india renewable energy status report 2014 - … · 7.1 state-wise biomass power potential in india...

INDIA RENEWABLE ENERGY STATUS REPORT 2014

May 14

© NOVONOUS www.novonous.com

Table of Contents 1. Executive Summary ............................................5

2. India’s Energy Position ........................................7

2.1 Future Energy Requirements and Supply Options ............................................................................ 8

2.2 India’s Electricity Demand Till 2032 ...................................................................................................... 9

2.3 Analysis of state-wise Renewable Purchase Obligation (RPO) Regulation across India ........ 10

2.4 State-wise Non-Solar and Solar RPOs (2011-12 to 2019-20)........................................................... 17

3. Need for Renewable Energy in India ............. 20

3.1 Energy Security ...................................................................................................................................... 20

3.2 Economic Viability ................................................................................................................................ 22

3.3 Rural Electrification ............................................................................................................................... 23

4. Wind Energy Market in India ........................... 25

4.1 State-wise Wind Farmable Sites in India ........................................................................................... 25

4.2 State-wise Wind Energy Potential in India (in MW) ......................................................................... 26

4.3 State-wise Wind Energy Installed Capacity in India (in MW) ........................................................ 27

4.4 State-wise Wind Energy Capacity Utilization in India (in %) .......................................................... 28

4.5 State-wise Contribution of Wind Energy Installed Capacity in India (in %) ............................... 28

4.6 State-wise Regulation and Policy Comparison for Wind Energy in India ................................... 29

4.7 EXIM Scenario in Indian Wind Energy Sector ................................................................................... 31

Export Scenario .................................................................................................................................. 31

Import Scenario .................................................................................................................................. 32

4.8 Key Growth Drivers and Inhibitors for Wind Energy Market in India ............................................ 33

4.9 Risks Associated With Wind Energy in India ...................................................................................... 33

Credit Risk ............................................................................................................................................ 33

Policy Risk ............................................................................................................................................ 34

Technical Risk ..................................................................................................................................... 34

4.10 Challenges for New Players in Indian Wind Energy Sector ......................................................... 35

4.11 Recommendations for Policy Makers ............................................................................................. 35

5. Solar Energy Market in India ........................... 37

5.1 State-wise Solar Energy Installed Capacity in India (in MW) ........................................................ 37

5.2 State-wise Grid Connected Solar Power Projects under JNNSM ................................................. 38

5.3 State-wise Solar RPO Targets (2011-12 to 2021-22) ......................................................................... 39

5.4 Solar Power Capacity Requirements (FY12 – FY22) ........................................................................ 39

5.5 State-wise Regulation and Policy Comparison for Solar Energy in India ................................... 40

5.6 EXIM Scenario in Indian Solar Energy Sector.................................................................................... 42

Export Scenario .................................................................................................................................. 42

Import Scenario .................................................................................................................................. 43

5.7 Growth Drivers and Inhibitors for Solar Energy Market in India..................................................... 45

5.8 Risks Associated with Solar Energy in India....................................................................................... 45

Credit Risk ............................................................................................................................................ 45

Policy Risk ............................................................................................................................................ 46

Technical Risk ..................................................................................................................................... 46

5.9 Application-wise Solar Energy Usage and Trends .......................................................................... 47

Rooftop Solar PV Programme ......................................................................................................... 47

Off-Grid Lighting Systems ................................................................................................................. 48

Solar City Scheme ............................................................................................................................. 48

Solar Water Pumping ........................................................................................................................ 48

Telecom Towers.................................................................................................................................. 49

Solar Water Heating Systems ........................................................................................................... 49

Solar Cookers and Steam Generating Systems ........................................................................... 49

Industrial Process Heat Applications .............................................................................................. 50

Solar Air Conditioning / Refrigeration ............................................................................................ 50

Solar Water Purification / Desalination .......................................................................................... 50

Concentrated Solar Power (CSP) Plants ....................................................................................... 50

5.10 Challenges for New Players in Indian Wind Energy Sector ......................................................... 51

5. 11 Recommendations for Policy Makers ............................................................................................ 51

6. Small Hydro Power Market in India ................ 53

6.1 State-wise Small Hydro Power Potential in India (in MW) .............................................................. 53

6.2 State-wise Small Hydro Power Installed Capacity in India (in MW) ............................................. 54

6.3 State-wise Small Hydro Power Upcoming Capacity in India (in MW)......................................... 55

6.4 State-wise Regulation and Policy Comparison for Small Hydro Power in India ....................... 56

6.5 EXIM Scenario in Indian Small Hydro Power Sector ........................................................................ 58

Export Scenario .................................................................................................................................. 58

Import Scenario .................................................................................................................................. 59

6.6 Growth Drivers and Inhibitors for Small Hydro Power Market in India ........................................ 60

6.7 Risks Associated with Small Hydro Power in India ........................................................................... 60

Credit Risk ............................................................................................................................................ 60

Policy Risk ............................................................................................................................................ 60

Technical Risk ..................................................................................................................................... 61

6.8 Challenges for New Players in Indian Small Hydro Power Sector ................................................ 61

6.9 Recommendations for Policy Makers ............................................................................................... 61

7. Biomass/ Bagasse Cogeneration Power Market in India ..................................................... 63

7.1 State-wise Biomass Power Potential in India (in MW) ..................................................................... 63

7.2 State-wise Bagasse Cogeneration Power Potential in India (in MW) ......................................... 64

7.3 State-wise Regulation and Policy Comparison for Biomass Power in India ............................... 65

7.4 State-wise Regulation and Policy Comparison for Bagasse Cogeneration Power in India ... 68

7.5 Central Financial Assistance (CFA) for Biomass/ Bagasse Cogeneration Power Projects ..... 70

7.6 Fiscal Incentives for Biomass/ Bagasse Cogeneration Power Projects ....................................... 71

7.7 Growth Drivers and Inhibitors for Biomass/ Bagasse Cogeneration Power Market in India ... 72

7.8 Challenges for New Players in Indian Biomass / Bagasse Cogeneration Power Sector ......... 72


8. Waste to Energy (WtE) Power Market in India 75

8.1 State-wise Waste to Energy (WtE) Power Potential in India (in MW) for MSW ........................... 75

8.2 State-wise Regulation and Policy Comparison for Waste to Energy (WtE) Power in India for MSW ............................................................................................................................................................... 76

8.3 Central Financial Assistance (CFA) for Waste to Energy (WtE) Power Projects ........................ 77

Capital Subsidy to Developers ........................................................................................................ 77

Incentives to State Nodal Agencies .............................................................................................. 78

Financial assistance for promotional activities ............................................................................ 78

8.4 Growth Drivers and Inhibitors for Waste to Energy (WtE) Power Market in India ...................... 78

........................................................................................................................................................................ 78

8.5 Challenges for New Players in Indian Biomass / Bagasse Cogeneration Power Sector ......... 79


Company Information ......................................... 82

INDIA RENEWABLE ENERGY STATUS REPORT 2014 - MAY 14, 2014 © NOVONOUS 4


1. Executive Summary

India has the world’s fifth-largest electricity generation capacity which currently stands at 243 GW. The power sector in India is highly diverse with varied commercial sources for power generation like coal, natural gas, hydro, oil and nuclear as well as unconventional sources of energy like solar, wind, bio-gas and agriculture. The demand for power has been growing at a rapid rate and overtaken the supply, leading to power shortages in spite of manifold growth in power generation over the years. Focused efforts are going on to bridge this demand-supply gap by way of policy reforms, participation from private sector and development of the Ultra Mega Power Projects (UMPP). The power sector offers tremendous opportunities for investing companies due to the huge size of the market, growth potential and returns available on capital. Industrialization, urbanization, population growth, economic growth, improvement in per capita consumption of electricity, depletion of coal reserve, increasing import of coal, crude oil and other energy sources and the rising concern over climate change have put India in a critical position. It has to take a tough stance to balance between economic development and environmental sustainability. One of the primary challenges for India would be to alter its existing energy mix which is dominated by coal to greater share of cleaner and sustainable sources of energy.

Renewable energy including large hydro constitutes for only 28.8% of overall installed capacity in India. The total renewable energy potential from various sources in India is 2,49,188 MW. India till 31st March 2014 has been able to achieve only 12.95% of its renewable energy potential. The untapped market potential for overall renewable energy in India is 216918.39 MW which shows huge growth potential for renewable energy in India.

Sector Potential (in MW) Installed Capacity (in MW) % Achieved

Wind Energy 102772 21136.2 20.57

Solar Energy 100000 2647 2.65

Small Hydro Power (SHP) 20000 3816.91 19.08

Biomass 17536 1914.5 10.92

Bagasse Cogeneration 5000 2648.4 52.97

Waste to Energy (WtE) 3880 106.6 2.75

Total 249188 32269.6 12.95

The Ministry of New & Renewable Energy (MNRE), Government of India has set a target of achieving overall renewable energy installed capacity of 41,400 MW by 2017. As per NOVONOUS estimates, this creates an opportunity worth US$ 10.51 billion for the renewable market in India till 2017.


2. India’s Energy Position As a developing country, India’s energy market is still in a nascent/maturing stage. The per-capita consumption of electricity is growing at a steady pace due to greater penetration of power grids, availability of more consumer electronic products and higher disposable incomes. However, it is still not at the stage of Russia, China or even Brazil, suggesting unmet demand for power.

Exhibit 2.1 Per Capita Electricity Consumption in India Source: CEA, NOVONOUS Insights

India’s power market is estimated to grow at a CAGR of 7.5-8% till 2017-18. Power consumption is estimated to grow from ~1127 TWh in FY2013 to ~3793 TWh in FY2032 at a CAGR of 6%, while power generation has grown from FY2007 to FY2013 at CAGR of 5.5%. From April 2013 to March 2014, electricity generation grew at 5.96%.

Exhibit 2.2 Year on Year Electricity Production Growth in India Source: NOVONOUS Insights

73.9 126.2 171.6 228.7329.2

464.4

671.9559.2

813.3917

0200400600800

1000

1966 1974 1979 1985 1990 1997 2002 2007 2011 2013

India - Per Capita Electricity ConsumptionkWh per person

663 705 724 772 811876 912

1006

0

200

400

600

800

1000

1200

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Ele

ctric

ity P

rodu

ctio

n in

TW

h

India - Electricity Production in TWh


2.1 Future Energy Requirements and Supply Options To meet the rate of consumption of electricity, 88.5 GW of electricity production capacity has been planned under the 12th Five Year Plan, and an estimated 100 GW will be scheduled in the 13th Plan.

Of the plants scheduled to be commissioned till 2017-18, more than 80% are coal-powered plants. However, there is a coal supply deficit in India that is scheduled to grow over the years. While this can be met by importing coal, it will put pressure on the prices of electricity generated by thermal power plants.

To meet the energy requirement, increase in renewable and non-conventional energy sources have been planned. The Wind Energy sector is scheduled to grow at 10-15% to meet the demand for power. Solar Energy is also estimated to reach 20 GW of energy capacity till 2022 due to heavy incentives offered by the government. The private sector is expected to play a major part, as by 2017-18, the private sector is expected to account for more than 35% of the country’s power generation.

However, despite the persistent focus on renewable energy over the past few years, demand supply deficits have steadily worsened from ~5% in 2003 to ~11% in 2009. Despite the work being done to minimize transmission and distribution (T&D) losses (T&D loss has reduced from 32.5% in 2002-03 to 25.47% in 2008-09), the country still faced an average energy deficit of 6.7% in 2013-14.

Exhibit 2.3 Region-wise Energy Deficit in India Source: CEA, NOVONOUS Insights

As of 31st March 2014, India had total installed capacity of 243028.95 MW. Thermal power plants (coal, gas and oil) had largest share at 168254.99 MW (69.23%) followed by hydro, nuclear and renewable energy sources. Renewable energy sources included are Small Hydro Project (SHP), Biomass Gasifier (BG), Biomass Power (BP), Urban & Industrial Waste Power (U&I) and Wind Energy.

ENERGY

State/Region Requirement / Demand

Availability / Supply Surplus/ Deficit

MU MU MU % Northern 319885 301418 -18467 -5.77 Western 286752 283396 -3356 -1.17 Southern 309840 250583 -59257 -19.13

Eastern 119632 131880 12248 10.24 North Eastern 12424 11024 -1400 -11.27 All India 1048533 978301 -70232 -6.70


Exhibit 2.4 Source-wise Installed Capacity in India (in MW) Source: CEA, NOVONOUS Insights

2.2 India’s Electricity Demand Till 2032 The electricity demand in India is estimated to grow from ~1127 TWh in FY2013 to ~3793 TWh in FY2032 at a CAGR of 6%. NOVONOUS estimates that the electricity generation capacity will grow from about 243 GW today to 710GW by 2032 to meet the rising demand. This will require India to spend around US$ 550 billion in increasing power generation capacity and another US$ 400 to US$ 500 billion in upgrading the transmission and distribution (T&D) infrastructure which accounted for loss of 25.47% in 2008-09.

Exhibit 2.5 Electricity Consumption in India by 2032 Source: NOVONOUS Insights

Coal145273.39

59.78%

Gas21781.85

8.96%

Oil1199.750.49%

Hydro40531.4116.68%

Nuclear4780.001.97%

RE Sources*29462.5512.12%

India -Source-wise Installed Capacity in MW

Coal

Gas

Oil

Hydro

Nuclear

RE Sources*

1127.91

3793.2

0

500

1000

1500

2000

2500

3000

3500

4000

2013 2032 (est.)

Ele

ctric

ity C

onsu

mpt

ion

in T

Wh

India - Electricity Consumption in TWh


2.3 Analysis of state-wise Renewable Purchase Obligation (RPO) Regulation across India State Favorable Policies Neutral/Negative Policies

Andhra Pradesh

· Renewable energy sources' means renewable sources such as Co-generation (from renewable sources of energy like bagasse).

· The consumption of a Rural Electricity Supply Co-operative Society (RESCO) shall be taken into account for calculating the consumption of a distribution licensee for the purpose of these Regulations. There shall be no separate Renewable Power Purchase Obligation on the RESCOs.

· The State Agency shall submit quarterly status to the Commission in respect of compliance of Renewable Power Purchase Obligation (RPPO) by the obligated entity(s)

· Pooled Cost of Power Purchase does not include purchases based on liquid fuel, from traders, and short-term purchases

· The state has set a RPO target of 0.25% till 2012-13 in line with Tariff policy but it has set a flat target of 0.25% till 2016-17

Assam · The State Agency shall submit quarterly status to the Commission in respect of compliance of renewable purchase obligation by the obligated entities in the format as stipulated by the Commission.

· "Average Pooled Power Cost" definition is in line with the CERC REC Regulation, 2010

· The state has set a RPO target of 0.15% till 2012-13 which is lower than Tariff policy targets. Also, the trajectory of RPO target is till 2014-15 which is 0.25%

· The regulation does not specify the min capacity for Captive consumers for applicability of RPO

Bihar · The Certificates purchased by the obligated entities from the power exchange in terms of the regulation of the Central Commission shall be deposited by the obligated entities to the Commission within a month of the purchase of the certificate.

· The regulator has also defined a longer trajectory till 2021-22 for the solar RPO target with a base of 0.25% in 2012-13 and an increase of 0.25% every year till 2019-20 and 0.5% in 2020-21 and 2021-22.

· If the distribution licensee is unable to fulfill the obligation, the shortfall of the specified quantum of that year would be added to the specified quantum for the next year. However, credit for excess purchase from renewable energy sources would not be adjusted in the ensuing year.

· The State Agency shall submit quarterly status to the Commission in respect of compliance of renewable purchase obligation by the obligated entities in the format as stipulated by the Commission and may suggest appropriate action to the Commission if required for compliance of the renewable purchase obligation.


· If solar certificates are not available in a particular year, then in such cases, additional non-solar certificate shall be purchased for fulfillment of the Renewable Purchase Obligation (RPO).

Chhattisgarh · The state has set a target of 0.5% for Solar RPO (by 2012-13) which is higher than that stipulated in the Tariff Policy.


· The State Agency shall develop suitable protocol for collection of information from various sources such as renewable energy generating companies, obligated entities, SLDC, chief electrical inspector etc., on regular basis and compile such information to compute the compliance of RPO target by such Obligated Entities.

· In the event of non compliance of the RPO by distribution licensees by any of the modalities, from

· The state has set a very short trajectory for RPO targets i.e. till 2012-13.


non-solar renewable energy plants or solar power plants in the State, the distribution licensee whose purchase of renewable energy is maximum during the year shall be compensated by other distribution licensees so that percentage of renewable energy consumption by all the distribution licensees functioning in the State become equal.

Delhi · The state has considered off-grid generation also for fulfillment of RPO.

· There will an be automatic approval on year to year basis if tariff considering capital subsidies/GBI/Carbon credits etc. is less than Average Power Purchase Cost (APPC) during a particular year.

· The Licensee(s) has/have to submit half yearly progress report to the Commission, on the capacity addition, generation and purchase of electricity from renewable energy sources in their area(s) of supply, which is used by generator itself or sold to the third party under open access, and also post them on their website.


· The regulation has guided state agency to submit a summary statement of renewable energy procurement and RPO compliance by different obligated entities. The same needs to be published by the State Agency on a cumulative basis every month by 10th day of the next month on its website.

· In case the total off grid usage/generation capacity established under such schemes exceeds 10 percent of the total RPO obligation of Delhi Distribution Licensees in the relevant category, the Commission may re-fix the RPO obligations of the distribution licensees taking into consideration such off grid usage/generation capacity.

· The regulator has also defined a lower level of Solar RPO target i.e. 0.15% (by 2012-13) and 0.35%(by 2016-17) of the total power procured.

Gujarat · The state has set a high Solar RPO target of 1% which is higher than Tariff policy targets.


· The State Agency shall submit quarterly status to the Commission in respect of compliance of renewable purchase obligation by the obligated entities in the format as stipulated by the Commission.

· The RPO regulations are not applicable on captive as well as open access consumers.

· As per the regulation the APPC of previous year would be applicable while determining the cost of power but in reality GUVNL freezes the APPC for the complete life projects.

· If the mentioned minimum quantum of power purchase from solar is not available in a particular year, then in such cases, additional wind or other energy, over and above their RPO, shall be utilized for fulfillment of the solar RPO.

· RPO trajectory beyond 2012-13 is not provided.

Haryana · It is clearly mentioned that Non-fossil fuel based co-generation project shall qualify for Renewable Energy source.

· The State Agency shall submit quarterly status to the Commission in respect of compliance of renewable purchase obligation by the obligated entities in the format as stipulated by the Commission and may suggest appropriate action to the Commission


· In case of genuine difficulty in complying with the renewable purchase obligation because limited availability of renewable energy or non-availability of certificates, the obligated entity can approach the Commission for relaxation or carry forward of compliance requirement to the next year. This provision of seeking relaxation is not desirable.

Himachal Pradesh

· The state has set RPO target in line with Tariff policy. · Also the state has defined a longer trajectory for

· There is no provision requiring State Agency developing


RPO targets (till 2021-22) in line with the Tariff Policy · "Average Pooled Power Cost" definition is in line with

the CERC REC Regulation, 2010

methodology/reporting to commission regarding RPO compliance.

Jammu & Kashmir

· The State Agency shall devise appropriate protocol for collection of information from various sources such as renewable energy generating companies, obligated entities, SLDC, etc., on a regular basis and compile such information to compute the compliance of RPO target by such Obligated Entities.


· Generation from grid connected renewable energy sources with installed capacity of 250 kW and above shall alone be considered as eligible renewable energy sources. However, generation from grid connected renewable energy sources with installed capacity below 250 kW shall be considered as 'eligible RE source' provided suitable metering and communication arrangement with State Load Dispatch Centre is established by such renewable energy project

· There is no clarity on RPO targets beyond 2012-13.

· RPO on any person owning Standby (or Emergency backup) Captive Generating Plant facilities will not be subject to RPO.

Jharkhand · The state has defined a high Solar RPO (1% for 2012-13) compared to other states in the country.

· The State Agency shall develop the formats for submission of quarterly progress report in respect of compliance of renewable purchase obligation by the obligated entities and get them approved by the Commission


· The state has defined a very short trajectory for RPO targets till 2012-13.

· In case of genuine difficulty in complying with the renewable purchase obligation because of non availability of Certificates, the Obligated entity can approach the Commission for carry forward of compliance requirement to the next year

JERC(Goa &UT)

· The commission has set a target higher (0.4% for 2012-13) than stipulated in the Tariff Policy.

· The regulation mandates the State Agency to submit quarterly status to the Commission in respect of compliance of renewable purchase obligation by the obligated entities in the format as stipulated by the Commission and may suggest appropriate action to the Commission if required for compliance of the renewable purchase obligation.


· There is no long term trajectory (beyond 2012-13) of RPO targets.

· The regulation does not specify the min capacity for Captive consumers for applicability of RPO.

JERC(Manipur & Mizoram)

· The regulator has defined a Solar RPO target of 0.25% for 2012-13 in line with the Tariff Policy.

· The State Agency shall devise appropriate protocol for collection of information from various sources such as renewable energy generating companies, obligated entities, SLDC, etc., on a regular basis and compile such information to compute the compliance of RPO target by such Obligated Entities.


· There is no long term trajectory of RPO targets.

Karnataka · The State Agency shall submit quarterly status to the Commission in respect of compliance of renewable purchase obligation by the obligated entities in the format as stipulated by the Commission.


· Solar RPO is applicable only on DISCOMS which is 0.25%. There is no trajectory defined.

· There is no separate solar RPO on Captive and Open Access consumers.

· A distribution licensee may in case of non-availability of


solar power generated in the State of Karnataka procure from other renewable sources of energy or REC to the extent of shortfall in its RPO in any year.

· Captive users can sell their surplus power only to the distribution companies (ESCOMs) at a price not exceeding the APPC

· RECs accreditation can be achieved only to the generators selling the power to ESCOMS at pooled cost of power purchase as approved by the Commission for the previous year.

Kerala · The state has set a longer trajectory for RPO (till 2021-22) targets which brings clarity to the investor.



· The Solar RPO of the state is 0.25% constant till the end of the trajectory period.


Maharashtra · It is clearly mentioned that eligible renewable energy sources shall include Non-fossil fuel (including bagasse) based co-generation projects (both, qualifying and non-qualifying co-generation projects)

· The summary statement of RE procurement and RPO compliance by different Obligated Entities shall be published by the State Agency on cumulative basis every month on its website.

· The State Agency shall submit quarterly status to the State Commission in respect of compliance of renewable purchase obligation by the Obligated Entities

· Each Distribution Licensee shall indicate, along with sufficient proof thereof, the estimated quantum of purchase from renewable energy sources for each year of the Operating Period under the Business Plan as well as under MYT Petition


· Procurement of RE power generated within the State by Distribution Licensee at rate other than rate approved by the State Commission directly from generator or from trader shall not be considered as eligible quantum for fulfillment of renewable purchase obligation of such distribution licensee

· Captive user(s) consuming power from grid connected fossil fuel based co-generation plants, are exempted from applicability of RPO target and other related conditions as specified in these Regulations.

· The state has set a RPO target of 0.25% in line with Tariff policy but it has set a flat target of 0.5% till 2015-16.

Meghalaya · The state has defined a high Solar RPO compared to other states in the country.



· The state has defined a very short trajectory for RPO targets till 2012-13

· If the distribution licensee is unable to fulfill the obligation, the shortfall in the specified quantum for the year shall be added to the specified quantum for the following year, and credit for


excess purchase shall not be adjusted in the ensuing year.

· The discoms are allowed for carrying forward the unfulfilled RPO but the captive and open access consumers are not allowed the same.


Odisha · The state declared a separate RPO for procurement from renewable energy as well as from cogeneration based stations.

· The state has defined a longer trajectory for RPO targets till 2015-16.

· Third Party Sale from renewable energy sources has been be exempted from the cross-subsidy surcharge



· The state has a lower solar RPO (0.15% in 2012-13) compared to the target as stipulated in the Tariff Policy of 0.25% by 2012-13.

Punjab · The State Agency shall develop the formats for submission of quarterly progress report in respect of compliance of renewable purchase obligation by the obligated entities and get them approved by the Commission


· The commission has set a very low RPO target compared to the Tariff policy targets. The Solar RPO target for year 2012-2013 is 0.07% compared to the target as stipulated in the Tariff Policy of 0.25% by 2012-13.The RPO trajectory is till 2014-15.

· The commission has carried forward the non-compliance of RPO for 2011-12 to 2012-13.

· There is lack of clarity on the RPO applicable on the captive users in terms of capacity.

Rajasthan · At the end of each financial year, each obligated entity shall submit a detailed statement regarding total electricity drawn / consumed and renewable energy /REC purchased and duly certified by the auditors to the State agency on or before ensuing 30th September.

· Solar RPO target (on DISCOMS only) of 0.75% in 2012-13 is higher than Tariff policy target.

· Each Distribution Licensee shall indicate, along with sufficient proof thereof, the estimated quantum of purchase of renewable energy for the ensuing year in tariff/ARR petition in accordance with Regulations notified by the Commission


· The State agency shall develop methodology for

· As per, Rajasthan Electricity Regulatory Commission (Power Purchase & Procurement Process of Distribution Licensee) (2nd Amendment) Regulations, 2011 solar RPO in Rajasthan is applicable on DISCOMS only.

· RPO targets are till 2013-14 only. A longer trajectory may be desirable

· There is separate RPO for bio-mass and that can be fulfilled by purchase of power from biomass plant only and not by purchase of REC.

· In case of genuine difficulty in complying with the renewable power purchase


collection of information from renewable energy generating company, obligated entities, SLDC etc. on regular basis, compile the information to compute the RPO fulfillment by the obligated entities indicating separately the direct purchase of renewable energy as well as purchase through REC mechanism. The information shall be placed on a cumulative basis for each quarter by the State Agency on its website.

obligation because of non-availability of renewable energy and/or certificates, the obligated entity can approach the Commission to carry forward the compliance requirement to the next year or seek its waiver.

· The shortfall in RPO obligation can be fulfilled by purchase of renewable energy and/or REC up to 30th June of the next financial year.

· 'Pooled Cost of Power Purchase' means the weighted average price at which the distribution licensee has purchased the electricity including cost of self generation, if any, in the previous year from all the energy suppliers, excluding short term power purchases and those based on renewable energy.

Tamil Nadu · The State Agency shall submit quarterly status to the Commission in respect of compliance of renewable purchase obligation by the obligated entities in the format as stipulated by the Commission.

· The state have set a very low solar RPO target for 2012-13 i.e. 0.1%

· The RPO targets set under TN Solar Policy 2012 and TNERC are conflicting to each other.

· The state has clarified that purchases made from co-generation units irrespective of the fuel type would be considered for fulfilling their RPO.

· The APPC defined as per TNERC excludes short term as well as purchases from liquid fuels for computation of APPC.

· Also according to draft amendment published by TNERC, the APPC should not exceed 75% of the preferential tariff of the respective technology.

Tripura · 0.1 (%) percentage points out the renewable purchase obligation so specified shall be procured from generation bases on solar.



· In case of genuine difficulty in complying with the renewable purchase obligation because of non availability of Certificates, the Obligated entity can approach the Commission for carry forward of compliance requirement to the next year

· There is no long term RPO trajectory beyond 2012-13.

Uttarakhand · The State Agency shall develop the formats for submission of quarterly progress report in respect of compliance of renewable purchase obligation by

· The commission has set a very low Solar RPO target of 0.05% for the year 2012-13.


the obligated entities and get them approved by the Commission


There is no long term RPO trajectory beyond 2012-13

· Provided that in case of genuine difficulty in complying with the renewable purchase obligation because of non-availability of certificates, the Obligated Entity can approach the Commission for carry forward of compliance requirement to the next year.


Uttar Pradesh · Solar RPO target of 1% in 2012-13 is higher than Tariff policy target.

· The renewable purchase obligation specified for the year 2012¬13 shall continue beyond 2012-13 until any revision is effected by the Commission in this regard.

· All captive consumers irrespective of capacity will be RPO complaint.

· Every distribution licensee shall, on a yearly basis on or before 15th March, submit to the State Agency under intimation to the Commission, the details of the estimated quantum of purchase from renewable energy sources for the ensuing year.

· The distribution licensee shall submit quarterly status to the State Agency in respect of compliance of renewable purchase obligation.

· If the obligated entity has established the fact that the minimum quantum of purchase from solar energy is not available in the market either in the form of solar power or solar certificate in a particular year and the Commission is satisfied with this fact, then additional non-solar energy over and above current non solar RPO target shall be purchased for fulfillment of total renewable purchase obligation.

· The Commission may, either on its own motion or on recommendation of the State Agency or on receipt of an application from the obligated entity, revise for any year the percentage RPO targets as deemed appropriate.

West Bengal · The regulator has clearly defined RPO target fulfillment by purchase of power both being originated from co-generation and/or renewable sources.

· RPO trajectory till 2017-18 is defined. · To meet the RPO the licensee shall make

advertisement in at least two widely published national English daily newspapers and at least one widely published Bengali daily newspaper every year.


· The commission in its regulation have defined RPO target from 2013-14 onwards.

· RPO targets till 2017-18 (0.6%) are not sufficient to meet Tariff policy targets

· There is no provision requiring State Agency developing methodology/reporting to commission regarding RPO compliance.


Exhibit 2.6 Analysis of state-wise RPO Regulation across India Source: MNRE


2.4 State-wise Non-Solar and Solar RPOs (2011-12 to 2019-20) State RE

Technology 2011-12 2012-

13 2013-

14 2014-

15 2015-

16 2016-

17 2017-

18 2018-

19 2019-

20 Andhra Pradesh

Non-Solar 4.75% 4.75% 4.75% 4.75% 4.75% 4.75% Solar 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% Total 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%

Arunachal Pradesh

Non-Solar 4.10% 5.45% 6.80% Solar 0.10% 0.15% 0.20% Total 4.20% 5.60% 7.00%

Assam Non-Solar 2.70% 4.05% 5.40% 6.75% Solar 0.10% 0.15% 0.20% 0.25% Total 2.80% 4.20% 5.60% 7.00%

Bihar Non-Solar 2.25% 3.75% 4.00% 4.25% Solar 0.25% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2.00% Total 2.50% 4.00% 4.50% 5.00%

Chhattisgarh Non-Solar 5.00% 5.25% Solar 0.25% 0.50% Total 5.25% 5.75%

Delhi Non-Solar 1.90% 3.25% 4.60% 5.95% 7.30% 8.65% Solar 0.10% 0.15% 0.20% 0.25% 0.30% 0.35% Total 2.00% 3.40% 4.80% 6.20% 7.60% 9.00%

JERC (Goa & UT)

Non-Solar 1.70% 2.60% Solar 0.30% 0.40% Total 2.00% 3.00%

Gujarat Non-Solar 5.50% 6.00% Solar 0.50% 1.00% Total 6.00% 7.00%

Haryana Non-Solar 1.50% 2.00% 3.00% Solar 0.00% 0.05% 0.10% Total 1.50% 2.05% 3.10%

Himachal Pradesh

Non-Solar 10.00% 10.00% 10.00% 10.00% 11.00% 12.00% 13.00% 14.00% 15.00% Solar 0.01% 0.25% 0.25% 0.25% 0.25% 0.25% 0.50% 0.75% 1.00% Total 10.01% 10.25% 10.25% 10.25% 11.25% 12.25% 13.50% 14.75% 16%

Jammu and Kashmir


Jharkhand Non-Solar 2.50% 3.00% Solar 0.50% 1.00% Total 3.00% 4.00%

Karnataka Non-Solar 10% and 7%

Solar 0.25% Total

(Discoms only)

10.25% & 7.25%

Kerala Non-Solar 3.35% 3.65% 3.95% 4.25% 4.55% 4.85% 5.15% 5.45% 5.75% Solar 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% Total 3.60% 3.90% 4.20% 4.50% 4.80% 5.10% 5.40% 5.70% 6.00%

Madhya Pradesh

Non-Solar 2.10% 3.40% 4.70% 6.00% Solar 0.40% 0.60% 0.80% 1.00% Total 2.50% 4.00% 5.50% 7.00%

Maharashtra Non-Solar 6.75% 7.75% 8.50% 8.50% 8.50%


Solar 0.25% 0.25% 0.50% 0.50% 0.50% Total 7.00% 8.00% 9.00% 9.00% 9.00%

Manipur Non-Solar 2.75% 4.75% Solar 0.25% 0.25% Total 3.00% 5.00%

&Mizoram Non-Solar 5.75% 6.75% Solar 0.25% 0.25% Total 6.00% 7.00%

Meghalaya Non-Solar 0.45% 0.60% Solar 0.30% 0.40% Total 0.75% 1.00%

Nagaland Non-Solar 6.75% 7.75% Solar 0.25% 0.25% Total 7.00% 8.00%

Orissa Non-Solar 4.90% 5.35% 5.80% 6.25% 6.70% Solar 0.10% 0.15% 0.20% 0.25% 0.30% Total 5.00% 5.50% 6.00% 6.50% 7.00%

Punjab Non-Solar 2.37% 2.83% 3.37% 3.81% Solar 0.03% 0.07% 0.13% 0.19% Total 2.40% 2.90% 3.50% 4.00%

Rajasthan Non-Solar 5.50% 6.35% 7.00% Solar 0.50% 0.75% 1.00% Total 6.00% 7.10% 8.20%

Tamil Nadu Non-Solar 8.95% Solar 0.05% Total 9.00%

Tripura Non-Solar 0.90% 1.90% Solar 0.10% 0.10% Total 1.00% 2.00%

Uttarakhand Non-Solar 4.50% 5.00% Solar 0.03% 0.05% Total 4.53% 5.05%

Uttar Pradesh


West Bengal Non-Solar 3.75% 4.70% 5.60% 6.50% 7.40% Solar 0.25% 0.30% 0.40% 0.50% 0.60% Total 3.00% 4.00% 4.00% 5.00% 6.00% 7.00% 8.00%

Exhibit 2.7 State-wise Non-Solar and Solar RPOs (2011-12 to 2019-20) Source: MNRE


3. Need for Renewable Energy in India Industrialization, urbanization, population growth, economic growth, improvement in per capita consumption of electricity, depletion of coal reserve, increasing import of coal, crude oil and other energy sources and the rising concern over climate change have put India in a critical position. It has to take a tough stance to balance between economic development and environmental sustainability. One of the primary challenges for India would be to alter its existing energy mix which is dominated by coal to greater share of cleaner and sustainable sources of energy.

The total renewable energy potential from various sources in India is 2,49,188 MW.

Exhibit 3.1 Total Renewable Energy Potential in India (in MW) Source: MNRE, NOVONOUS Insights

As of 31st March 2014, the total installed capacity from renewable energy, both grid-interactive and off-grid/captive power, was 32,730 MW. Thus the untapped market potential for overall renewable energy in India is 2,15,922 MW.

3.1 Energy Security Energy security is interplay of demand and supply scenarios which are influenced by a number of factors that requires careful consideration and evaluation. Energy security is one of the key challenges confronting India. Energy is critical for the socio-economic development of a country. Hence, energy is considered as a ‘strategic commodity’ and any uncertainty regarding its supply can affect the functioning of a country’s economy. In this strategic sense, achieving

Solar Power100000

Wind Power 102772

Small Hydro Power (up to 25 MW)

20000

Bio-Power: Agro-Residues

17536

Bio-Power: Cogeneration

- Bagasse5000

WtE: Municipal Solid Waste2600

WtE: Industrial Waste1280

India - Total Renewable Energy Potential (in MW)

Solar Power

Wind Power

Small Hydro Power (up to 25 MW)

Bio-Power: Agro-Residues

Bio-Power: Cogeneration - Bagasse

WtE: Municipal Solid Waste

WtE: Industrial Waste


energy security is considered to be of fundamental importance for India’s economic growth and meeting the Millennium Development Goals (MDG) such as decreasing unemployment, alleviation of poverty, improving healthcare and increase the literacy rate. India wants to be self-reliable in energy production, because large import of coal, crude oil, natural gas or other energy sources is paid in foreign currencies which results in devaluating Indian currency and increase the inflation which would affect the economy.

Even though India is the fifth largest producer of energy at 548 Million Tons of Oil Equivalent (MTOE) in the world as of 2012, the gap between production and consumption is huge and growing. As of 2012, the gap between production and consumption is 226 MTOE. The energy deficit of the country is around 30% as of 2012. Most of the deficit in the energy front is due to the fact that India is a net importer of oil.

As per 12th Five Year Plan, the total domestic energy production by 2016-17 will be 669.6 MTOE and by 2021-22 it is expected to reach 844 MTOE. This will meet around 71 per cent and 69 per cent of expected energy consumption, with the balance to be met from imports, projected to be about 267.8 MTOE by 2016-17 and 375.6 MTOE by 2021-22.

India continues to depend heavily on coal to meet most of the demand and it will continue to remain as the most important source of energy in the near future.

Coal Supply Constraints and Pricing Risk: India has the fifth-largest global reserves of coal. However, coal imports are increasing. Coal imports now meet 18% of the country’s demand and have been up from 9% five years back. Coal imports are likely to grow at a CAGR of 13% over FY12 to FY17 and meet 21% of demand in FY17. With international coal prices much higher than the domestic coal price, the performance of generators relying on imported coal has been adversely affected.

Gas Shortage and High Price: India has less than 1% of the world’s gas reserves. Over the past five years, domestic supply has increased 54%, but way below the government and industry expectations. Import gas prices remain to be high and making such projects economically unviable.

Nuclear Facing Twin Challenges: Public opposition and the Nuclear Liability Bill are the two key challenges faced by the nuclear sector in India. Post Fukushima, lot of allegations regarding the safety and viability of this source of energy cropped up .The Kudankulum nuclear plant site in Tamil Nadu, where the construction was around 90% complete when the Fukushima disaster struck Japan in March 2011 faced lot of resistance to start operations.

Water Stress Aggravating: India is a water stressed nation. According to available estimates by the Centre for Science and Environment, 88% of the country’s industrial water demand is taken up by thermal power plants. The per capita availability of water in the country is 1545 cubic meters as per the 2011 census according to ministry of water resources.


Power Supply Deficit: As per Central Electricity Authority (CEA), India currently has a peak deficit of 12GW, which is 6.7% of its demand. With electricity demand expected to grow and conventional power capacity facing its own challenges, we expect developers and investors to favor renewable capacity addition. With India’s growing population coupled with increased industrialization the Demand supply gap will only keep on growing .At this rate it becomes imperative to look beyond conventional sources of energy and evaluate their economic viability.

3.2 Economic Viability The cost of electricity generation from major renewable sources like wind and solar is comparable to or cheaper than diesel or re-gasified liquid natural gas (RLNG). Only coal, hydro powered plants have cheaper cost per unit of electricity production.

Exhibit 3.2 Source-wise Cost Per Unit of Electricity Production in India (in INR) Source: CEA, NOVONOUS Insights

The initial capital cost of installation is higher in most of the renewable sources except hydro. But the cost of operation and maintenance is comparatively cheaper than thermal or nuclear power plants.

Also since the cost of fuel is none for renewable energy sources. With increase in prices of coal, gas and other fossil fuels renewable sources will become comparable or cheaper than conventional power sources and will thus become economically viable.

3.5

14

86

8.58

4.5

2.12

02468

10121416

Imported Coal Diesel Re-gasified Liquid Natural Gas (RLNG)

Nuclear Solar Wind Hydro

India - Source-wise Cost Per Unit of Electricity Production in INR


3.3 Rural Electrification As per 2011 census, around 742 million or 72.2% people in India live in villages. Also 43% of rural households still use kerosene to light their houses compared to 6-7% people in urban areas. As of 31st March 2014 out of a total 5,93,732 inhabited villages, only 5,72,414 (96.4%) villages have got access to electricity. There are still 21,318 villages which have got no access to electricity.

Exhibit 3.3 Electrified vs. Unelectrified Village in India Source: CEA, NOVONOUS Insights

These communities are still waiting to see a bulb glowing in their homes. People are deprived of carrying on many activities after sunset which hampers their productivity as no economic activity can be carried in dark. It also affects the children as they cannot study during night.

Over 85% of rural India is still using firewood, crop residue or cow dung as its primary source of fuel for cooking. These inefficient cooking stoves not only use more energy but also give rise to health problems as well as energy poverty.

One of the major reasons for this situation lies in the location of the villages itself which are often time in remote areas. Also it takes a lot of investment is required in setting up transmission and distribution (T&D) mechanisms in the rural areas.

Renewable energy become a very suitable candidate in these case as it is much more cost effective and less time consuming to set up in rural areas.

Electrified Villages57241496.41%

Unelectrified villages213183.59%

India - Electrified vs. Unelectrified Villages

Electrified Villages

Unelectrified villages


4. Wind Energy Market in India India has an estimated wind power potential of 1,02,772 MW out of which the total installed capacity as of 31st March 2014 was 21,136.30 MW.

4.1 State-wise Wind Farmable Sites in India Centre for Wind Energy Technology (C-WET), Chennai is responsible for identifying various wind farmable sites in India and also for validating and certifying various wind turbines in India. C-WET has identified 233 sites in India across 14 states and union territories after detailed surveys which are suitable for wind farms as they have wind power density (WPD) > 200 W/m2 at 50 m height.

Exhibit 4.1 State-wise Wind Farmable Sites in India Source: C-WET, NOVONOUS Insights


4.2 State-wise Wind Energy Potential in India (in MW) India has an estimated on-shore wind energy potential of 1,02,772 MW. India has a coastline of 7517 Km. thus offering a huge potential for off-shore wind energy as well. C-WET currently is working on mapping the off-shore wind energy potential in India.

Exhibit 4.2 State-wise Wind Energy Potential in India (in MW) Source: C-WET, NOVONOUS Insights


4.3 State-wise Wind Energy Installed Capacity in India (in MW) As of January 2014, India’s wind energy installed capacity was majorly spread across 8 states Rajasthan, Gujarat, Madhya Pradesh, Maharashtra, Andhra Pradesh, Karnataka, Tamil Nadu and Kerala.

Exhibit 4.3 State-wise Wind Energy Installed Capacity in India (in MW) Source: MNRE, NOVONOUS Insights


4.4 State-wise Wind Energy Capacity Utilization in India (in %) As of January 2014, states like Maharashtra, Rajasthan and Tamil Nadu had utilized their overall wind energy potential by more than 50%. Karnataka on the other hand has estimated wind energy potential of 13,593 MW spread across 26 wind farmable sites out of which it has been able to utilize only 17.01% of capacity. This is a huge opportunity for wind energy manufactures, plant developers and Government to expand this sector.

Exhibit 4.4 State-wise Wind Energy Capacity Utilization in India (in %) Source: MNRE, NOVONOUS Insights

4.5 State-wise Contribution of Wind Energy Installed Capacity in India (in %)

Exhibit 4.5 State-wise Wind Energy Installed Capacity in India (in %) Source: MNRE, NOVONOUS Insights

4.47 9.6517.01

4.1813.17

58.25 54.14 51.24

0.040.00

10.0020.0030.0040.0050.0060.0070.00

India - State-wise Wind Energy Capacity Utilization(in %)

Andhra Pradesh3.20%

Gujarat16.73%

Karnataka11.43%

Kerala0.17%

Madhya Pradesh1.91%

Maharashtra17.17%

Rajasthan13.52%

Tamil Nadu35.85%

Others0.02% Andhra Pradesh

Gujarat

Karnataka

Kerala

Madhya Pradesh

Maharashtra

Rajasthan

Tamil Nadu

Others


4.6 State-wise Regulation and Policy Comparison for Wind Energy in India STATE / CENTRE

Tariff Regulations / or Order or

Draft

Control period

Tariff (Rs/kWh) Capital

Cost (Rs.

Lakh/MW)

Capacity Utilisation Factor (%)

Useful life

(yrs)

Subsidy and

incentive by Central /State Govt

Taxes and

Duties

Late Payme

nt surchar

ge

CERC (FY13-14)

Draft CERC Generic RE Tariff Order for FY 2013-14; CERC Regulations, 2012

FY 2012-16 (3 yrs)

Wind power density = Tariff(Rs /kWh) <200 = 6.27, 5.78(with A.D) 200-250 = 5.70, 5.25(with A.D) 250-300 = 5.02, 4.63(with A.D) 300-400 = 4.18, 3.85(with A.D) >400 = 3.92 , 3.61(with A.D)

595.99 (FY 2013-14)

Wind power density CUF <200 = 20% 200-250 = 22% 250-300 = 25% 300-400 = 30% >400 = 32%

25 Shall be factored in the tariff on per unit benefit derived on levellised basis

Tariff exclusive of taxes and duties, pass through allowed on actual basis

1.25% per month if payment delayed beyond 60 days

Andhra Pradesh

Wind Tariff Order in respect of "New Wind Based Power Projects ( O.P No. 6/7 of 2009)

For WPP having entered into PPA btw May 1, 2009 to March 31, 2014

For first 10 years-3.5 For next 10 years-determined thereafter

470 24.50% 20 N.A N.A N.A

Gujarat Wind Tariff Order (Order No.2 of 2012, Aug 8, 2012)

August 11, 2012 to March 31, 2016

Gross Tariff - Rs 4.23/kWh Depreciation- Rs 0.38/kWh Net Tariff-Rs 4.23/kWh

608 24% 25 Takes into account benefit of depreciation. Shall take a view on GBI once MNRE announces the scheme

N.A N.A

Karnataka Order for determination of tariff for RE sources (Dec, 11,2009)

10 years Average tariff for first 10 years from signing of PPA= Rs 3.70/kWh

470 26.50% 25 Shall not take into consideration incentives allowed by Govt for tariff determination

Pass through on actual incurred basis

N.A


Maharashtra Generic Tariff Order ( March 30, 2012)

FY 2012-13

Wind power density = Tariff(Rs /kWh) 200-250 = 5.67 (including AD of 0.81/kWh) 250-300 = 4.93 (including AD of 0.70/kWh) 300-400 = 4.20 (including AD of 0.60/kWh) >400 = 3.78 (including AD of 0.54/kWh)

516.94 for FY 13 subject to indexation

Wind power density CUF 200-250 =20% 250-300 =23% 300-400 =27% >400 =30%

25 Takes into account benefit of depreciation. However shall not take into account GBI benefit into tariff determinattion

Pass through on actual incurred basis

1.25% per month if payment delayed beyond 60 days

Rajasthan RERC (Terms and Conditions of Tariff) Regulations, 2009, Draft Tariff Order on Wind Projects for FY 2012-13

April 1, 2009 to March 31, 2014

5.18 (without AD) 4.90 (with AD)-for projects in Jaisalmer, Jodhpur and Barmer districts 5.44 (without AD) 5.14 (with AD)-for other districts

530 for FY 13

21%- Jaisalmer, Jodhpur and Barmer districts 20%- Other districts

25 Any Policy support by way of capital subsidy /Capital Finance Assistance (CFA), higher depreciation benefit or GBI, which becomes available to the developer/generator, needs to be passed on to the utilities.

Tax is not a pass through; ROE computed on pre-tax basis

1.25% per month on daily basis for delay beyond a period of 1.5 month from the date of billing

Tamil Nadu Comprehensive Tariff Order on Wind Energy (Order No. 6 of 2012) dated July 31, 2012

August 31, 2012 to March 31, 2014

3.51 Rs/kWh 575 27.15% 20 Penalty of 1% per month shall be levied for delayed payment by the licensee

Exhibit 4.6 State-wise Wind Energy Regulation and Policy in India Source: Various SERC Orders


4.7 EXIM Scenario in Indian Wind Energy Sector

Export Scenario

India’s export of wind generators was at US$ 0.78 million in 2003-04 which rose to US$ 49.93 million in 2013-14 (Apr-Dec). India exported US$ 1824.90 million worth of wind generators and the overall exported quantity was 46,730 units between 2003-04 and 2013-14 (Apr-Dec).

Exhibit 4.7 Export Value of Wind Generators in India (in US$ million) from FY 03-04 to FY 13-14 Source: Dept. of Commerce, NOVONOUS Insights

Exhibit 4.8 Export Quantity of Wind Generators in India (in thousands) from FY 03-04 to FY 13-14 Source: Dept. of Commerce, NOVONOUS Insights

0.78 1.18 23.76

296.51364.97

694.23

287.41

4.62 44.59 56.92 49.930

100200300400500600700800

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 (Apr -Dec)

India - Export Value of Wind Generators(in US$ million)

1.63 1.81 3.71 3.62

27.36

4.23 3.110.1 0.13 0.57 0.46

05

1015202530

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 (Apr -Dec)

India - Export Quantity of Wind Generators(in thousands)


Import Scenario

India’s import of wind generators was at US$ 1.18 million in 2003-04 which rose to US$ 3.14 million in 2013-14 (Apr-Dec). India imported US$ 40.81 million worth of wind generators and the overall imported quantity was 3,320 units between 2003-04 and 2013-14 (Apr-Dec).

Exhibit 4.9 Import Value of Wind Generators in India (in US$ million) from FY 03-04 to FY 13-14 Source: Dept. of Commerce, NOVONOUS Insights

Exhibit 4.10 Import Quantity of Wind Generators in India (in thousands) from FY 03-04 to FY 13-14 Source: Dept. of Commerce, NOVONOUS Insights

1.182.22

7.61

2.41.06

2.291.63

5.756.57 6.96

3.14

012345678

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 (Apr -Dec)

India - Import Value of Wind Generators(in US$ million)

0.01

0.29 0.230.1 0.1

0.76

0.21

0.48

0.12

0.94

0.08

00.10.20.30.40.50.60.70.80.9

1

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 (Apr -Dec)

India - Import Quantity of Wind Generators(in thousands)


4.8 Key Growth Drivers and Inhibitors for Wind Energy Market in India

Exhibit 4.11 Key Growth Drivers and Inhibitors for Wind Energy Market in India Source: NOVONOUS Insights

4.9 Risks Associated With Wind Energy in India

Credit Risk

Ernst & Young LLP ranked India as Asia’s third-most attractive country for renewable investments as it plans to double its clean-energy capacity to 55 GW by 2017. Lack of affordable financing is a major hindrance in reaching this goal as the central bank is raising interest rates to combat inflation and commercial banks are wary about lending to new technologies.

According to Bloomberg, the state-run Indian Renewable Energy Development Agency Ltd. (IREDA) raised about 7.2 billion rupees ($117.8 million) in the month of March 2014 by selling 10, 15 and 20 year tax-free bonds to help finance clean-energy projects.

Growth Inhibitors- High Initial Investment- Large Land Requirements- Variable Energy Outputs- Lack of Transmission Infrastructure- Delay in Payments- Lack of Strict Enforcement of RPOs

Growth Drivers- Government Incentives- Cost Competitiveness of RE- Shift to Clean Energy- Distributed Electricity Demand- Favorable Foreign Investment Policy- Huge Untapped Potential


Currently Indian commercial banks offer 10 year loans with interest rates of varying from 12-13 percent to renewable plants. As per Climate Policy and Indian School of Business study such unfavorable terms add as much as 32 percent to the cost of renewable energy in India compared to similar projects in other countries This study also found that India could cut the cost of subsidizing wind energy by as much as two-thirds by introducing new policies to allow projects to raise cheaper, longer-term loans.

By helping wind farms and solar-power plants to reduce borrowing costs and obtain loans with terms as long as 20 years would be a cheaper way of supporting clean energy than existing policies.

A cost-effective way for the government to support renewable energy would be through debt-related policies, such as paying part of the interest-rate obligations of projects or lending funds below commercial rates or for longer tenors.

According to Bloomberg, India witnessed increased investment in renewable power and energy smart technologies at $7.8bn in 2013, up from $7.6bn in 2012. It shows investors are still willing to invest in this sector which can further be improved with favorable policies.

Policy Risk

Almost all renewable energy projects are prone to policy risk, for example heavy losses could be incurred due to changes in the energy markets which can be because of changes in the price of other sources of energy including fossil fuels.

In India’s case, renewable project revenues currently depend more on policy support rather than on the prices of fossil fuels. Even minor reduction in the financial support may impact financing arrangements and hamper investor confidence in the sector. For example, both the accelerated depreciation (AD) and the generation based incentive (GBI), which comprised 10% of wind energy incentives, expired in March 2012. Although they were brought back in 2013, it affected the sector significantly. New mechanisms, including the Renewable Energy Certificate (REC) market can assist India’s ambition to increase renewable energy installed capacity in near and long term but it’s still in a nascent stage and the demand is overpowered by huge supply of REC’s resulting in flooring of prices.

Technical Risk

Like any technology, wind energy also has its own risks. Some of the major areas related to technology are:

Building and Testing Risk: The risk of property damage or third-party liability arising from accidents during building or testing of new wind power plants/equipments can prove to be dangerous.


Operational Risk: The risk of unplanned plant closure, for example owing to unavailability of resources, plant damage or component failure. The wind power industry is still focusing on replacing smaller wind turbines with larger once. The major reason for this behavior is that all the best sites are already occupied, and increasing the wind turbine size is one of the few ways left to increase the output. This is already happening in leading states in terms of wind power like Tamil Nadu. So far, there are no offshore wind farms in India. C-WET and MNRE are working towards changing this scenario. In case of off-shore wind farms, the level of risk increases with size and location.

Weather-Related Risk: The risk of a fall in volume of electricity produced due to lack of wind or high speed of wind. The complete dependence on climatic conditions leads to variability in power generation which acts as a major obstacle to recover costs.

Supply Chain Risk: The shortage of component and increase in transportation costs put pressure on margins. The shortage of critical components like gearboxes, slew rings, pitch bearings, towers, control panels etc. can affect maximum power generation from wind turbines.

4.10 Challenges for New Players in Indian Wind Energy Sector Wind Turbine Manufacturers Component Manufacturer Wind Farm Operator

Competition in the industry Product acceptance in the market Land acquisition

Health of the distribution company High amount of technical support Huge investment for turn-key projects

Difficulty in finances No past track record Evacuation of energy

Acquiring skilled manpower Difficult to maintain cycle time Forest area permission

Stability in currency exchange rate Quality control Hard to get clearances

Exhibit 4.12 Challenges for New Players in Indian Wind Energy Sector Source: NOVONOUS Insights

4.11 Recommendations for Policy Makers 1. Improve short-term wind forecasting 2. Adequate Grid Connectivity

3. Increase PPPs to reduce risks to private investors 4. Solve institutional inefficiencies

5. Establish long-term markets for off-shore wind power

6. Provide flexible financing options to new players

Exhibit 4.13 Recommendations for Policy Makers Source: NOVONOUS Insights


5. Solar Energy Market in India India has an estimated solar power potential of around 1,00,000 MW out of which the total installed capacity as of 31st March 2014 was 2,647 MW.

5.1 State-wise Solar Energy Installed Capacity in India (in MW) As of March 2014, India’s solar energy installed capacity was majorly spread across 8 states Rajasthan, Gujarat, Madhya Pradesh, Maharashtra, Andhra Pradesh, Tamil Nadu, Karnataka and Uttar Pradesh.

Exhibit 5.1 State-wise Solar Energy Installed Capacity in India (in MW) Source: MNRE, NOVONOUS Insights


5.2 State-wise Grid Connected Solar Power Projects under JNNSM As of 31st March 2014, India had 2631.9038 MW of grid connected solar power projects which were commissioned under Jawaharlal Nehru National Solar Mission (JNNSM). This included 687.8 MW projects by Ministry of New & Renewable Energy (MNRE), 1322.59 MW under various state government policies, 90 MW under renewable purchase obligation (RPO), 490.685 under renewable energy certificate (REC) scheme, 15.6288 MW by private initiative (roof-top) and 25.2 MW by central public sector undertakings (CPSUs).

This was an increment of 947.4683 MW over last year which ended with 1684.4355 MW as of 31st March 2013.

Sr. No.

State/UT Total MNRE Projects (in MW)

State Policy

(in MW)

RPO (in MW)

REC Scheme (in MW)

Private Initiative

(Roof top) (in MW)

CPSUs (in MW)

Total commissioned

capacity till 31-3-14 (in

MW) 1 Andhra Pradesh 46.75 85.09

131.84

2 Arunachal Pradesh 0.025

0.025 3 Chhattisgarh 4

3.1

7.1

4 Gujarat 0 860.4 50 6

916.4 5 Haryana 7.8

2.5 10.3

6 Jharkhand 16

16 7 Karnataka 5 17

9 31

8 Kerala 0.025

0.025 9 Madhya Pradesh 5.35 175

166.815

347.165

10 Maharashtra 47 150

49.25 3

249.25 11 Orissa 13 5

2.5 10

30.5

12 Punjab 9.325

7.52

16.845 13 Rajasthan 493.5 22.1 40 174.5

730.1

14 Tamil Nadu 16 3

78.86 0.5

98.36 15 Uttar Pradesh 12.375

8.7 21.075

16 Uttarakhand 5.05

5.05 17 West Bengal 2.05 5

7.05

18 Andaman & Nicobar 0.1

5 5.1 19 Delhi 0.885

2.14 2.1288

5.1538

20 Lakshadweep 0.75

0.75 21 Pondicherry 0.025

0.025

22 Chandigarh 2

2 23 Others 0.79

0.79

TOTAL 687.8 1322.59 90 490.685 15.6288 25.2 2631.9038

Exhibit 5.2 State-wise Grid Connected Solar Power Projects in India under JNNSM (in MW) Source: MNRE


5.3 State-wise Solar RPO Targets (2011-12 to 2021-22) State 2011-

12 2012-

13 2013-

14 2014-

15 2015-

16 2016-

17 2017-

18 2018-

19 2019-

20 2020-

21 2021-

22 Andhra Pradesh 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%

Arunachal Pradesh

0.10% 0.15% 0.20%

Assam 0.10% 0.15% 0.20% 0.25%

Bihar 0.25% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2.00% 2.50% 3.00%

Chhattisgarh 0.25% 0.50%

Delhi 0.10% 0.15% 0.20% 0.25% 0.30% 0.35%

JERC (Goa & UT) 0.30% 0.40%

Gujarat 0.50% 1.00%

Haryana 0.00% 0.05% 0.10%

Himachal Pradesh

0.01% 0.25% 0.25% 0.25% 0.25% 0.25% 0.50% 0.75% 1.00% 2.00% 3.00%

Jammu and Kashmir

0.10% 0.25%

Jharkhand 0.50% 1.00%

Karnataka 0.25%

Kerala 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%

Madhya Pradesh 0.40% 0.60% 0.80% 1.00%

Maharashtra 0.25% 0.25% 0.50% 0.50% 0.50%

Manipur 0.25% 0.25%

Mizoram 0.25% 0.25%

Meghalaya 0.30% 0.40%

Nagaland 0.25% 0.25%

Orissa 0.10% 0.15% 0.20% 0.25% 0.30%

Punjab 0.03% 0.07% 0.13% 0.19%

Rajasthan 0.50% 0.75% 1.00%

Sikkim No regulation issued for RPO by the Power Department

Tamil Nadu 0.05%

Tripura 0.10% 0.10%

Uttarakhand 0.03% 0.05%

Uttar Pradesh 0.50% 1.00%

West Bengal 0.25% 0.30% 0.40% 0.50% 0.60%

Exhibit 5.3 State-wise Solar RPO Targets (2011-12 to 2021-22) Source: MNRE

5.4 Solar Power Capacity Requirements (FY12 – FY22) As per the National Tariff Policy, it is envisaged that the targets for Solar RPO shall be 0.25% by 2012-13 extending to 3% by 2022. The Jawaharlal Nehru National Solar Mission has been the first step towards achieving these targets.

The following table illustrates the Solar RPO requirement by FY 2022 on the basis of expected demand in India. Assumptions: Average CUF for Solar Power Technologies to be 19%.


Year Energy Demand (MU)*

Solar RPO (%) Solar Energy Requirement (MU) for RPO compliance

Solar Capacity Requirement for RPO compliance (MW)

(A) (B) (A)X(B)

2011-12 9,53,919 0.25% 2,385 1,433

2012-13 10,22,287 0.25% 2,556 1,536

2013-14 10,95,555 0.50% 5,478 3,291

2014-15 11,74,074 0.75% 8,806 5,291

2015-16 12,58,221 1.00% 12,582 7,560

2016-17 13,48,399 1.25% 16,855 10,127

2017-18 14,43,326 1.75% 25,258 15,176

2018-19 15,44,936 2.25% 34,761 20,885

2019-20 16,53,700 2.50% 41,343 24,839

2020-21 17,70,120 2.75% 48,678 29,247

2021-22 18,94,736 3.00% 56,842 34,152 Exhibit 5.4 Solar Power Capacity Requirements (FY12 to FY22) Source: National Electricity Plan for Generation January 2012

5.5 State-wise Regulation and Policy Comparison for Solar Energy in India STATE Tariff

Regulations / or Order or

Draft

Control period

Tariff (Rs/kWh)

Capital

Cost (Lakh/MW)

Capacity

Utilisation

Factor (%)

Auxiliary Consum

ption (%)

Useful life (yrs

)

Subsidy

and incentive by

Central

/State Govt

Taxes and

Duties

Late Paym

ent surcha

rge

CERC (FY13-14)

Draft CERC Generic RE Tariff Order for FY 2013-14; CERC (Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2012

FY 2012-16 (3 yrs)

Lev - 8.75 AD - 0.88 After AD - 7.87

800 (FY 2013-14)

19% 25 Shall be factored in the tariff on per unit benefit derived on levellised basis


1.25% per month beyond a delay of 60 days

Andhra Pradesh

IA No 17 of 2010, dated July 14, 2010

2010-11 and 2011-12

17.91 (Without AD) 14.95 (With AD)

25


Gujarat GERC Order 1 of 2012 dated Jan 27, 2012

Jan 29, 2012 to March 31, 2015

For MW Scale Plants: Jan 2012-March 2013: 10.37 (Without AD), 09.28 (With AD), FY 2013-14: 9.64 (Without AD), 8.63 (With AD), FY 2014-15: 8.97 (Without AD), 8.03 (With AD) For kW scale Plants Jan 2012-March 2013: 12.44 (Without AD), 11.14 (With AD), FY 2013-14: 11.57 (Without AD), 10.36 (With AD), FY 2014-15: 10.76 (Without AD), 9.63 (With AD)

1000 (MW scale Plants), 1200 (kW scale plants)

18% with 1% annual degradation

0.25% 25

Karnataka

KERC Order on Solar Power Tariff Determination dated July 13, 2010

Upto March 31, 2013 commissioning

14.5 (Including rooftop and small solar PV plants)

1550 19% 25

Madhya Pradesh

Tariff Order for Solar Based Power Generation dated Aug 01, 2012

Aug 2012 to March 2014

10.44 (capacity >2 MW), 10.70 (Capacity upto 2 MW)

1025 (capacity >2 MW), 1050 (capacity upto 2 MW)

19% with 1% annual deration from 3rd yr onwards

0.25% 25 1.25% per month beyond a delay of 30 days

Maharashtra

MERC RE tariff regulayions,2010 ,Case No 10 of 2012 (Mar 30, 2012)

FY 2010-14(5 years from the date of commencement )

Lev -11.16 (11.66 - RT & SSPGP) AD -1.65 (1.65) after AD -9.51 (10.01)

1000 (FY 2012-13)

19% NA 25 Shall be factored in the tariff on per unit benefit derived on levellised basis




Rajasthan

RERC (Determination of benchmark capital cost for solar PV and Solar thermal power projects) dated 13 may 2012

9.63 (Plant comissioned

by 31 Mar 2014)

with AD - 10.45

9.63 (Roof top and

SSPG comissioned

by 31 mar 2014)

940 20% with deration of 0.5% PA after 2nd year

0.25% 25 GBI

Tamil Nadu

TNERC (tariff order for projects covered under JNNSM) dated 27/05/10

FY 2010-11 (till 31/05/12)

Lev - 18.45 AD- 4.11 After AD - 14.34

17.15 19% with a deration of 1% every year after ten years.

2% 25 AD benefit shall be factored in the tariff

1% per month for payment after 30 days of billing

Uttar Pradesh

UPERC (Captive and Non-conventional Energy generating plants )regulation 2009

FY 2010-14 (5 years)

15 (comissioned by Dec 2011,not covered under GOI incentive scheme)


Exhibit 5.5 State-wise Solar Energy Regulation and Policy in India Source: Various SERC Orders

5.6 EXIM Scenario in Indian Solar Energy Sector

Export Scenario

India currently has an overall production capacity of 1GW for cells and 2MW for modules. This production capacity exceeds the present PV installation capacity in the country significantly and will remain so in the coming years considering the annual growth rates witnessed in the past.

India’s export of solar PV cells was at US$ 49.77 million in 2003-04 which rose to US$ 207.21 million in 2013-14 (Apr-Dec). India exported US$ 2351.21 million worth of solar PV cells and the overall exported quantity was 47.33 million units between 2003-04 and 2013-14 (Apr-Dec).

India’s exports of solar PV cells and modules have fallen after FY 2010-11 majorly due to fall in prices by about 80% (US$ 3/watt to US$ 0.6/watt) during 2010-13. The major reason behind this was the huge increase in capacity buildup by Chinese manufacturers backed by a US$ 43 billion subsidy and soft loans from Chinese government.


Exhibit 5.6 Export Value of Solar PV Cells in India (in US$ million) from FY 03-04 to FY 13-14 Source: Dept. of Commerce, NOVONOUS Insights

Exhibit 5.7 Export Volume of Solar PV Cells in India (in thousands) from FY 03-04 to FY 13-14 Source: Dept. of Commerce, NOVONOUS Insights

Import Scenario

India’s import of solar PV cells was at US$ 14.94 million in 2003-04 which rose to US$ 539 million in 2013-14 (Apr-Dec). India imported US$ 3914.31 million worth of solar PV cells and the overall imported quantity was 599.61 million units between 2003-04 and 2013-14 (Apr-Dec).

49.77 67.48 72.04110.1

238.49

533.72

290.71

511.69

163.06106.94

207.21

0

100

200

300

400

500

600

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 (Apr -Dec)

India - Export Value of Solar PV Cells (in US$ million)

1374.65 2330.21 1613.66 1296.33 1223.59 2244.13 2367.59

18204.24

7595.184220.44 4863.8

02000400060008000

100001200014000160001800020000

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 (Apr -Dec)

India - Export Quantity of Solar PV Cells(in thousands)


The major import locations were China, Taiwan and USA. Due to the availability of cheap Chinese solar PV cells, the import from China is on the rise compared to other countries.

Exhibit 5.8 Import Value of Solar PV Cells in India (in US$ million) from FY 03-04 to FY 13-14 Source: Dept. of Commerce, NOVONOUS Insights

Exhibit 5.9 Import Volume of Solar PV Cells in India (in thousands) from FY 03-04 to FY 13-14 Source: Dept. of Commerce, NOVONOUS Insights

14.94 36.24 41.17 91.92 168.85380.26

213.75 252.63

1348.48

827.07

539.00

0.00200.00400.00600.00800.00

1000.001200.001400.001600.00

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 (Apr -Dec)

India - Import Value of Solar PV Cells (in US$ million)

7874.96 10300.43 10628.65 15982.55 22024.2938535.8 47776.85

52548.18

139724.71145802.57

108412.4

020000400006000080000

100000120000140000160000

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 (Apr -Dec)

India - Import Quantity of Solar PV Cells(in thousands)


5.7 Growth Drivers and Inhibitors for Solar Energy Market in India

Exhibit 5.10 Key Growth Drivers and Inhibitors for Solar Energy Market in India Source: NOVONOUS Insights

5.8 Risks Associated with Solar Energy in India

Credit Risk

The credit risk for India’s solar power sector is considerably high due to high interest rates (upto 13%) and low loan periods (10 years). Also there is counter party risk which arises in the form of inability of distribution companies (DISCOMS), who are the buyers of solar power, to pay for the power they purchase. To meet their renewable purchase obligations (RPOs), DISCOMS in India are mandated to purchase renewable power, but the high cost of power from solar compared to other renewable sources is making the situation more difficult.

Growth Inhibitors- High Initial Investment- Large Land Requirements- Variable Energy Outputs- Lack of Transmission Infrastructure- Delay in Payments- Lack of Strict Enforcement of RPOs- Poor State of R&D- Cheap Solar Imports from Countries Like China

Growth Drivers- Huge Demand-Supply Gap in Power Sector- Government Incentives- Cost Competitiveness of RE- Shift to Clean Energy- Distributed Electricity Demand- Huge Untapped Potential


In the phase I of national solar mission (NSM), the low-cost financing from foreign sources resulted in success of initial phase. Due to this financial institutions have gained confidence that the solar projects can become operational and be profitable.

Policy Risk

Almost all renewable energy projects are prone to policy risk and solar energy projects are not and exception to this phenomenon. For example heavy losses could be incurred due to changes in the energy markets which can be because of changes in the price of other sources of energy including fossil fuels.

In India’s case, since renewable project revenues currently depend more on policy support rather than on the prices of fossil fuels, any uncertainty in policies for the sector can prove to be troublesome for the sector. This can range from policies related to land allocation, government clearances, electricity rates and most importantly contribution of solar energy in RPOs for various DISCOMS.

The regulatory environment in India is still not very mature. The current policy initiatives related to renewable energy certificate (REC) mechanism, domestic content regulation, protection of local solar manufacturing from dumping from countries like China, strict implementation of RPOs leaves a lot be desired.

Technical Risk

Some of the major technology related risk areas related to solar power are:

Operational Risk: This risk is more in case of solar thermal technology compared to solar PV. The parabolic trough technology is the widely used solar thermal technique. Such projects require large area of land, direct solar radiation and large amount of water as well as human resources. It is difficult to maintain these parabolic dishes on a rugged terrain as the chances of mechanical failure are high. Also the mirrors require constant cleaning due to dust accumulation which reduces their life. Thus the risk of unplanned plant closure, for example owing to reduced efficiency of power generating equipment is high.

Weather-Related Risk: There is a risk of fall in volume of electricity produced due to lack of solar radiation. The complete dependence on climatic conditions leads to variability in power generation which acts as a major obstacle to recover costs.

Grid Integration Risk: The variable nature of power output by solar energy systems poses a risk while trying to integrate them with existing power transmission infrastructure.


5.9 Application-wise Solar Energy Usage and Trends Jawaharlal Nehru National Solar Mission (JNNSM) was started to establish India as a global leader in solar energy, by creating the policy conditions for its large scale usage across the country as quickly as possible.

The Mission has been planned in 3-phases, beginning in the 11th Plan and first year of the 12th Plan (up to 2012-13) as Phase I, the remaining 4 years of the 12th Plan (2013-17) as Phase II and the 13th Plan (2017-22) as Phase III. The targets set by the JNNSM are as follow:

Sector Phase I Phase II Phase III

Utility Grid Power including rooftop (in MW)

1,100 4,000 – 10,000 20,000

Off Grid Solar Installations (in MW)

200 1,000 2,000

Solar Collectors (in million square meters)

7 15 20

Exhibit 5.11 JNNSM Targets for Phase I, II and III in India Source: MNRE

The major applications under JNNSM are:

Rooftop Solar PV Programme

A rooftop solar PV system can be used in both grid connected and off-grid model. In case of grid connected solar PV system the power is fed to the grid using either 11 KV three phase line or using 220V single phase line. These systems generate power in day time which is used for captive power needs and the excess being fed to the grid. If there is drop in the power generation due to say cloud cover, then the captive demand can be met by drawing power from the grid. Thus these systems work in net metering basis.

The off-grid rooftop solar systems are used mostly where the grid connectivity is not available. As per 2011 census, India had 330 million houses of which 166 million were having electric connectivity. According to MNRE estimates, there are 140 million home with proper roofs made of either concrete or asbestos/metal sheets which can accommodate about 1-3 kWp of roof top solar systems. On the other hand large rooftops of industrial sector are capable of accommodating capacities in the range of 100-500 kWp.

As per NOVONOUS, the total market potential for rooftop solar for residential sector is worth INR 14000 billion.

Under phase II of JNNSM the government is planning to achieve 1000 MW of rooftop solar PV installations for both off-grid and grid connected levels.


The government has already announced its plans to install 23,500 units of 1 kWp systems for domestic households in Rajasthan, Andhra Pradesh, Kerala, Tamil Nadu, Chattisgarh and other selected states at an estimated project cost of INR 4.93 billion during 2013-14.

Off-Grid Lighting Systems

In rural areas more than 76 million homes were still using kerosene as a source of lighting. In this backdrop off-grid solar lighting systems become more suitable solutions for such a requirement. The off-grid solar PV lighting systems are used to store electrical energy during daytime in batteries which are used during night time to produce light using LED lights.

During phase II of JNNSM the government has set a target to achieve installation of 1million off-grid solar PV lighting systems.

The government has already announced its plans under JNNSM to install 68000 solar PV off-grid lighting systems at an estimated cost of INR 3.67 billion during 2013-14.

Solar City Scheme

The solar city scheme aims at minimum 25% reduction in projected demand of conventional energy at the end of five years, through a combination of enhancing supply from renewable energy sources in the city. It is aimed to promote renewable energy as a power source to local governments.

Government is planning to implement this scheme in 100 cities across India under phase II of JNNSM.

MNRE has already given sanctions for 31 cities which have received in-principle approvals and they have engaged consultants for preparation of master plan. These cities are: Agra, Moradabad, Rajkot, Gandhinagar, Nagpur, Kalyan-Dombiwali, Kohima, Dehradun, Chandigarh, Gurgaon, Faridabad, Thane, Panaji City & Environs, Bilaspur, Raipur, Imphal, Itanagar, Jodhpur, Jorhat, Guwahati, Agartala, Ludhiana, Amritsar, Shimla, Hamirpur, Haridwar & Rishikesh, Vijaywada, Aizawl, Mysore, Hubli and Gwalior.

Apart from this a draft Master plans have been prepared for 18 cities which are Guwahati, Surat, Thiruvananthapuram, Kochi, Aurangabad, Nanded, Shirdi, Indore, Bhopal, Rewa, Dimapur, Bhubaneswar, SAS Nagar (Mohali), Ajmer, Jaipur, Coimbatore, Chamoli-Gopeshwar and Howrah.

Solar Water Pumping

Solar PV systems can be also used to pump water for irrigation or drinking purpose. Solar pumps operate directly on DC without power storage mechanism like batteries and thus are cost effective and low-maintenance systems.


Government has planned for deployment of 25,000 solar pumps in phase II of JNNSM.

The plan to install 10,000 solar pumps across India in next two years has already been announced by the Government at a cost of INR 2.28 billion.

Telecom Towers

As per Telecom Regulatory Authority of India (TRAI) study on Green Telecommunication published in March 2011, India had more than 3.10 lakh telecom towers and 60% of their power requirements were met by diesel generators. These generators about 2 billion litres of diesel fuel each year and result in 5.3 million tonnes of CO2 emission.

If all these cell phone towers switch to solar energy then it could save significant amount of fossil fuels and also reduce carbon foot print of the Indian telecom industry to a significant extent.

Thus the government under phase II of JNNSM has planned to focus on developing special schemes for promotion of solar telecom towers and would target around 25000 solar integrated telecom towers.

Solar Water Heating Systems

Solar water heating systems are used to heat water for industrial and residential use using a collector based system and an insulated storage tank.

Government has planned to achieve 8 million square meters of collector area during phase II of JNNSM.

Government has already announced its plans to install 4,00,000 square meters collector area in next two years at a cost of INR 3.6 billion. This project will be executed under National Clean Energy Fund (NCEF).

Solar Cookers and Steam Generating Systems

Solar cooker system uses parabolic dish to concentrate solar energy for cooking applications. These systems use manual tracking and thus had to be adjusted during cooking process. The other system is direct cooking system which allows users to cook food indoors in the kitchen itself.

Solar steam generating systems are either of fixed receiver based systems or of fully tracked receiver on dish technology based systems. These systems are normally used for large scale cooking requirements like those found in hotels, hostels, hospitals, ashrams, defense outposts etc. This system can also be used to clean clothes in textile industry, hotels etc.

Government has planned to achieve installation of 50,000 units of solar cookers during phase II of JNNSM.


Industrial Process Heat Applications

Concentrated solar thermal (CST) technology is used to focus the sunlight at receiver to achieve high temperatures for various applications. This technology requires regular tracking of the sun for optimal performance thus they are usually based on singe axis (E-W) tracking as well as dual axis (E-W & N-S) tracking. There is huge potential for this technology in sectors like textiles, chemicals, plastics etc. The system can be used along with other conventional boiler heating systems in these industries.

Under phase II of JNNSM, government has planned to install at least 400 CST systems of 250 square meters on an average thus achieving total 1,00,000 square meters of CSTs for heating applications in various industries.

Solar Air Conditioning / Refrigeration

Solar Air Conditioning Systems use solar heat from the sun to superheat the refrigerant and deliver it directly to the condenser bypassing the compressor. The superheated refrigerant makes it possible for the compressor to work less. Solar air conditioners also do away with the chlorofluoro carbons (CFCs), hydro chlorofluoro carbons (HCFCs) which constitute a major reason for destruction of ozone layer.

During phase II of JNNSM, the government has planned to install at least 200 systems of 30 ton of refrigeration (TR) covering 60,000 square meters area for air conditioning or refrigeration purpose.

As per NOVONOUS, the market potential for solar air conditioning and refrigeration in phase II of JNNSM is INR 420 million.

Solar Water Purification / Desalination

Solar water purification system can function without the support of any external energy source. It is composed of solar PV modules connected to set of batteries which are connected to the inverter system. For the backup power source a wind turbine or diesel generator is used. During the day solar energy is captured by the photo-voltaic panels which powers the purification installation and charges the batteries. When the sun disappears, the batteries continue to run the installation during the night. The batteries are designed for 1 day period of autonomous working. If there is no availability of sufficient sunlight for more than a day, the system would be operated using the backup power source.

Concentrated Solar Power (CSP) Plants

Concentrated solar power plants use the concept of using lenses or mirrors to focus a large amount of sunlight into a small concentrated beam. The concentrated heat is then used as a heat source for conventional power plant. The two popular technologies in use are parabolic reflectors and concentrating linear fresnel reflectors.


The JNNSM phase I had a target of 470MW worth of grid connected CSP projects but as on March 2013, only around 50MW had been commissioned. The main reason behind this was the lack of proper Direct Normal Incidence (DNI) data, dusty condition and supply issues with heat transfer fluid (HTF).

In phase I of JNNSM, both solar PV and CSP based power systems were allocated in equal proportion of 50:50 as targets. While most of the PV projects were commissioned as per schedule, most of the CSP are yet to be commissioned. The reduced cost of solar PV compared to CSP has prompted MNRE to cut down on the proportion of allocation of projects of grid connected CSP to PV from 50:50 to 70:30 in phase II of JNNSM. The revised allocation is as shown below:

Description Capacity (in MW) Central Schemes (in MW) State Schemes (in MW)

Solar PVs 6300 2520 3780 Solar Thermal 2700 1080 1620 Total 9000 3600 5400 Exhibit 5.12 JNNSM Targets for Phase II for Solar PV and CSP Source: intersolar.in

5.10 Challenges for New Players in Indian Wind Energy Sector Solar Manufacturers Component Manufacturer Solar Farm Operator

Foreign competition in the industry Product acceptance in the market Land acquisition

Health of the distribution company High amount of technical support Huge investment for turn-key projects

Difficulty in finances No past track record Evacuation of energy

Acquiring skilled manpower Difficult to maintain cycle time Forest area permission

Stability in currency exchange rate Quality control High cost of solar power

Exhibit 5.13 Challenges for New Players in Indian Solar Energy Sector Source: NOVONOUS Insights

5. 11 Recommendations for Policy Makers

1. Implementation of Domestic Content Regulation (DCR)

2. Imposition of Anti Dumping Duties to shield local industry from cheap import from China etc.

3. Proper Enforcement of Solar RPOs 4. Provide access to low cost funds

5. Timely Release of Subsidies 6. Support in Accessing / Developing New Technologies



6. Small Hydro Power Market in India India has an estimated small hydro power (less than 25 MW) potential of around 20,000 MW out of which the total installed capacity as of 31st March 2014 was 3,816.91 MW including both off-grid and grid connected power plants.

6.1 State-wise Small Hydro Power Potential in India (in MW)

Exhibit 6.1 State-wise Small Hydro Power Potential in India (in MW) Source: MNRE, NOVONOUS Insights


6.2 State-wise Small Hydro Power Installed Capacity in India (in MW)

Exhibit 6.2 State-wise Small Hydro Power Installed Capacity in India (in MW) Source: MNRE, NOVONOUS Insights


6.3 State-wise Small Hydro Power Upcoming Capacity in India (in MW) There are a total of 1061.5 MW small hydro power (SHP) plants under construction in India.

Exhibit 6.3 State-wise Small Hydro Power Upcoming Capacity in India (in MW) Source: MNRE, NOVONOUS Insights


6.4 State-wise Regulation and Policy Comparison for Small Hydro Power in India STATE Tariff Regulations /

or Order or Draft

Control

period

Tariff (Rs/kWh)

Capital Cost

(lakh/MW)

Capacity Utilisation

Factor (%)

Auxiliary Consumptio

n (%)

Useful

life (yrs)

Subsidy and

incentive by

Central /State Govt

Taxes and

Duties

Late Pay

ment surcharge

CERC (FY13-14)


FY 2012-16 (3 yrs)

HP, Uttarakhand and NE States (Below 5MW) - 4.37(without AD), 4.02 (with AD) (5MW-25MW)- 3.74(without AD), 3.42 (with AD) Other States (Below 5MW) - 5.15(without AD), 4.74 (with AD) (5MW-25MW)- 4.39(without AD), 4.01 (with AD)

HP, Uttarakhand and NE States (Below 5MW) - 798.11 (5MW-25MW)- 725.55 Other States (Below 5MW) - 621.90 (5MW-25MW)- 570.08

HP, Uttarakhand and NE States - 45% Other States- 30%

1% 35 Shall be factored in the tariff on per unit benefit derived on levellised basis



Arunachal Pradesh

Tariff Regulations (Dated 9/4/2012)

9/4/2012 to 8/4/2017

NA 700 (<=5 MW) & 630 (5-25 MW)

45% 1% 35 passed on to utility/consumer

passed on to utility/consumer

1.25% p.m. beyond 60 days

Himachal Pradesh

HPERC( Promotion of Generation from Renewable Energy sources and Terms and conditions of Tariff) Regulations, 2012 (Dec 17, 2012)

18/12/2012 to 31/3/2017

NA 780 (100kW - 2MW), 750 (2-5 MW) & 700 (5-25 MW)

- 1.00%

40 passed on to utility/consumer



Jammu and Kashmir

Draft RE Tariff Regulations

2012-13 to 2016-17

NA 770 (<=5 MW) & 700 (5-25 MW)




Karnataka

RE Tariff Order (Dated 11/12/2009)

NA Rs 3.40/kWh for the first 10 years after signing the PPA

475 30% 1% NA NA passed on to utility/consumer not included in the tariff

NA

Madhya Pradesh

SHP Tariff Regulations (Dated 30/06/2010)

30/06/2010 to 31/03/2013

Refer Table 1 below

700 for Run of the river, 600 for canal based generation

35% for Run of the river, 30% for canal based generation

1% 30 NA NA NA

Maharashtra


2010-11 to 2014-15

NA 498.88 (<=5 MW) & 453.53 (5-25 MW)




Uttarakhand


NA 700 For 0-5 MW, 685 For 5-10 MW, 670 For 10-15 MW, 650 For 15-20 MW & 630 For 20-25 MW

45% 1% 35 75% passed onto utility/consumer



Uttar Pradesh


2010-11 to 2013-14

UPERC specifies 'year of operation' based fixed cost and financial year based tariff. It does not specify the parameters for tariff determination.

NA passed on to utility/consumer

1.25% p.m. beyond 2 months

Exhibit 6.5 State-wise Small Hydro Power Regulation and Policy in India Source: Various SERC Orders


6.5 EXIM Scenario in Indian Small Hydro Power Sector

Export Scenario

India’s export of water turbine generators was at US$ 0.01 million in 2003-04 which rose to US$ 0.22 million in 2013-14 (Apr-Dec). India exported US$ 4.85 million worth of water turbine generators and the overall exported quantity was 1470 units between 2003-04 and 2013-14 (Apr-Dec).

Exhibit 6.6 Export Value of Water Turbine Generators in India (in US$ million) from FY 03-04 to FY 13-14 Source: Dept. of Commerce, NOVONOUS Insights

Exhibit 6.7 Export Volume of Water Turbine Generators in India (in thousands) from FY 03-04 to FY 13-14 Source: Dept. of Commerce, NOVONOUS Insights

0.01 0.05

2.13

0.65

0.21 0.05

0.650.88

0.22

0

0.5

1

1.5

2

2.5

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 (Apr -Dec)

India - Export Value of Water Turbine Generators(in US$ million)

0.07 0.07

1.32

0.010

0.20.40.60.8

11.21.4

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 (Apr -Dec)

India - Export Quantity of Water Turbine Generators(in thousands)


Import Scenario

India’s import of water turbine generators was at US$ 2.08 million in 2004-05 which became to US$ 0.50 million in 2013-14 (Apr-Dec). India imported US$ 56.67 million worth of water turbine generators and the overall imported quantity was 90 units between 2003-04 and 2013-14 (Apr-Dec).

Exhibit 6.8 Import Value of Water Turbine Generators in India (in US$ million) from FY 03-04 to FY 13-14 Source: Dept. of Commerce, NOVONOUS Insights

Exhibit 6.9 Import Volume of Water Turbine Generators in India (in thousands) from FY 03-04 to FY 13-14 Source: Dept. of Commerce, NOVONOUS Insights

2.08 2.57 3.28 2.80 1.21 2.00

18.70

23.53

0.500

5

10

15

20

25

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 (Apr -Dec)

India - Import Value of Water Turbine Generators(in US$ million)

0.01

0.02

0.01 0.01 0.01

0.03

00.0050.01

0.0150.02

0.0250.03

0.035

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 (Apr -Dec)

India - Import Quantity of Water Turbine Generators(in thousands)


6.6 Growth Drivers and Inhibitors for Small Hydro Power Market in India

Exhibit 6.10 Key Growth Drivers and Inhibitors for Small Hydro Power Market in India Source: NOVONOUS Insights

6.7 Risks Associated with Small Hydro Power in India

Credit Risk

Hydropower projects have a high gestation period (6-7 years) before they become profitable and are highly susceptible to geological and hydrological risks. There is also a risk of under-estimation of revenue project costs and over-estimations of energy production potential, failure or delay in the execution of the project due to factors such as lack of infrastructural facilities like road and communication, land acquisition problems, environmental clearance issues, law and order problem, paucity of funds etc. leading to cost overruns for developers.

Policy Risk

Government policies and benefits like Feed-in-Tariff and Accelerated depreciation are only given for Solar and Wind projects currently. Even the state governments are reluctant to

Growth Inhibitors- Heavy Dependency on State PoliciesSince Water is a State Issue- Remote Terrain and Small Project Size- Lack of Transmission Infrastructure- Delay in Approvals and Clearancesfrom Government

Growth Drivers- Huge Demand-Supply Gap in Power Sector- Government Incentives- Cost Competitiveness of RE- Shift to Clean Energy- Distributed Electricity Demand- Huge Untapped Potential- Useful for Captive Power in Remote Areas


accelerate the development of hydropower projects due to the proposal for them to fund the high initial investment required to develop the basic infrastructure like roads and communication. Also since water is a state issue, individual state policies play a crucial role in driving small hydro power projects. Many states are yet to come up with policies related to small hydro power or lack clarity in their current policies. Thus the hydropower sector faces the risk of being marginalized and not being able to fulfill its enormous potential.

Technical Risk

Small hydro power projects face technical constraints due to the geological nature of the project sites. Lack of detailed investigation of the project site and inadequate assessment of the impact of the projects could lead to under utilization of the installed capacity. This is also due to the lack of hydrological data and fluctuations in the water supply due to change of seasons.

6.8 Challenges for New Players in Indian Small Hydro Power Sector 1. Lack of experience & project management skills 2. Land acquisition

3. Difficulty in finances 4. Huge investment for turn-key projects

5. Long Gestation Period for SHPs 6. Evacuation of energy

7. Unstable returns from RECs 8. Forest area permission

Exhibit 6.11 Challenges for New Players in Indian Small Hydro Power Sector Source: NOVONOUS Insights

6.9 Recommendations for Policy Makers

1. Speedy implementation of policies by states 2. R&D activity for provide accurate hydrological and site data

3. Speedy clearances for small hydro power projects

4. Provide access to low cost funds




7. Biomass/ Bagasse Cogeneration Power Market in India India has an estimated biomass power potential of around 17,536 MW out of which the total installed capacity as of 31st March 2014 was 1,914.50 MW including both off-grid and grid connected power plants. For bagasse cogeneration power, India has a potential of around 5,000 MW out of which the total installed capacity as of 31st March 2014 was 2,648.40 MW.

7.1 State-wise Biomass Power Potential in India (in MW)

Exhibit 7.1 State-wise Biomass Power Potential in India (in MW) Source: MNRE, NOVONOUS Insights


7.2 State-wise Bagasse Cogeneration Power Potential in India (in MW)

Exhibit 7.2 State-wise Bagasse Cogeneration Power Potential in India (in MW) Source: MNRE, NOVONOUS Insights


7.3 State-wise Regulation and Policy Comparison for Biomass Power in India STATE Tariff

Regulations / or Order or

Draft

Control

period

Tariff (Rs/kWh)

Capital

Cost (lakh/MW

)

Specific heat

rate (kcal/kWh)

Auxiliary Consumptio

n (%)

Calorific Valu

e (kCal/kg)

Plant Load

Factor (%)

Fuel Cost

(Rs/ MT)

Useful life (yrs)

Subsidy

and incentive by

Central

/State Govt

Taxes and

Duties

Late

Payment surcharge

CERC (FY13-14)


FY 2012-16 (3 yrs)

Andhra Pradesh(5.58), Haryana(6.09), Maharashtra(6.18), Punjab(6.28), Rajasthan(5.55), Tamil Nadu(5.51), Uttar Pradesh(5.64), Others (5.83) with AD

462 (FY 13-14)

4000 10% 3300 60% during stabilisation period , 70% for remaining stabilisation period of 1st year and then 80% from 2nd year onward

Andhra Pradesh-2502.01 Haryana-2847.86 Maharashtra-2912.71 Punjab-2978.63 Rajasthan-2485.80 Tamil Nadu-2460.94 Uttar Pradesh-2545.24 Other States-2676.01

20 Shall be factored in the tariff on per unit benefit derived on levellised basis



Gujarat

Bagasse Tariff

Order - Order

No. 5 of 2010-

May 17, 2010

1.06.2010

to 31.03.2013

.

4.49 (with AD) 4.54(w/o

AD)

454 3800 10% 3300 70% for 1st year

& 80% from 2nd year

onwards.

1600 (5% esc)

20 Normative capit

al cost,

Accelerate

d Depreciation ,

Corporate income tax

rate.

Pass through on

actual incurred basis subjec

t to production

of docu

mentary

evidence

by the generating company.

1.25%

per month, beyond 60

days

Haryana

Haryana RE

(Biomass) Tariff Order -0309201

2

3 years

(till FY 13-

FY15)

5.59 (for waterco

oled) 5.88 (for aircoole

d condens

er)

445 (aircoole

d condenser) 475

3800 10% 3458 70% for 1st year

& 80% from 2nd year

onwards

2556 - FY 2012-13(5% esc)

20 Normative capit

al cost,

Accelerate

d

Pass through on

actual incurred basis subjec

t to

1.25%

per month, beyond 60


(water

cooled

condenser)

. Depreciation ,

Corporate income tax

rate.

production

of docu

mentary

evidence

by the generating company.

days

Karnataka

RE Tariff Order(111209)

NA NA 487 9% 75% 1280 FY 2009-10

( 5% esc)

20 NA NA NA

Kerala

No tariff Order

No tariff Orde

r

No tariff Order

No tariff Orde

r

No tariff

Order

No tariff Order

No tariff Order

No tariff Order

No tariff Order

No tariff Order

No tariff

Order

No tariff

Order

No tarif

f Order

Madhya

Pradesh

Biomass Tariff

Order_ March 2, 2012

March

2012 to

end of FY 2013-

14

450 3800 10% 3612 During stabilisation : 60

% (ii)During the

remaining

period of the

first year of

operation of the

plant (after

stabilization) : 70%

(iii)From 2nd Year

onwards : 80%

2100 20 NA NA NA

Maharashtr

a

MERC suo

motu Tariff

Order dated

FY2013-14 and FY2014-15

5.41 402.54

3800 10% 3611 60% before

stabilisation

period , 70% for remaini

ng stabilisat

ion period of 1st year and then 80% from 2nd year

2605 20 Passed on

to utility/consumer

excluded

from the tariff

NA


onward

Rajasthan

RERC Tariff

Regulation 2009 dated

January 23, 2009,

Tariff Order dated

Dec 21, 2012

FY2009-10 to FY 2013-

14

FY 2012-13

Revised Tariff-4.96 for water cooled / 5.42 for

Air cooled

521.24/564.68

4300 during stabilisation and 4200 after

stabilization / 4540

before stabilization and 4440 after

stabilization

10.5 %

during s and 10% after tabilization /

12.5 %

during s and 12% after tabilizatio

n

3400 60% before

stabilisation

period , 70% for remaini

ng stabilisat

ion period of 1st year and

then75% from 2nd year

onward

1921.5 for

FY012-13 ( with

5% esc)

20 Passed on

to utility/consumer

excluded

from the tariff

NA

Tamil Nadu

Comprehensive

Tariff Order

for Biomass Power Plants, Order

No 8 of 2012

dated July 31 ,2012

August1,

2012 to

July 31,

2014

4.694 445 3840 10% 3200 80% 2277 20 Passed on

to utility/consumer

NA interest of 1% per Month

Uttar Prade

sh

UPERC (Captive and Non-

Conventional

Energy Generat

ing Plants)

Regulations, 2009

(hereinafter

referred to as CNCE

Regulations,

2009).

October 1,

2009 to

March 31, 2014

5.02 NA NA NA NA NA NA NA

passed on

to utility/consumer

NA 1.25%

p.m.

beyond

2 months

Exhibit 7.3 State-wise Biomass Power Regulation and Policy in India Source: Various SERC Orders


7.4 State-wise Regulation and Policy Comparison for Bagasse Cogeneration Power in India STATE Tariff

Regulations /

or Order

or Draft

Control

period

Tariff (Rs/kWh)

Capital

Cost (lakh/MW

)

Station

heat rate

(kcal/kWh

)

Auxiliary

Consumptio

n (%)

Calorific Valu

e (kCal/kg)

Plant Load Facto

r (%)

Fuel Cost (Rs/ MT)

Useful life (yrs)

Subsidy and

incentive by

Central /State Govt

Taxes and

Duties

Late Paymen

t surcharg

e

CERC (FY13-

14)

Draft CERC Generi

c RE Tariff

Order for FY 2013-

14; CERC (Terms and

Conditions for

Tariff determinati

on from

Renewable

Energy Source

s) Regulations, 2012

FY 2012-16 (3 yrs)

Andhra Pradesh(

5.42), Haryana(

6.16), Maharashtra(5.83

), Punjab(5

.69), Tamil

Nadu(4.95), Uttar Pradesh(

5.73), Others (5.58)

with AD

436.36

(For FY 13-14)

3600 8.50% 2250 UP&AP - 45% TN &

Maha -

60% Other States -

53%

Andhra

Pradesh-

1412.58

Haryana-

2009.17

Maharashtra

-1979.9

9 Punja

b-1768.1

6 Tamil

Nadu-1521.7

4 Uttar

Pradesh-

1575.78

Other States-1710.8

8

20 Shall be factored in the tariff on per unit benefit derived

on levellised basis

Tariff exclusiv

e of taxes and

duties, pass

through allowed on

actual basis

1.25%

per mon

th beyond

a delay of 60

days

Andhra

Pradesh

Tariff Order (Date

d 31/03/2009)

2009-10 to 2014-

15

325 3700 9.0% 2300 55%

950 20 Passed on to

utility/consum

er

over and

above the

determined

tariffs, to be

reimbursed by

the DISCO

Ms

-

Bihar Order on

Tariff Determination for

Bagasse

based

5 Years

( 2012-13 to 2016-17)

FC - 2.29/kWh

VC - 2.77/kWh with 5% annual

escalation in fuel

cost

420 3650 8.50% 2275 53%

1583(5% esc)

20


Co-generation Plants to be

commissione

d in

2012-13 to 2016-

17 Gujar

at Bagass

Tariff Order - Order No. 4

of 2010-May 31,

2010

three years from 1st

June, 2010

to 31st

May, 2013.

4.65 (with AD) 4.71(w/o

AD)

415 3600 8.50% 2250 60%

1200(5% esc)

20 Normative

capital cost,

Accelerated

Depreciation , Corpor

ate income

tax rate.

Pass through

on actual incurred basis subject

to production of documentary eviden

ce by the genera

ting compa

ny.

1.25%

per month,

beyond 60

days

Karnataka

RE Tariff

Order(111209

)

NA NA 365 3600 8% 2250 60%

1025(with 5%

esc)

20

Maharashtr

a

Tariff Regula

tions (Date

d 07/06/2010) & RE Tariff

Order March

31, 2012

2010-11 to 2014-

15

2.26(F.C)+

2.53(V.C)= 4.79 (for FY

2012-13)

398.07

3600 8.50% 2250 60%

1832 20 Passed on to

utility/consum

er

Passed on to

utility/consum

er

1.25%

p.m. beyond 60

days

Punjab

Tariff Order (Date

d 19/07/2012)

2012-13

Rs 5.32/kWh (Without AD) & Rs 5.2/kWh

(With AD)

420 3600 8.50% 2250 80%

2357 20 Passed on to

utility/consum

er

Passed on to

utility/consum

er

1.25%

p.m. beyond 60

days Tamil Nadu

Tariff Order (Date

d 31/07/2012)

01/08/2012 to 31/07/2014

NA 420 3700 9% 2300 55%

1050 20 NA NA 1% p.m. beyond 30

days


Uttar Prade

sh

Tariff Regula

tions (Date

d 22/03/2010)

2010-11 to 2013-

14

refer workshe

et 'Additional Data', Table 1

UPERC specifies 'year of operation' based fixed cost and financial year based variable cost. It does not

specify the parameters for tariff determination.

NA Passed on to

utility/consum

er

1.25%

p.m. beyond

2 months

Exhibit 7.4 State-wise Bagasse Cogeneration Power Regulation and Policy in India Source: Various SERC Orders

7.5 Central Financial Assistance (CFA) for Biomass/ Bagasse Cogeneration Power Projects MNRE had defined various incentives for biomass and bagasse cogeneration power projects in India under central financial assistance (CFA) scheme. Some of the highlights of this scheme is as follows:

Project Type Special Category States(NE Region, Sikkim, J&K, HP & Uttaranchal)

Other States

Biomass Power projects INR 2.5 million X(Capacity in MW)^0.646 INR 2.0 million X (Capacity in MW)^0.646

Bagasse Co-generation by Private sugar mills

INR1.8 million X(Capacity in MW)^0.646 INR1.5 million X (Capacity in MW)^0.646

Bagasse Co-generation projects by cooperative/ public sector sugar mills 40 bar & above 60 bar & above 80 bar & above

INR4.0 million* INR5.0 million* INR 6.0 million*

Per MW of surplus power@ (maximum support INR 80 million per project)

INR 4.0 million* INR 5.0 million* INR 6.0 million*

Per MW of surplus power@

(maximum support INR 80 million per project)

*For new sugar mills, which are yet to start production and existing sugar mills employing backpressure route/seasonal/incidental cogeneration, which exports surplus power to the grid, subsidies shall be one-half of the level mentioned above.

@ Power generated in a sugar mill (-) power used for captive purpose i.e. net power fed to the grid during season by a sugar mill.

The CFA for bagasse cogeneration project in cooperative/ public sector sugar mills implemented by IPPs/state government undertakings or state government joint venture company / special purpose vehicle (Urja Ankur Trust) through BOOT/BOLT model is as follows:

Project Type Minimum Configuration Capital Subsidy Single coop. mill through BOOT/BOLT Model

60 bar & above 80 bar & above

INR 4.0 million/MW of surplus power * INR 5.0 million/MW of surplus power* (maximum support INR 80 million/ sugar mill)


The CFA for bagasse cogeneration project in existing cooperative sector sugar mills employing boiler modifications is as follows:

Project Type Minimum Configuration Capital Subsidy Existing Cooperative Sugar Mill 40 bar & above

60 bar & above 80 bar & above

INR 2.0 million/MW of surplus power * INR 2.5 million/MW of surplus power* INR 3.0 million/MW of surplus power*

7.6 Fiscal Incentives for Biomass/ Bagasse Cogeneration Power Projects MNRE has declared following incentives and benefits for biomass and bagasse cogeneration power projects in India:

Area Fiscal Incentive / Benefits Accelerated Depreciation 80% depreciation in the first year can be claimed for the

following equipment required for co-generation systems:

1. Back pressure, pass-out, controlled extraction, extraction–cum-condensing turbine for co-generation with pressure boilers

2. Vapour absorption refrigeration systems 3. Organic rankine cycle power systems 4. Low inlet pressures small steam turbines

Income Tax Holiday 10 years tax holidays. Customs / Excise Duty Concessional customs and excise duty exemption for machinery and

components for initial setting up of Biomass power projects. General Sales Tax Sales tax exemption is available in certain states Loans Loans for setting up biomass and bagasse cogeneration power plants in

available from Indian Renewable Energy Development Agency (IREDA). Exhibit 7.5 Financial Incentives for Biomass / Bagasse Cogeneration Power in India Source: MNRE

*Power generated in a sugar mill (-) power used for captive purpose i.e. net power fed to the grid during season by a sugar mill.


7.7 Growth Drivers and Inhibitors for Biomass/ Bagasse Cogeneration Power Market in India

Exhibit 7.6 Key Growth Drivers and Inhibitors for Biomass / Bagasse Cogeneration Power Market in India Source: NOVONOUS Insights

7.8 Challenges for New Players in Indian Biomass / Bagasse Cogeneration Power Sector

1. Lack of experience & project management skills 2. Land acquisition

3. Difficulty in securing feedstock 4. Long Gestation Period

5. Limited access to funds from Financial Institutions 6. Lack of grid connectivity infrastructure

7. Difficulty in securing clearances 8. Lack of skilled manpower

Exhibit 7.7 Challenges for New Players in Indian Biomass/ Bagasse Cogeneration Power Sector Source: NOVONOUS Insights

Growth Inhibitors- Non-Availability of Feedstock- Unorganized Nature of Market- Volatility in Feedstock Prices- Long Gestation Periods- Limited Successful CommercialDemonstration

Growth Drivers- Huge Demand-Supply Gap in PowerSector- Financial Incentives / Subsidies- Low Plant Setup Cost Compared toCoal Powered Plants- Huge Untapped Potential- Useful for Captive Power in Industries



1. Creation of biomass/bagasse cogeneration related policies by all states

2. Setting up of fuel depots

3. Regularization of feedstock prices and availability 4. Provide access to low cost funds to new players




8. Waste to Energy (WtE) Power Market in India India has an estimated waste to energy power potential of around 3,880 MW out of which of potential from municipal solid waste (MSW) is 2,600 MW and industrial waste is 1,280 MW.

The total installed capacity as of 31st March 2014 was 106.60 MW.

8.1 State-wise Waste to Energy (WtE) Power Potential in India (in MW) for MSW

Exhibit 8.1 State-wise Waste to Energy (WtE) Power Potential in India (in MW) for MSW Source: MNRE, NOVONOUS Insights


8.2 State-wise Regulation and Policy Comparison for Waste to Energy (WtE) Power in India for MSW STATE Projects

(Project name)

Technology (Incineration/ Biomethanation/ Gasification)

Tariff Order

Tariff (Rs/kWh)

Capital Cost (lakh/MW)

Station heat rate (kcal/kWh)

Auxiliary Consumption (%)

Calorific Value Range (kCal/kg)

Plant Load Factor (%)

Fuel Cost (Rs/ MT)

Useful life (yrs)

Andhra Pradesh

NA - Tariff Order

(dt 31/03/2009)

4.04 in 2009-10 and 5% escalat

ion thereafter till

2013-14

Project

Parameters not

specified in the

order

Project

Parameters not

specified in the

order

Project

Parameters not

specified in the

order

Project

Parameters not

specified in the

order

Project

Parameters not

specified in the

order

Project

Parameters not

specified in the

order

Project

Parameters not

specified in the

order Delhi Timarpur

Okhla Waste

Management Co. Ltd. (16

MW)

Incineration & Biomethanatio

n

Order dt

20/01/2011

Rs 2.49/kWh for the first

year and Rs 2.833/k

Wh from the

second year

onwards

Project

awarded

through tariff based competitive biddin

g. (Auxilli

ary Consumption of 22%)

Project

awarded


g. (Auxilli


Project

awarded


g. (Auxilli


Project

awarded


g. (Auxilli


Project

awarded


g. (Auxilli


Project

awarded


g. (Auxilli


20

Gujarat Hanjer Green Power

Pvt. Ltd. (15 MW)

Incineration

Tariff order

(dt 30/07/2011)

6.8 690.7 4100 11.5% 2250 60% for the

first year and 80% from the

second year onwar

ds

1320 20

Karnataka

Srinivasa Gayathri Resource Recovery

Ltd. (8 MW)

Incineration

Tariff Order

(dt 28/02/2012)

Rs 4.15/k

Wh

1111.125

4300 15% 2200 73% NA 20

Maharashtra

Solapur Bioenergy Systems Pvt. Ltd.

(2.83 MW)

Biomethanatio

n

Tariff Order

(dt 03/09/2010)

Rs 4.88/k

Wh

1277 - 12.72% 4800 78.90% - 20


Uttar Pradesh

NA - Tariff Regulations (Date

d 22/03/2010)

Rs 2.89/kWh for existing projects and Rs 3.21 for new Projects under

the head 'Other NCE

Projects'

The regulations have the

provision of deter

mining the

tariffs of new projects on case-

to-case basis


provision of deter

mining the


to-case basis


provision of deter

mining the


to-case basis


provision of deter

mining the


to-case basis


provision of deter

mining the


to-case basis


provision of deter

mining the


to-case basis


provision of determining the tariffs

of new projects on case-

to-case basis

West Bengal

NA - Draft Tariff Regulations (Date

d 10/08/2012)

Capped at Rs 5.1/kWh upto August

10, 2022

No parameters

specified

No parameters

specified

No parameters

specified

No parameters

specified

No parameters

specified

No parameters

specified

No parameter

s specif

ied

Exhibit 8.2 State-wise Waste to Energy (WtE) Power Regulation and Policy in India for MSW Source: Various SERC Orders

8.3 Central Financial Assistance (CFA) for Waste to Energy (WtE) Power Projects

Capital Subsidy to Developers

Waste/Processes/Technologies Capital Subsidy 1. Power generation from municipal Solid Waste

INR 20 million/MW (Max. INR100 million/project)

2. Power generation from biogas at Sewage Treatment Plant or through biomethanation of Urban and Agricultural Waste/residues including cattle dung or production of bio-CNG.

INR 20 million/MW or bio-CNG from 12000 m3 biogas/day (Max. INR 50 million/project)

3. Biogas generation from Urban, Industrial and Agricultural Wastes/residues

INR 5 million /MW eq. (12000 m3 biogas /day with maximum of INR 50 million/ project)

4. Power Generation from Biogas (engine / gas turbine route) and production of bio-CNG for filling into gas cylinders

INR 10 million/MW Or bio-CNG from 12000 m3 biogas (Max. INR 50 million/project

5. Power Generation from Biogas, Solid Industrial, Agricultural Waste/residues excluding bagasse through Boiler + Steam Turbine Configuration

INR 2 million/MW (Max. INR 10 million/project)

Exhibit 8.3 CFA for Waste to Energy Power in India under 12th Five Year Plan Source: MNRE


Incentives to State Nodal Agencies

State Nodal Agencies would be provided an incentive / service charge @ 1% of MNRE subsidy restricted to INR 0.05 million per project, in order to facilitate development of projects and their monitoring during implementation / post commissioning.

Financial assistance for promotional activities

Financial assistance would be provided for organizing training courses, business meets, seminars / workshops, and publicity / awareness on case-to-case basis, subject to a maximum of INR 0.03 million per event /activity.

8.4 Growth Drivers and Inhibitors for Waste to Energy (WtE) Power Market in India

Exhibit 8.4 Key Growth Drivers and Inhibitors for Waste to Energy (WtE) Power Market in India Source: NOVONOUS Insights

Growth Inhibitors- Lack of Appropriate Technology- High Manpower Cost- Delay in Approvals and Clearances fromGovernment- Public Reaction Related to Plant Safety

Growth Drivers- Huge Availability of Municipal Solid Waste- Financial Incentives / Subsidies- Huge Untapped Potential- Tax Holiday for 10 Years


8.5 Challenges for New Players in Indian Biomass / Bagasse Cogeneration Power Sector

1. Lack of experience & project management skills 2. Land acquisition

3. Difficulty in raw material 4. Long Gestation Period

5. Difficulty in securing clearances 6. Lack of skilled manpower

Exhibit 8.5 Challenges for New Players in Indian Waste to Energy (WtE) Power Sector Source: NOVONOUS Insights


1. Creation of Waste to Energy related policies by all states

2. Setting up of fuel supply chain

3. Provide access to low cost funds to new players 4. Support in Accessing / Developing New Technologies

5. Increase Public Awareness towards Waste to Energy

6. Increase FDI in this sector



Notes


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INDIA RENEWABLE ENERGY STATUS REPORT 2014 - MAY 14, 2014

2014

India Renewable EnergyStatus Report

india renewable energy status report 2014 - … · 7.1 state-wise biomass power potential in india...

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