This report gives an overview of the renewable energy market in India

1. Renewable Energy Market in India
Findings from a study by Prayag Consulting
Fi di f d b P C li
March 2010

2. Outline
Takeaways
Global energy
Indian energy scenario
• Policies and regulations
Potential f
P t ti l of renewable energy in India
bl i I di
Focus on each renewable source/ opportunities
• Wind
• Solar
• Small Hydro
• Biomass

3. Takeaways
• India’s sustained efforts in the past two decades are now bearing
fruit
f i as renewable energy and i b
bl d its benefits get accepted and
fi d d
acknowledged
– Emphasis on decentralized energy
• Grid-interactive renewable power projects b
G id i t ti bl j t based on wind power,
d i d
biomass, small hydro and solar are mainly private investment driven,
with favorable tariff policy regimes established by State Electricity
Regulatory Commissions (
g y (SERC) )
– Almost all-renewable power capacity addition during the year has come through
this route
• India has more mature capabilities in Wind Energy and Small Hydro,
while Solar technology is still in the nascent stage
• The State Electricity Regulatory Commission (SERC) mandated
Renewable Purchase Obligation (RPO), an obligation on States that
renewable energy should form some minimum part of the total
power consumption

4. World power report
• The maximum power consumed worldwide at any given moment is about
12.5 trillion watts (terawatts, or TW), according to the U.S. Energy
Information Administration
– Much of it is powered through coal and other sources
• A shift towards renewable or clean energies appears to be a viable option in
the long run
• Examples where renewable energy has made a difference
– Wind farms in Denmark generate about 20% of the nation’s electricity
– The solar PV (photovoltaic) industry reached more than 2 GW in 2006, making
the solar manufacturing and installation industry worth nearly $16 billion
– More than half of Americans live in states that have mandated that their utilities
generate a specified percentage of electricity (in many cases up to 20% or 25%)
from renewable sources such as solar, wind, biomass, and geothermal by a
specific target year
Did you know? Germany and Spain rank first and second, respectively, in world wind
power production

5. Energy Scenario in India
India’s total installed power capacity stands at 1,47,402.81 MW
Thermal – Hydro – Renewable energy – Nuclear sources –
93,392 MW 36,647.76 MW 13,242.41 MW 4,120 MW
While some progress
has been made,
renewable energy gy
has still a long way to
go to make significant
impact

6. Renewable energy in India
Grid-interactive Estimated Cumulative
renewable power Potential (MW) Achievement (MW)
• India established the world’s
Wind Power 45,195 10,242.50 first government department
Solar Power
S l P 50 / k
/sq.km. 2.12 /sq.km.
2 12 / k for non conventional energy in
1982, updated to a ministry in
Small Hydro Power (up 15,000 2,429.67 1992 and has the largest
to 25 MW) renewable energy program in
Bio Power (Agro 16,881 703.30 the world
residues & Plantations) • The current 8,000 MW of
Cogeneration-bagasse 5,000 1,048.73 installed capacity is expected
to reach 20,000 MW by 2012
Waste to Energy (Urban 2,700 58.91 (2008)
& Industrial)
Did you know? The Indian
market for clean energy is
estimated at $600 million
with an annual growth rate
of 25 percent (2008)

7. Policies to promote renewable energy
• Preferential tariffs are being reviewed by the State Electricity Regulatory
Commissions (ERCs)
– Andhra Pradesh, Madhya Pradesh and Maharashtra have announced
promotional policies through their respective ERCs
• Renewable Purchase Obligation (RPO) is the obligation mandated by the
State Electricity Regulatory Commission (SERC) under the Act, to purchase
minimum level of renewable energy out of the total consumption in the area
of a distribution licensee
• This concept has the potential to develop into a marketplace for renewable
energy so that states with higher potential can supply power to states with
lower or no potential

8. Renewable Energy Certificate (REC)
• Renewable Energy generators will have two options
– Either to sell the renewable energy at preferential tariff fixed by the concerned
Electricity Regulatory C
Commission or
– To sell the electricity generation and environmental attributes associated with RE
generation separately
• On choosing the second option the environmental attributes can be
option,
exchanged in the form of REC
• The Central Agency will issue the REC to RE generators
• The
Th REC will b exchanged only i th P
ill be h d l in the Power E h Exchanges approved bd by
CERC within the band of a floor price and a forbearance (ceiling) price to be
determined by CERC from time to time
• The distribution companies, Open Access consumer, Captive Power Plants
(CPPs) will have option of purchasing the REC to meet their Renewable
Purchase Obligations (RPO)
The government is launching numerous initiatives and policies to increase the generation
of renewable energy

9. Generation-based incentives
• Wind
– Indian government has launched a Generation-based Incentive of INR 0.5/ kWh
over feed-in tariffs for 4GW of new-build
– It expects to come online between mid-December 2009 and 31 March 2012
– Will allow the investors, apart from getting the tariff determined by the state
investors
regulatory commissions, also get an incentive of 50 paise per unit of electricity
for a period of 10 years, provided they do not claim the benefit of accelerated
depreciation
• Solar
– Financial assistance of Rs 12 per KW hour in case of solar photovoltaic and Rs
10 per KW hour in case of solar thermal power fed to the electricity grid from a
grid interactive solar power plant of a capacity of 1 MWp and above
– This incentive will be worked out taking into account the tariff provided by the
utility to the solar power producer
GBIs are offered by the Government to various forms of renewables over the years to
give a boost

10. WIND ENERGY

11. Wind energy in India
• Wind l t i
Wi d electric generators of unit sizes b t
t f it i between 225 KW and 1 65 MW h
d 1.65 have
been deployed across the country
State Potential (MW) Installed capacity (MW)
1 Karnataka 11531 1327.4
2 Gujarat 10645 1566.5
3 Andhra Pradesh 8968 122.5
122 5
4 Tamil Nadu 5530 4304.5
5 Rajasthan 4858 738.4
6 Maharashtra 4584 1938.9
1938 9
7 Kerala 1171 27
8 Madhya Pradesh 1019 212.8
Total 48306 10238
Did you know? India is now the fifth largest wind power producer in the world, after USA,
Germany, Spain and China

12. Technology Development and Manufacturing
Base
Wind Electric Generators are
manufactured in the country by
manufacturers through
• Joint ventures or under licensed
production The current annual production capacity of
• Subsidiaries of foreign companies under domestic wind turbines is about 3000 MW
licensed production
• Indian companies with their own
technology
t h l
The trend in recent installations is moving
towards
• Better aerodynamic design
• Use of lighter and larger blades The wind industry has taken up
• Higher to ers
towers indigenized production of blades
blades,
gearboxes, yaw components, controllers,
• Direct drive
etc.
• Variable speed gearless operation using
advanced power electronics typically to
suit moderate wind regime and weak
local grid network
An indigenization level up to 50% has been achieved in machines

13. Opportunity for manufacturers
• Expertise is available in plenty
Major Players in India:
• India appears to be a mature market with majority of • Suzlon
major players serving the domestic market • Vestas
– Suzlon leads the competitors in exporting wind energy • GE
equipment • Regen Power Tech
• Enercon,
Enercon Suzlon and Regen Power Tech are the major • Shriram EPC
companies in handling turnkey projects • Enercon India
Export:
• Indigenously produced wind turbines valued at about US$ 600 million were exported
to Australia, Brazil, Portugal, Spain, Turkey and USA during the year
• Wind turbines components such as nacelle, Hub, Bolt box assembly, etc of US$ 50
million were exported to USA
• Wind turbine blades valued at US$ 5.4 million were exported to China and Japan

14. Market structure in India
Competitive Market Structure Overview, Wind Turbine Component Segments
Few players are able to
duction facility geographi footprint
Global
supply full product portfolio,
Core set of five or six large
scale generator suppliers Bearings serving multiple industries
mainly exporting from with expanding global
regional hubs, with new production networks, while
ic
t t
entrants emergingi several pitch and yaw
suppliers entering
Generators Consolidated group of
Regional
large scale suppliers are
Proliferation of local Gear boxes under pressure as regional
suppliers as new players scale
markets scale
R
Blades One large independent
supplier, several
small-scale regional
Towers players contending
cal
with in-house
Loc
Prod
production
Fragmented Concentrated Consolidated
Market Concentration
Source: Emerging Energy Research, Wind Turbine Supply Chain Strategies, 2009-2020

15. SOLAR PV

16. Solar energy in India – bright prospects
• India is home to one of the most abundant solar resources in the world, with 2.97 million square
kilometers of tropical and subtropical land and an average of 250-300 clear sunny days a year
• Nascent segment to explore
– Solar-based
Solar based energy accounts for only 0 5% of installed base with a grid interactive (grid hybrid)
0.5% grid-interactive (grid-hybrid)
solar power totaling only 2.12 MW from just 33 installations
• Government continuing with the demonstration programmes on grid connected solar photovoltaic
(SPV) power generation
Indian Government’s future plans:
• India is planning to boost output from near zero to 20 GW by 2020
$19B plan aims to kick-start solar industry in India
• Money would be spent on incentives for production and installation as well as research and
development
If fully implemented, solar power would be equivalent to one-eighth of India's current installed
power base
Includes large-scale deployment of solar generated power for both grid connected as well as
distributed d decentralised off-grid provision of commercial energy services
di t ib t d and d t li d ff id i i f i l i
• The move could unlock India's huge renewables potential and benefit companies such as
Tata BP Solar, a joint venture between Tata Power and BP plc's solar unit, BP Solar, and
Bharat Heavy Electricals Ltd and Lanco Infratech
Did you know? The world now produces about 14 GW of solar power, about half of it
added last year

17. Opportunity for manufacturers
Few players in the market
• Opportunity for more players to enter the fray
j y
Major Players in India:
The price of solar electricity in India is still about 3 times • Tata BP Solar
that of traditional grid electricity • Moser Baer
• Signet Solara
• New players have to come with a lot of value
engineering that drive the capital intensity to lower side
Significant potential to tap into
Huge opportunity for European technology
Current scenario:
Nearly 75 per cent of Tata BP Solar sales come from exports largely to Europe and the U.S
Growth plans include expansion of its module manufacturing facility and thrust on domestic sales
The latest company that has evinced interest in setting up a unit in the Fab City is BHEL, which will be
C
investing Rs 500 crore
• Much of the activity seems to be focused currently on manufacturing — with the manufacturers
themselves possibly offering d i
th l ibl ff i design, i t ll ti and monitoring services as well
installation d it i i ll
• Expected to change in favor of a growing service industry

18. SMALL HYDRO POWER

19. Small hydro energy in India
5,415 potential So far 674 small
sites with an hydropower
aggregate capacity projects
of 14,292 MW aggregating to
have been about 2 430 MW
2,430
identified have been set up
• Out of this in various parts of
potential about the country
Most of the 50% lies in • Out of this174
potential i i
t ti l is in The i bilit f
Th viability of Arunachal private sector
Himalayan States these projects Pradesh, SHP projects
as river-based improves with Himachal with an
projects and in increase in the Pradesh, Jammu aggregate
other States on station capacity & Kashmir and capacity of about
irrigation canals Uttarakhand. 887 MW have
Chhattisgarh, been set up
Karnataka, mainly in Andhra
Kerala and Pradesh,
Maharashtra Himachal
Pradesh,
Karnataka,
K t k
Maharashtra,
Punjab and
Uttarakhand
Technology is well established in India

20. BIOMASS POWER

21. Biomass energy in India
For the last 15 years, biomass power has become an industry attracting annual
investment of over Rs.1000 crores, generating more than 9 billion units of electricity
per year and creating employment opportunities in rural areas
Estimated biomass power potential is about 21,000 MW
By using these surplus
agricultural residues,
residues
more than 16,000 MW Biomass power projects with an aggregate capacity
Bi j t ith t it
of grid quality power of 703 MW through 102 projects have been installed
can be generated with
presently available in the country
technologies
5000 MW of power can
be produced, if all the
550 sugar mills in the
country switch over to
modern techniques of
co-
co generation

22. Sources
• http://mnes.nic.in/
p
• http://www.cwet.tn.nic.in/
• http://www.ireda.in/
• http://ahec.org.in/
htt // h i /
• http://pibmumbai.gov.in/scripts/detail.asp?releaseI
d=E2010PR88
• http://www.indiacore.com/renewable-energy.html
• http://www.business-
standard.com/india/news/government-launches-
standard com/india/news/government launches
incentive-scheme-for-wind-energy-
projects/379955/

23. Thank you
For any query, contact:
Email: enquiries@prayag.com
Phone: 080-26593328/9