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Destination India

Making India the solar capital of the World

Saibaba Vutukuri

Co-Chairman- FICCI Solar Task Force

& CEO, LANCO SOLAR

(2)

Content

India – The Past and Future

Indian Govt Infrastructure Focus Power Requirement of India

Power Requirement of India

Renewable Energy in India

Solar Energy in India

(3)

India - The Past and Future

India’s GDP (constant prices), Rs Trillion

10.8

22.2

48.8

4.2%

6.0%

8.6%

0 10 20 30 40 50 60 70

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

1990-91 2003-04 2010-11E

GDP

% CAGR growth in GDP

From 1950-90, India’s GDP has grown at slow pace with 4.2% CAGR

With economic liberalization in 1991, Indian economy picked up & shown significant growth thereafter. In last 7 years, India’s GDP has grown at 8.6% CAGR

India GDP for 10-11 is estimated at Rs 48.8 trillion (~ 1.3 trillion US $), 8.5% growth over 09-10

India is the 4th largest economy in the world in terms of GDP (PPP) after US, China & Japan

(source: IMF, World Economic Database, 2010)

(Source: India’s

Economic Survey 10-11)

1990-91 2003-04 2010-11E

1950-51 1991-92 2004-05

India's GDP (Trillion Rs) % CAGR GDP Growth

(4)

Rising income of Indian Middle Class

9x

(Source: Mckinsey Global Institute: The ‘Bird of Gold’: The rise of India’s Consumer Market, May’2007)

Indian economy has evolved as domestic consumption economy.

Spending power of middle class has risen & income levels will increase by 3 to 4 times.

said by 2015-16, India will be a country of 53.3 million middle class households, translating into 267 million people falling in the category (As per NCAER)

India will be world’s 5th largest consumer market by 2025

Middle Class

(5)

Content

India – The Past and Future

Indian Govt Infrastructure Focus Power Requirement of India

Renewable Energy in India

Solar Energy in India

(6)

167

79

65 65 63

36 22

8 6 4

0 40 80 120 160 200

US $ bn

Strong focus to drive infrastructure growth

Infrastructure Investment (2007-12)

Current government is putting lot of emphasis on infrastructure investment and growth

Positive regulatory reforms remain a key driver of growth

Power being the major thrust area Infrastructure investment may

be doubled (~1 trillion) in 12th five year plan (2012-17)

~ US$ 500 bn

Source: Planning commission (XIth five year plan) Source: Planning commission (XIth five year plan)

State 82.5 GW

48%

Central 54.4 GW

31%

Private 36.8 GW

21%

(Source: Central Electricity Authority (“CEA”) & MNRE) Generation mix (as on 31 Mar’11)

Install Capacity (as on 31 Mar’11)

Current Power Scenario

173.6 GW

Hydro 22%

Nuclear 3%

RES 11%

Coal 54%

Gas 10%

Oil 0.7%

Thermal 65%

(7)

Content

India – The Past and Future

Indian Govt Infrastructure Focus Power Requirement of India

Renewable Energy in India

Solar Energy in India

(8)

India’s power requirement would be fourfold

Current Per capita consumption of electricity (Approx kWh)

15000

11000

8000

7000 6200

5600

1800 700

2300

USA Australia Japan Germany UK Russia China India World Avg

153

220

306

425

575

778

2006-07 2011-12 2016-17 2021-22 2026-27 2031-32 (Source: Integrated Energy Policy - Planning Commission Report 2006)

Power Requirement (GW)

Avg

India uses less electricity as compared to the world’s average

Indian Govt. plans to increase per capita consumption to 1000kWh by 2012

Currently, Demand for power is far more than supply. Average deficit stands at 10-12%.

Peak deficit is around 15%.

If India sustains 8% GDP growth year–on-year, it would require more than 750 GW of power by 2031-32.

(Source: Integrated Energy Policy - Planning Commission Report 2006)

(9)

Content

India – The Past and Future

Indian Govt Infrastructure Focus Power Requirement of India

Renewable Energy in India

Solar Energy in India

(10)

India ranked 10

th

in Clean Energy investment

Clean Energy Investment ($ billion) RE Capacity Trend (GW)

3.5

10.3

22.5

Upto 9th Plan (2002)

Upto 10th Plan (2007)

Target upto 11th plan (2012)

54.4

41.2 34

13.9 13.4

7.6 5.6 4.9 4 4

Renewable Energy capacity in India has grown 6 times in last 10 years

India attracted $4 billion in private investments for clean energy, ranked 10th among the G-20 countries.

Indian RE sector also ranked 10th for five-year growth rates for RE capacity Ranked 7th worldwide in the amount of installed RE capacity.

(Source: MNRE, Annual report 2010-11) (Source: Pew Charitable Trusts research, 2010)

(11)

India has a large potential for RE

Installed capacity – 18.8 GW (as 31Mar’11)

Source Estimated Potential

(GW)

Installed (GW) as 31Mar’11

Wind Power 48.5 13.18

Biomass &

Waste to Energy

23.7 2.67

Small Hydro 15.0 2.95

Solar Power 20-30 0.03

RE Potential in India

Wind Power 70.0%

Small Hydro Power 15.7%

Biomass & Waste to Power

14.2%

(Source: MNRE, Annual report 2010-11)

Solar Power 20-30 MW/sq.km

0.03

Wind energy constitutes largest commercially exploited RE source in India.

RE capacity is 10-11% of total grid installed capacity base

Barely 20-22% of the total potential has been tapped excluding solar energy

Today, Solar power is merely 0.2% (32.4 MW) of Grid interactive RE power

But potential of Solar power in India is far more than other RE sources

(Source: MNRE, Annual report 2010-11) 14.2%

Solar Power 0.2%

(12)

Content

India – The Past and Future

Indian Govt Infrastructure Focus Power Requirement of India

Renewable Energy in India

Solar Energy in India

(13)

India’s Solar Advantage

Specific Avg Annual Solar Energy Yield (kWh/kWp)

900-1000 1000-1200

1200-1400

1500 -1600 1500-1600 1500-1600

1700-1900 1700-1900

Germany Japan China Spain Italy Australia USA India

Rank Country

All Renew

ables

Solar Index

Solar PV

Solar CSP

1 China 72 62 67 48

2 USA 67 74 73 77

3 India 63 65 70 53

4 Germany 62 48 66 0

5 Italy 60 58 64 65

Source: DLR; Fraunhofer Institute; DOE; NREL; Sargent & Lundy; Mckinsey Solar energy potential

is virtually infinite Daily solar radiation 4-7

kWh/m2

250-300 sunny days in a year

5000 trillion kWh solar radiation incident in yr Interesting Statistics Rajasthan State has the

highest intensity of radiation (6.4 – 6.6 kWh/m2/day) 3500Km2 of area in

Rajasthan sufficient to produce 750-2100 GW

900-1000 Germany

(14)

Centre & State Govts policy support

Centre Govt even before & after JNNSM formed various conducive policies and regulatory ecosystem

The Electricity Act (2003)

The National Tariff Policy (2006) The National Electricity Policy (2005) Integrated Energy Policy (2006)

The Energy Conservation Act (2001)

State Govts are also supporting

State Solar Policies Gujarat

Rajasthan

Maharashtra, etc.

Manufacturing Policies and SEZ Schemes

The Energy Conservation Act (2001) Special Incentive Package Scheme

(2007)

Schemes

Karnataka Semiconductor Policy Gujarat Solar SEZ Policy, etc

Assist Private Sector to invest in the solar power and equipment

space in India

(15)

...& incentives across the value chain

•Preference to

Indigenous Production

•Custom & Excise Duty Concessions/Exemptions

•SEZ Tax Breaks

•Solar-specific

Renewable Energy Certificates (RECs)

•CDM Benefits

•Govt Subsidies

•Feed-in-Tariffs (FITs) support

•Solar specific Renewable Purchase Obligation

(RPOs) Manufacturing /

Solar Plant Set-up

Solar Energy Production

Use of Solar Energy

•SEZ Tax Breaks

•Access in Solar Parks

•Lower Interest Rates &

Refinancing Options

•R&D Ecosystem and HRD Support

•Govt Subsidies

•Availability of Soft loans (RPOs)

•Generation Based Incentives (GBI)

•Long term PPA

(16)

Initiative by GOI to promote Solar Power

Jawaharlal Nehru National Solar Mission

Grid Connected

Rural Electrification

Current Phase 1 Phase 2 Phase 3

Market SizeCumulative

Solar PV Farm large &

small and rooftop

More than 1860 MW of capacity already allotted under various Centre &

State Policy

These capacity likely to come up by FY 11-12 More than Rs. 27000 Cr

(~6 billion US $) of investments required

Currently….

3.3 GW 1.3 GW

0.3 GW 0.13 GW

2022 2017 2013 2009

*

**

Rural Electrification

Current Phase 1 Phase 2 Phase 3

SizeCumulative

Other Off Grid

Solutions

* : Remote village electrification program of about 10,000 villages

** : 20 Million solar lighting systems for rural areas

investments required

More than 700 MW

capacity to be allotted in current financial year Likely commissioning of

projects by FY 12-13 About Rs 12000 Cr

(~2.6 billion US $) of investments required

Next….

(17)

India will be the next solar capital of the World

2.0

2.7

15.6

23.2

0.7

5.2

13.1

44.8

68.0

0 10 20 30 40 50 60 70 80

0 5 10 15 20 25 30 35

Cumulative Solar Capacity (GW)

Annual Solar Market (GW)

(Source: KPMG’s Solar Market Potential Model)

Till date growth was in Europe

CAGR of ~ 60% for both CSP & Solar PV technology in the last 5 years in the world

Source: REN21

Next growth will be in India.

By 2021-22, cumulative Solar capacity will be 68 GW

Key Drivers

Strong Government support Decreasing cost of Solar power Huge Off grid requirement of

Agriculture/Rural segment

0 0

2011-12 2014-15 2017-18 2020-21 2021-22

Annual Solar Market Cumulative Solar Capacity

(18)

Tremendous growth projected in Off-Grid segment

Annual Solar Market Off-take (MW) 17-18 18-19 19-20 20-21 21-22 Grid-connected Solar Potential

Residential Rooftop 1024 1356 3600 5341 7677

Utility Scale Solar Power (CSP and PV) 1043 2229 3570 5084 8146 Off-grid Solar Application Potential

Solar-powered Agriculture Pumpsets 268 563 3969 4639 6730

Solar-powered Telecom Towers 318 380 414 562 612

Total Annual Solar Market 2653 4528 11553 15626 23165

(Source: KPMG in India’s The Rising Sun, May 2011)

With decrease in cost of solar power, the residential rooftop and agriculture will be fastest growing segment

Solar power, with its ability to provide day time power, can meet the agriculture power demand from the farmers without being connected to grid

Solar power is already competitive with the effective price of diesel based power for Telecom towers. It has potential to replace ~30% of diesel consumption.

(19)

Grid parity in next 10 years

Levelized Cost Comparison of Utility-scale PV and Conventional Power at Grid

(Source: KPMG’s Solar Grid Parity Model

*Note that the CDM benefit of INR 0.60 / KWH has been factored in the Solar Costs)

In India grid parity to happen in 2019-20 when the levelized tariffs from solar

power are comparable with the levelized tariffs of grid power

(20)

Significant investment opportunity exists

2012-17 2017-22

USB Bn USB Bn

Small Scale Solar Market (Rooftops, Agriculture

Pumpsets, Telecom, Solar Lighting) 5 64

Utility-scale Solar Farms (CSP & PV) 15 28

Cumulative Investments in 5 year periods 20 92

Supporting Industries Solar Specific Vendor Market

Solar Investments in India

2012-17 2017-22 USB Bn USB Bn Solar PV Segment

Inverter Market 1.8 12.3

Solar CSP Segment

Parabolic Troughts 0.6 1.8

Mirrors 0.4 1.2

Subtotal 1 3

Total 2.8 15.3

2012-17 2017-22 USB Bn USB Bn Solar PV Segment

EPC Services Market 1.5 7.5 Solar CSP Segment

EPC Service Market 0.5 1.6

Civil Works 0.2 0.6

Subtotal 0.7 2.2

Total 2.2 9.7

Supporting Industries Solar Specific Vendor Market

(Source: KPMG’s Solar Market Size Model)

(21)

India will be next Manufacturing Hub

Polysilicon Wafering Cells Modules

Capacity

(MW) None Negligible ~ 500-600 ~1000-1200

Moser Baer, Tata BP, Indo Solar, Solar

Current Manufacture rs

Lanco is setting-up a plant

Maharishi Solar, Lanco are setting up plants

Indo Solar, Solar Semiconductor, Jupiter, Webel, BHEL, BEL, CEL Thin Films: Moser Baer

More than 40 manufacturers

Investment

Opportunity Very High Very High High Medium

(22)

Different financing opportunities as sector evolves

Commercial Banks

NSM States

RPO

Near Term Medium Term Long Term

FY 11- 13 FY 14-17 FY 18-22

Phase-1 Phase-2 Phase-3

Gujarat Policy Other State Policies

Launch RPO /REC Increasing RPO% 3% Solar RPO by 2022

FI such as IREDA

International Development banks/agencies

Govt Lending/Subsidies Private Equity/VC

Public Markets

Very high High Medium Low Very low

Source: EY Analysis, presented at Global Solar Investment Summit, Apr11, Mumbai Above is a qualitative view on the level of different types of

financing as the solar sector evolves in India

(23)

Concluding Remarks

India’s solar potential among highest in the World and barely a fraction of it has been exploited.

Sufficient demand generated through Govt support - JNNSM & States policies.

Tremendous growth opportunity exists in Off-Grid segment.

Plethora of opportunities along the entire manufacturing value chain and ecosystem as current capacities are insufficient to meet the growing demand.

demand.

Cost reduction through economies of scale in manufacturing/projects is possible

Solar Power is the solution to India’s growing needs

(24)

References

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