identifying opportunities in renewables energy

8/2/2019 Identifying Opportunities in Renewables Energy

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AVALONConsulting

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2010 Avalon Consulting. All Rights Reserved

Case Study


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AVALONConsulting

An Indian Engineering major with global footprint wanted to exploreopportunities in the renewable energy space

An Indian Engineering major with global footprint

The client wanted to understand possible play in the renewable energy space in India

power generation since it is the most significant user of energy globally. It also has seen

maximum application of Renewable Energy. Hence, the study was limited to renewableenergy for power generation.

The penetration of renewable energy (RE) sources in power generation has grown over theyears but is still miniscule. Hence the client believed that there was potential of investing in

this space.

The client wanted to understand which of the various energy sources had the most potential

and which part of the value chain was most attractive

Situation Approach Solution

Client

Situation

Identifying opportunities in renewables


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AVALONConsulting

The relative penetration of various types of renewable energy in powergeneration was mapped

Situation Approach Solution Example

RESources

Biomass

Tidal

Geothermal

Wind

Hydro

Solar

PV

Solar

Thermal

Heated water from the earths

core accessed through natural

springs and cavities used togenerate power

Tidal or wave movements areused to power traditional

hydropower mechanisms

Biomass elements like coal, wood ordung are burnt and heat generated is

used to power traditional thermal

power mechanisms

Solar cells convert lightenergy into electricity

through photovoltaics

Solar energy isconcentrated onto a fluid

which is heated and then

used to power traditionalthermal power

mechanisms

Dams create water bodies

whose potential energy is usedto power turbines connected to

a generator

Ambient wind rotates large

rotors which are connected togeneratorsNew

Well penetrated

Less penetrated



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AVALONConsulting

The evolution of technology and hence, the technology risk was mapped


Wind

Wind power has evolved over the years and has attained prominence in the renewables space

Technology and business models both have become more refined

Capacities of individual plants have grown from 500 KW to 3MW today; 5MW plants are being considered

It is expected to be the future of renewable power generation

Solar

Solar technology both thermal and photovoltaic are fairly nascent though they have been around for long

Among the two, PV is more evolved and attracts greater interest and investment globally than thermal

Crystalline silicon technology is well-developed but expensive

Currently research is on to develop next-gen solar PV thin films which will revolutionise renewable power

Geothermal

Geothermal power generation involves deep dr illing which is capital intensive & technologically challenging

The geothermal reservoirs also have limited life and low conversion efficiency

Most geothermal sites are regionally clustered in the Pacific region

Therefore the potential for geothermal power generation is limited

Tidal

Tidal movement lateral or vertical is used to move turbines which are used for power generation

However significant tidal activity is required which again regionally limits this source

There are also ecological issues around marine life conservation

These issues therefore limit the large scale adoption of tidal power

BiomassBiomass is widely used for power generation since all kinds of waste can be used as feedstock

However procuring large scale and high quality feedstock is a challenge for biomass plants

Conversion efficiencies are also low in biomass

Readiness

http://images.google.co.in/imgres?imgurl=http://i1.trekearth.com/photos/10088/windmill_closer.jpg&imgrefurl=http://www.trekearth.com/gallery/North_America/United_States/photo494793.htm&usg=__3n5IfAx6xjvHf-6Hfgb-4SSvtfc=&h=800&w=496&sz=68&hl=en&start=3&um=1&tbnid=ldqWn9t9EQPIOM:&tbnh=143&tbnw=89&prev=/images?q=windmills&um=1&hl=en&sa=N


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AVALONConsulting

Based on technological maturity and growth potential, wind and solarenergy was chosen for a deeper evaluation


1990 2000 2010 2020

Growth in Global RE Power Generation by Sources, TWh/a

Wind

Biomass

Geothermal

PV

Others21%

127241

693

4505

In India also RE power isexpected to grow driven

mainly by wind power



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AVALONConsulting

The growth potential and growth drivers were mapped

ExampleSituation Approach Solution

2008 2009 2010 2011 2012

Global Annual Capacity Addition Growth, MW

On-Shore

Off-Shore

Refers to land-based windfarms and are moreprevalent

Easier to setup andmanage -- erection andmaintenance is lesscomplicated

Issues around availability ofland which are expected tofurther aggravate as theaverage size of windturbines increases

Typically erected in the high-seas

Setup and maintenance morecomplicated due to the addedcomplexity of working in a moretemperamental environment

(much like off-shore oil rigs)

Issue of evacuation of power

Increased wind turbine sizehigher conversion efficiencyand reduced cost

No issues of land availability

On-Shore

2000 2001 2002 2003 2004 2005 2006 2007 2008

Wind Power Installed Capacity Growth in India, MW

Lack of reliable grid supply

Policy Initiatives

- 16 out of 29 states have setup RPOs mandating gencos to

purchase 10% of their requirement from RE sources

- Mechanisms for wheeling and banking of power, feedin tariffshave been defined by some states

- Central Government is offering incentives such as accelerateddepreciation, 10 year tax holiday, no income tax on power sales toutilities and fast clearance of FDI

Availability of reliable suppliers of wind power equipment in India

Growth Drivers

India will mainly witness on-shore growth in the shortterm given the high untapped potential


Off-Shore


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AVALONConsulting

Suzlon

RRB

Vestas

Gamesa

Enercon

The wind value chain was mapped and based on the industrystructure, competition and value captured at each stage, the attractiveopportunities were identified


CustomersEPC

CompaniesOEMs

Utilities are being forced

by legislation and lackof strong alternatives tobuy wind power

Technology is a key

success factor and hencethe early starters have adefinite advantage

The entry barriers for newplayers are very high on

account of this

Power UtilitiesTier 1 & 2

Suppliers

Currently this role is played

by the OEMs though there isan opportunity to delink thisfrom the OEM businesssince the skills sets required

are very different

A range of specialised

equipmentmanufacturers serves theOEM for components likefan

blades, motors, turbines,etc. Over 8000

components go intomaking a wind turbine

Vestas

GE Wind

GamesaEnercon

Suzlon

Siemens

Others


Global Market Shares of Key Equipment Suppliers ofWind Power, 2007

Indian Market Shares of Key Equipment Suppliers of Wind

Power, 2007


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AVALONConsulting

The wind value chain was mapped and based on the industrystructure, competition and value captured at each stage, the attractiveopportunities were identified


Solar Power Technologies

Solar ThermalSolar Photovoltaic

Crystalline Silicon Thin Film

Refer to the use of solarconcentrators to generate heat

which is then used to generatepower

The technology is still nascent dueto its low conversion efficiency

The sizes of the resultant plantsalso necessitate large land area

and these are therefore typicallyfound in the deserts

While these are popular forstandalone applications, grid-tying

them will pose challenges

Used to manufacture solar cells

using wafers cut from silicon ingots

The process is capex intensive andresults in significant consumptionand wastage of silicon

Currently it is not economically

comparable to wind power due toabove reasons

Low concentration technology isbeing experimented with toimprove electrical characteristics

Developed with a view to reduce

silicon consumption

Film of silicon material is sprayedonto a substrate or othersurfaces (windows, outer

walls, etc.)

Is expected to reduce the capexin solar PV by 80%

Significant investments are beingmade here



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AVALONConsulting

Similarly attractive niches were identified in the solar space, based on thevalue captured, competitive intensity and ease of entry in different stages ofthe value chain


Silicon WaferMaker

Solar PanelMaker

Systems Customer

Of the installed capacity for

solar power in 2007, majority

was grid-tied and a minoritywas off-grid applications

Solar CellMaker

Most of the action in this market istaking place in this space in the

form of R&D to reduce the cost of

solar cell. Huge investments arebeing made by a variety of

companies

Capex and power intensiveprocess; silicon supplies may

become an issue in the futurerequiring long term sourcingcontracts

Could either be standalonesystems or grid evacuation of

power



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AVALONConsulting

Raj Nair or K.A. Ramakrishnan or Naimish Dave or Jaldeep SodhiCasa Avalon

61, Dr. S. S. Rao Road, Parel

Mumbai 400 012 - IndiaPhone : 91-22- 66191100

Fax : 91-22- 66191122

E-mail : [email protected] : www.consultavalon.com

mumbai

Premchand C.

No: 10, 3rdFloor, Spur Tank Road, ChetpetChennai 600 031 - India

Phone : 91-44- 43455345

Fax : 91-44- 43455338E-mail : [email protected]

chennai

Sridhar V.

E-141, Okhla Industrial Estate, Phase III

New Delhi 110 020 - IndiaPhone : 91-11- 40516600

Fax : 91-11- 40516650

E-mail : [email protected]

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identifying opportunities in renewables energy

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