Renewable Energy India Expo

Report
5th Renewable Energy 2012 Conference:
Wind Edition
May 2012
Power scenario in India
Growing importance of renewable energy
Break up of installed power generation capacity
►
Renewable energy accounts for
approximately 12% of a total 200
GW of power generation capacity
installed in India.
12%
(as on 31 March 2012)
Coal
Gas
20%
►
►
►
Demand for power in India has been
increasing due to the rising
population, growing economy, and
changing lifestyles.
Despite substantial capacity
additions, the power sector is still in
shortage of energy.
Diesel
56%
2%
1%
9%
Source: CEA
24.5
20.0
16.8
14.4
12.3
+2.4
+4.5
+3.2
+2.1
+2.1
FY07
Source: MNRE, CEA
Page 2
Renewable
CAGR
19%
Peak demand shortage averages
around 12%.
Renewable energy installed capacity
has grown at a healthy CAGR of
19% over FY07-FY12.
Hydro
Growth of renewable energy installed capacity in India (GW)
10.2
►
Nuclear
FY08
FY09
FY10
FY11
FY12
Renewable energy: growth story
Wind—the mainstay of renewable energy in India
►
►
►
►
►
Wind energy, with over 16 GW installed capacity,
accounts for nearly 66% of the renewable energy
installed in India.
Installed wind energy capacity in India has grown
at a CAGR of 19% (FY’07-FY’11).
The states of Tamil Nadu, Maharashtra and
Gujarat are the leaders in installed wind energy
capacity.
As per various estimates, the total potential for
wind energy is around 46 - 70 GW.
MNRE envisages wind to constitute ~70% of
overall renewable capacity translating to 2-3 GW
of new capacity per year till 2020.
Resource
Estimated
potential (GW)
Wind
48.5
16.2
15.4
3.3
Biomass
23.0
3.0
20-30 MW/sq. km
2.1
As of 31 Jan 2012
Source: MNRE, Ernst & Young analysis
Page 3
(As on 31 Jan 2012)
Solar
2%
Others
6%
Biomass
13%
Small
hydro
13%
Wind
66%
Source: MNRE
Biomass includes bagasse cogeneration; Others includes Waste to power
Growth of Wind installed capacity in India (GW)
CAGR
19%
Installed
capacity (GW)
Small hydro
Solar
Renewable energy installed capacity split in India
7.1
+2.0
+2.4
+1.6
+1.4
+1.7
FY07
11.8
10.2
8.8
16.2
14.2
FY08
Source: MNRE
FY09
FY10
FY11
Jan' 12
Ernst & Young Renewable Energy Attractiveness Indices
India is globally one of the most attractive destinations for wind energy
76
China
70
Germany
67
US
66
UK
►
64
India
61
Canada
Italy
58
France
58
54
Sweden
52
Poland
Wind
All renewables
Source: Ernst & Young Renewable Energy Attractiveness Index, February 2012
Page 4
►
►
The Ernst & Young Renewable
Energy Country Attractiveness
Indices ranks renewable energy
markets, their renewable energy
infrastructure and suitability to
various technologies.
The indices are forward looking
and take a long-term view of the
markets, ranking countries with
high unexploited potential higher
on the index.
India ranks fourth on EY’s most
recent all renewables
attractiveness index and fifth on
the wind index owing to its vast
unexploited potential and
favorable government support.
Wind energy investment in India:
experiencing growth but challenges remain
►
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►
India is emerging as one of the fastest growing
countries in terms of renewable energy
investment.
India’s investment in renewable energy totaled
US$10.4 billion in 2011, growing 54% over
2010 — the second fastest among G-20
countries.
The wind energy sector attracted US$4.6 billion
in 2011, or 44% of the total, adding 2.8 GW of
capacity.
The wind energy sector attracted 67% of all
VC/PE capital and 98% of all new-build asset
finance, raised YTD in India, across all forms of
renewable energy.
Multilateral agencies such as the World Bank,
International Finance Corporation (IFC), and
Asian Development Bank (ADB), as well as bilateral agencies such as KfW (German
Development Bank) have also stepped up their
assistance to the sector in the last few years.
New investment in clean energy, 2004 – 2011 (US$ b)
350
5.4%
300
3.8% 3.7% 3.3% 3.7%
250
3.9%
2.3% 1.9% 2.7%
200
150
100
50
0
2004 2005 2006 2007 2008 2009 2010 2011 1Q'12
Europe
United States
China
India
India as % of global
New investment in wind energy in India, 2004 –
1Q’12 (US$ m)
Asset finance
Public markets
VC/PE
6,000
5,000
4,000
3,000
2,000
1,000
0
2004 2005 2006 2007 2008 2009 2010 2011 1Q'12
Page 5
Changing paradigm of wind power:
GBI and REC are likely to transform the wind power space
2012
2003
2003-09:
Investment Option
REC
Depreciation driven
NPV/ IRR driven
Balance sheet
financed
GBI
Packaged solution
RPO
Project finance
EPC/ EPCM etc
Multi-sale options
Sale to utility only
Annuity business
2010- onwards:
Business Option
FIT
Risk-return
framework
Together, the Generation Based Incentive scheme and Renewable Energy
Certificates are likely to transform the structure of the wind energy industry in India.
However, the repeal of the Accelerated Depreciation tax break will have an adverse
impact on investment in the sector
Page 6
RPO regulations:
a key step towards the promotion of renewable energy
Progressive targets
►
Renewable Purchase Obligations (RPOs)
require the following obligated entities
►
►
►
distribution licencees
captive power consumers
open access consumers
to purchase/generate a certain percentage of
their total electricity requirement from eligible
renewable sources.
State
Segment
FY10-11
FY11-12
FY12-13
Wind
4.5%
5.0%
5.5%
Solar
0.25%
0.5%
1.0%
Others
0.25%
0.5%
0.5%
5.0%
6.0%
7.0%
Biomass
1.75%
2.00%
Wind
6.75%
7.50%
Total
8.5%
9.5%
Gujarat
Total
Rajasthan
8.0%
Source: Respective State Electricity Regulatory Commission orders
►
►
To enhance compliance to the RE purchase obligations, a tradable market based instruments,
Renewable Energy Certificates (RECs), have been launched.
The REC mechanism will enable even states with lower RE potential to target higher RPOs and at the
same time encourage developers to set-up RE facilities at most optimal locations.
Sold at preferential
tariff
Renewable
energy sources
Page 7
Electricity
Sold at nonpreferential tariff
RECs
Trade/
Transact
Critical success factors (1 of 2)
►
Technological
factors
►
►
►
Financial
factors
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Page 8
Power evacuation infrastructure has not kept pace with the development of
wind power plants. Tamil Nadu provides an example of a state where many
commissioned wind plants are unable to evacuate the energy generated
because of lack of infrastructure.
Wind power generated fluctuates depending on wind speeds and availability.
The bulk generation of such intermittent/variable renewable energy creates
significant disturbances to the grid.
The repowering of wind turbines, or the replacement of old and small
turbines with larger and more powerful turbines, would lead to enhanced
generation from the same site. However, this process has its own limitations
such as ownership, cost, incentive and policy issues.
Continuous losses are being incurred by many state discoms, which is
leading to significant delays in payments to wind generators.
► This also has a ripple effect on the lenders, who complain of nonregular repayment of loan installments.
Mechanism like REC financing and green bonds need to be strengthened
and promoted as an alternative way to close the funding gap.
The implementation of the Direct Tax Code (DTC) and the Goods and
Services Tax (GST) will result in an increase in the cost structure for wind
energy projects.
Critical success factors (2 of 2)
Regulatory
factors
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Institutional
factors
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Page 9
Strict implementation of RPO is a challenge and sector growth trajectory
depends on the achievement of RPO targets set by state governments.
The removal of the accelerated depreciation (AD) benefit will weigh down on
the investments in the wind energy sector.
The generation based incentive (GBI) scheme was launched in 2009 to provide
a level playing field to players across various classes and to encourage energy
generation as opposed to only capacity additions.
A favorable law and order system with single window clearance system is
required .
Diversion of land and obtaining environmental and forest clearance is a long
drawn procedure which leads to delay or suspension of projects.
India needs trained and skilled manpower to work in the sector to meet growth
targets.
Structured training programs at institutions and development of industrial
training institutes (ITIs) for imparting technical skills to locals will create
employment and increase the availability of trained manpower.
The wind turbine and component supply chain needs to be strengthened to
reliably and efficiently meet the growing demand.
Thank you

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