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Renewable Energy Market in India Findings from a study by Prayag Consulting March 2010
Renewable Energy Market in India
Findings from a study by Prayag Consulting
March 2010
Outline Takeaways Global energy Indian energy scenario • Policies and regulations Potential of renewable energy in
Outline
Takeaways
Global energy
Indian energy scenario
• Policies and regulations
Potential of renewable energy in India
Focus on each renewable source/ opportunities
• Wind
• Solar
• Small Hydro
• Biomass
Takeaways • India’s sustained efforts in the past two decades are now bearing fruit as renewable
Takeaways
India’s sustained efforts in the past two decades are now bearing
fruit as renewable energy and its benefits get accepted and
acknowledged
– Emphasis on decentralized energy
Grid-interactive renewable power projects based on wind power,
biomass, small hydro and solar are mainly private investment driven,
with favorable tariff policy regimes established by State Electricity
Regulatory Commissions (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
World power report • The maximum power consumed worldwide at any given moment is about 12.5
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 ener gies 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?
Did you know? Germany and Spain rank firs
Germany and Spain rank firstt and second, respectively,
and second, respectively, inin world wind
world wind
power production
power production
Energy Scenario in India India’s total installed power capacity stands at 1,47,402.81 MW Thermal – 93,392
Energy Scenario in India
India’s total installed power capacity stands at 1,47,402.81 MW
Thermal –
93,392 MW
Hydro –
36,647.76 MW
Renewable energy –
13,242.41 MW
Nuclear sources –
4,120 MW
While some progress
has been made,
renewable energy
has still a long way to
go to make significant
impact
Renewable energy in India Grid-interactive Estimated Cumulative renewable power Potential (MW) Achievement (MW) • India established
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
f
or non conven ona energy n
ti
l
i
Solar Power
50 /sq.km.
2.12 /sq.km.
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
installed capacity is expected
Cogeneration-bagasse
5,000
1,048.73
to reach 20,000 MW by 2012
Waste to Energy (Urban
2,700
58.91
(2008)
& Industrial)
Did you know? The Indian
Did you know?
The Indian
market for clean energy is
market for clean energy is
estimated at $600 million
estimated at $600 million
with an annual growth rate
with an annual growth rate
of 25 percent (2008)
of 25 percent (2008)
Policies to promote renewable energy • Preferential tariffs are being reviewed by the State Electricity Regulatory
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
Renewable Energy Certificate (REC) • Renewable Energy generators will have two options – Either to sell
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 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
exchanged in the form of REC
The Central Agency will issue the REC to RE generators
The REC will be exchanged only in the Power Exchanges approved 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
The government is launching numerous initiatives and policies to increase the generation
of renewable energy
of renewable energy
Generation-based incentives • Wind – Indian government has launched a Generation-based Incentive of INR 0.5/ kWh
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
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
GBIs are offered by the Government to various forms of renewables over the years to
give a boost
give a boost
WIND ENERGY
WIND ENERGY
Wind energy in India • Wind electric generators of unit sizes between 225 KW and 1.65
Wind energy in India
Wind electric generators of unit sizes between 225 KW and 1.65 MW 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
4
Tamil Nadu
5530
4304.5
5
Rajasthan
4858
738.4
6
M
a
h
aras
ht
ra
4584
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,
Did you know? India is now the fifth largest wind power producer in the world, after USA,
Germany, Spain and China
Germany, Spain and China
Technology Development and Manufacturing Base Wind Electric Generators are manufactured in the country by manufacturers through
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
The trend in recent installations is moving
towards
• Better aerodynamic design
Use of lighter and larger blades
The wind industry has taken up
indi enized
g
p
roduction of blades
,
• Higher towers
gearboxes, yaw components, controllers,
• Direct drive
etc.
• Variable speed gearless operation using
advanced power electronics typically to
suit moderate wind re ime and weak
g
local grid network
An indigenization level
An indigenization level upup toto 50% has been achieved inin machines
50% has been achieved
machines
Opportunity for manufacturers • Expertise is available in plenty Major Players in India: • India appears
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
• Shriram EPC
Enercon, Suzlon and Regen Power Tech are the major
• Enercon India
companies in handling turnkey projects
Export:
Export:
• Indigenously produced wind turbines valued at about US$ 600 million were exported
• Indigenously produced wind turbines valued at about US$ 600 million were exported
to Australia, Brazil, Portugal, Spain, Turkey and USA during the year
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
• Wind turbines components such as nacelle, Hub, Bolt box assembly, etc of US$ 50
million were exported to USA
million were exported to USA
•• Wind turbine blades valued at US$ 5.4 million were exported toto China and Japan
Wind turbine blades valued at US$ 5.4 million were exported
China and Japan
Market structure in India Competitive Market Structure Overview, Wind Turbine Component Segments Few players are able
Market structure in India
Competitive Market Structure Overview, Wind Turbine Component Segments
Few players are able to
supply full product portfolio,
Core set of five or six large
scale generator suppliers
mainly exporting from
regional hubs, with new
entrants emerging
Bearings
serving multiple industries
with expanding global
production networks, while
seve a
r
l
p
it
c
h
a
nd
yaw
suppliers entering
Generators
Gear boxes
Proliferation of local
suppliers as new
markets scale
Consolidated group of
large scale suppliers are
under pressure as regional
players scale
Blades
Towers
One large independent
supplier, several
small-scale regional
players contending
with in-house
production
Fragmented
Concentrated
Market Concentration
Consolidated
Source: Emerging Energy Research, Wind Turbine Supply Chain Strategies, 2009-2020
Pro duction facili ty geographi c footprint
Lo cal
Regional
Global
SOLAR PV
SOLAR PV
Solar energy in India – bright prospects • India is home to one of the most
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 energy accounts for only 0.5% of installed base with a 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 and decentralised off-grid provision of commercial energy services
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
Did you know? The world now produces about 14 GW of solar power, about half of it
added last year
added last year
Opportunity for manufacturers Few players in the market • Opportunity for more players to enter the
Opportunity for manufacturers
Few players in the market
• Opportunity for more players to enter the fray
Major Players in India:
• Tata BP Solar
The price of solar electricity in India is still about 3 times
that of traditional grid electricity
• Moser Baer
• Signet Solara
• New players have to come with a lot of value
eng neer ng
i
i
th
a
t d i
r ve
th
e cap
it
a
l
i
n ens
t
it
y
t
o
l
ower s
id
e
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 manu facturing 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
investing Rs 500 crore
• Much of the activity seems to be focused c urrently on manufacturing — with the manufacturers
themselves possibly offering design, installation and monitoring services as well
• Expected to change in favor of a growing service industry
SMALL HYDRO POWER
SMALL HYDRO POWER
Small hydro energy in India 5,415 potential So far 674 small sites with an hydropower aggregate
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
,
identified
have been set up
in various parts of
• Out of this
the country
potential about
50% lies in
• Out of this174
Most of the
Arunachal
p rivate sector
potential is in
The viability of
Pradesh,
SHP projects
Himalayan States
these projects
Himachal
with an
as river-based
improves with
Pradesh, Jammu
aggregate
projects and in
increase in the
& Kashmir and
capacity of about
other States on
station capacity
Uttarakhand.
887 MW have
irri ation canals
g
Chhattisgarh,
been set up
Karnataka,
mainly in Andhra
Kerala and
Pradesh,
Maharashtra
Himachal
Pradesh,
Karnataka,
Maharashtra,
Punjab and
Uttarakhand
Technology is well established in India
BIOMASS POWER
BIOMASS POWER
Biomass energy in India For the last 15 years, biomass power has become an industry attracting
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,
more than 16,000 MW
of grid quality power
can be generated with
presently available
technologies
Biomass power projects with an aggregate capacity
of 703 MW through 102 projects have been installed
in the country
5000 MW of power can
be produced, if all the
550 sugar mills in the
country switch over to
modern techniques of
co- generation
Sources • http://mnes.nic.in/ • http://www.cwet.tn.nic.in/ • http://www.ireda.in/ • http://ahec.org.in/ • http://pibmumbai.gov.in/scripts/detail.asp?releaseI d=E2010PR88 • http://www.indiacore.com/renewable-energy.html • http://www.business-
Sources
• http://mnes.nic.in/
• http://www.cwet.tn.nic.in/
• http://www.ireda.in/
• http://ahec.org.in/
• 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-
incentive-scheme-for-wind-energy-
projects/379955/
Thank you For any query, contact: Email: enquiries@prayag.com Phone: 080-26593328/9
Thank you
For any query, contact:
Email: enquiries@prayag.com
Phone: 080-26593328/9