ey mapping-indias-renewable-energy-growth-potential

Mapping India’s Renewable Energy growth potential:Status and outlook 2013

Content

Power scenario in India ...........................................................................2

Renewable energy scenario in India .........................................................3

Key drivers of renewable energy in India ..................................................5

Key government initiatives ......................................................................6

Wind ....................................................................................................11

Solar ....................................................................................................15

Biomass ...............................................................................................21

Small hydro ..........................................................................................24

..................................................................................27

Sources ................................................................................................29

2 | Mapping India’s Renewable Energy growth potential: Status and outlook 2013

Power scenario in India

Overview

the country.

shortage.

Break-up of installed power generation capacity

Source: CEA, Ernst & Young analysis; as on 31 March 2013 Note: Hydro power is also a form of renewable energy, but it is accounted for

renewable energy.

Coal, 58.3%

Total: 223 GW

Nuclear, 2.1%

Oil,0.5%

Gas,9.0%

Hydro, 17.7%

Renewable,12.3%

86.0

131.6

72.3

34.6 39.0

10.97.824.5 29.8

3.9 4.8 5.3

End of X plan2006-07

End of XI plan2011-12

Planned XII planadditions2012-17

India installed generation capacity (GW)

Thermal Hydro Renewable Nuclear

Source: CEA

Target

Investments

3Mapping India’s Renewable Energy growth potential: Status and outlook 2013 |

Renewable energy scenario in IndiaOverviewPower generation from renewable sources is on the rise in

Growth of installed capacity of renewable energy in India (GW)

Source: MNRENote: includes wind, solar, biomass (incl. bagasse) and small hydro. Excludes large hydro.

10.2 12.314.4

16.820.0

24.528.1

FY07 FY08 FY09 FY10 FY11 FY12 FY13

CAGR18.4%

Installed capacity of renewable energy in India

Source: MNRE; as on 31 March 2013Note: biomass includes bagasse cogeneration; ‘others’ includes waste-to-power

Small hydro,12.9%

Biomass, 12.8%

Wind, 67.9%

Solar, 6.0%

Others, 0.3%Total: 28.1 GW

Investments

Targets


Renewable Technology

2010-11 2011-12 2012-13 2013-14

Target (MW) Actual (MW) Target (MW) Actual (MW) Target (MW) Actual (MW) Target (MW) Actual (MW) (as on 30.6.13)

Wind Power 512

300 307 350 353 350 237 300 54

Bio Power 472 474 475 475 472 425

Solar Power 200 27 200 905 754 75

Total 2,972 3,157 3,425 4,943 4,125 3,162 4,325 640

Renewable energy actual installations and target

Ernst & Young LLP’s Renewable Energy Country Attractiveness Index (RECAI)

Rank Country All renewables Wind index Solar index

1 US 75.4

2 China 71.9 76.7 79.6

2 69.6 59.6

4 UK 62.1

5 43.7

6 61.3 46.2 57.2

7 Canada 59.3 52.5 46.1

56.9 47.3

9 India 56.2 50.5 60.6

10 Italy 54.4 37.3 50.3

11 Belgium 53.0 42.5 35.7

12 South Korea 52.2 39.9 41.7

13 51.7 36.0 45.5

14 51.3 46.0 24.9

15 Brazil 50.9 47.4 46.9


Key drivers of renewable energy in IndiaEnergy security concerns

Government support

of renewable energy sources.

Climate change: India is among the most vulnerable countries

Increasing cost competitiveness of renewable energy technology: Renewable energy is becoming increasingly

Distributed electricity demand: Renewable energy is a

infrastructure.

Favorable foreign investment policyhas created a liberal environment for foreign investment in

Vast untapped potential

receives one of the highest levels of solar irradiation in the

forestry residues.

Resource Estimated potential (GW) Installed capacity (GW)

Wind 19.1

Small hydro 19.7 3.6

22.5 3.6

6 1.7


Key government initiativesThe framework

Promotion of electricity from renewables

SERCs to set differential tariff for renewables

Key policy initiatives

energy

�energy

announced by several

�

Establishment of Central

Constitution of offshore Wind Energy Steering

2008 2008-09 2009-11 2011-13


RPO regulations

sources.

Year RPO Target

National targets under NAPCC

STATE RE Technology 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Solar

Solar

Solar

Bihar

Solar

Chhattisgarh

Solar

Solar

Solar

Solar

Solar

Solar

Jammu and Kashmir

Solar

Solar

| Mapping India’s Renewable Energy growth potential: Status and outlook 2013

STATE RE Technology 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Solar

KeralaSolar

Solar

Solar

Solar

Solar

Solar

Solar

Solar

Solar

Solar

Solar

Solar

Solar

Uttar Pradesh

Solar

West Bengal

Solar


the country.

REC mechanism

certain environmental attributes of electricity generated from

Renewable energy sources

or

Electricity

Sold at preferential tariff Sold at non-preferential tariff

RECs

Trade/transact

Type of REC Floor price (INR/MWh)

Forbearance price (INR/MWh)

Solar

Source: REC Registry of India

Non-solar RECs issued and redeemed, and average clearing price (INR/MWh)*

1,500

0

100000

200000

300000

400000

500000

600000

700000

REC issued

Sep-

12

Oct

-12

Nov

-12

Dec-

12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3

REC redeemed Average price

* Average clearing price for non-solar RECsSource: REC registry of India, IEX, Ernst & Young analysis


Solar-RECs buy and sell bids and average clearing price (INR/REC)

Buy bids Sell bids Cleared priced

Source: ???

12,500

12,680

12,720

12,620

12,500

12,500

13,400

12,206

11,490 9,300

9,300

0

8,000

16,000

24,000

32,000

40,000

48,000

Sep-

12

Oct

-12

Nov

-12

Dec-

12

Jan-

13

Feb-

13

Mar

-13

Apr

-13

May

-13

Jun-

13

Jul-1

3


WindSector overview

Global installed capacity of wind energy (%)

Source: GWEC Annual market update 2012; as on December 2012

US, 21.2%

China, 26.6%

Germany,11.1%

Total: 282.6 GW

Spain, 8.1%

India, 6.5%

France, 2.7%

Rest of World, 15.7%

Canada, 2.2%

UK, 3.0%

Italy, 2.9%

State-wise wind potential and installed capacity (MW) and potential in India

State Estimated Potential * (MW)

Installed capacity (MW)

Kerala 35

4

measurements.

Re-introduction of GBI to aid growth;

restored, will be another key driver

registered under the scheme.

can be drawn between 4 and 10 years.

last year’s generation.


Growth of installed capacity of wind energy in India (GW)

Source: MNRE

CAGR17.9%

7.1 8.8 10.2 11.814.2

17.4 19.1


Role of GBIs and RECs

locations.

will need to factor in these considerations into their business analysis to arrive at a suitable model.

Offshore wind policy released

Encourage investment in energy infrastructure

renewable energy resources in the EEZ of the country

Reduce carbon emissions

Encourage indigenization of the offshore wind energy technology

industry

clearances.

Permission would be granted on a case basis to interested

throughout the value chain.


Growing investor interest

almost half of the total investment in clean energy in India in

by states

regulators

conventional energy

India for various renewable energy technologies under

State Tariff (INR/kWh) Order Remarks

3.51

4.15 July 2013

Zone 2: 5.05

Zone 3: 4.31

3.07 July 2013

5.92

4.70

25 years

Source: Relevant SERC orders and announcements


Key takeaways

integration of renewable energy into the grid.

Key challenges


SolarSector overview

the country has 300 sunny days a year and receives an annual

solar radiation across the country.

State-wise split of solar power projects (MW)

Source: MNRE, as of 31 March 2013

Gujarat, 858

Rajasthan, 553

Maharashtra, 100

Andhra Pradesh,23

Madhya Pradesh,37

Others, 115

JNNSM: catalyst for solar sector growth

2022.

JNNSM capacity addition target

Phase I Phase II Phase III

200

7 15 20

JNNSM — an update


Phase I — JNNSM allocations and commissioned capacity

Solar PV projects under batch II, phase I (as of 31 July 2013)

Capacity allocated as per PPA (MW)

Capacity actually commissioned (MW)

140.00 130.00

340.00 310.00

54.00

30.00 2.50

Total 662.05 579.3

Name of projects State Capacity allocated as per PPA (MW)

Capacity commissioned (MW)

Date of commissioning

15 15 22.01.2013

15 15 31.01.2013

20 20 19.02.2013

20 20 20.02.2013

10 10 20.02.2013

20 20 20.02.2013

15 15 12.02.2013

20 20 13.02.2013

15 15 21.01.2013

5 5 23.12.2012

20 20 30.01.2013

5 5 24.12.2012

5 5

5 5 22.02.2013

20 20 11.02.2013

5 5 24.02.2013

10 10 26.02.2013

10 10 25.02.2013


Phase II — proposed schedule for allocations under Batch 1

Name of projects State Capacity allocated as per PPA (MW)

Capacity commissioned (MW)

Date of commissioning

10 10 26.03.2013

5 5 26.03.2013

10 10 27.04.2013

10 10 01.05.2013

10 10 26.04.2013

10 10 26.04.2013

20 20 26.04.2013

20

10

Phase II — progress update

Event Date

Zero date

Zero date + 15 days

Zero date + 45 days

evaluation of bids.Zero date + 90 days

signingZero date + 120 days

13 months from the date of

Incentives offered under JNNSM

by states

obligation for states

conventional energy

India for various renewable energy technologies under


Policy roadmap

Source: MNRE, IREDA

Guidelines issued for the following:

Off-grid PV and decentralized solar applications

Rooftop & Small Solar Power Generation Programme (RPSSGP)

Jun2008

Nov2009

Jun2010

Jul2010

Aug2010

Feb2010

Oct2010

Nov2010

Dec2010

Sept2010

Jul 2011

Nov2011

Dec2011

May2012

Apr2013

Aug2013

Launch of National Action Plan on Climate Change (NAPCC) suggesting setting up of JNNSM.

35 projects with aggregate capacity of 610 MW achieve

JNNSM Phase-I.

Allocation of 350 MW of solar PV projects under Batch-II of the JNNSM Phase-I

29 projects (~20 MW) sanctioned under the off-grid PV scheme

96 projects shortlisted to set up solar PV projects for RPSSGP- 80 projects (98 MW) sanctioned

Government approved JNNSM - aims to promote the development and use of solar energy for power generation

Guidelines for migration of projects under development to JNNSM

Guidelines for new grid connected solar power projects and

notice for RFS

418 applications receivedSubmission of bids

Solar project allocations (620 MW)LoI issued

In-principle approval and sanction of INR172.3 million awarded to 37 ‘solar cities’.

Solar Energy Industry Advisory Council (SEIAC) constituted by the MNRE to help attract investments, encourage R&D, reduce costs and make the Indian solar industry competitive.

First solar REC traded.

Guidelines for 750 MW under VGF (JNNSM Phase 2, Batch 1)

Allocation of roof top PV projects in selected cities/states (Phase-II)

IREDA scheme for Solar Off-Grid

16 projects (84 MW) migrated to NSM

The opportunity landscape

Off grid Diesel offset Manufacture of solar equipment

Grid power

Solar PV appears to the immediate opportunity to achieve critical size

DDG issues include ‘size’ and revenue collectionDLS/SWH/Torches have critical dependence on a distribution channel

Need to develop customized solutions as per end useHigher gestation to achieve ‘size and scale’Spread market /smaller project size

Evolving technology Propriety technology like solar thermalEconomies of scale to compete with establishes western/Chinese/south-east asian companies

Immediate opportunity to achieve size and scale Shorter gestation ~2 yrs for SPVSolar thermal has limited operating history /equipment issues


State policies complement JNNSM

State Measures/initiatives

Kerala

Uttar Pradesh

New state policies expected to increase demand

determined by the Central Electricity Regulatory Commission

Regulatory uncertainty, however,


manufacturing

is still awaited.

Manufacturers, developers differ on anti-dumping duties

that goods from these countries are being sold below cost.

Falling rupee adds to industry woes

Key takeaways

industry.

Key challenges


BiomassSector overview

Biomass availability in India is estimated at about 500 million

State-wise grid-interactive biomass power installed capacity and potential in India

State Estimated Potential (MW)


Uttar Pradesh 776.50

756.90

236 249.90

124.50

91.30

45.30

Bihar 919 43.30

30.50

West Bengal 396 26.00

246 20.00

16.00

24 10.00

Growth of biomass-based power generation installed capacity in India (MW)

Source: MNRE

1,112 1,324 1,751

2,199 2,665

3,135 3,601


CAGR21.6%


Policy focus and impetus for biofuels and biomass-based power

Fiscal incentives for biomass power projects

Capital subsidies for biomass/bagasse cogeneration projects

Capital subsidies for bagasse cogeneration projects by cooperative/public sector sugar mills

Area/program

systems

for 10 years

duties

Project type Special category states (North eastern region, Sikkim, Jammu & Kashmir, Himachal Pradesh and Uttarakhand)

Other states

0.646 0.646

Bagasse cogeneration by

0.646 0.646

above.

Project capacity Subsidy (per MW*)

40 bar and above

60 bar and above

Next-generation biofuels to address energy security and environmental concerns

for addressing energy security and environmental concerns.

are being announced to induce villagers to rehabilitate waste


Recent development

heat agricultural waste left after harvests in controlled conditions.

Key takeaways

Key challengesInconsistent availability of biomass with a

concern.


Small hydroSector overview

of an electrical transmission grid system is uneconomical.

SHP installed capacity and potential in India

State Estimated Potential (MW)


964

794 300

219

175

Kerala 704

441 155

131

943

Growth of biomass-based power generation installed capacity in India (MW)

Source: MNRE

CAGR11.35%

1,905 2,045 2,429

2,735 3,043 3252

3,632


remote areas

deforestation and resettlement associated with large hydel

very low load densities.

Government incentives

utilization.


of new designs of water mills for mechanical and electricity

Category Above 100 KW and up to 1000 KW

Above 1 MW- 15 MW

Category Up to 1000 KW Above 1 MW-25 MW

Support to new SHP projects in the state sector

Support to new SHP project in private/ cooperative/ joint sector

Tariff norms for FY13–14

Area/program

Preferential tariffs by many SERCs

to state governments and the

Customs duty concessions

Low private investment in the sector

Execution and evacuation challenges

allotment and getting a number of statutory clearances is

State Capacity Generic Levelized tariff (INR/KWh)*

3.34

3.27

3.17

5.91

5.41

4.91

4.20

Kerala 2.94 for 25 years

Source: SERC


Key takeaways

Key challenges


Key initiatives under the NMEEE

Perform Achieve and Trade (PAT) scheme

Market Transformation for Energy

NMEEE

platform

The PAT scheme

country.

focuses on creating

savings.

Recent developments

of the scheme.

Policy Database (IREEED

Smart grids

increase in the generation of intermittent renewable sources such as solar and wind.


the mandatory installment of metering systems in Indian

as of June 2013.

would be given as grant.

smart grid technologies in India.

Micro grids

removed to ensure the success of micro grids in India.

Energy storage

the integration of a large amount of intermittent renewable energy smoothly with the grid and also in grid stabilization.

Energy storage technology Estimated potential in India

Rural micro grid

Solar integration

Rural grid connected

Wind integration

SEZ

Market potential for ESS in India through 2020 (MW)

systems in India.


Sources


2013


For more information, visit www.ey.com/in

Connect with us

Assurance, Tax, Transactions, Advisory A comprehensive range of high-quality services to help you navigate your next phase of growth

Read more on ey.com/IN/en/Services

Our services

Centers of excellence for key sectors Our sector practices ensure our work with you is tuned in to the realities of your industry

Read about our sector knowledge at ey.com/IN/en/Industries

Sector focus

Easy access to our knowledge publications. Any time.

http://webcast.ey.com/thoughtcenter/

Webcasts and podcasts

www.ey.com/subscription-form

Follow us @EY_India Join the business network from EY

Stay connected


Ahmedabad2nd

Bengaluru12th th

th

th

Chandigarh1st

Chennaith th

Hyderabad

Kochi9th

Kolkata22 Camac Street3rd

Mumbai14th

5th

NCR

Sector 42

6th

4th th

Puneth

Scan this QR Code for more or visit www.ey.com/in

To download your free QR code scanner, visit your smartphone’s app-store

Available on

Ernst & Young LLPEY

About EY

our clients and for our communities.

intended for general guidance only. It is not intended to be a substitute

About UBM India

need to do business successfully. Its focus is on serving

About Renewable Energy India (REI) Expo

ey mapping-indias-renewable-energy-growth-potential

Business