The Indian Market for Renewable Energy

The Indian Market for Renewable Energy

THE INDIAN MARKET FOR RENEWABLE ENERGY
THE 100 GW SOLAR INITIATIVE
PRESENTATION BY : MR KESHAV PRASAD
MEMBER, DELEGATION OF THE CONFEDERATION OF INDIAN INDUSTRY (CII) &
CHIEF OPERATING OFFICER, IL&FS ENERGY DEVELOPMENT COMPANY LTD
10 JUNE 2015 | MUNICH, GERMANY
THE INDIAN ECONOMY
INDIA SECTOR-WISE GDP
• The largest democracy | Population 1.25 billion^
• GDP USD 2.308 trillion (nominal), GDP Rank: 7 (nominal)
• GDP Growth: 7.3% (2014-15)*
17.4%
56.9%
25.8%
• A liberal foreign investment regime
• FDI Inflows into India (equity + re-invested earnings + other capital)**
•
Cumulative FDI Inflow 2000 - 2015: USD 365 bn (Equity inflow: 264 bn)
•
Total FDI Inflow 2014 - 15: USD 41.2 bn (Equity inflow: USD 28.8 bn)
Agriculture
Industry
• Abundant natural resources, a rich mineral base, self-sufficiency in agriculture
• Fifth highest investment in energy infrastructure projects to reach financial
closure and serve the public
• Energy growth is critical for meeting GDP targets
^ 2013, World Bank
* World Economic Outlook Database, International Monetary Fund, April 2015
** Reserve Bank of India, February 2015
Services
THE INDIAN POWER SECTOR
•
•
•
•
•
•
•
•
•
Total Installed Capacity: 272.7 GW
Total Installed Renewable Energy Capacity: 35.8 GW (13%)
Total Renewable Energy Potential: 890 GW+
More than 25% of primary energy needs met by imports, mainly
crude oil, gas and coal
India has vast renewable energy resources: wind, solar, biomass
and small hydro
Present share of RE in electricity mix: 6%
Target share of RE in electricity mix: 15% by 2020
‘Power For All’: India to provide 24x7 electricity to all citizens by
2019
Target to add 175 GW of RE capacity by 2022 to meet growing
power needs, ensure energy security, manage carbon footprint
Data: April 2015, Central Electrical Authority, Ministry of Power, Government of India
INDIA INSTALLED POWER CAPACITY
(GW)
35.8
5.8
189.5
41.6
Thermal
Hydro
Nuclear
Renewables
INDIA RENEWABLE ENERGY
INSTALLED CAPACITY (GW)
3.8
4.6
4.0
Wind
Solar
23.4
Bio-Energy
Small Hydro
THE 100 GW SOLAR INITIATIVE
o The 175 GW renewable energy capacity addition target:
TOP 5 INDIAN STATES BY
INSTALLED SOLAR CAPACITY (MW)
• 100 GW solar / 60 GW wind / 10 GW bio / 5 GW small hydro
o 100 GW solar will:
• Entail investment of USD 100 billion in 7 years
929
840
• Meet 9% of India’s electricity need (up from present 0.5%)
o India’s solar energy potential: 749 GWp*
354
GUJARAT
RAJASTHAN
MADHYA
PRADESH
287
235
MAHARASHTRA
ANDHRA
PRADESH
o Most Indian states have approx. 300 sunny days per year
STATE-WISE SOLAR TARGETS 2022 (MW)
• Rajasthan, Gujarat have maximum insolation; then Tamil
Nadu, Andhra Pradesh, Madhya Pradesh, Maharashtra,
Chhattisgarh
o Annual solar radiation: 4.5 - 6.5 kWh/m2/day
11926
10697
9834
o Total Green Energy Commitment from industry: 273 GW
• Solar Energy Commitment: 156 GW (approx.)
*Ministry of New & Renewable Energy, February & March 2015
8884
8020
5762
1
MAHARASHTRA
UP
ANDHRA
PRADESH
TAMIL
NADU
GUJARAT
RAJASTHAN
100 GW IMPLEMENTATION APPROACH
• 40 GW : Utility Projects
• 40 GW: Rooftop solar
• 20 GW: Grid-tied MW Plants @ distribution transformer level
implementation through young entrprenurs
• 10 GW worth utility projects are expected to be tendered through
ebidding process (Tariff and VGF based) before March 2016
• Tenders of about 3 GW currently in public domain
Power Sale Options :
o Regulated Market
•
•
Feed-in-tariff
Average
Power
Purchase Cost + REC
o Open Market Sale
•
•
•
RECs
Voluntary green power
purchasers
Conventional
Captive
Plants
SOLAR PARKS
o Key challenge for GW deployment: land and power evacuation
o Strategy : MNRE has approved 25 solar parks of 500 MW capacity
each plus ultra-mega solar power projects
o Solar parks to be set up during 5 years (FY 2014-15 to 2018-19) in Public and Private
partnership. IL&FS is developing 5000 MW Solar Park in state of Rajasthan
o Solar Parks will enable:
• Implementation of single location large scale project size 500-1000
• Individual project sizes 50 to 250 Mw
• Use of large tracts of available, inexpensive wastelands
• Savings on infrastructure: land, water, power, roads, construction, evacuation system
• Better network optimisation, grid integration, reduced transmission losses
• Accelerated deployment due to removal of regulatory hurdles
GREEN ENERGY TRANSMISSION CORRIDOR
o Will evacuate renewable power from RE rich states to load centres
o Will make RE generation grid interactive, reduce evacuation losses, allow grid-scale
energy storage & management
o Estimated investment requirement for development: INR 43,000 crore (USD 7 bn
approx.)
o State-owned Power Grid Corp to develop green corridors for 20,000 MW of
upcoming solar and wind power projects
SOLAR ROOFTOPS
o Installed capacity: 285 MW*
• 97 MW Commercial, 76 MW Industrial, 112 MW Residential
o Target: 40 GW of Grid-Interactive Rooftop Solar PV Plants in 5 years
o Rooftop plants in residential, commercial, industrial, institutional
sectors
o Capacity range: 1 kWp to 500 kWp
o Government subsidy of 15% on solar rooftop plants
o Plants economically viable as they produce clean electricity at approx.
INR 7 per kW event without subsidy
o Home and Home Improvement loans to individual borrowers to install
rooftop panels on new and existing properties
o Net metering available in states of Tamil Nadu, Karnataka, Andhra
Pradesh, West Bengal and Uttarakhand; many more in implementation
* October 2014, Bridge To India
REPLACING DIESEL WITH
SOLAR
Power from diesel costs
between INR 16-40/kWh,
depending on the application
India has about 7,000 MW of
diesel based power production
The price of diesel has
increased 300% since 2002,
46% since 2010
Captive solar power costs INR
7-8.5/kWh; once plant is
installed the cost of power is
fixed for the next 25 years
Captive solar PV power plants
provide attractive equity IRRs
and equity payback periods
DATA: EAI, 2014
SOLAR MANUFACTURING: MAKE IN INDIA
• India has about 800 MW cell capacity , over 2 GW module capacity and Multi GW capacity
in BOS
• Govt is committed to encourage domestic cells and modules industry
• Demand support for domestic industry: about 2000 MW will be allocated in two years; 700
MW order placed, rest under bidding
• Semiconductor policy for solar revived
• Industrial parks promoted to provide infrastructure for manufacturing
• MOUs/announcements by Indian & Foreign companies for manufacturing in India through
JV route: 1000+ MW capacity in cell and module
SKILLED MANPOWER
o Estimated 2 million ‘green jobs’ in the renewable energy sector in
the next decade
o Urgent need to create a pool of appropriately trained manpower
o The Sector Skill Council for Green Jobs (SSCGJ) launched in May
2015
o Year 1 Target:
• To train 1500 trainers
• Accredit 60 training organisations in the sector
• Certify 10,60,000 students
o Government allotted INR 220 cr (USD 34 mn) to skill 50,000 ‘Surya
Mitras’ (Friends of the Sun) i.e. trained solar equipment technicians
in next 3 years
o Government’s GPS-backed mobile app to connect consumers with
‘Surya Mitras’ for installation and maintenance of rooftop solar
generators, heaters and cookers
THE SECTOR SKILL
COUNCIL FOR GREEN
JOBS
Joint initiative of :
• Ministry of New and
Renewable Energy
• Ministry of Skill
Development and
Entrepreneurship
• National Skill
Development Council
• Confederation of Indian
Industry
POLICY AND REGULATORY SUPPORT
o Electricity Act, 2003
• Provides for policy formulation by Government of India; mandates State Electricity Regulatory
Commissions (SERCs) to promote renewable and non-conventional sources of energy within
their jurisdiction
o National Electricity Policy 2005
• Aims to exploit potential of RE resources, reduce capital costs, promote competition and
private sector participation
o National Tariff Policy, 2006
• Mandates a minimum percentage of RE procurement; preferential tariffs to be determined by
SERCs
o National Action Plan of Climate Change, 2008
• The Jawaharlal Nehru National Solar Mission
• Targets of 5% RE purchase for FY 2009-10, with 1% increase each year to reach 15% RE
penetration by 2020
POLICY AND REGULATORY SUPPORT
o Renewable Purchase Obligation (RPO)
• Electricity (Amendment) Bill, 2014 strengthens penalty provisions related to RPOs
manifold to make them stringent
• Amendment proposes that SERCs be obliged to purchase 8% of their power generation
from solar sources by March 2019 (up from 3% by 2022)
• New RPO target implies an aggregate solar capacity of 69 GW by 2019, equal to 87%
growth per annum
o Renewable Generation Obligation (RGO)
• Electricity (Amendment) Bill, 2014 has proposed that companies setting up new power
projects be obligated to generate 10% renewable energy component
TAX-BASED INCENTIVES FOR RENEWABLE ENERGY PROJECTS
INCENTIVE
DETAILS
Income Tax Holiday
100% for 10 consecutive years - MAT @ 20% to apply
Accelerated Depreciation
Accelerated depreciation @ 80% on solar assets
Additional depreciation @ 20% on new plant/machinery in the first year
Deemed Export Benefits
Available to specified goods manufactured and not actually exported
• Advance authorisation from Directorate General of Foreign Trade
• Deemed export drawbacks
• Exemption/return of Terminal Excise Duty
Service Tax on Negative
list
Certain services exempted: transmission or distribution of electricity by an
electricity utility
Customs and Excise Laws
Various duty concessions and exemptions to RE Sector
Reduced Value Added
Tax
Certain states allow reduced VAT rates (5%) on RE projects
Additional One-Time
Allowance
Available @15% in Budget 2014 on new plant and machinery
Tax-free Grants
Grants received from holding company engaged in generation, distribution or
transmission of power
NON-TAX INCENTIVES FOR RENEWABLE ENERGY PROJECTS
INCENTIVE
DETAILS
Priority Sector Lending
• Bank loans up to INR 15 crore to borrowers for solar and biomass power
generators, wind mills, micro-hydel plants, and non-conventional energy based
public utilities
• For individual households, loan limit INR 10,00,000 lakh per borrower
Feed-in-tariffs
• When RE generators sell to state utilities under the MoU route
• Rates decided by the Central and State Electricity Regulatory Commissions
Rebates
• Available on the manufacturing of solar and wind components
• Targeted at specific types of RE technology
• Include subsidies and rebates on capital expenditures
Favourable land policies
• By state governments for RE development
• Reduce capital costs and favour ease of land allocation
Government R&D
Programmes
• Improve RE technologies
• Lead to growing performance, importance and reducing costs
Bank Loans
• Low cost financing
• Home and Home Improvement loans to individual borrowers to install rooftop
panels
FOREIGN INVESTMENT IN RENEWABLE ENERGY PROJECTS
FOREIGN DIRECT INVESTMENTS
JOINT VENTURES
100% FDI under the Automatic Route
Liberalised foreign investment approval regime
Does not require approval from the Government of Automatic approval for up to 74% foreign equity
India
participation
The Indian Company receiving FDI must:
• Report FDI receipt to the Reserve Bank of India 100% foreign investment as equity is permissible
within 30 days
with approval of Foreign Investment Promotion
• File Form FC-GPR within 30 days of issue of Board (FIPB)
shares
Shares issued to investor within 180 days of FDI
Investors can set up liaison office in India
receipt
Financial and fiscal advantages such as preferential Investors encouraged to set up RE power generation
tariff or payment security mechanism
projects on Build-Own-Operate basis
Government
technology
encourages
transfer
of
foreign
Various Chambers of Commerce, industry
associations to guide investors towards appropriate
partners
THANK YOU!
© 2015 Confederation of Indian Industry