and policies to increase the generation of renewable energy

The government is launching numerous initiatives and policies to increase the generation of renewable energy

Generation-based incentives

• Wind– Indian government has launched a Generation-based Incentive of INR 0.5/ kWh

over feed-in tariffs for 4GW of new-build– It expects to come online between mid-December 2009 and 31 March 2012

Will allow the investors apart from getting the tariff determined by the state– Will allow the investors, apart from getting the tariff determined by the state regulatory commissions, also get an incentive of 50 paise per unit of electricity for a period of 10 years, provided they do not claim the benefit of accelerated depreciation

• Solar– Financial assistance of Rs 12 per KW hour in case of solar photovoltaic and Rs

10 per KW hour in case of solar thermal power fed to the electricity grid from a grid interactive solar power plant of a capacity of 1 MWp and abovegrid interactive solar power plant of a capacity of 1 MWp and above

– This incentive will be worked out taking into account the tariff provided by the utility to the solar power producer

GBIs are offered by the Government to various forms of renewables over the years to give a boost

GBIs are offered by the Government to various forms of renewables over the years to give a boost

WIND ENERGYWIND ENERGY

Wind energy in IndiaWi d l t i t f it i b t 225 KW d 1 65 MW h• Wind electric generators of unit sizes between 225 KW and 1.65 MW have been deployed across the country

State Potential (MW) Installed capacity (MW)State Potential (MW) Installed capacity (MW)

1 Karnataka 11531 1327.4

2 Gujarat 10645 1566.5

3 Andhra Pradesh 8968 122 53 Andhra Pradesh 8968 122.5

4 Tamil Nadu 5530 4304.5

5 Rajasthan 4858 738.4

6 Maharashtra 4584 1938 96 Maharashtra 4584 1938.9

7 Kerala 1171 27

8 Madhya Pradesh 1019 212.8

Total 48306 10238Total 48306 10238

Did you know? India is now the fifth largest wind power producer in the world, after USA, Germany, Spain and China

Did you know? India is now the fifth largest wind power producer in the world, after USA, Germany, Spain and China

Technology Development and Manufacturing Base

Wind Electric Generators are manufactured in the country by manufacturers through • Joint ventures or under licensed

production• Subsidiaries of foreign companies under

licensed production • Indian companies with their own

t h l

The current annual production capacity of domestic wind turbines is about 3000 MW

technology

The trend in recent installations is movingThe trend in recent installations is moving towards • Better aerodynamic design• Use of lighter and larger blades

Higher to ersThe wind industry has taken up

indigenized production of blades• Higher towers• Direct drive• Variable speed gearless operation using

advanced power electronics typically to suit moderate wind regime and weak

indigenized production of blades, gearboxes, yaw components, controllers,

etc.

suit moderate wind regime and weak local grid network

An indigenization level up to 50% has been achieved in machinesAn indigenization level up to 50% has been achieved in machines

Opportunity for manufacturers

• Expertise is available in plenty• India appears to be a mature market with majority of Major Players in India:

• Suzlonmajor players serving the domestic market

– Suzlon leads the competitors in exporting wind energy equipment

• Enercon Suzlon and Regen Power Tech are the major

Suzlon• Vestas• GE• Regen Power Tech• Shriram EPC• Enercon, Suzlon and Regen Power Tech are the major

companies in handling turnkey projectsShriram EPC

• Enercon India

Export:• Indigenously produced wind turbines valued at about US$ 600 million were exportedExport:• Indigenously produced wind turbines valued at about US$ 600 million were exportedIndigenously produced wind turbines valued at about US$ 600 million were exported

to Australia, Brazil, Portugal, Spain, Turkey and USA during the year• Wind turbines components such as nacelle, Hub, Bolt box assembly, etc of US$ 50

million were exported to USA

Indigenously produced wind turbines valued at about US$ 600 million were exported to Australia, Brazil, Portugal, Spain, Turkey and USA during the year

• Wind turbines components such as nacelle, Hub, Bolt box assembly, etc of US$ 50 million were exported to USA

• Wind turbine blades valued at US$ 5.4 million were exported to China and Japan• Wind turbine blades valued at US$ 5.4 million were exported to China and Japan

Market structure in India

Competitive Market Structure Overview, Wind Turbine Component Segments

Glo

bal

BearingsCore set of five or six large scale generator suppliers

mainly exporting from regional hubs, with new

t t i

Few players are able to supply full product portfolio, serving multiple industries

with expanding global production networks, while

several pitch and yawic fo

otpr

int

Reg

iona

l GeneratorsGear boxesProliferation of local

suppliers as new markets scale

entrants emerging

Consolidated group of large scale suppliers are

under pressure as regional players scale

several pitch and yaw suppliers entering

ty g

eogr

aphi

cal

R

Towers

Blades

markets scale

One large independent supplier, several

small-scale regional players contending

with in-house duct

ion

faci

li

Fragmented Concentrated Consolidated

Loc production

Market Concentration

Prod

Source: Emerging Energy Research, Wind Turbine Supply Chain Strategies, 2009-2020

SOLAR PVSOLAR PV

Solar energy in India – bright prospects

• India is home to one of the most abundant solar resources in the world, with 2.97 million square kilometers of tropical and subtropical land and an average of 250-300 clear sunny days a year

• Nascent segment to exploreSolar based energy accounts for only 0 5% of installed base with a grid interactive (grid hybrid)– Solar-based energy accounts for only 0.5% of installed base with a grid-interactive (grid-hybrid) solar power totaling only 2.12 MW from just 33 installations

• Government continuing with the demonstration programmes on grid connected solar photovoltaic (SPV) power generation

Indian Government’s future plans:• India is planning to boost output from near zero to 20 GW by 2020

$19B plan aims to kick-start solar industry in India• Money would be spent on incentives for production and installation as well as research and

developmentIf fully implemented, solar power would be equivalent to one-eighth of India's current installed power baseIncludes large-scale deployment of solar generated power for both grid connected as well as di t ib t d d d t li d ff id i i f i l idistributed and decentralised off-grid provision of commercial energy services

• The move could unlock India's huge renewables potential and benefit companies such as Tata BP Solar, a joint venture between Tata Power and BP plc's solar unit, BP Solar, and Bharat Heavy Electricals Ltd and Lanco Infratech

Did you know? The world now produces about 14 GW of solar power, about half of it added last year

Did you know? The world now produces about 14 GW of solar power, about half of it added last year

Opportunity for manufacturers

Major Players in India:

Few players in the market

• Opportunity for more players to enter the frayj y

• Tata BP Solar• Moser Baer• Signet Solara

The price of solar electricity in India is still about 3 times that of traditional grid electricity• New players have to come with a lot of value

engineering that drive the capital intensity to lower side

Huge opportunity for European technology

engineering that drive the capital intensity to lower side

Significant potential to tap into

Huge opportunity for European technology

Current scenario:Nearly 75 per cent of Tata BP Solar sales come from exports largely to Europe and the U.S

Growth plans include expansion of its module manufacturing facility and thrust on domestic salesC

• Much of the activity seems to be focused currently on manufacturing — with the manufacturers th l ibl ff i d i i t ll ti d it i i ll

The latest company that has evinced interest in setting up a unit in the Fab City is BHEL, which will be investing Rs 500 crore

themselves possibly offering design, installation and monitoring services as well• Expected to change in favor of a growing service industry

SMALL HYDRO POWERSMALL HYDRO POWER

Small hydro energy in India

5,415 potential sites with an aggregate capacity of 14,292 MW have been

So far 674 small hydropower projects aggregating to about 2 430 MW

Most of the t ti l i i Th i bilit f

have been identified• Out of this

potential about 50% lies in Arunachal

about 2,430 MW have been set up in various parts of the country• Out of this174

private sectorpotential is in Himalayan States

as river-based projects and in other States on irrigation canals

The viability of these projects improves with increase in the station capacity

Arunachal Pradesh, Himachal Pradesh, Jammu & Kashmir and Uttarakhand.

private sector SHP projects with an aggregate capacity of about 887 MW have irrigation canals

Chhattisgarh, Karnataka, Kerala and Maharashtra

been set up mainly in Andhra Pradesh, Himachal Pradesh, K t kKarnataka, Maharashtra, Punjab and Uttarakhand

Technology is well established in India

BIOMASS POWERBIOMASS POWER

Biomass energy in IndiaFor the last 15 years, biomass power has become an industry attracting annual investment of over Rs.1000 crores, generating more than 9 billion units of electricity per year and creating employment opportunities in rural areas

Estimated biomass power potential is about 21,000 MW

By using these surplus agricultural residues Bi j t ith t itagricultural residues,

more than 16,000 MW of grid quality power

can be generated with presently available

technologies

Biomass power projects with an aggregate capacity of 703 MW through 102 projects have been installed in the country

5000 MW of power can be produced, if all the 550 sugar mills in the country switch over to modern techniques of

co generationco- generation

Sources

• http://mnes.nic.in/p• http://www.cwet.tn.nic.in/• http://www.ireda.in/

htt // h i /• http://ahec.org.in/• http://pibmumbai.gov.in/scripts/detail.asp?releaseI

d=E2010PR88• http://www.indiacore.com/renewable-energy.html• http://www.business-

standard com/india/news/government launchesstandard.com/india/news/government-launches-incentive-scheme-for-wind-energy-projects/379955/

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