Renewable Watch november 2017 by Mohit Shrimal

Volume No. 8 Issue No. 1

PUBLISHING

EDITORIAL

Alok Brara

EDITOR Nandita S. Kochhar (Senior Editor, Copy)

EDITORIAL OPERATIONS Mudita Mehta (Director) Devangshu Datta (Consultant) Shyama Warner (Consultant)

EDITORIAL Rama Sudhakar Patnaik (Consultant)

With this issue, we celebrate our seventh anniversary. As before, we use this occasion to share our take on the state of the sector. A reflection on the past year indicates a lacklustre performance by the renewable energy sector, in terms of capacity addition as well as new capacity allocation across segments. The year has also witnessed a number of transformational changes. One of the biggest developments has been the wind industry moving away from the FiT structure to competitive bidding. The tariffs that have emerged from this development spell good news for the discoms, which will be able to procure this new wind power at Rs 2.64 per kWh.

Nidhima Gambhir (Associate Copy Editor) Sayantanee Ghosh (Sr. Subeditor) Sugandha Khurana (Sr. Subeditor)

RESEARCH Associate Director: Dolly Khattar Sr. Research Analyst: Ashay Abbhi Analyst: Puneet Kumar Arora

BUSINESS DEVELOPMENT Raman Dev Narang (Senior Vice-President)

But the same cannot be said for the industry. Given that only 2 GW of capacity has been tendered so far, and there is an unsaid “freeze” on any new capacity allocation through the FiT route, the project pipeline is running dry. In the first half of 2017-18, only about 420 MW of wind power capacity has been commissioned, which is merely 10 per cent of the set target of 4 GW for the year. Like wind, the performance of the solar segment has also not been that impressive. Post the Bhadla Solar Park tender that was concluded in May 2017, no new tender has been opened. As of September 2017, only 2.3 GW of additional ground-mounted solar capacity came online against a target of 9 GW for 2017-18. In the rooftop solar space as well, only 134 MW has come online against a target of 1,000 MW.

Mohit Shrimal (Manager)

DESIGN Joybroto Dass (Art Director)

The slowdown in capacity addition and allocation has been accompanied by a crash in tariffs for both solar (Rs 2.44 per kWh) and wind power (Rs 2.64 per kWh), thereby raising concerns over the viability of projects set up at these tariffs.

Jaison Jose (Graphic Designer)

ADMINISTRATION Jose James

CIRCULATION Sumita Kanjilal

PHOTOGRAPHY Pallee

PRINTING/PROCESSING IPP Ltd

OFFICE B-17, Qutab Institutional Area, New Delhi 110 016

The demand for power, meanwhile, also seems to have slowed down. If this continues, it will have a major impact on the discoms’ willingness to buy additional power, be it from thermal or renewable sources of energy. However, there is hope that the focus on rural electrification, industrialisation and 24x7 supply, and the promotion of electric vehicles will reverse this trend. On the positive side, a recent announcement by the new minister for power and new and renewable energy to tender 21 GW of solar and wind power capacity in 2017-18 has given some assurance of business continuity to the industry. Another positive has been the improvement in discom finances, helped by the UDAY scheme, as the debt and interest costs have been significantly reduced. Moody’s upgrade of India to a solid investment grade level is yet another piece of good news. This will be especially beneficial for renewables where sectoral lending options for domestic financial institutions and banks are limited and interest costs are an important part of the project cost.

Phone +91-11-4103 4600-01 Fax +91-11-2653 1196 Email: info@indiainfrastructure.com Website: renewablewatch.in

Now, what’s important is that the government supports these moves through relevant policy and regulatory interventions while also drawing up a clear roadmap for tapping emerging opportunities such as energy storage and renewable hybrids.

Image courtesy: shutterstock images

November 2017 ● Renewable Watch ● 3

CONTENTS

ANNIVERSARY ISSUE

106

20 Testing times

Company highlights

A year of big developments but small achievements

Key developments in the past 12 months

124

Segment review

Steady flow of funds

Progress so far and future outlook

Significant domestic and foreign capital infusion despite cautious sentiment

CONTENTS NEWS BRIEFS

TRENDS AND DEVELOPMENTS

Testing times: A year of big developments but small achievements Dynamic changes: Policy and regulatory moves keep pace with emerging sector needs New lows: Aggressive bidding and fewer projects send tariffs tumbling Uncertain future: Stay order delivers another blow to the REC market SEGMENT REVIEW Coming of age: Solar power segment begins to show signs of maturity Still winds: Ultra-low tariffs slow down segment growth Untapped potential: Lack of a clear policy framework stymies bioenergy expansion

4 â&#x2014;? Renewable Watch â&#x2014;? November 2017

No silver lining: SHP segment beleaguered by policy 50 uncertainty and investor reluctance Promising technologies: Industry focuses on emerging 52 renewable segments Sluggish growth: Off-grid segment faces multiple challenges 54

24 COMPANIES

Company highlights: Key developments in the past year

FINANCE

Steady flow of funds: Significant domestic and foreign capital infusion despite cautious sentiment Key financings: Major debt and equity deals

106

124 126

36 WORLD VIEW

42 46

Global trends: Market snapshot and growth potential

132

PHOTOGALLERY

136

CONTENTS

ANNIVERSARY ISSUE

R.K. Singh, Minister of State (Independent Charge) for Power and New and Renewable Energy 58 “We are confident of exceeding the 175 GW target”

Sudhir Garg, Ministry of Railways 70 “Indian Railways is very conscious about energy savings and efficiency”

Anand Kumar, MNRE “Renewable energy is the only way India can move forward”

Ajay Jain, Government of Andhra Pradesh 72 “Andhra Pradesh has been promoting renewable energy in a big way”

Gireesh B. Pradhan, CERC “The market design needs a relook to revive demand growth”

Sanjay Malhotra, RRVPN “We aim to provide reliable, cost-effective power”

I.S. Jha, Powergrid “The transmission network has become an enabler for ongoing reforms”

Ankur Gupta, Government of Haryana “Haryana has a huge target for rooftop solar power”

K.S. Popli, IREDA “India will be a key player in the global green bond market”

Anil Sardana, Tata Power 78 “The PPA structure needs to be strengthened”

Jatindra Nath Swain, SECI “There is an expectation that tariffs will fall further”

PERSPECTIVE

Viability concerns: Developers’ views Waiting to take off: Manufacturers’ opinion Positive sentiment: Financiers’ views

80 84 90

PEOPLE

Changes at the top

138

New records, new challenges: Consultants’ perspective 94 Storing renewable energy: A sizeable but untapped 102 opportunity

power projects REC trading on IEX and PXIL: Growth between October 2016 and October 2017

146

DATA AND STATISTICS

Renewable energy growth: Progress in 2017-18, by programme/scheme Renewable energy capacity: By source and by state Solar manufacturing: Installed and operational capacities Power from waste: Current and upcoming MSW-based

6 ● Renewable Watch ● November 2017

140 142 143 145

FORM IV Publisher: Alok Brara Printer: Alok Brara Owner: India Infrastructure Publishing Private Limited Editor: Alok Brara Printing Press: International Print-o-Pac Limited, C-4 to C-11, Hosiery Complex, Phase-II Extension, Noida 201305 Place of Publication: B-17, Qutab Institutional Area, New Delhi 110 016

NEWS BRIEFS

National News

ANNIVERSARY ISSUE the court dismissed a petition filed by the Indian Wind Energy Association (IWEA) that asked the court to intervene in the auction. An extension of seven days has been provided to the IWEA to appeal the order. Earlier this year, the IWEA had petitioned against the proposed reverse auction stating that the commission’s tariff order for signing wind PPAs at Rs 4.19 per kWh is valid up to March 31, 2019, and that the tariff should be applicable to new capacities till the said date.

he Ministry of New and Renewable Energy (MNRE) has issued the Solar Photovoltaics, Systems, Devices and Components Goods (Requirements for Compulsory Registration) Order, 2017 for the quality control of solar equipment. According to the order, manufacturers will be required to register with the Bureau of Indian Standards for using a standard mark, in compliance with the Indian quality standard. The order will come into effect from January 1, 2018.

he Gujarat Electricity Regulatory Commission has amended its net metering regulations for grid-connected rooftop solar projects in the state. The new regulations, which came into effect from October 6, 2017, will be applicable to all rooftop projects installed in Gujarat. The changes include capping the maximum capacity of a rooftop solar photovoltaic (PV) system on a consumer’s premises (except residential consumers) to a maximum of 50 per cent of the consumer’s sanctioned load or contract demand. However, in the case of residential consumers, the capacity of a rooftop system will not be subjected to the sanctioned load or contract demand. Moreover, it is mandatory for the new applicants to mention the capacity of the planned rooftop solar project in their application to the discoms.

Regulations

he Central Electricity Regulatory Commission (CERC) has released the Grant of Connectivity and General Network Access [GNA] to the Inter-State Transmission System and Other Related Matters Regulations, 2017. Under this, a 100 MW project will be charged Rs 400,000, a 100-500 MW project will be charged Rs 600,000, a 500-1,000 MW project will be charged Rs 1.2 million and a project over 1,000 MW will be charged Rs 1.8 million for connectivity and GNA. The CERC has invited comments on the draft regulations till December 14, 2017.

he proposed electricity amendment bill will include penalty provisions, stricter enforcement of power purchase agreements (PPAs) and renewable purchase obligations (RPOs). The move comes in the wake of renewable energy producers facing offtake issues on power that they have not already tied up for sale through longterm PPAs. It will also ensure that all discoms have PPAs to cover their 100 per cent RPO requirement. Meanwhile, all state energy ministries have been advised to set upper limits for cross-subsidisation charges in tariffs to supplement industry competition.

he Appellate Tribunal for Electricity (APTEL) has directed the Haryana Electricity Regulatory Commission and the Haryana Power Purchase Centre to allow electricity injection from Balarch Renewable Energy’s 1 MW solar power project. According to the order released by APTEL, a developer is entitled to inject electricity into the grid at the tariff approved by the CERC for 2016-17, a condition which is applicable in this case.

he Gujarat High Court has ruled in favour of Gujarat Urja Vikas Nigam to conduct a 500 MW wind auction. The decision came after

8 ● Renewable Watch ● November 2017

he Assam Electricity Regulatory Commission (AERC) has released regulations for generation and supply of renewable energy from mini-grids (10 kW to 500 kW of installed capacity) and microgrids (up to 10 kW of installed capacity) in the state’s rural areas. The generated electricity from these systems will contribute towards the RPO of the state. Under the regulation, the AERC will require all existing micro/mini-grid projects to comply with the Central Electricity Authority [CEA] Regulations, 2010; CEA Regulations, 2012; and CEA Regulations, 2006. Moreover, the microgrid and mini-grid operators will be responsible for the operations and maintenance (O&M) of the primary distribution network as well as the cost of the interconnection network from the renewable energy system to the interconnection point. In addition, micro/minigrid operators will mutually decide on the supply tariff and the billing and payment mechanism with their consumers, after approval from the AERC.

he Rajasthan Electricity Regulatory Commission has fixed a generic levellised tariff of Rs 3.93 per kWh and Rs 3.66 per kWh for solar power projects with and without accelerated depreciation respectively. The tariffs will be applicable to all those solar power projects commissioned on or before March 31, 2019, the PPAs for which will be signed on or before March 31, 2018.

he Karnataka government has annulled a Karnataka Electricity Regulatory Commission (KERC) order mandating the commission to sign wind PPAs in the state. The state government invoked Section 108 of the Electricity Act, 2003, which allows it to get involved in the policy for public interest. In addition, the state government has directed the KERC to approve PPAs at the rate of Rs 4.50 per

NEWS BRIEFS kWh for 270.5 MW of wind projects. Moreover, for wind projects to be commissioned before March 31, 2018, developers will have to enter into PPAs with the discoms at a tariff of Rs 3.74 per kWh, fixed by the KERC. The developer will pay Rs 2 million per MW as bank guarantee to Karnataka Renewable Energy Development Limited for projects to be commissioned from September 4, 2017 to March 31, 2018.

Projects

he Solar Energy Corporation of India (SECI) has issued a 100 MW wind project tender for central public sector enterprises. The projects, which will be connected to the interstate transmission system, will be developed on a build-own-operate (BOO) basis and the power generated will be purchased by SECI at a tariff of Rs 2.64 per kWh for a period of 25 years. The tender includes construction of the wind project as well as the transmission network up to the grid connection point. For each wind power project, developers can bid for a maximum and minimum of 100 MW and 50 MW capacities, respectively.

ECI has released a tender for the development of support services for facilitating power trading at SECI in New Delhi. Category I or Category II trading licensees registered by the CERC are eligible for participation in the tender, whereas technical and financial joint ventures (JVs) as well as consortiums of companies are barred from it. The contract will be valid for two years with a possible extension of one year. The successful bidder will manage SECI’s control room and all power scheduling-related activities, in compliance with CERC regulations and norms. The bid submission deadline is December 11, 2017.

ailway Energy Management Company Limited has released engineering, procurement and commissioning (EPC) tenders for developing a total of 32 MW grid-connected rooftop solar projects at offices, buildings and railway stations of the zonal railways. The public-private partnership projects will be developed on a design-build-finance-operate-transfer basis. The successful bidder will supply power from the commissioned rooftop solar projects and provide O&M services for 25 years after commissioning. A central financial assistance of Rs 16,250 per kW and Rs 39,000 per kW will be provided upon the achievement of 80 per cent of the target or above within the allotted time for general category and special category states respectively. The bid submission deadline is December 21, 2017.

TPC SAIL Power Company Limited (NSPCL) has released an EPC tender to develop solar projects aggregating 25 MW in Paschim Bardhaman district of West Bengal. The last date for the submission of bids is December 22, 2017. The successful bidder will have to provide O&M services for the project and transmission systems for a period of five years from the date of successful completion of the trial run. In addition, the bidder will be responsible for interfacing the plant with the transmission network at 33 kV. The pro10 ● Renewable Watch ● November 2017

ANNIVERSARY ISSUE ject will be financed by NSPCL.

IAL Infrastructures Limited, the wholly owned subsidiary of Cochin International Airport, has released EPC tenders to develop solar power projects totalling 9.9 MW of capacity. Out of this, 2.4 MW will be developed as a carport system in two parts – Part A for civil and allied works and Part B for developing 2.4 MW grid-connected solar on the carport’s roof. Bidding for the two parts will be combined. The remaining 7.5 MW capacity constitutes multiple projects. These are a 5.3 MW project for development near the duty-free godown building; 1 MW near the Terminal 3 entry; 0.7 MW at the periphery of the existing 14.4 MW solar project; 0.4 MW over a stormwater drain at the western boundary; and a 0.1 MW rooftop project above the flat roof buildings near the new domestic terminal premises. The total estimated cost for the projects is Rs 510 million and the bid submission deadline is December 6, 2017.

olar power EPC projects have been tendered by various government agencies. These include the 2 MW Military Engineering Services solar project in Jamnagar, Gujarat; a 90 kW rooftop solar project by the Maharashtra Energy Development Agency in Pune, Maharashtra; a 40 kW solar rooftop project in West Bengal; and a 30 kW rooftop solar project by the Nashik Municipal Corporation.

1.5 MW small-hydro power plant has been commissioned in Biaras Dras, Kargil, Jammu & Kashmir. It is the first project under the Prime Minister’s Ladakh Renewable Energy Initiative. It was developed by the Kargil Renewable Energy Development Agency. According to the Press Information Bureau, around 1,000 families would benefit from the electricity generated by the power plant, which was entirely funded by the MNRE and cost approximately Rs 170 million.

ajasthan Renewable Enegy Corporation has released an EPC tender for 18 MW of grid-connected rooftop solar projects to be developed in Rajasthan under the company’s rooftop power generation programme for 2017-18. The minimum and maximum capacity at a single site is 1 kW and 500 kW respectively. The estimated project cost for the entire capacity is Rs 1.26 billion, for which the completion timeline is nine months from the date of issue of the letter of award. The successful bidder can avail of central financial assistance amounting to 30 per cent of the project cost. Besides, the successful bidder will provide O&M services as well as free replacement warranty on spare parts against manufacturing defects for a period of five years after the project commissioning.

ajasthan Electronics and Instruments Limited has released an EPC tender for 15 MW multiple solar projects on behalf of the Oil and Natural Gas Corporation (ONGC). These may be grid connected rooftop solar or small solar projects with sizes ranging from 1 kW to 500 kW at a single location or building. The projects will be set up on or near ONGC buildings in the states of

NEWS BRIEFS Gujarat, Uttarakhand, Assam and Tripura. In addition, the successful bidder will develop the project under the capex model, as well as provide energy storage solutions and O&M services for five years. To be eligible for bidding, a developer has to bid for the entire capacity offered in at least one state. The eligible bidder can also bid for the entire capacity in all the four states before November 8, 2017.

adhya Pradesh Urja Vikas Nigam Limited has released an EPC tender for 40 MW of grid-connected rooftop solar projects to be developed at various locations in Madhya Pradesh. The permissible bidding capacity at a single location is between 1 kW and 500 kW. The projects can have a net metering connection or can consume power within the premises with no export of power. The projects will be developed under the renewable energy service company (RESCO) mode and the successful bidder will be responsible for the O&M of the project for 25 years. The estimated project cost is Rs 2.4 billion and the bid submission deadline is December 6, 2017.

unjab State Power Corporation Limited (PSPCL) has released an EPC tender on a BOO basis for the development of a 100 MW solar power plant on the premises of the Guru Nanak Dev Thermal Plant in Bathinda, Punjab. The proposed plant will be located near the 66 kV and 132 kV/220 kV substations and 499 acres of land will be provided by the Punjab government for 25 years on lease. Neither any upper tariff cap has been fixed by PSPCL, nor any provision of a payment guarantee has been notified. However, developers are eligible for the MNRE’s incentive to develop solar projects on wasteland and in hilly areas.

he Delhi Jal Board has tendered an EPC project for developing grid-connected rooftop solar capacity aggregating 4 MW at Wazirabad Water Works, Timarpur, in Delhi. A single bidder has to bid for the entire capacity and will be responsible for the O&M of the project for 25 years. The project completion period is nine months from the award of contract and the bid submission deadline is December 7, 2017.

he Jharkhand Renewable Energy Development Agency (JREDA) has issued an EPC tender for the electrification of 47 villages under the Deendayal Upadhyaya Gram Jyoti Yojana. The villages are located in West Singhbhum, Chatra, Sahibganj, Gumla and Hazaribagh districts of the state where micro solar grids are proposed to be set up for rural electrification. The estimated project cost is Rs 100.93 million and the completion time frame is 45 days from the issue of the letter of award. The successful bidder will provide O&M for five years.

he Lakshadweep Energy Development Agency (LEDA) has invited expressions of interest (EoIs) for developing floating solar projects worth 10 MW in and around Lakshadweep’s nine islands. The EoIs call for the best technology available to aid the administra-

12 ● Renewable Watch ● November 2017

ANNIVERSARY ISSUE tion for preparing a detailed project report and a request for proposal (RfP). In addition, the bidders have been asked to prepare their offers after the verification of the topography and climatic conditions of the islands, for which LEDA has promised all logistics support.

zure Power has emerged as the lowest bidder by quoting a tariff of Rs 3.14 per kWh to develop 250 MW of solar projects tendered by NTPC Limited under the domestic content requirement (DCR) category. Other major bidders included ReNew Power, which quoted Rs 3.15 per kWh to develop 150 MW, and Waaree Energies, which quoted Rs 3.95 per kWh to develop 25 MW. The projects will be developed across the country.

ata Power Renewable Energy Limited (TPREL) has commissioned two projects having a combined capacity of 55 MW in Maharashtra and Gujarat, under the DCR category. This includes a 25 MW grid-connected solar project at the Charanka Solar Park in Gujarat that was commissioned ahead of schedule. The project is spread across 113 acres, for which a 25-year PPA has been signed with SECI. The second project of 30 MW capacity is located in Satara district in Maharashtra. It is spread over 140 acres and is expected to produce over 62 million kWh of solar power annually. Both projects were developed under the viability gap funding programme and PPAs were signed at Rs 4.43 per kWh.

DEN, a JV between EREN Renewable Energy and EDF Energies Nouvelles, has developed and commissioned three solar projects with a combined capacity of 87 MW. The projects comprise two 36 MW solar projects in Uttarakhand and a 15 MW project in Madhya Pradesh. EDEN has a 49 per cent stake in its Uttarakhand projects, while the project in Madhya Pradesh is entirely owned by the company. A PPA for 25 years has been signed for all projects.

he Clean Energy Access Network (CLEAN) has issued an RfP inviting battery energy storage technology providers and mini-grid developers to develop a pilot project to demonstrate lithium-ion applications in mini-grids. The mini-grids are expected to be in the range of 1520 kW, generating 80-100 kWh of energy per day. In the case of bidders designating a new site based on Then CLEAN’s specifications, that is, the balance of system and the cost of system will be shared among CLEAN (50 per cent), the developer (30 per cent) and the battery provider (20 per cent), and the ownership of the battery will remain with the developer. The United States Agency for International Development will be funding the pilot project.

jaas Energy has been awarded an EPC contract by the Assam Energy Development Agency for the development of a 2 MW, gridconnected rooftop solar project on an aggregated basis in the state. The project will be developed under the RESCO model. Previously, the company was awarded contracts for developing rooftop

NEWS BRIEFS projects from JREDA (8.5 MW rooftop solar), SECI (20.03 MW), Oil India Limited (500 kW) and the West Bengal Renewable Energy Development Agency (1.5 MW).

Finance

he Government of India and the World Bank have signed a $100 million loan and grant agreement to develop solar park infrastructure in the country. The first component of the funding comprises a $75 million loan from the International Bank for Reconstruction and Development (part of the World Bank) with a five-year grace period and a maturity of 19 years, and a $23 million loan from the Clean Technology Fund (CTF) with a 10-year grace period and a maturity of 40 years. The second component of $2 million is an interest-free CTF grant.

he State Bank of India (SBI) and the World Bank have jointly announced the provision of Rs 23.2 billion in credit facilities for seven Indian solar companies. The funds will be used for developing grid-connected solar rooftop projects totalling 575 MW of capacity. The companies receiving credit facilities are the Adani Group, Hinduja Renewables, JSW Energy, Tata Power Renewable, Azure Power, Cleantech Solar and Hero Solar Energy. According to the Press Trust of India, the line of credit will be made available under the SBI-World Bank Grid Connected Rooftop Solar PV Programme.

he US-India Clean Energy Finance initiative will provide $900,000 funding to solar companies in India to encourage the adoption of distributed solar power in the country. The funds can be utilised for a variety of project preparatory activities, including legal, technical, financial, environmental and social impact assessments. The first class of project developers selected for receiving the grant are Argo Solar, HCT Sun India, OMC Power, SMG Ventures and SunFunder.

reenko has raised Rs 30 billion through the sale of onshore rupeedenominated bonds set to mature in 2027. The bonds have a 10year tenor and a coupon rate of 8.75 per cent. Moreover, the bonds have a call option after five years and the interest payment will be calculated semi-annually. The sale was made through Greenko’s special purpose vehicles (SPVs) operating solar projects in India. The 10 SPVs will develop and operate a 500 MW solar power project at the Kurnool Solar Park in Andhra Pradesh. JP Morgan Chase has arranged the offering for Greenko’s SPVs.

inland’s state-controlled power utility Fortum OYJ has hired Barclays Bank to sell a stake in its operational solar assets in India. All of the projects for which the company is seeking partners are fully operational and are located in the states of Rajasthan (75 MW), Madhya Pradesh (10 MW) and Karnataka (100 MW).

Miscellaneous

he Indian government has announced grants worth Rs 1.05 billion to smart cities for purchasing electric vehicles (EVs) and developing

14 ● Renewable Watch ● November 2017

ANNIVERSARY ISSUE charging infrastructure. Cities with populations greater than 1 million are eligible for this. The vehicles will be used for mass transportation for a pilot project under the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME) programme. The Department of Heavy Industry has already issued a notice inviting EoIs from state government departments, undertakings, municipal corporations and public authorities for innovative proposals that involve multimodal public transportation based on a purely electric power train. The funds can be used for procuring electric buses (Rs 10 million-Rs 15 million per bus), electric fourwheeler cars (Rs 76,000-Rs 138,000 per car), and electric threewheelers (Rs 37,000-Rs 61,000 per three-wheeler).

TPC is seeking a common pan-Indian licence to construct and set up EV charging stations across India. According to the Electricity Act, 2003, electricity can be sold by a discom and its licensees or franchisees. NTPC plans to overcome this issue with the new licence. In addition, the company is planning to set up battery swapping stations and is currently working on a strategy to reduce the costs for setting up the charging stations.

nergy Efficiency Services Limited (EESL) and the Global Environment Facility (GEF) have jointly launched a $454 million project to mitigate 60 million tonnes of CO2 equivalent and enable energy savings amounting to 38.3 million gigajoule (GJ) by 2022 and 137.5 million GJ by 2032. The project is known as “Creating and Sustaining Markets for Energy Efficiency” and the funds will comprise a GEF grant of $20 million and co-financing of $434 million in the form of loans and equity, including a $200 million loan from the Asian Development Bank. EESL has also proposed the formation of an energy efficiency revolving fund as part of the project.

ata Power Delhi Distribution Limited and Deutsche Gesellschaft für Internationale Zusammenarbeit have signed an MoU to collaborate and conduct research in the areas of grid-connected rooftop solar, energy storage systems, EVs, smart grid initiatives and energy efficiency measures. In addition, the companies will jointly organise capacity building programmes for channel partners, project developers, financial institutions, government departments, distribution utilities and public sector units.

ightsource Renewable Energy and UK Climate Investments have entered into a partnership agreement to fund the development, acquisition and ownership of large-scale solar power generation assets in India. Together, the companies target greenfield development and acquisition of operational utility-scale solar assets in the country, thereby creating high quality, de-risked investment opportunities. The seed asset for the partnership will be Lightsource’s 60 MW (DC) project in Maharashtra, which has reached financial closure. UK Climate Investments will provide 49 per cent of the equity for the construction of the first project. It has earmarked up to GBP 30 million to develop and construct up to a total of 300 MW of solar projects with Lightsource. ■

NEWS BRIEFS

International News S

outh Africa-based Sun Exchange, which is a marketplace for leasing solar equipment, has raised around $1.6 million in financing from a group of investors. The investors comprise Network Society Ventures from the US; Kalon Venture Partners from South Africa and three of the world’s leading technology accelerators, BoostVC, Techstars and Powerhouse from the US. The company will use the funds to meet the demand for its commercial-scale solar power projects.

rance-based ENGIE has announced the acquisition of 100 per cent stake in Uganda-based Fenix International, an energy generation company offering solar home systems in Africa. However, the financial terms of the transaction have not been revealed publicaly.

S-based AES Corporation’s Dominican unit AES Dominicana has commissioned 20 MW of storage battery systems at two locations in the Dominican Republic. Each system has a capacity of 10 MW and has been supplied by AES Energy Storage. The systems will help improve the efficiency and stability of the National Interconnected Electricity System of the Dominican Republic.

ANNIVERSARY ISSUE pre-qualification process for the conception, financing, construction and running of PV plants that have a combined capacity of 100 MW. The successful bidder will sign the power purchase agreement (PPA) with the Senegalese Electricity Society signatories having energy production licences.

he European Bank for Reconstruction and Development (EBRD), the International Finance Corporation (IFC) and a set of private sector investors have decided to invest $500 unit for the construction of 1.4 GW of PV capacity in Egypt. While EBRD has identified 16 new solar projects with a cumulative capacity of 750 MW to receive financing, IFC will support the development of 13 solar parks with a cumulative capacity of 650 MW. The contribution of EBRD as reported stands at $380 million and that of IFC at $203 million. An additional $7 million funding will be mobilised from the private sector investors.

orway-based solar plant and panels developer Saga Energy has signed a $2.94 billion deal with Iran’s Amin Energy to build 2 GW of PV projects in the country. Reportedly, the deal is awaiting the finalisation of economic guarantees from the Iranian government.

pain-based renewable energy company ACCIONA will build three PV power plants with a combined capacity of 150 MW in Egypt. The three facilities will be a part of the 1.8 GW Benban solar complex in Aswan, Egypt. The estimated cost of the three projects is $180 million. These projects will be developed under a 25-year PPA and will sell power to local state-owned power provider Egyptian Electricity Transmission Company.

hile-based Austrian Solar has announced the commencement of the Huatacondo photovoltaic (PV) project in northern Chile. This is a 98 MW project, which will be set up on 350 hectares of public land granted by the Ministry of National Property of Chile. The company has announced that the installation works will be finalised by August 2018.

S-based investment fund Global Infrastructure Partners (GIP) and co-investors have acquired Singapore-based Equis Energy, the largest renewable energy independent power producer (IPP) in the Asia-Pacific region, for $5 billion along with assumed liabilities of $1.3 billion. This is said to be the largest renewable energy acquisition, under which GIP has taken over 180 assets with a combined capacity of 11,135 MW at various stages of operation, construction and development, across Australia, Japan, India, Indonesia, the Philippines and Thailand.

he Clean Energy Finance Corporation will provide a $94 million loan to Windlab and Eurus Energy for co-development of the Kennedy Energy Park. The 60 MW park comprises 43.2 MW of wind capacity, 15 MW of solar PV and 2 MWh of battery storage. The wind and PV generation sources together with large-scale battery storage systems will help increase the reliability of renewable energy and balance high levels of intermittent generation on Australia’s electricity network.

ransCanada Corporation has entered into an agreement with Axium Infinity Solar, a subsidiary of Axium Infrastructure Canada II LP, for the sale of its PV portfolio in Ontario comprising eight facilities with a total generation capacity of 76 MW, at $540 million. The transaction is expected to close by end-2017, subject to certain regulatory and other approvals. An IPP, TransCanada currently owns or has stake in around 6,200 MW of power generation capacity in Canada and the US.

he Senegalese government has issued an open tender for solar projects with a combined storage capacity of 100 MW in the Diourbel, Kaolack and Fatick regions of Senegal. The two-phase open tender is for private investors who wish to participate in a 16 ● Renewable Watch ● November 2017

iemens Gamesa Renewable Energy has received an order for the supply and installation of 67 units of its recently upgraded SWTDD-130 OptimaFlex wind turbine. The project site is located west of Tromsø, a city in northern Norway. The turbines are rated at 4.2

NEWS BRIEFS MW and have an overall cumulative capacity of 281.4 MW.

estas Offshore Wind has been selected as the turbine supplier by Moray Offshore Windfarm (East) for a 950 MW wind farm in the UK. The wind farm, located in the Outer Moray Firth, off the east coast of Scotland, will use 100 units of the V164-9.5MW turbines. Moray Offshore Windfarm (East) is a joint venture between EDP Renovaveis SA (76.7 per cent) and Engie SA (23.3 per cent).

erman wind turbine manufacturer Nordex has secured a contract to supply 37.2 MW of its systems to VSB Energies Nouvelles for a project in France. The latter has ordered six N117/3000 turbines for the Coesmes wind project located around 40 km southeast of Rennes. Nordex will start delivering the turbines in February 2018. These will be installed on 120 metre high towers. The German company will also start installing eight N117/2400 turbines for the Valbin project near Troyes from April 2018.

irst Solar has reported record bookings of 4.5 GW in the quarter ended September 2017, taking the company’s order book to 7.4 GW, for shipments out to 2020. This has been a result of high demand in China and urgency in the US to secure supply owing to the spectre of the Section 201 case. The company’s net sales for the quarter ended September 2017 stood at $1.087 billion, 60 per cent higher than the net sales in the corresponding period in 2016.

catec Solar and its partners have reached financial closure for six solar PV projects in Egypt with a combined generation capacity of 400 MW. A group of international development finance institutions is providing $335 million of non-recourse project financing, accounting for 75 per cent of the capex. The financing group comprises EBRD, the United Nations’ Green Climate Fund, the Dutch development bank FMO, the Islamic Development Bank and the Islamic Corporation for the Development of the Private Sector. The remaining 25 per cent equity will be provided by the three project sponsors – Scatec Solar, Norfund and Africa50. The six projects, entailing a total investment of $450 million, are located in the 1.8 GW Benban solar park in Aswan, Upper Egypt. Project construction is expected to commence in early 2018.

he World Bank has approved two grants totalling $35 million from its Climate Investment Fund to improve electricity access and scale up renewable energy investments in Haiti. The bank noted that more than 5 million people could be reached through solar PV, adding that access is limited in rural areas and only one in three Haitians has access to electricity. As part of the grants, two projects have been launched – Renewable Energy for All and Haiti Modern Energy Services for All. Both projects will be implemented by the energy cell of the Ministry of Public Works, Transport and Communications.

hina-based integrated and merchant PV manufacturer, the Tongwei Group has launched its high efficiency solar cell plant S2,

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ANNIVERSARY ISSUE in Chengdu, China, which includes the world’s first unmanned monocrystalline solar cell production line under the intelligent manufacturing term, 4.0. The S2 plant has an initial nameplate capacity of 2 GW, which take Tongwei’s monocrystalline cell capacity to around 3.4 GW. The company also has around 2 GW of multicrystalline solar cell capacity. The 4.0 cell line, which tests intelligent, fully automated manufacturing tools and software systems, is completely unmanned. The company has also recently completed the expansion of a polysilicon plant by 5,000 million tonnes (mt), bringing its nameplate production capacity to 20,000 mt. It is also constructing a new 50,000 mt polysilicon plant.

he Asian Development Bank has agreed to provide a $200 million loan with sovereign guarantee to the Ceylon Electricity Board (CEB) for the development of a 100 MW wind park in Sri Lanka. It is reportedly the first 100 MW wind farm in the country, and is estimated to contribute to the country’s 2020 renewable energy target significantly. It will be located in Mannar Island in the Northern Province. The CEB will invest $56.7 million in the $256.7 million project.

he Green Climate Fund is providing a $12 million grant as additional financing for 6 MW of grid-connected solar PV combined with 3MW/12MWh of battery energy storage projects on the Cook Islands. The project has already been co-financed by the Asian Development Bank, the European Union, and the Government of Cook Islands, having been approved in October 2014. The plan is to reduce Cook Islands’ reliance on fossil fuels and promote the shift to solar power on five of its islands.

he International Finance Corporation (IFC) through a consortium has finalised a $653 million debt package for 13 solar projects at Benban Solar Park near Aswan in Egypt. The 13 plants will have a combined capacity of 752 MW. As per the IFC, this is the largest private sector financing package for a solar PV facility in the Middle East and North Africa regions. The consortium comprises the Africa Development Bank, the Asian Infrastructure Investment Bank, the Arab Bank of Bahrain, CDC of the United Kingdom, Europe Arab Bank, Finance in Motion, FinnFund, ICBC, and OeEB of Austria.

iemens Gamesa Renewable Energy has won contracts to supply over 300 wind turbines worth 780 MW. The company will supply a total of 310 wind turbines of different types to five separate wind energy projects across the US, whose contracts were signed during the third quarter of 2017. In total, Siemens Gamesa will supply 92 units of its SWT-2.3-108 wind turbine, 144 units of the SWT-2.625-120 wind turbine, and 74 units of the G126-2.625 MW turbine. Majority of the manufacturing for the projects will be kept within the US, with the nacelles and hubs for SWT-2.3-108 and SWT-2.625-120 to be assembled at the SGRE factory in Hutchinson, Kansas, and the majority of the blades for the five projects to be manufactured at the company’s blade facility in Ford Madison, Iowa – with the excess being sourced through the company’s North America manufacturing network. ■

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Testing Times A year of big developments but small achievements By Dolly Khattar

he Indian renewable energy sector has witnessed significant changes over the past few years - in terms of the pace of development, commercial dynamics, development model, risks and opportunities. The change has been most visible in the past one year as capacity additions in the power sector (planned or developed) are coming almost entirely from renewable sources. Notably, in 201617, for the first time, renewable capacity additions were at par with thermal capacity additions. The renewable energy sector ended 2016-17 with a record capacity addition of 11,320 MW, comparable with the 11,551 MW added in the thermal power sector. In fact, 2016-17 witnessed many milestones being achieved in the renewable energy sector. The total installed capacity crossed 50 GW, and the wind and solar segments crossed the 30 GW and 10 GW marks respectively. The renewable capacity additions have

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been accompanied by commercial dynamics that are completely different from those that existed even a year ago. At a solar power tariff of Rs 2.44 per kWh and a wind power tariff of Rs 2.64 per kWh (the winning tariffs achieved in the latest round of auctions), the economic advantage has shifted in favour of renewables from thermal power. These tariffs are significantly lower than the Rs 3.20 per kWh average rate of power generated by NTPC Limited’s coal-fuelled projects. This implies that discoms, which were earlier reluctant to buy renewable power, prefer to purchase this over thermal power. For developers, this signifies a much lower risk of power offtake defaults, although it comes at the cost of losing out on a substantial part of their margins.

adoption of the solar park-based model and the decline in global equipment prices in 2016-17 also led to a drastic fall in solar tariffs. In the 100 MW domestic content requirement-based tender in Karnataka in May 2016 for instance, the winning tariff was Rs 4.84 per kWh; in comparison, in the latest tender for 500 MW capacity at the Bhadla Solar Park in May 2017, a tariff of Rs 2.44 per kWh was discovered. Moreover, with no project visibility for the future, both solar and wind power developers with access to lowcost funds have been trying to capture as much capacity as possible, leading to aggressive bids. Distress sales by equipment manufacturers have further enabled independent power producers (IPPs) to quote lower tariffs.

Such low bids, at least in the wind power space, have stemmed from the ongoing transition from the feed-in tariff (FiT) regime to competitive bidding-based allocation, which, for the time being, has left the project pipeline dry. Further, the

The increasing competition, changing dynamics and growing private and public sector interest in renewable energy development are a ringing endorsement of the government’s vision for clean energy development. In fact, financing, which

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ANNIVERSARY ISSUE was earlier considered a key impediment to sector growth, has now turned into a major growth enabler. However, this growth comes with its own set of risks and challenges, of which spiralling tariffs have been the most talked about in the past one year. Such low tariffs raise several questions for policymakers, discoms, project developers, investors and lenders. Some states that have completed auctions with higher prices in the past two years (Jharkhand, Andhra Pradesh, Karnataka and Haryana) refused to sign power purchase agreements (PPAs) in 2017, thereby creating uncertainty in the market. Jharkhand has already renegotiated the tariff and signed PPAs at a much lower tariff than that quoted by developers at the time of bidding. Falling prices also imply that projects that have already signed PPAs and have commenced or even completed construction face a growing risk of discom default over time. Will the discoms honour older PPAs signed at tariffs of Rs 4-Rs 6 per kWh after, say, five years when new projects are available at tariffs of Rs 2 per kWh or even less? Many such questions have cropped up. And while clear answers may not be available, as the year 2017 draws to a close, it may be a good time to take stock of the progress made so far, analyse the key trends and developments, and examine the issues that need to be resolved going forward.

Capacity addition trends India’s installed renewable energy capacity increased by 11.32 GW in 2016-17, taking the cumulative capacity to 60.2 GW as of September 30, 2017 and contributing 18.2 per cent to the energy mix. The large capacity addition was on account of factors such as a favourable policy environment, shorter gestation periods and enhanced tariff competitiveness for solar energy. In the case of wind energy, the capacity addition was better than expected, owing to the impending removal of generation-based incentives and the reduction in accelerated depreciation

benefits in April 2017. In addition, IPPs were trying to leverage the prevailing FiT regime in the states. However, the wind segment witnessed a slowdown in the first half of 2017-18 given the ongoing transition from FiT-based PPAs to competitive bidding-based PPAs. The key highlight of the year was the heightened activity in the developer space, which saw many players competing for whatever little capacity was up for tendering, thereby driving down tariffs.

Innovative and large-scale financing With project sizes of over 100 MW and the government’s thrust on the sector, the financial landscape has changed significantly. Borrowing capital for renewable energy projects is no longer restricted to domestic banks; multilateral banks and nonbanking financial institutions too are looking to invest in this market aggressively. Despite having entered the bond market fairly recently, India has emerged as one of the largest green bond markets in the world, driven by favourable policies and a promising business environment. As of July 2017, India’s green bond issuances reached $2.1 billion, including $1.5 billion raised by the Greenko Group and Azure Power together in just two weeks. The amount is enough to fund the debt of over 3.5 GW of renewable energy projects. On the equity front, the sector has been witnessing greater consolidation, higher private equity interest and the entry of strategic investors from across the world. Notably, a large number of players in the sector have crossed the 1 GW portfolio mark in 2017, which puts them on a strong wicket for accessing the capital market.

RPO default The renewable purchase obligation (RPO) is a benchmark against which the sector’s progress can be gauged. While the sector is taking rapid strides, from an RPO perspective, it is far behind the targets. In 2016-17, India missed the overall RPO target yet again - as against a targeted non-

solar renewable energy procurement of 8.75 per cent, the actual procurement stood at 5.51 per cent; and as against a solar power target of 2.75 per cent, the actual procurement was just 1.11 per cent. The overall renewable energy generation was 6.62 per cent as against the procurement target of 11.5 per cent. Most states have specified RPO targets; however, due to the lack of enforcement of RPO regulations and the absence of penalties for non-compliance, many of the state discoms are not meeting their RPO targets fully. In fact, 25 states and union territories are lagging behind their specified solar RPO targets for 2017-18. The total solar RPO deficit amounts to 64 per cent, which is equivalent to 2,033.94 MW of capacity.

Record generation Despite significant growth in renewable energy capacity, achieving the RPO targets seem to be a distant dream because the increase in renewable energy generation is not as significant as the addition in installed capacity due to the lower plant load factors of solar and wind power projects. However, on a stand-alone basis, renewable energy generation has been increasing at a fast pace. In July 2017, India generated 12.9 BUs of electricity from green energy sources including solar, wind, biomass and smallhydro. This is 37.2 per cent more than the 9.4 BUs generated in July 2016 and 12 per cent more than the 10.2 BUs generated in June 2017. Significantly, the share of renewables in the total energy generation of 98.1 BUs, touched 13.2 per cent in July 2017, the highest ever in the sector. (The data for August 2017 is not yet available but the industry estimates it to be even higher than in the previous month.)

Rooftop solar steals the show Over the past one year, there has been a strong impetus to rooftop solar, which has resulted in a sharp increase in installed capacity. The rooftop solar segment grew by 81 per cent in 2016-17 over 2015-16. November 2017 ● Renewable Watch ● 21

TRENDS & DEVELOPMENTS As opposed to other rooftop-rich countries that have grown on the back of high capacity additions in the residential rooftop segment, the Indian market has seen greater growth in the commercial and industrial rooftop solar segments. As of March 2017, the installed rooftop solar capacity in India stood at 1,396 MW and another 1.5 GW is expected to be added in 2017-18. The development of rooftop solar projects makes considerable sense for the industrial and commercial segments as the levellised tariffs are significantly lower than grid-based tariffs. These segments are, therefore, driving growth in the rooftop solar space, followed by the government and institutional segment. Almost all utility-scale developers have jumped on to this bandwagon, assigning separate teams for establishing their rooftop solar businesses. In the past one year, at least 100 engineering, procurement and construction companies have entered this market, mostly concentrating on different regions in the country. As far as the policy framework is concerned, all the states have announced their net metering policies for rooftop solar, which is noteworthy.

Challenges in policy implementation While the government has introduced some growth-enabling policies, their implementation has run into many challenges and operational issues. Different land and infrastructure agreements have different duties levied on them. Instead of a stamp duty of Rs 0.6 million, a company could end up paying Rs 18 million in some states. Taking another example, the goods and services tax (GST) for the solar segment has been the subject of discussion in 2017. There was a major debate about taxing modules at 5 per cent or 18 per cent, before it was finally settled at 5 per cent. There is also ambiguity regarding the GST for balance of system equipment. While GST has been specified for a few components such as inverters, the rates for the remaining parts remain ambiguous. A developer’s primary job is to set up a plant and produce power, instead of going 22 ● Renewable Watch ● November 2017

ANNIVERSARY ISSUE to the judiciary to settle legal and regulatory issues. In addition, any changes in law will only lead to legal complications, thereby delaying project development. Therefore, there should be greater certainty regarding the regulatory regime.

Sluggish growth in power demand The 10 largest states in India consume over 60 BUs each, and they together account for almost 75 per cent of the total demand. States like Karnataka, Andhra Pradesh, Tamil Nadu, Telangana, Rajasthan, Madhya Pradesh and Punjab together account for over 80 per cent of India’s total installed and upcoming capacity of approximately 27 GW. The key states that have led the solar growth so far are Tamil Nadu, Rajasthan, Telangana, Andhra Pradesh and Karnataka. All these states have allocated more than 3 GW of capacity each under state and central policies. In addition, Madhya Pradesh and Punjab have floated tenders for 2 GW and 1 GW of capacity respectively. Other states continue to lag behind and the progress is expected to be slow because of an apparent surplus power situation in the country. The demand-supply deficit reduced significantly, from 8.71 per cent energy deficit and 8.98 per cent peak demand deficit in 2012-13 to 0.7 per cent and 1.63 per cent respectively in 2016-17. This is likely to go down further in 2017-18. Another key concern pertains to the predictability of power demand, which has been volatile. As renewable energy capacity increases, it would be in the interest of the industry as well as the utilities to have forecasting and scheduling mechanisms in place so as to ensure demand predictability. There is a material risk that some discoms may, under commercial or political pressure, renegotiate or back out of existing PPAs, particularly if demand does not grow sufficiently and/or if there are grid-related problems. This risk needs to be tackled at the regulatory end as issues pertaining to supply exceeding demand have already been initiated in the power sector.

Concerns over falling tariffs Aggressive bidding and the sharp fall in prices have raised concerns regarding whether the solar and wind power segments will suffer the same fate as thermal power or the road sector, where irrational pricing led to many projects being abandoned or becoming financially distressed. From the past record, it seems likely that most of the recently won projects will come online given their short gestation period, credible sponsor groups and small project sizes. Delays are possible and some investors may bear the pain, but the banks are likely to be largely protected. Another major challenge facing the sector is the slow pace of new tender announcements and completed auctions. The southern states, except Tamil Nadu, are bound to slow down in terms of allocating new capacity. Amongst the large states, Maharashtra and Gujarat have surplus power and remain unenthusiastic about new renewable energy capacity. That leaves mainly the northern states, of which Uttar Pradesh is the only state with reasonable growth prospects; however, developers are not very keen to invest in this state.

Conclusion The long-term demand outlook for the sector is positive, aided by favourable policy support from both the central and state governments, as well as the improving tariff competitiveness of wind and solar power. Even with a conservative assumption of the overall RPO at 15 per cent by 2021-22, the incremental cumulative renewable energy requirement for 2017-22 is estimated at 63 GW. Given the ongoing transition from FiT-based PPAs to competitive bidding-based PPAs, wind energy capacity additions are likely to be affected in the current fiscal. As far as the solar segment is concerned, the utilityscale solar market will level out after 2017 until the power demand-supply situation becomes more favourable and storage technology becomes commercially and technically more attractive. However, rooftop solar will witness impressive growth in 2018. ■

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Dynamic Changes Policy and regulatory moves keep pace with emerging sector needs By Ashay Abbhi

he policy and regulatory initiatives taken over the past few years have provided an impetus to the renewable energy sector. Dynamic adjustments made to the renewable policy framework have led to capacity growth in line with the country’s renewable energy plans and climate change commitments. Meanwhile, India’s intended nationally determined contribution targets have helped define the country’s renewable policy mechanism. The past year witnessed several key policy and regulatory changes that will shape the future of renewable energy in the country. Renewable Watch analyses the policy highlights of the year... 24 ● Renewable Watch ● November 2017

Disrupting trends in wind Earlier this year, a major policy initiative completely changed the course of the Indian wind power segment, upending the traditional wind industry. The segment moved from the feed-in tariff regime to competitive bidding for tariff determination and project allocation with the launch of the country’s first ever wind tender. The tender, for a capacity of 1,000 MW, was launched by the Solar Energy Corporation of India (SECI) in January 2017. The results discovered in the bidding bore testimony to the disruptive influence of the policy change. The tender was oversubscribed 2.6 times and the tariffs plunged to Rs 3.46 per unit from around Rs 5 earlier.

More action followed. The second tranche of SECI’s wind auction for a capacity of 1,000 MW concluded in October 2017 and was oversubscribed three times. Prices spiralled down further to Rs 2.64 per unit, a 24 per cent decline. Access to competitive capital, increased competition for a handful of projects and the entry of large companies led to ultra-low tariffs, which may not be sustainable in the long run. In April 2017, the Ministry of New and Renewable Energy (MNRE) released a draft policy for the procurement of wind power through competitive bidding. The policy guidelines provide a framework for wind power procurement through a transparent

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ANNIVERSARY ISSUE bidding process, while also laying down the norms for its standardisation and defining the roles and responsibilities of various stakeholders. These guidelines are applicable to all grid-connected wind energy projects with more than 5 MW of capacity. With the auction-based allocation of projects, wind power tariffs have come down significantly, thereby impinging on the high margins enjoyed by developers earlier. Reduced profits will compel them to take cost-cutting measures across the value chain, including deploying competitively priced equipment. In turn, turbine manufacturers will have to reduce their prices and margins, and improve efficiencies in order to remain relevant in the market. In addition, project opportunities for developers are expected to reduce since allocations in the segment are moving entirely towards competitive bidding. Given the maturity of the segment, the capacity already installed and the limited site availability in the eight wind-rich states, developers will have to compete for a handful of projects in each auction. On the flip side, low tariffs will lead to greater offtake of wind power by discoms, thus reviving the wind segment that had been neglected until recently due to the offtaker emphasis on solar power.

National energy policy The country’s energy and power sectors are currently undergoing a transformation, with constantly changing capacity and generation shares. To streamline growth, NITI Aayog has released a forward-looking draft national energy policy that outlines the roadmap for the energy sector up to 2040. The policy also envisages a growth in the share of renewable energy in the power generation mix, from 5 per cent to 24-29 per cent by 2040. The policy also envisages a gradual phasing out of all subsidies, must-run status, renewable purchase obligations and other incentives available to renewable energy plants in order to create an independent and self-sustaining market. The policy, moreover, suggests the

use of large-hydro power for load balancing and reducing the dependence on coalbased power generation. It, however, does not dwell on newer technologies such as energy storage and electric vehicles. According to the policy, the country’s installed renewable energy capacity is expected to increase at a compound annual growth rate of 10 per cent, from 58 GW at present to 597 GW by 2040. The installed solar and wind power capacities are likely to reach 367 GW and 187 GW respectively. For better renewable energy integration, it suggests investing in grid expansion and automation. Further, the forecasting and scheduling time interval should be reduced from 15 minutes to five minutes.

Solar bidding guidelines While competitive bidding has benefited the Indian solar power segment, the lack of standard documentation and proper guidelines for the process has impacted the quality of auctions. To this end, in August 2017, the MNRE released draft guidelines for tariff-based competitive bidding. These are applicable to all solar power projects that have a capacity of over 5 MW and are feeding power to the discoms. The guidelines also propose to introduce standard bidding documents such as requests for selection and power purchase agreements (PPAs). This is expected to significantly improve the auction process, especially for project developers. The guidelines attempt to streamline the bidding process by setting strict timelines for each process such as undertaking land acquisition and transmission connectivity, and obtaining requisite approvals for developing projects. All statutory clearances as well as transmission availability must be in place before signing the PPA. The guidelines also introduce a payment security mechanism, wherein a security fund must be established with a three-month billing amount, in addition to the traditional letter of credit for one-month billing. The solar segment has been struggling with grid unavailability and curtailment iss-

ues, particularly in the southern region, despite the “must-run” status accorded to renewable energy plants. The guidelines seek to address this challenge by providing compensation to those developers that are asked to back down their plants. If evacuation infrastructure is unavailable for more than 50 hours in a year, the developer will be entitled to sell an equivalent amount of extra energy to the discom over three subsequent years. Moreover, 50 per cent of the revenue losses incurred on account of the curtailment will be borne by the discoms. However, no compensation will be provided for grid instability or safety issues. The guidelines also secure the developer against PPA termination by providing them with compensation equivalent to the total outstanding debt as well as 150 per cent of adjusted equity or six months of the billing amount, whichever is lesser. Also, the new standard PPAs will allow for substitution if the developer defaults on payments to its lenders.

Goods and services tax The goods and services tax regime was rolled out by the government on July 1, 2017 in a bid to create a single tax system by categorising items into tax slabs of 5 per cent, 12 per cent, 18 per cent and 28 per cent. Much to its dismay, the renewable energy sector, which was earlier exempt from taxes, fell into the 5 per cent bracket. Moreover, there was confusion in the taxation system regarding the equipment that was used for not only renewable energy generation but also for conventional power generation (taxed in higher brackets). Meanwhile, equipment prices recorded a marginal increase, with minimal impact on the overall tariffs.

Incentivising rooftop solar The rooftop solar segment has witnessed strong resistance from discoms, especially with regard to the industrial and commercial segments that constitute some of the highest-paying consumers. This has prevented the expansion of the rooftop segment. In a move that could change the curNovember 2017 ● Renewable Watch ● 25

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ANNIVERSARY ISSUE Indosolar, Websol and Jupiter Solar, some of the largest Indian solar equipment manufacturers.

Stay on REC trading

rent hostile environment towards rooftop solar plants, the MNRE has announced financial incentives of Rs 3.75 million per MW for discoms that support rooftop solar installations of up to 1,350 MW. These funds can be used for developing grid infrastructure, raising consumer awareness, providing training to employees, etc.

Amendment to the Electricity Act The government is planning to reintroduce the Electricity (Amendment) Bill, 2014 in the winter session of Parliament. If passed, it will replace the Electricity Act, 2003. It attempts to divide the power distribution system into power carrying and selling activities. While the lines carrying power will be laid by the state entities, private companies will be responsible for competitively selling power. The bill is expected to reduce the role of states to that of an enabler for private companies, thereby putting an end to the state versus centre power struggle. Further, the bill seeks to distribute the losses across the country while providing the profits to private companies as an incentive for better power quality and service. However, the bill has met with strong protests from states and employee unions, which allege that the government is trying to privatise distribu26 ● Renewable Watch ● November 2017

tion. The new act is expected to reduce power prices for big consumers while increasing them for small consumers.

Anti-dumping investigation To address concerns regarding the dismal manufacturing scenario in India due to the bulk import of cheap solar power equipment from China, Taiwan and Malaysia, the government has initiated an anti-dumping investigation. Foreign imports, which constitute about 85 per cent of all solar cell and module sales in the country, have reduced the competitiveness of Indian equipment in the market. The petition was submitted by the Indian Solar Manufacturers Association (ISMA) on behalf of

NITI Aayog’s draft national energy policy envisages a gradual phasing out of subsidies, must-run status, and other incentives for renewable energy plants in order to create a selfsustaining market.

In March 2017, the Central Electricity Regulatory Commission introduced a new pricing regime for renewable energy certificates (RECs), wherein the forbearance prices were reduced from Rs 3,500 per REC to Rs 2,500 per REC, and floor prices from Rs 1,500 to Rs 1,000 per REC. The price reduction was aimed at encouraging REC trading, which has failed to take off so far. However, the REC generators objected to the sudden reduction in prices, which would further shrink their small revenues. The matter was being contested at the Appellate Tribunal for Electricity when the Supreme Court intervened and imposed a stay on REC trading in April 2017. In July 2017, however, the stay on the trading of nonsolar RECs was lifted, while trading of solar RECs remains suspended. The new pricing regime has also been suspended, although the court has ordered that the difference in amount is to be placed in an escrow with the regulator while the matter is pending.

Outlook With the growing focus on renewable energy, there is a strong need for regulatory support to enable targeted development of the sector. Moreover, dynamic policy changes to adapt to the changing renewable energy market will help create a conducive ecosystem for growth. The government should also ensure effective implementation of the policies. It should focus on addressing the persisting challenges relating to land acquisition, grid infrastructure availability, discom payments and conflict resolution, especially in light of the reducing tariffs and dishonouring of PPAs. As the country approaches the 2022 target deadline, it is expected that actionable policy initiatives and regulatory changes will be announced and implemented over the next few years. ■

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ANNIVERSARY ISSUE

New Lows Aggressive bidding and fewer projects send tariffs tumbling By Dolly Khattar

lunging solar and wind power tariffs made the headlines in the renewable energy space during 2017. Aggressive bidding, driven by increasing competition and a drying up of the project pipeline, especially in the case of wind power, has led to a significant decline in tariffs over the past 11 months. Renewable Watch takes a look at the key tariff trends in the solar and wind segments...

Solar tariffs The year began with the solar power segment witnessing a record low levellised tariff of Rs 3.30 per kWh in the auction conducted for 750 MW of capacity at the Rewa Solar Park in Madhya Pradesh. Mahindra Renewables, Acme Solar Holdings and Solenergi Power bid record low tariffs

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of Rs 2.979 per kWh, Rs 2.97 per kWh and Rs 2.974 per kWh respectively for 250 MW of capacity each. Under the awarded contracts, there will be a tariff escalation of Re 0.05 per annum over 15 years. Prior to this, the lowest tariff discovered for a solar power project in India was Rs 4.34 per unit. Rewa Ultra Mega Solar Limited, a joint venture between the Solar Energy Corporation of India (SECI) and Madhya Pradesh Urja Vikas Nigam, had invited bids for the 750 MW park in Rewa district of Madhya Pradesh. A total of 20 national and international players submitted their bids for developing solar plants. Spread over 1,500 hectares of land in Gurh, the park will be developed in three tranches of 250 MW each. Of the 20 developers, four submitted bids for developing the entire

project. These were SBG Clean Tech, Enel Green Power, ReNew Power and Rosepetal. Meanwhile, two others submitted proposals for developing 500 MW and the remaining 14 submitted proposals for developing one unit of 250 MW. In May 2017, solar tariffs recorded a new low of Rs 2.44 per kWh, quoted by ACME Solar for developing 200 MW of capacity at the Bhadla Solar Park Phase III. SBG Cleantech won the remaining 300 MW at a bid price of Rs 2.45 per kWh. Overall, 10 companies quoted a tariff of less than Rs 3 per kWh. ACME’s bid was almost 6.9 per cent lower than the previous low tariff quoted in the 250 MW Bhadla Solar Park Phase IV auction, conducted two days prior to the Phase III auction. At the time, South Africa-

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ANNIVERSARY ISSUE based Phelan Energy and India-based Avaada Power had quoted the lowest winning bid of Rs 2.62 per kWh for 50 MW and 100 MW respectively. The second lowest bid of Rs 2.63 was quoted by SBG Cleantech for the remaining capacity. Overall, the tariff for solar projects developed under the non-domestic content requirement (DCR) category fell 44 per cent from Rs 4.34 per kWh to Rs 2.44 per kWh over the past year. During the same period, Chinese module prices fell 23 per cent while Indian module prices declined by 17 per cent. Meanwhile, the tariff for solar projects developed under the DCR category declined by 35 per cent as aggressive bidding trend continued. In October 2017, the 250 MW auction conducted by NTPC under the DCR category saw Azure Power quoting a tariff of Rs 3.14 per kWh for a 250 MW solar project. Other bidders to quote below Rs 4 per kWh in the same auction were ReNew Power (Rs 3.15 per kWh for 150 MW) and Waaree Energies (Rs 3.95 per kWh for 25 MW). The other participants were Mahoba Solar (Uttar Pradesh), a subsidiary of Adani, which quoted a tariff of Rs 4.44 per kWh to develop 250 MW of capacity, and Canadian Solar Energy Holding, which quoted Rs 4.95 per kWh for 100 MW. Azure Power’s winning tariff of Rs 3.14 per kWh was 35 per cent lower than the previous low DCR tariff of Rs 4.84 per kWh quoted by Tata Power in NTPC’s Phase II Batch II auction. However, of late, there has been a significant lull in the announcement of utilityscale solar tenders by SECI. This year it has announced only one tender, for 750 MW of capacity under the Bhadla Solar Park, in comparison to around 5 GW of new tenders in 2016. There have been expectations of new tenders in Odisha, Chhattisgarh, Delhi, Karnataka, Andhra Pradesh and Bihar, but none of these have materialised until now. Furthermore, SECI has again extended bid submission timelines for the ongoing Bhadla III (250 MW) and Bhadla IV (500 MW) tenders. These projects were supposed to be allocated to

developers in the third quarter of 2017. Meanwhile, NTPC has not made any progress on the new guidelines for the development of solar projects. Such tendering delays may push developers to bid even more aggressively going forward. Many of them have raised funding, but have been left high and dry due to the vacuum created in the project development landscape. The pent-up demand may therefore push auction tariffs further down. The only factor that may prevent them from being too aggressive is the expected increase in module costs. Recently, Acme, which won 200 MW at a tariff of Rs 2.44 per kWh in the auction, has expressed regret on going forward with the tariff as Chinese module suppliers have been increasing their prices over the past three months, thus lowering return expectations. Other costs have also gone up on account of the goods and services tax implementation. If costs continue to increase, solar tariffs may also go up. However, the discoms may walk away due to the rising tariffs, creating even more problems for the segment.

Wind tariffs India’s wind power tariff fell to a record low of Rs 2.64 per kWh in the second wind power auction conducted by SECI for 1 GW of wind power projects in September 2017. A 24 per cent decline was recorded from the winning tariff of Rs 3.46 per kWh discovered in the first wind auction conducted by SECI in February 2017. The new tariff led to a major debate in the industry about the viability of such bids. In the second 1 GW wind auction, ReNew Power quoted the L1 tariff of Rs 2.64 per kWh to win a contract for 250 MW of wind capacity; Orange Sironj Wind Power quoted Rs 2.64 per kWh to develop 200 MW of wind capacity; and Inox Wind, Green Infra Wind Energy and Adani quoted Rs 2.65 per kWh to develop 250 MW each. Inox Wind and Green Infra were awarded 250 MW each while Adani was awarded 50

MW. Overall, nine developers quoted tariffs below Rs 3 per kWh. The other bidders include BLP Energy, Sprng Energy, Hero Wind Energy and ReGen Powertech. They quoted tariffs between Rs 2.72 per kWh and Rs 2.80 per kWh. Only time will tell if these projects turn out to be viable. The main reasons for the drastic decline are increased competition and the lack of adequate projects in the segment, which have led to a shift from the feed-in tariff (FiT) regime to competitive bidding-based allocation. With the transition from the FiT regime, the release of new tenders by the states has slowed down. This is pushing developers as well as turbine manufacturers to be more aggressive. It must be noted that with SECI’s second round of wind project auction, the tariff is now just 8 per cent less than the lowest solar tariff of Rs 2.44 per kWh. Both wind and solar tariffs are now below the average thermal power tariff. At the state level, most states have stopped signing new power purchase agreements (PPAs) at FiT rates. Some are also revising their FiTs based on the new tariffs determined through auction. For example, the Karnataka Electricity Regulatory Commission (KERC) passed an order on September 4, 2017 setting a fresh FiT of Rs 3.74 per kWh for wind power, which is considerably lower than the tariff of Rs 4.50 per kWh set in October 2015. This has been in response to the wind auctions held in Tamil Nadu, which saw the winning tariff plunge to Rs 3.42 per kWh. The order, however, put into jeopardy 599 MW of wind projects that already had PPAs signed with various discoms in Karnataka at the old rate of Rs 4.50 per kWh and were awaiting ratification by KERC. Around 273 MW had already been commissioned and power was being supplied to the state discoms at Rs 4.50 per kWh. Following the new order, these PPAs have now been renegotiated and the tariff has been set at Rs 3.74 per kWh. The developers had no choice but to accept the new tariff. Meanwhile, 326 MW of capacity is still under construction. ■ November 2017 ● Renewable Watch ● 29

TRENDS & DEVELOPMENTS

ANNIVERSARY ISSUE

Uncertain Future Stay order delivers another blow to the REC market By Ashay Abbhi

he renewable energy certificate (REC) market has failed to take off and the unsold inventory continues to pile up beyond 10 million. While there was a relative improvement in REC purchases in 2016-17, the absolute numbers still indicate a sluggish market. And now, in what could spell the end for the REC market, the Supreme Court has imposed a stay on the trading of solar RECs in a dispute pending with the Appellate Tribunal for Electricity (APTEL), between the Central Electricity Regulatory Commission (CERC) and REC generators. There are several reasons for the flat growth in the REC market. Among these are the unenforced renewable purchase

32 â&#x2014;? Renewable Watch â&#x2014;? November 2017

obligations (RPOs), the fact that the country has become power surplus and that renewable energy is readily available, contributing to the growing glut. Increasingly, rooftop solar power and captive renewable power plants are becoming preferred ways to offset carbon emissions by commercial and industrial consumers, further eroding the market for RECs. Meanwhile, the continuing poor health of the discoms is preventing them from investing in the purchase of RECs.

Market dynamics The low demand-high supply REC scenario continued in 2016-17 as well with a dismal offtake of RECs. In 2016-17, solar buy bids on the Indian Energy Exchange

(IEX) accounted for a mere 1.3 per cent, or 404,081 RECs, of the total sale bids of 32.2 million, while non-solar buy bids comprised 4.3 per cent of the 98.1 million sale bids. The trend on Power Exchange India Limited (PXIL) was as disappointing. The percentage of buy bids against sell bids for solar RECs fell from 1.9 per cent in 2015-16 to 1 per cent in 2016-17, while that of non-solar RECs remained constant at 2.9 per cent. In absolute terms, PXIL recorded 152,933 buy bids against 14.7 million sale bids for solar RECs, and 1.7 million buy bids against 59.6 million sale bids for non-solar RECs in 2016-17. The uptake of solar and non-solar RECs on PXIL was, however, higher in 2016-17 than in 2015-16.

TRENDS & DEVELOPMENTS

ANNIVERSARY ISSUE

A deep analysis of monthly trading trends reveals a marked shift in pattern. In the non-solar REC category, the peak clearing volume for 2016-17 was recorded in January 2017, while in 2015-16, peak sales were observed in December 2015 and March 2016. In the solar category, the highest sale of RECs was observed in April 2017. This can be attributed to the fact that the CERC had introduced a new pricing regime in March 2017, following which buyers began purchasing heavily at the low prices. Other macroeconomic developments in the country during 2016-17 also affected the general offtake of RECs.

Category-wise analysis

3,500

IEX cleared volume

3,500

PXIL cleared volume 200,000

Price at IEX

3,000

Price at PXIL 150,000

2,500

Volume

119,869 31,177

2,000

100,000

1,500

50,000

16,826

7,297

25,003

24,789

16,598 0

15,126

1,906 11,945

September 2016

October 2016

8,327

3,931

39,572

45,613

January 2017

February 2017

112,445

1,000

88,533 500

0 November December 2016 2016

March 2017

April 2017

May 2017

June 2017

July 2017

August 2017

September 2017

Sources: Indian Energy Exchange; Power Exchange of India Limited

bearance prices fall from Rs 3,500 per REC to Rs 2,500 per REC, and floor prices drop from Rs 1,500 per REC to Rs 1,000 per REC as per an order released in March 2017.

reveals a rather skewed share pattern. Open access consumers (3,818) accounting for 91 per cent of the total consumers across the two exchanges, bought 27 per cent of the RECs. Moreover, only 77 discoms, accounting for around 1.8 per cent of the total participants, bought 61 per cent of the RECs. About 7 per cent or 294 captive consumers are responsible for only about 12 per cent of the total volume. This is a strong indicator of a highly consolidated market in favour of discoms, which, despite being small in number, accounted for a far larger quantity of RECs than any other category.

REC generators, companies that have registered their projects with the REC Registry, objected to the sudden fall in prices that led to severe losses. The matter was referred to APTEL to find a way to clear the unsold stock of around 10 million RECs. APTEL suggested providing a vintage multiplier that allowed a generator to sell more RECs per unit of power. When the parties were unable to reach a consensus on APTEL’s suggestions, the case was referred to the Supreme Court. The court imposed a stay on the entire REC mech-

Pricing dispute In March 2017, the CERC decided to introduce a new pricing regime that saw for-

Market clearing volume and price of non-solar RECs at IEX and PXIL 1,600,000

1,500

1,400,000

1,500

1,600

1,400

272,051 IEX cleared volume

1,200,000

1,200

PXIL cleared volume 1,000,000

Price at IEX

1,000

228,878

Price at PXIL 800,000

800

316,346 1,248,242

600,000

600

195,420 98,048

200,000

173,551

815,357

400,000

84,170 91,355 September 2016

October 2016

400

November 2016

89,525

572,357

111,007

157,273 150,050

116,878

364,820 226,532 December 2016

139,250 January 2017

Price (Rs/REC)

Three out of the four offtaker categories of RECs have continued to follow the dynamic pattern of previous years. The biggest change can be observed in the share pattern of discoms. Their participation in clearing volumes increased to about 61 per cent during September 2016-September 2017 from 39 per cent during the same period of the previous year. The share of open access consumers shrank to 27 per cent from 38 per cent, while that of captive consumers declined from 27 per cent to just over 12 per cent. The share of voluntary buyers remained virtually non-existent.

4,000

3,500

Volume

The lack of interest in buying RECs is true for both the exchanges. As of October 2017, 1,095 projects with an aggregate capacity of 4.47 GW were registered with the REC Registry of India. This translates into 7 per cent of the country’s total installed renewable energy capacity, down from 10 per cent in 2016-17 and 12.6 per cent in 2015-16.

Market clearing volume and price of solar RECs at IEX and PXIL 250,000

Price (Rs/REC)

With the Supreme Court imposing a stay on the trading of solar RECs in May 2017 and suspending trading of non-solar RECs for May, June and July 2017, the buy bids on the IEX stood at 738,847 against sale bids of 23.9 million, while those on PXIL stood at 471,036 against 11.9 million for non-solar RECs as of September 2017.

February 2017

March 2017

April 2017

May 2017

June 2017

July 2017

207,960

200

292,482

81,545 August 2017

0 September 2017

Sources: Indian Energy Exchange; Power Exchange of India Limited

An analysis of the number of participants November 2017 ● Renewable Watch ● 33

TRENDS & DEVELOPMENTS

ANNIVERSARY ISSUE

Category-wise participation

Category-wise cleared volume

(September 2016-September 2017) (%)

Discoms: 1.84

Captive consumers: 7.01

Voluntary buyers: 0.02 Captive consumers: 12.26

Voluntary buyers: 0.12

Open access: 27.08

Discoms: 60.65

Open access: 91.03

Sources: Indian Energy Exchange; Power Exchange of India Limited

anism in May 2017, halting trading and staying the implementation of the CERC’s new pricing regime. While the trading of solar RECs remains suspended, the trading of non-solar RECs was allowed by the court in July 2017, following an appeal by the Indian Wind Power Association. A final decision on the matter is to be taken by APTEL. However, the court ordered that the difference between the old and the new

Sources: Indian Energy Exchange; Power Exchange of India Limited

prices is to be deposited in escrow with the regulator while the matter is pending.

Key issues One of the primary reasons for the dismal REC market is the lack of RPO enforcement. Moreover, the poor financial health of discoms has heavily affected their ability to purchase RECs to fulfil their RPOs. Further, for open access, captive and vol-

untary buyers there are absolutely no incentives to meet their specified obligations. The lack of RPO compliance prevents them from investing in RECs. In fact, in states/union territories such as West Bengal, Uttar Pradesh, Kerala, Arunachal Pradesh, Odisha, Haryana, Assam, Chandigarh and Bihar, the compliance level is less than 60 per cent of the obligation. Another key reason is the falling capital costs and tariffs of renewable energy generation, which has increasingly allowed users and discoms to fulfil their RPOs by investing in more profitable renewable energy projects.

Outlook With the CERC versus generators case still pending with APTEL and the Supreme Court, the trading of solar RECs remains suspended. Meanwhile, the trading of non-solar RECs is slowly limping back to normalcy at the behest of the wind power industry post a three-month suspension. The new pricing regime has also been stayed by the court and it is, therefore, expected that the low pricing methodology will be either scrapped or revised in favour of the generators. Overall, the future of the REC market appears bleak. With an already fragile ecosystem, the court case could spell the beginning of the end of the REC market. ■ 34 ● Renewable Watch ● November 2017

SEGMENT REVIEW

ANNIVERSARY ISSUE

Coming of Age Solar power segment begins to show signs of maturity By Ashay Abbhi

he solar power market in India has entered the maturity phase over the past year. It recorded a growth rate of about 82 per cent in 2016-17. In fact, solar power capacity addition has picked up significantly in the past three years, with more than 75 per cent of the total installed capacity being set up during this period. From a modest 1.7 GW in 2012 to 13.1 GW in August 2017, the market has grown at a compound rate of over 65 per cent during the period. The growth has been driven by key parameters such as falling capital costs, sliding solar power tariffs, favourable policy measures and declining cost of capital as low-interest funds become accessible. One of the most striking developments in the solar segment over the past year has been the steep fall in tariffs. The latest low

36 ● Renewable Watch ● November 2017

was Rs 2.44 per kWh recorded in the auction for 500 MW of capacity at the Bhadla Solar Park in Rajasthan. Apart from the government’s push to achieve 100 GW by 2022, intense competition among developers and a drop in global equipment prices are the key factors that are driving down tariffs. This can be attributed to the fact that a number of international players have forayed into the Indian solar market with deep pockets and large appetites. While several global majors such as SoftBank (Japan), Engie (France), Enel (Italy), Canadian Solar (Canada) and Sembcorp (Singapore) have already entered the Indian market, others such as Norway’s Statoil ASA, Francebased Total SA and Netherlands-based Royal Dutch Shell Plc are looking at India as a promising investment opportunity. Meanwhile, a number of domestic firms such as ReNew Power and ACME Solar have

received access to low-cost funds, adding to the competitive pressures. Renewable Watch analyses the key trends and developments in the Indian solar power segment over the past year...

Capacity growth To achieve the 100 GW solar target by 2022, the government is looking to add 12-15 GW of solar power capacity annually over the next five years. The target specified for 2017-18 is 10 GW – 9 GW of ground-mounted and 1 GW of rooftop solar capacity. However, as of August 2017, only 1.5 GW or 16.6 per cent of the targeted ground-mounted solar capacity, and about 10.6 per cent of the rooftop solar capacity was installed. Capacity addition is expected to improve in the second half of the current financial year as the

SEGMENT REVIEW

ANNIVERSARY ISSUE state and central tenders released in the third and fourth quarters of the previous year will begin to realise.

State-wise installed capacity during 2014-17 (MW) State

Installed capacity 2014-15

In June 2017, Andhra Pradesh became the largest solar state in the country with a cumulative installed capacity of over 2 GW, followed closely by Rajasthan at 1.96 GW. While Tamil Nadu had the highest solar installed capacity at 1.59 GW as of January 2017, it has grown little, only to reach 1.69 GW of capacity by June 2017. This is primarily due to power evacuation issues in the state that have forced operators to curtail solar power generation, which has affected the upcoming tenders in the state as investors are wary of the losses they would have to bear due to the backing down of plants. Telangana has shown the highest growth by achieving an installed solar capacity of 1.6 GW since its formation about four years ago. Karnataka with 1,180 MW and Madhya Pradesh with 857 MW of installed capacity have also grown significantly during the year. Gujarat, on the other hand, recorded a marginal increase from 1.1 GW in January 2017 to 1.26 GW in June 2017.

Rooftop solar The Indian rooftop solar segment also grew considerably in 2016-17, at the rate of about 81 per cent over 2015-16. The Indian solar market is dominated by the commercial and industrial rooftop segments, contrary to the global trend. This is primarily due to high discom tariffs for the indus-

Andhra Pradesh Gujarat Karnataka Madhya Pradesh Maharashtra

2016-17

126.77

435.11

1,294.03

2,010.87

83.65

119.12

130.20

1,262.10

46.22

68.24

882.38

1,180.38

205.00

217.79

388.89

809.45

82.23

25.01

66.61

452.36

168.75

219.79

388.88

809.45

Rajasthan

228.85

327.83

543.00

1,961.21

Tamil Nadu

54.12

919.24

630.01

1,697.32

Telangana

61.25

360.80

759.14

1,609.27

Source: MNRE

trial and commercial categories in the country. As of March 2017, the total rooftop solar capacity in the country stood at 1.3 GW, of which about 42 per cent or 590 MW was in the industrial consumer segment, 22.4 per cent or 313 MW in the commercial segment and 21.7 per cent or 303 MW in the residential segment, while the remaining was installed on government buildings. State-wise, distribution of rooftop solar capacity in Tamil Nadu, Maharashtra, Haryana and Punjab is dominated by the commercial and industrial segments. These are followed by Gujarat, Rajasthan, Delhi, Uttar Pradesh, Andhra Pradesh and Telangana. Capacity addition in these states is largely driven by high tariffs for grid-based electricity and favourable government policies. However, rooftop capac-

80.0

12,000

60.0 44.3

50.0 40.0

6,000

30.0 4,000 20.0 2,000 1,724

2,711

3,913

7,100

12,912

13,184

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

10.0 0.0

Source: MNRE

Capacity

Growth rate

As of August 2017

Growth rate (%)

Installed capacity (MW)

70.0 57.3

8,000

ity addition lags in states such as West Bengal, Jharkhand and Jammu & Kashmir as well as the north-eastern states. For the development of rooftop solar capacity in the country, the states also need to implement net metering policies. Net metering has seen patchy progress so far due to a poor policy framework and strong reluctance among discoms to execute the policy. There have been no amendments to the policies formed based on the guidelines issued in 2013, despite the growth in the rooftop solar segment and the solar industry in general. Further, the restrictive nature of the policy such as caps on system capacity and deployment limitations leads to sluggish implementation. The lack of incentives for the adoption of the policy has been another reason for the poor execution of the policy.

Manufacturing segment 90.0

81.9

81.4

10,000

June 2017

Punjab

Year-wise capacity addition and growth rate 14,000

Cumulative capacity as of

2015-16

India has emerged as a promising market for solar equipment. However, the state of domestic manufacturing remains dismal in the country as international players dominate the market. Foreign players, which are primarily Chinese, have either set up manufacturing units in the country or are importing modules. Due to the lack of import duties on renewable energy equipment, imported modules are cheaper than those manufactured domestically. The steep fall in equipment prices across the world has further worsened the prospects of Indian November 2017 â&#x2014;? Renewable Watch â&#x2014;? 37

SEGMENT REVIEW

ANNIVERSARY ISSUE India initiative, international solar manufacturers are encouraged to set up equipment manufacturing facilities in India, which will augment the domestic manufacturing capacity and further bring down the prices. To this end, the government is planning to roll out a $3 billion programme called the Pradhan Mantri Yojana for Augmenting Solar Manufacturing or “PRAYAS”, under which 5 GW of capacity will be developed by 2019.

Andhra Pradesh

1,609.27

1,697.32

759.14

543.00

630.01

809.45 388.88

66.61

130.20

388.89

452.36

809.45

882.38

1,180.38

1,262.10

1,294.03

1,961.21

2,010.87

State-wise capacity addition (MW)

Gujarat

Karnataka

Madhya Pradesh

Maharashtra

Punjab

Rajasthan

Source: MNRE

Tamil Nadu

2016-17

manufacturers, despite strong measures being taken under the Make in India initiative. As per BRIDGE TO INDIA, in 2016-17, Chinese companies held a 75 per cent market share in the Indian solar segment. As a result, much of the domestic manufacturing capacity stands underutilised, with only less than a quarter of the cell capacity and about half of the module capacity currently operational. Given the glut of solar modules in the country, the handful of Indian manufacturers with large capacities are now shifting their focus towards upcoming international markets such as the Middle East and Africa. Low prices and domestic content restrictions have discouraged Indian manufacturers from expanding into the home market. As of May 2017, the operational cell manufacturing capacity stood at 1,667.05

Telangana

Cumulative as of June 2017

MW, nearly half of the installed capacity of 3,164 MW. Mundra Solar PV Limited, part of the Adani Group, has the largest installed capacity of 1,200 MW, but it is yet to begin operations. Tata Power Solar Systems Limited has the largest operational capacity at 270 MW (installed 300 MW), followed by Jupiter International Limited at 260 MW and Indosolar Limited at 240 MW. The country’s installed solar module manufacturing capacity stood at 8,398 MW as of May 2017, while the operational capacity was 5,506.65 MW. Three companies have the largest installed and operational capacities at 500 MW, Waaree Energies, Vikram Solar and Emmvee Photovoltaic. The government is determined to promote the manufacturing of solar power equipment in the country. Under the Make in

Tariff trend 6.00

4.79

4.67

4.43

4.00

1,400

4.40

4.35 3.31

1,200 3.47

3.15 2.62

3.00

1,000 2.65

2.44

800 600

2.00 500

1,500

500

250

300

750

130

270

920

400

350

500

1,000

400 1.00 0.00

200

38 ● Renewable Watch ● November 2017

Capacity

Gujarat

Tamil Nadu

Bhadla Phase III

Bhadla-Phase IV

NTPC Kadapa

Tamil Nadu

Rewa (Madhya Pradesh)

NTPC Rajasthan

Odisha (JNNSM)

Andhra Pradesh (JNNSM)

NTPC Telangana

Karnataka (JNNSM)

Source: MNRE

NTPC Karnataka

Jharkhand

Tariff

Capacity tendered (MW)

5.00

Tariff (Rs per kWh)

1,600

5.38

Given the new policies and financial incentives, several companies have announced their plans to start manufacturing in India. The Adani Group is planning to invest $3 billion to develop a 3 GW solar manufacturing plant in the country over the next three years. Of this, around 1.2 GW is expected to be operational by end-2017. Meanwhile, Shapoorji Pallonji, Lanco, Waaree and Emvee are also reportedly considering investing in the domestic solar manufacturing arena. China-based Trina Solar has plans to invest $200 million-$300 million in a manufacturing facility in Andhra Pradesh, with solar cell and module manufacturing capacity of 700 MW and 500 MW respectively.

Issues and challenges Even as the solar power segment progresses in the country, multiple challenges continue to plague the market, often dampening investor interest. These roadblocks lead to restricted growth. The following are some of the key issues and challenges faced by the Indian solar segment: z Financial health of discoms: Most of the state discoms are facing huge financial losses, and thus are not able to buy solar power. Power offtake and payment security are considered to be among the biggest risks in scaling up of solar power. The implementation of the Ujwal Discom Assurance Yojana to resolve the fundamental problem of discom finances is expected to considerably help the solar power segment by providing funds for payments and power offtake. z Infrastructure planning: There is a lack of integrated generation and transmission planning to support solar power

SEGMENT REVIEW

projects. Timely augmentation of transmission capacity will be the key to avoiding the accumulation of generation capacity. Grid integration: Intermittent renewable generation makes grid integration a challenge, which calls for the implementation of balancing mechanisms in the grid. To this end, significant investments need to be made in transmission infrastructure to evacuate power from upcoming solar energy projects. Absence of competitive finance: The interest rate for providing finance to solar manufacturers by domestic lenders stands at 13-17 per cent, depending on the creditworthiness of the manufacturer. In contrast, foreign institutions provide loans to manufacturers at interest rates as low as 5 per cent, thus bringing down the cost of production and the sale price.

ANNIVERSARY ISSUE

Key trends and developments z Spiralling tariffs: The solar power tariff hit a new historic low of Rs 2.44 per kWh on May

11, 2017, a drop of 7 per cent from Rs 2.62 per unit recorded on May 9, 2017. This tariff was quoted by ACME Solar in the auction for 500 MW of capacity at the Bhadla Solar Park, Phase III, while the remaining 300 MW capacity was won by SBG Cleantech at Rs 2.45 per kWh. Solar tariffs have been sliding throughout the year. In March 2017, the levellised solar power tariff dropped to Rs 3.15 per unit in the auction for a 250 MW project in the Kadapa Solar Park, Andhra Pradesh. In February 2017, lower capital expenditure and cheaper credit had brought down the solar tariff to Rs 3.31 per unit in the auction conducted for 750 MW of capacity in the Rewa Solar Park, Madhya Pradesh. Tariffs have somewhat settled at Rs 2.65 per unit, discovered as the lowest tariff in the auction held by the Gujarat government. z Market consolidation: Consolidation remained a dominant trend in the Indian solar seg-

ment. Mergers and acquisitions took place throughout the year. Noteworthy among these were the Greenko Group’s acquisition of SunEdison’s portfolio; offloading of Suzlon Energy’s solar projects, two to Canadian Solar and one to Ostro Energy; and takeover of Prestige Ocean Holding’s upcoming 100 MW solar project in Haryana by the Dino Energy Corporation. Reportedly, the Shapoorji Pallonji Group is also looking for a suitable buyer to sell its solar portfolio. Essel Infraprojects has appointed Investec as the banker for the sale of its solar business. Canada’s SkyPower has hired YES Bank to find a buyer for its Indian solar portfolio, while Fortum OYJ has hired Barclays to help it offload its solar power projects. This trend indicates a lack of confidence among players that do not consider

Outlook Efforts are being made to address the aforementioned challenges and facilitate the growth of the Indian solar power market in order to meet the country’s 2022 targets. The target for 2017-18 is still a distant reality, as the pace of new tender announcements and completed auctions has slowed down significantly over the past year, by 68 per cent and 59 per cent respectively. Several states have frontloaded capacity addition – Andhra Pradesh (installed and tendered 74 per cent of capacity targeted for March 2022), Telangana (70 per cent) and Karnataka (69 per cent) – and are bound to slow down. In the medium term, the outlook for the sector remains bright as viability concerns regarding low tariffs would get sorted and states would become more streamlined in capacity allocation. In addition, there is a growing need to increase investments in the solar power space. To this end, innovative financial mechanisms and alternative instruments are being designed to lower the cost of capital, and low-cost, long-term commitments are being secured from global institutions. In the next year, India will 40 ● Renewable Watch ● November 2017

solar energy as their core business and are willing to do away with such projects while the capacity is still low. z Bond market: India has become a considerable green bond market, owing to the huge

investment of around $100 billion undertaken to meet the country’s ambitious renewable energy targets. The first seven months of 2017 saw green bond issuance worth $2.1 billion, which is enough to fund the debt of over 3.5 GW worth of projects in the country. This includes $1.5 billion raised together by the Greenko Group and Azure Power in only two weeks. Green bonds are debt instruments for climate-focused investment solutions that have helped reduce the overall cost of funds. These bonds are particularly useful for institutions such as the Green Climate Fund, the Green Investment Bank and the Indian Renewable Energy Development Agency, which are mandated to invest in clean energy options only. z Anti-dumping investigation: The Indian solar power industry is awaiting the results of an

anti-dumping investigation into solar cell and module imports from China, Taiwan and Malaysia. The outcome could have far-reaching implications for the solar manufacturing industry. Experts opine that given the present condition of the Indian solar market, imposing anti-dumping duties could have a detrimental effect. As module prices have already seen a slight increase due to the goods and services tax, more duties would further increase the prices and subsequently, the solar power tariffs. However, considering the grim state of manufacturing in the country, the anti-dumping duty could act as a level playing field for domestic and international manufacturers.

demonstrate leadership in green finance as it will establish its first green bank and begin to support local banking options through unique public-private mechanisms. New sources of finance will increase the influx of capital, mainly from international institutions and reduce the overall cost of capital in the sector.

Given the achievements and developments of the solar segment over the past five to six years, the country seems to have built a significant ground for future solar power development. However, the challenges cannot be overlooked as they can seriously hamper the achievement of the 100 GW target. ■

SEGMENT REVIEW

ANNIVERSARY ISSUE

Still Winds Ultra-low tariffs slow down segment growth By Dolly Khattar

he year 2017 will be remembered as a landmark year with regard to the Indian wind power segment. From the discontinuation of generation-based incentives (GBIs) and phase-out of the accelerated depreciation (AD) benefit starting April 1, 2017, to the replacement of the feed-in tariff (FiT) mechanism with competitive bidding, it has been an eventful year for the wind power industry. On the one hand, the withdrawal of GBIs and the AD benefit led to the highest-ever wind capacity addition (about 5.5 GW) in 2016-17, while on the other, the transition from FiTs to auctions has put a dampener on new project installations. As of September 2017, only 421 MW of wind power projects have been commissioned against the government’s target of 4,000 MW for 201718. Since almost all wind-rich states have

42 ● Renewable Watch ● November 2017

stopped signing fresh power purchase agreements (PPAs) post the first wind auction held in February 2017, the capacity addition outlook for the year seems bleak. As per industry estimates, less than 1,500 MW of projects are likely to come online during 2017-18. This will largely comprise capacity signed under PPAs that were approved by the respective state electricity regulatory commissions (SERCs) prior to the first auction. After February 2017, not a single new PPA is reported to have been signed. Moreover, following the announcement of the second wind power auction results in September 2017, wherein the tariff touched a new low of Rs 2.64 per kWh, the signed PPAs that were awaiting SERC approval have also been cancelled in many states. For example, the Karnataka Electricity Regulatory

Commission (KERC) passed an order on September 4, 2017, setting a fresh FiT of Rs 3.74 per kWh for wind power, which is considerably lower than the tariff of Rs 4.50 per kWh set in October 2015. This move was in response to the Tamil Nadu wind auctions, where the winning tariff plunged to Rs 3.42 per kWh. As a result, 599 MW of wind projects were put in jeopardy. These projects had signed PPAs with various discoms in Karnataka at the old rate of Rs 4.50 per kWh, and were awaiting approval from KERC. Of these, around 273 MW had already been commissioned and power was being supplied to the state discoms at Rs 4.50 per kWh. However, following the new order, these PPAs will have to be renegotiated at Rs 3.74 per kWh. The remaining 326 MW of capacity is still under construction. A similar scenario is emerging in other states as well. This has brought the industry to a standstill as the project pipeline has totally dried up. The industry’s hopes are now pinned on the Ministry of New and Renewable Energy, which has stated that it will soon auction an additional 4.5 GW of capacity by the end of this financial year. However, this new capacity is not likely to be installed in less than 12 months.

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ANNIVERSARY ISSUE In a trickle-down effect, wind turbine makers are also staring at a slowdown even as the government looks to boost renewable energy capacity. A case in point is ReGen Powertech, one of the country’s top five wind turbine manufacturers, which has recently shut down a factory in Udaipur, Rajasthan, and also laid off some workers. According to Madhusudan Khemka, managing director, ReGen Powertech, “We all have extra capacity, so it was a good decision to restructure to stay lean. We operate from the 1 GW factory in Andhra Pradesh and have reduced staff strength from 1,700 employees to 1,300.” In yet another instance, in May 2017, turbine maker Inox Wind stated that it had stopped all manufacturing after the 700 MW of orders won under the previous FiT regime became a “piece of paper” when the states stopped signing PPAs. Other manufacturers have also been impacted. Suzlon Energy Limited’s revenue fell by 46 per cent in the quarter ended June 2017 over the previous quarter. Meanwhile, Siemens Gamesa, the biggest wind turbine supplier in India for the past three years, saw a 7 per cent drop in revenues in the quarter ended June 2017. Wind turbine manufacturers are facing several challenges as they adjust to an auction system that is putting a question mark on how much wind energy projects will actually get built. According to D.V. Giri, secretary general, Indian Wind Turbine Manufacturers Association, 2 GW of wind turbines are likely to be produced in 2017-18 against the earlier expectation of 6 GW, resulting in idle capacity at manufacturing facilities. In addition, there are impediments such as curtailment of wind power procurement, payment delays and the lack of guidelines for state-level wind bids. All these issues need to be addressed on priority.

On the bright side There is no denying that the industry is going through a tough phase as there

are multiple problems pertaining to upcoming wind power capacity, the supporting infrastructure and domestic manufacturing. However, this may be looked upon as a transition phase that may bring in greater transparency and efficiency in the segment. The auction process will ensure that bids are at a realistic level. For instance, earlier project sizes were in the range of 25-50 MW, with a few projects going up to 150 MW. With the new auction-based allocation route, project sizes have gone up to 250 MW, thus bringing in economies of scale. Moreover, the emerging modes of financing provide capital at a lower cost. In addition, new technologies and evolving wind turbine generators have increased plant load factors, all of which translates into a lower levellised cost of electricity. With regard to payments, the Ujwal Discom Assurance Yojana has been working well. If the scheme delivers positive results, the issues of payment delays and defaults would be taken care of. Meanwhile, an increased emphasis on scheduling and forecasting is being witnessed. This would certainly address the issue of wind power curtailment. “Whenever there is an issue of curtailment, developers have the right to protest because curtailment cannot be done without due reason,” said Kumar, reiterating the government’s stance on providing must-run status to all renewable energy plants. In a recent debate on must-run status in Madhya Pradesh, the government took cognisance of this matter and issued an advisory to all state governments that must-run status needs to be honoured.

GW as of March 2017. However, the year 2017-18 (up to September 2017) has witnessed a major slowdown as discussed above. The capacity till date, therefore, stands at 32.7 GW.

Few takers On February 24, 2017, wind power prices crashed to a record low of Rs 3.46 per kWh in the country’s first wind power auction, wherein the Solar Energy Corporation of India (SECI) invited bids for 1 GW of wind capacity based on the viability gap funding mechanism. Mytrah Energy (India) Limited, Singapore-based Sembcorp Industries, IDFC Alternatives-backed Green Infra Limited, global private equity fund Actis Capital’s clean energy platform Ostro Kutch Wind Private Limited, and Inox Wind Infrastructure Services Limited won contracts for 250 MW of capacity each at Rs 3.46 per unit. Meanwhile, Adani Power won 50 MW as against the bid capacity of 250 MW. This winning tariff was much lower than the country’s average wind FiT at around Rs 5 per kWh as of February 2017. Notably, the winning bid was not an outlier, as is evident from the losing bids placed by Adani Green Energy (MP) Limited (Rs 3.46 per kWh), ReNew Power Ventures Private Limited (Rs 3.47 per kWh) and Gamesa Renewables Private Limited (Rs 3.68 per kWh), all quite close to the winning tariff.

Current scenario

Results for the second tender were declared in September 2017, and the winners included ReNew Power (250 MW at Rs 2.64 per kWh), Orange Sironj Wind Power (200 MW at Rs 2.64 per kWh), Inox Wind (250 MW at Rs 2.65 per kWh), Green Infra (250 MW at Rs 2.65 per kWh) and Adani Green Energy (50 MW at Rs 2.65 per kWh).

For the Indian wind power segment, 201617 was a record year, both in terms of cumulative installed capacity and annual additions, with the country emerging as the fourth largest wind energy market in the world. With about 5.5 GW of wind capacity added in 2016-17, the segment reached a total installed capacity of 32.3

Meanwhile, companies such as BLP Energy, Actis LLP’s Sprng Energy, Hero Wind Energy and ReGen Powertech also quoted low tariffs. Besides the SECI tenders, the only state that has conducted wind power project auctions so far is Tamil Nadu, but it is yet to sign PPAs. November 2017 ● Renewable Watch ● 43

SEGMENT REVIEW

ANNIVERSARY ISSUE solar potential of high to moderate level. While existing wind farms have scope for solar photovoltaic (PV) capacity addition, existing solar PV plants have the potential for wind development in their vicinity. Thus, suitable policy interventions can help in setting up new wind-solar hybrid plants, and drive hybridisation of existing wind and solar plants.

Outlook Areas of opportunity Despite uncertainty in the segment due to the introduction of the competitive bidding regime, new opportunities are emerging in the segment. These are as follows: Repowering: The repowering of existing wind farms has created growth opportunities in the segment. Most of the old wind turbines in India have 30-40 metre hub heights and kilowatt-scale rated capacity. Low hub heights result in inefficient power generation. With technological development and innovation, it is now possible to install turbines at higher heights, which would increase the efficiency of windmills. Wind farms in Tamil Nadu, Maharashtra and Gujarat have a number of ageing wind turbines, which were installed during the early years of wind power development in India. Nearly 10 GW of installed projects have sub-100-metre hub heights and rated capacities of 225-1,000 kW. Of these, about 3.4 GW of plants, which are at high potential wind sites, are obsolete and present an opportunity for repowering. The National Institute of Wind Energy (NIWE) has reassessed the wind power potential to be 302 GW at 100 metres. Based on this, the government has come up with a repowering policy that will enable owners to replace obsolete wind turbines of less than 1 MW capacity with the latest technology. To further incentivise wind farm owners, the government has promised a rebate of 0.25 per cent along with existing benefits. Although there are concerns regarding cost overruns, rebate and deployment of energy efficient wind 44 ● Renewable Watch ● November 2017

turbines can boost repowering and help revamp the industry. Offshore wind: While Tamil Nadu and Gujarat are seen as having tremendous offshore wind potential, the falling onshore wind tariff has raised questions on the viability of offshore wind, which has substantially high costs and tariffs. Offshore wind project cost is nearly three times that of onshore wind projects. Given their large scale, offshore wind facilities entail greater challenges, as well as specialised equipment and expertise. The MNRE announced the Offshore Wind Policy in October 2015, after seeking consultations in 2013. Under the policy, FOWIND (Facilitating Offshore Wind in India) is reassessing the offshore wind potential in two coastal states – Gujarat and Tamil Nadu. This is a four-year project implemented by a consortium led by the Global Wind Energy Council and co-financed by the European Union and Gujarat Power Corporation Limited, among others. Currently, FOWIND is undertaking the first offshore wind resource measurement in the Gulf of Khambhat, off the coast of Gujarat. India’s first offshore wind research platform is also being developed under this project. Further, the NIWE is in the process of finalising the first geophysical survey along the coast of Gujarat. With such significant developments in the industry, the first tender for offshore wind is likely to be announced in 2019. Solar-w wind hybrids: A superimposition of wind and solar site maps shows that a large number of areas have both wind and

Currently, the country has a wind power capacity of 32.7 GW. In order to meet the 60 GW target by 2022, the industry will have to add around 6 GW of capacity per annum, which seems quite an impossible target for 2017-18. If an adequate and timely push is not given to the project supply side by the government, there could be far-reaching implications for the health of the sector. Recognising this problem, the government has announced a plan to auction 4,500 MW of capacity in three tranches in the coming months. The new tenders are expected to allow developers to bid for higher capacities of up to 400 MW as compared to the 250 MW allowed currently. This will help improve project economics and further bring down tariffs. However, for any sector to be healthy and sustainable, all stakeholders must gain. What the industry loses in terms of prices, it should earn in terms of volumes. To boost volumes, the state governments should be encouraged to come up with wind tenders. Tamil Nadu recently issued a 500 MW wind tender, and its results were declared a few weeks before the SECI tender. ReGen Powertech was declared the lowest bidder, quoting a tariff of Rs 3.42 per kWh. If more state-level tenders are launched, it may bring the segment back on track. But given the past record and the experience of the solar power segment, which has also undergone significant delays in tendering, the 6 GW per annum number looks a bit too ambitious for 2018-19 as well. Capacity addition may pick up from 201920 onwards. ■

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Untapped Potential Lack of a clear policy framework stymies bioenergy expansion

hile redefining India’s renewable energy targets to meet the country’s Intended Nationally Determined Contributions, the government had set an ambitious target of 10 GW of installed capacity for bioenergy by 2022. Despite the high potential of bioenergy in the country, the segment has not progressed as expected and growth has been sluggish. This segment has been eclipsed by the success of the wind and solar energy segments, which are characterised by much lower tariffs determined through reverse auctions. Although biomass presents a diverse array of applications, including energy generation, only a few have been implemented and that too on a small scale. As of October 2017, the country’s total biopower generation capacity stood at 8.3 GW. Of this, biomass power/cogeneration projects contributed 8.2 GW and waste-toenergy (WtE) projects contributed 0.11 GW. At present, biopower occupies 13.7 per cent share in the renewable energy sector and a meagre 2.5 per cent share of the total installed capacity in the country. Given that the segment has an estimated power generation potential of 25 GW (biomass and cogeneration combined), it has a long way to go in terms of additional power generation capacity that can be set up.

State-wise status Punjab has the highest bioenergy generation potential (3,517 MW) in the country, but has fallen behind in project implementation. As of March 2016, the state had only 155.5 MW of biomass-based generation projects. However, Punjab is amongst the handful of states that have been regularly notifying tariffs for biomass every year. Maharashtra, with the second highest bioenergy generation potential, leads the country with a biomass-based installed capacity of 1,220.78 MW as of March 2016. Karnataka and Uttar Pradesh follow closely with 872.18 MW and 842 MW of installed capacity respectively. Other states with significant biomass capacities are Tamil Nadu (626.9 MW), Andhra Pradesh (380.75 MW) and Chhattisgarh (279.9 MW).

Biofuels Over the past few years, capacity addition in the segment has seen a decline. In 2013-14, the segment added a capacity of 307.7 MW, which fell to 251.6 MW in 2014-15 and 171 MW in the subsequent year. However, the Ministry of New and Renewable Energy (MNRE) has contested these figures, stating that the quoted data could have been exportable capacities by the states, instead of installed capacities. However, the final data is awaited. 46 ● Renewable Watch ● November 2017

Biofuels can help reduce energy costs not only for the transport sector but also for industrial consumers that rely heavily on diesel for meeting their electricity needs. In addition, biofuel applications have found new interest in the telecom sector and its usage in powering telecom towers is being tested by using jatropha oil as fuel. To this end, companies have been carrying out research and development to reduce

costs and blend biofuel with conventional fuel. Hindustan Petroleum Corporation Limited recently issued a tender to determine the logistics of paddy straw for one of its biofuel pilot projects. In 2016, the Bangalore Metropolitan Transport Corporation launched a pilot project with a fleet of 135 buses fuelled by biodiesel. In addition, the Karnataka State Road Transport Corporation (KSRTC) announced plans to deploy 1,700 biofuel buses from 15 depots across the state. According to the company, each litre of fuel will contain 20 per cent biodiesel and 80 per cent regular diesel. Earlier, in 2015, KSRTC introduced 10 bio-buses on a trial basis and reported a reduction in greenhouse gas emissions. In April 2017, the Ministry of Petroleum and Natural Gas permitted oil marketing companies to increase the ethanol blending limit to 10 per cent across the country. To support this new order, the government has fixed the price of delivered ethanol in the range of Rs 48.50-Rs 49.50 per litre. Interest in biofuel production is supported by the fact that the country has large arable lands that can be exploited for the production of these crops. However, the question of sacrificing land for energy crop production instead of food crops has been raised across the world. Although these new plantations could benefit farmers and indus-

SEGMENT REVIEW tries, the cost of food crops could increase, which would lead to problems in a country that already faces food security issues. The government, therefore, needs to assess these probable issues and formulate an action plan to address them.

Other applications The government had set a target of achieving 400 MW of grid-connected capacity addition from biopower and 10 MW from WtE for 2016-17. Besides, under off-grid renewable energy systems, targets of 15 MW from WtE, 60 MW from biomass nonbagasse cogeneration and 10 MW from biomass gasifiers were set. No family-size biogas plants were planned for 2016-17. In 2016-17, off-grid power capacity from biomass gasifiers in eight rice mills and other industries including flour mills, bakeries for meeting captive electricity demand and thermal applications were installed in various states. More than 35,000 biogas plants of the approved models were installed with financial support from the MNRE, taking the cumulative installation to over 4.94 million biogas plants in all states and union territories. In the Northeast, 5,753 biogas plants were installed during the year. Under the National Biomass Cookstoves initiative, several pilot projects were taken up during the year for the deployment of improved cookstoves that were demonstrated for domestic and large-sized community cooking in anganwadis, midday meal schemes in schools, tribal hostels, etc. Moreover, projects taken up under the Unnat Chulha Abhiyan are eligible for carbon credits under the clean development mechanism. At present, 53 models of improved cookstoves have been approved by the MNRE. As part of the new initiative to support bio-CNG production, three projects with a cumulative production of 10,767 kg per day were commissioned during the year in Punjab, Rajasthan and Maharashtra. In addition, the MNRE, which is a partner in the IMPacting Research Innovation and Technology (IMPRINT) initiative, agreed 48 ● Renewable Watch ● November 2017

ANNIVERSARY ISSUE to support five projects that included the biofuel segment. A plan to launch an integrated bioenergy mission was proposed in 2015 to create a pathway for various schemes to promote the segment and address common issues faced by the subsegments. To this end, a bioenergy advisory committee was formulated, along with subcommittees on biomass, biofuels, and biogas. Moreover, a technical committee was proposed to be set up for formulating a complete scheme for feedstock and crop residue supply chain management for the biofuels segment. The committee has been working towards enhancing the biomass pelletisation industry. It has decided to create standards for biomass pellets and to certify the same as a renewable energy fuel. The MNRE is considering generation-based incentives for cogeneration plants for carrying out operations during off-peak periods by using other biomass fuels.

fuel costs (due to no provision of longterm supply contracts of raw materials with farmers) have made investors wary of setting up large biomass-based energy plants. In addition, the lack of adequate incentives from the government has failed to generate the much-needed interest from project developers and financiers. While some states have announced higher tariffs for bioenergy for the current year, the impact has been minimal. For example, Maharashtra increased biomass tariffs by 15 per cent. Rajasthan and Karnataka followed suit and also hiked tariffs. Lack of proper operations and maintenance and payment recovery practices and a stagnant policy and regulatory framework have prevented the segment from harnessing its full potential. Moreover, with solar and wind tariffs falling to below the cost of conventional power in recent auctions, attention has been diverted from the bioenergy segment, which has comparatively higher tariffs.

Challenges The sector faces multiple challenges ranging from regulatory uncertainty, lack of clear policies and their implementation and high technology and logistics costs. Time and again, issues such as seasonality of raw materials for biomass plants, lack of storage options for raw fuel as well as fuel processing units have been highlighted as the key reasons for the low capacity addition in the segment. Similarly, the WtE segment has faced problems with the planning and implementation of waste collection and segregation, adding to the list of issues in the segment. Moreover, high capital costs and high variability in Annual addition in bioenergy capacity (MW) 307.7 251.6

171.0

2013-14 Source: MNRE

2014-15

2015-16

Outlook To achieve the target of 10 GW of bioenergy capacity by 2022, about 1.8 GW of capacity addition needs to take place over the next five years. This seems unlikely, given the challenges faced by the segment. Innovative business models are needed to reinvent the biomass-based generation segment. Fuel logistics need to be improved through technology and financial innovations. State governments need to proactively push the development of these projects, which not only provide commercial advantages but also offer social benefits in terms of efficient collection of agricultural waste and employment generation in remote regions. Meanwhile, biofuels are capable of becoming the “next big thing” in the renewable sector, as the need for cleaner and indigenously produced fuel increases every day. There needs to be a greater focus on research and development projects focused on bioenergy, which may eventually lead to a strong indigenous manufacturing base. ■

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No Silver Lining SHP segment beleaguered by policy uncertainty and investor reluctance

he growth of the smallhydro power (SHP) segment in India has been sluggish year after year. While the government has been fairly optimistic about the segment, it has failed to translate this into a real fillip to growth. In fact, the segment has been short of target for the past few years and as such, there seems to be little hope on the horizon.

Current scenario With an estimated potential of 20,000 MW across 6,474 sites, the industry remains largely underdeveloped with an installed base of only 4,384 MW as of June 2017, with a paltry 4 MW being added in the first quarter of 2017-18. It can also be argued that the segment has lost favour with the government, which has instead turned its attention to the solar and wind energy segments. Notably, capacity addition has slowed down post the government’s announcement of the ambitious renewable energy target of 175 GW of capacity by 2022. As per data from the Ministry of New and Renewable Energy (MNRE),

a disappointing 106 MW was added in 2016-17 against the 250 MW target. Meanwhile, the private sector too is reluctant to invest in the SHP segment due to the large size of investments involved as well as the long delays in obtaining permits, low tariffs and modest returns. Moreover, seasonal variability and unpredictability of rainfall restrict power generation and hence affect revenues. Such issues undermine the viability of SHP projects for private investors.

State-wise scenario Although Karnataka and Himachal Pradesh have the largest SHP potential and installed capacity, Maharashtra has been able to achieve the largest share of its potential at 43.73 per cent as of June 2017. Uttarakhand has a significantly large potential of 1,707.87 MW. However, capacity addition has stagnated at 209.32 MW over the past three years. In the other states, capacity addition has been very modest. Among the worst performing states, where the installed capaci-

ty is only 10 per cent or below that of the identified capacity, are Arunachal Pradesh, Madhya Pradesh, Jharkhand, Assam, Manipur, Gujarat and Uttar Pradesh. While other sources of renewable energy have witnessed significant uptake in these states, SHP has failed to make a mark.

Issues and challenges There are a series of challenges that are impeding growth in the SHP segment. These issues have remained more or less the same year after year due to the lack of proactive government intervention in tackling these. Protracted delays and difficulties in obtaining permissions from multiple government agencies increase the gestation period of plants, reducing their viability and making SHP projects unattractive for private developers. The state governments and central agencies need to expedite and streamline the process of providing statutory clearances to projects. Another concern is grid availability. Lack of grid connectivity has often led to losses for developers, who are forced to curtail generation, leading to revenue losses and underutilisation of the plant.

The way forward

State-wise installed capacity (MW) State

December 2015

December 2016

June 2017

1,177.93

1,220.73

1,225.73

Himachal Pradesh

754.81

798.81

835.31

Maharashtra

338.87

346.17

347.37

Andhra Pradesh

232.23

241.98

Uttarakhand

209.32

Kerala

198.92

205.02

213.01

Karnataka

Others

1,266.82

1,311.82

1,311.83

Total

4,178.90

4,333.85

4,384.55

Source: MNRE

50 ● Renewable Watch ● November 2017

Future projections do not look too optimistic for the SHP segment, caught as it is between policy uncertainty and investor reluctance. Dwindling investor interest and lack of government attention indicate bleak times ahead for the SHP segment. While solar and wind no doubt make greater commercial sense, SHP has its own set of benefits that cannot be ignored. SHP projects offer large social and economic gains, which call for urgent government intervention to promote this segment. ■

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Promising Technologies Industry focuses on emerging renewable segments

n addition to developing the traditional sources of renewable energy, the market is increasingly focusing on emerging technologies in order to be future-ready. The key among these are wind-solar hybrids, electric vehicles, offshore wind, and floating solar photovoltaic. During the past year, considerable development has been witnessed in these areas, paving the way for a promising future. Renewable Watch takes a look at the key highlights in these segments...

Wind-solar hybrids Following the release of the draft national Wind-Solar Hybrid Policy and the identification of sites by the National Institute of Wind Energy (NIWE) in 2016, several pilot projects have been initiated in this segment over the past year. z The NIWE issued an expression of interest (EoI) for the Kayathar project, which comprises a 15-20 kW wind plant and a 5-10 kW solar plant for technology demonstration. z Gamesa won India’s first commercial level hybrid project called WiSH (WindSolar Hybrid) in Kudgi. Owned by NTPC, the project consists of a 50 MW wind farm with 28.8 MW of solar capacity, and a greenfield project with a 2 MW wind farm and 1.37 MW of solar capacity. z IL&FS Energy and the Andhra Pradesh government have signed an MoU to develop a 1,000 MW hybrid park with energy storage. z In March 2017, the Gujarat Energy Research and Management Institute announced plans to develop wind-solar hybrid technology under which wind turbines with hub heights of 5-125 metres will be connected to rooftop solar and ground-mounted systems. 52 ● Renewable Watch ● November 2017

Offshore wind The government has begun work to tap the 350 GW offshore wind power potential. In January 2017, the Gujarat government signed an MoU with Samiran Udaipur Windfarms to set up India’s first offshore wind farm (500 MW) in the Gulf of Kutch, at a cost of Rs 65 billion. In November 2017, the FOWIND consortium commissioned India’s first offshore light detection and ranging equipment in the Gulf of Khambhat to undertake longterm wind measurements. In September 2017, the National Institute of Ocean Technology identified Kanyakumari and Rameswaram, off the coast of Tamil Nadu, as the two suitable sites for offshore wind projects. As per estimates, 50 turbines with a capacity of 3.4 MW each can be installed 5 km away from the coastline of these cities. Each turbine is expected to cost Rs 690 million and the energy produced will be sold at tariffs of Rs 10.80 and Rs 9.60 per kWh in Rameswaram and Kanyakumari respectively. An internal rate of return of 14 per cent has been proposed to make these projects commercially viable.

Floating solar The concept of floating solar power plants has been adopted by most states over the past year. In February 2017, the Andhra Pradesh government announced plans to set up a 100 MW floating solar power plant at the Penna Ahobilam Balancing Reservoir in Anantapur. NTPC Limited commissioned a 100 kWp floating solar plant in Kayamkulam district, Kerala, in March 2017. Meanwhile, the NLC proposed tendering 5 MW of floating solar capacity in the Andaman & Nicobar Islands. In July 2017, Greater Visakhapatnam Smart City Corporation Limited tendered a 2 MW grid-

connected floating solar project at the Mudasarlova reservoir. In November 2017, the Lakshadweep Energy Development Agency invited an EoI to develop 10 MW of floating solar projects.

Electric vehicles To aid the government’s National Electric Mobility Mission Plan, NITI Aayog released a proposal in November 2017 to develop electric vehicle (EV) charging infrastructure in Delhi. Several projects were tendered or commissioned over the past year, kickstarting the e-vehicles programme. In August 2017, under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME-India) scheme, 25 charging stations were installed by Mahindra REVA Electric Vehicles in six locations across Bengaluru. Under the same scheme, the government sanctioned five proposals for development in Delhi-NCR, Jaipur and Chandigarh. NTPC has constructed two EV charging stations at its offices in Noida and Delhi and will develop 20 more stations in the NCR. It has sought a pan-Indian licence to aid its expansion plans. The ACME Group launched India’s first EV battery swapping and charging station in Nagpur, while Tata Power installed an EV charging station on its premises in Mumbai. Meanwhile, ABB India submitted a bid to set up 4,500 charging stations. It is developing nine solar charging stations for e-rickshaws in Jabalpur. Fortum and NBCC have signed an MoU to develop EV charging infrastructure. All these developments point towards a promising future for emerging technologies that will enable higher efficiencies and reduce the country’s carbon footprint. Investor interest in this space has also strengthened over time. ■

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Sluggish Growth Off-grid segment faces multiple challenges

onnecting remote areas to the grid continues to be a daunting task for the government. Of the 15,019 villages electrified over the past two years, only 8 per cent have achieved 100 per cent household connectivity, indicating the challenges faced during grid expansion. Moreover, despite being socially imperative, bringing the grid to remote areas is expensive and makes little economic sense given the small populations in these areas. In this scenario, off-grid power systems have emerged as a viable alternative and are being deployed for various purposes such as irrigation, cooking, lighting and heating. Renewable Watch takes a look at the key developments in some of the off-grid segments over the year...

Solar-powered pumpsets At present, India has about 19 million grid-connected and 9 million diesel pumpsets. However, given the erratic grid power supply and rising fuel costs, these options are a financial burden for farmers. Solar-powered pumpsets can address the issues associated with conventional pumpsets and provide cost-effective irrigation to farmers. Under the National Solar Mission (NSM), the solar pumpset segment has attracted significant interest. In March 2014, the government had approved subsidies of Rs 3 billion to help farmers install solar-powered water pumps to boost their agricultural yield and reduce diesel usage. Subsequently, the government initiated a programme to install 100,000 solar pumps for irrigation and drinking water purposes across the country, with financial support of Rs 4 billion. As of October 2016, a total of 90,710 solar pumps were installed across the country. 54 ● Renewable Watch ● November 2017

A key challenge facing this market is the high cost of solar pumpsets; a 5 horsepower (HP) solar water pumpset costs Rs 100,000-Rs 120,000. As part of the government’s off-grid programme, 30 per cent subsidy on the cost of the system ranging from Rs 21 to Rs 105 per watt is provided in the general category states, depending on the capacity of the modules and configuration of the solar PV systems/plants. The capital subsidy for solar water pumping stations ranges from Rs 27,630 per HP to Rs 57,600 per HP. The difference between the sanctioned funds and disbursements has emerged as a major issue for the solar pump market. From 2014 to 2016, only about a quarter of the funds sanctioned annually have been disbursed, leading to a reduction in the number of projects.

Solar water heaters The Indian solar water heater (SWH) market increased from 650,000 square metres in 2003 to 8.9 million square metres in January 2016, growing at a compound annual growth rate (CAGR) of about 24.4 per cent. This can be attributed to the increasing uptake by the residential segment, growing awareness and falling costs. The reduced costs have also increased the popularity of these sys-

tems in hotels, hospitals and other commercial institutions. Until 2014, the Ministry of New and Renewable Energy (MNRE) offered 30 per cent subsidy, which was the primary growth driver for the segment. However, the launch of evacuated tube collector (ETC) solar water heaters in October 2014 led to the discontinuation of the subsidy. The ETC systems offered better returns on investment as compared to flat plate collector systems. Therefore, the subsidy was removed to encourage the segment to become self-sustainable. A target of 15 million square metres has been set for 2017-18 and 20 million square metres for 2021-22. To this end, the segment will have to nearly double the capacity in the ongoing fiscal and grow at a CAGR of 17.6 per cent thereafter.

Solar lighting Demand for solar lanterns is expected to reach around 35 per cent of the underserved market by 2018, as compared to only 5 per cent in 2014. These solutions are affordable, but can provide only basic lighting. Thus, solar home systems and decentralised renewable energy solutions are better positioned to serve the evolving demand in rural areas. The MNRE’s Rural Village Electrification programme, launched in 2001, aims to provide lighting and electricity facilities through renewable energy systems to areas not covered under the Rajiv Gandhi Grameen Vidyutikaran Yojana. As of January 2017, the amount sanctioned for villages and hamlets under the programme was almost Rs 3.71 million. The programme is particularly relevant in Madhya Pradesh, Odisha, Jammu & Kashmir, Chhattisgarh and Jharkhand as well as the north-eastern states due to difficulties in grid expansion and the presence of a large unelectrified population in these regions. In addition, the deployment of around 1 million off-grid lighting systems is being targeted under the NSM. A credit-linked

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capital subsidy scheme for solar lighting is also being implemented through the National Bank for Agriculture and Rural Development and regional rural banks.

Growth in installed solar pumpsets, sanctions and disbursements 5,000.00

40,000

37,677

4,500.00

Biomass

4,000.00

The adoption of biomass-based off-grid systems has been slow in the recent past with the MNRE consistently falling short of its target by huge margins. As against the target of 60 MW of installed non-bagasse cogeneration biomass capacity for 201718, only 9.5 MW was achieved as of September 2017. The total installed capacity from non-bagasse cogeneration biomass stood at 661.41 MW, hardly an increase over the 651.91 MW in September 2016. Further, approximately 0.92 MW of capacity was added from biomass gasifiers against a target of 7.5 MW, taking the cumulative installed biomass gasification capacity to 163.37 MW.

3,500.00

Microgrids Microgrids provide a community-based alternative to grid-connected power. Of late, solar has become the most important generation source for microgrids while the popularity of biomass has also grown considerably. However, India’s potential for microgrids remains underutilised due to the absence of efficient and cost-effective energy storage technologies. The MNRE provides a capital subsidy of 30 per cent on the cost of installation of solar micro- and mini-grid systems under the off-grid and decentralised solar applications scheme of the

25,000

3,000.00

20,000

2,500.00 2,000.00

15,000

1,500.00 10,000 1,000.00 5,000

500.00

3,905.77

0.00

1234.64

Source: MNRE

Number of projects

NSM. Therefore, a subsidy of Rs 105 per Wp is provided for a 10 kWp microgrid (DC) and a subsidy of Rs 90 per Wp for microgrid systems having module capacity in the range of 10 kWp to 250 kWp. In addition, the ministry provides a minimum warranty of five years for these systems in the rural and remote areas.

Challenges and the way forward Despite significant adoption of renewable off-grid power solutions, the segment’s growth remains sluggish due to various factors. Manufacturers in the segment are still not mature and often face difficulties in securing finance for capital expansion. This prevents them from achieving higher efficiencies while bringing down costs.

Street lights 1,307,828

959,862 413,102

274,679

March 2014

56 ● Renewable Watch ● November 2017

November 2016

1309.57

3036.17

2015

1,996,841

Source: MNRE

4431.94

2014

Home lights

1,099,505

Rs million

30,000 24,081

Solar lighting installations Solar lanterns/Study lamp

35,000

32,734

875.61

2016 Released amount (million)

Sanctioned amount (million)

The majority of the consumer base of the segment is located in far-flung areas and is dependent on agricultural income subject to seasonal variations. Therefore, financing the entire project upfront is not always feasible and securing loans from financial institutions is also difficult. The precarious financial situation restricts both supply and demand in the off-grid market. Moreover, the lack of awareness of the benefits and subsidies provided for such systems is a deterrent to the growth of the segment. For policymakers, the segment is often overshadowed by gridconnected renewables. The ambiguity in the policy structure further restricts the uptake of off-grid power solutions. In light of the significant socio-economic gains of off-grid solutions, the government should focus on their growth in parallel with grid-connected power, and formulate proactive policies to make the segment more attractive for investors. The financial benefits provided to investors and manufacturers will help them scaleup operations in the segment, thereby reducing costs. Financiers, in turn, need to come up with innovative instruments for both consumers and manufacturers in order to increase the uptake of off-grid solutions. The government should also focus on creating greater awareness about the viability and benefits of such technologies to drive uptake. ■

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Views of R.K. Singh “We are confident of exceeding the 175 GW target” The government recently announced the trajectory for achieving the target for commissioning 175 GW of renewable energy capacity by 2022, including 100 GW of solar and 60 GW of wind. On the occasion of the signing of power sale agreements (PSAs) between the state discoms and the Solar Energy Corporation of India (SECI), R.K. Singh, minister of state (independent charge) for power and new and renewable energy, spoke about the government’s plans to speed up renewable energy installation and strengthen the renewable energy equipment manufacturing base. Excerpts from his address at the event... Trajectory for renewable energy

R.K. Singh Minister of State (Independent Charge) for Power and New and Renewable Energy

“The sanctity of PPAs has to be ensured and the agreements mandatorily honoured.”

There has been a long-pending demand from the industry to declare the renewable energy roadmap of the government. According to me, 175 GW of renewable energy capacity by 2022 is a very conservative target. India can easily achieve 200 GW of capacity by 2022. We are confident of not just achieving the 175 GW target but even exceeding it, along with providing 24x7 affordable, clean and efficient power to everyone. This can be achieved with the cooperation of the states in ensuring that their power utilities remain financially viable. The central government has provided all the required support to the states, such as disbursing funds under the Deendayal Upadhyaya Gram Jyoti Yojana and the Integrated Power Development Scheme, to ensure 24x7 “Power for All” by strengthening the intra-state transmission networks and ensuring mandatory metered connections. The Ministry of Power is in talks with the states to ensure 100 per cent metered connections through smart/prepaid meters. The reverse auction of solar and wind power capacity has been very successful and resulted in tariffs dropping to an all-time low. The government, therefore, has decided to auction up to 21 GW of solar and wind power capacity by March 2018. The Ministry of New and Renewable Energy (MNRE), along with the state governments, has planned bids for about 21 GW of ground-mounted solar capacity in 2017-18, of which 3.6 GW

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has already been bid out, 3 GW will be bid out in December 2017, 3 GW will be bid out in January 2018, 5 GW in February 2018 and 6 GW in March 2018. Another 30 GW each will be bid out in 2018-19 and 2019-20. In the wind power segment, against a target of 60 GW, 32 GW has already been commissioned. The central government, along with the state governments, intends to issue bids for a cumulative capacity of 8 GW in 2017-18. Of this, 5 GW (including a recently announced 2 GW tender) has already been bid out, while 1,5002,000 MW will be bid out in January 2018 and 1,500-2,000 MW in March 2018. A total of 10 GW will be bid out in 2017-18 and another 10 GW in 2018-19, leaving a margin of two years for the commissioning of projects. Further, the ministry will soon be issuing bidding guidelines for the wind segment.

Encouraging domestic manufacturing Local manufacturers want the government to create a market for solar energy equipment in India. We expect to achieve this through the tendering route. In order to encourage the Make in India programme in the renewable energy sector, the MNRE is working out a scheme and will soon be issuing an expression of interest to gauge the expectations of the industry. Under the scheme, the government plans to award development contracts for 20 GW of projects to companies that have equipment manufacturing units in the country or are willing to set up manufacturing

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ANNIVERSARY ISSUE capabilities. This means that a manufacturer will need to set up a manufacturing unit of a particular size, right from the ingot stage to the module stage, and only then can it participate in the bidding. The scheme would be earmarked for government-owned projects, which would insulate it against anti-competition norms set by the World Trade Organization (WTO). A WTO ruling last year went against India for favouring local manufacturers under the domestic content requirement programme wherein the government had mandated that a certain portion of solar capacity addition be reserved for domestically sourced modules. With wind power tariffs becoming competitive and the state discoms being encouraged to buy more renewable power, the government has doubled the bidding capacity for the third national-level wind auction from 4 GW last year to around 9 GW in the current year. Regarding clarity on the goods and services tax rates on solar panels, the MNRE is in talks with the Ministry of Finance and in the coming days, all the issues would be resolved. Further, we will think about imposing customs duty,

Government to conduct third wind power auction of 2,000 MW capacity At the event marking the announcement of the trajectory to achieve 100 GW of solar and 60 GW of wind capacity by 2022, SECI signed PSAs for wind power generated by the winners under the second wind auction, with the state utilities of Uttar Pradesh, Bihar, Jharkhand, Assam, Punjab, Goa and Odisha. Reverse auctions for the SECI-II wind bid were conducted on October 4, 2017, which saw a very competitive tariff of Rs 2.64/Rs 2.65 per kWh. It may be mentioned that the winners of the SECI-II wind bid - ReNew Power (250 MW at Rs 2.64 per kWh), Orange (200 MW at Rs 2.64 per kWh), Inox (250 MW at Rs 2.65 per kWh), Green Infra (250 MW at Rs 2.65 per kWh) and Adani Green (50 MW at Rs 2.65 per kWh) - will be setting up wind power plants in Gujarat, Tamil Nadu and Madhya Pradesh and will sell power to these utilities. PPAs with these winners are expected to be signed shortly. The government also announced the third round of SECI’s wind power auction for setting up 2,000 MW of wind power projects connected to the interstate transmission system. The bidder can bid for a minimum capacity of 50 MW and a maximum capacity of 400 MW. The projects under this scheme are expected to be commissioned towards the end of 2019.

“Local manufacturers want the government to create a market for solar energy equipment in India. We expect to achieve this through the tendering route.” if any, on solar equipment once we develop our domestic manufacturing capacity.

Innovative alternatives The MNRE is also exploring innovative ways to achieve additional renewable energy capacity in the form of floating solar

power plants (FSPP) over dams, offshore wind energy systems (OWES) and hybrid solar-wind power systems (HSWPS), which may provide over 10 GW of additional capacity. An MNRE team of experts has already surveyed the Bhakra Nangal Dam for floating solar power plants, and is exploring offshore wind power opportunities in Gujarat and Tamil Nadu. For innovative alternatives such as FSPP, OWES and HSWPS, land does not have to be acquired. Again, only those companies that will set up manufacturing facilities can participate. The advantage in such cases is since the projects will be at the dam site, power evacuation will not be a problem.

PPAs and RPOs The sanctity of power purchase agreements (PPAs) has to be ensured and the agreements have to be mandatorily honoured. The ministry is in constant talks with the state governments, including Andhra Pradesh and Karnataka, to ensure the same. In the same way, meeting renewable purchase obligations (RPOs) is also mandatory and needs to be adhered to strictly. ■ November 2017 ● Renewable Watch ● 59

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Interview with Anand Kumar “Renewable energy is the only way India can move forward” Following the recent success of reverse auctions and acting on industry concerns over the recent slowdown in new capacity allocation, the Ministry of New and Renewable Energy (MNRE) has announced plans to auction 21 GW of solar and wind power capacity in 2017-18. Given that only about 8 GW of capacity has been tendered so far in the year, it seems unlikely that the target will be achieved. In an interview with Renewable Watch, Anand Kumar, who took over as secretary, MNRE, in July 2017 outlines the growth trajectory for renewables, the sector’s performance in the past year and the key challenges…. How would you sum up the performance of the renewable energy sector in the past one year?

Anand Kumar Secretary, Ministry of New and Renewable Energy

The renewable energy sector has done fairly well and we have been able to bring in some significant changes. One such change is the transition from the feed-in tariff (FiT) regime to competitive bidding in both the solar and wind power segments. For solar power, the lowest price achieved so far has been Rs 2.44 per kWh and for wind power it has been Rs 2.64 per kWh. These prices could be for the best sites in India and the rates may differ from state to state, depending on irradiation, resource availability, the state’s policy framework, land costs, etc. In 2016-17, we were able to achieve a capacity addition of 5,500 MW in the wind power segment, against a target of 4,500 MW. We are planning to tender around 9,000 MW of wind power capacity in 2017-18.

“At COP 22, we received the support of 35 countries as signatories to the framework for the ISA as well as 15 ratifications. This has made the ISA an international inter-governmental body.”

What is the update on the International Solar Alliance? We have been able to achieve the ratification of the International Solar Alliance (ISA). The prime minister announced this initiative on the sidelines of the Conference of Parties (COP) 21 in 2016. In 2017, at COP 22, we opened the ISA for participation by various countries and we have received the support of 35 countries as signatories to the framework as well as 15 ratifications. This has made the ISA an international inter-governmental body. The last ratification was achieved on November 5, 2017 and it will now become fully functional on December 5, 2017.

60 ● Renewable Watch ● November 2017

Within two years of the announcement of the ISA, the MNRE has been able to gather the necessary support, with the assistance of the Ministry of External Affairs. The MNRE has been instrumental in making the ISA the first international and inter-governmental association to be headquartered in India. What are your priorities for the short and medium terms? We have finalised the standard bidding guidelines for the solar segment and we will soon be coming out with the standard bidding guidelines for wind power. How is the National Solar Mission (NSM) progressing? What measures are you taking to facilitate the effective implementation of the scheme? We are doing fairly well with regard to the NSM. We are doing well as far as ground-mounted solar power capacity is concerned. We have been able to install 14 GW of ground-mounted solar capacity. However, the rooftop solar segment is facing several challenges. One of these pertains to net metering but we are in the process of resolving it. We are trying to implement quality standards, which include promoting the use of radio frequency identification-enabled solar panels so that we can deliver quality. We are also planning to begin a “rent-your-roof” programme. With the price of solar cells, panels and switches coming down, the rooftop solar segment will pick up pace soon. By 2022, I am sure we will be able to achieve not just 100 MW but more than that. We are already planning to revise

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ANNIVERSARY ISSUE our annual ground-mounted solar target from 15 GW to 17 GW. What has been the impact of competitive bidding on the wind power segment? How are you planning to address the issues faced by the segment? We have seen a transition from the FiT regime to the bidding system. Most of the state electricity regulatory commissions (SERCs) were earlier awarding projects on an FiT basis. We had given instructions to the SERCs to continue awarding projects on an FiT basis on the rates decided by them. However, they have not really taken the FiT route; for the benefit of the consumer, they are taking the bidding route. On November 24, 2017, we announced a long-term trajectory for wind power auctions. The central government, along with the state governments, intends to issue bids for a cumulative capacity of about 8 GW in 2017-18. Of this, 5 GW has already been tendered or bid out, 1,500-2,000 MW will be bid out in January 2018 and another 1,500-2,000 MW in March 2018. A total of 10 GW will be tendered in 2018-19 and another 10 GW in 2019-20, leaving a margin of two years for the commissioning of projects. The Solar Energy Corporation of India (SECI) has already allocated 2,000 MW of wind power capacity and has achieved a price of 2.64 per kWh in the latest auction

“The biggest challenge for renewable energy is the high cost of storage. Although storage prices have come down by 45 per cent between 2010 and 2017, it is still costly. I hope storage becomes cheaper in the coming years and once that happens, renewable energy will never look back.” concluded in October 2017. Another tender for 2,000 MW of wind power capacity has been announced recently by SECI. Gujarat and Tamil Nadu have also come up with auctions of 1,000 MW each. We are planning auctions for more capacity than the currently installed manufacturing capacity. We are also talking to the Export-Import Bank of India to increase wind exports to other countries. What do you see as the biggest challenge in the renewable energy sector? What measures do you intend to take to counter this? The biggest challenge for renewable energy is the high cost of storage. Although storage prices have come down by 45 per cent between 2010 and 2017, it is still costly. I hope storage becomes cheaper in the coming years and once that happens, renewable energy will never look back. With efficient storage, the problem of power wastage will be overcome. To boost renewable sector growth, we are trying to extend the inter-state transmission system. As proposed, free inter-state transmission

will be provided to all projects commissioned up to August 2022. In addition, we are trying to develop green energy corridors. We are also trying to bring in new schemes to develop smaller projects of 1 MW or 2 MW capacities that can be linked to 11 kV/33 kV stations on barren land that cannot be used for agriculture. What is your outlook for the power sector in general and for renewables in particular? India is self-sufficient in power, but this is considering the fact that we currently have very low consumption. In the years to come, as India transforms into a developed country, the demand for power is bound to grow. Currently, India is facing a problem because of limited fossil fuel and we do not want to waste our foreign exchange on imports. Renewable energy is the only way India can move forward. The country is also committed to reducing its carbon footprint. The emission intensity will be reduced by 33-35 per cent by 2040. If India has to supply affordable power, especially in remote areas, renewable energy is the only way to proceed. Renewables can be helpful in remote areas only with the help of a minigrid supported by solar panels or mini-hydropower plants. However, securing financing for these projects is always a challenge. In a positive development, the Indian Renewable Energy Development Agency has raised a loan of $300 million to support such projects. We are also trying to bring in a scheme for providing grid-connected and off-grid solar pumps to support the agriculture sector. Farmers will be able to consume the power for captive use and also supply it for generating extra income. ■ November 2017 ● Renewable Watch ● 61

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Interview with Gireesh B. Pradhan “The market design needs a relook to revive demand growth” The Central Electricity Regulatory Commission (CERC) has been working on a number of reforms to facilitate growth in the power sector. One of the landmark orders issued by it last year was to implement the forecasting and scheduling mechanism for wind and solar power across the country. Gireesh B. Pradhan, chairperson, CERC, spoke to Renewable Watch on wide-ranging issues including upcoming regulations, improving renewable purchase obligation (RPO) compliance, and the outlook for the sector. Excerpts... What is your assessment of the current state of the power sector? What have been its biggest achievements in the past one year?

Gireesh B. Pradhan Chairperson CERC

“One of the biggest achievements in the past year is renewable energy achieving parity with thermal power in terms of price per unit.”

Let me answer this question in two parts. The power sector has witnessed significant developments and taken big strides to meet the growing demand. Policy and regulatory initiatives have resulted in a number of positive outcomes for the sector. These include a phenomenal addition of generation capacity, a substantial growth in renewable energy generation, and a robust shortterm power market. Substantial growth has been witnessed in terms of size and transformation capacity in the transmission segment. The grid is more secure and reliable now. Further, the multiplicity of players has created growth avenues and expanded the horizon of the market. Regarding the biggest achievements in the past year, renewable energy has achieved parity with thermal power in terms of price per unit. During the year, special efforts were made to integrate renewable generation, which started yielding results. Ancillary services have been rolled out. A regulatory framework has been created for scheduling and a deviation settlement mechanism introduced for variable solar and wind generation. This has significantly facilitated the integration of renewable generation, while ensuring secure and reliable grid operations. Going forward, we will be working on new interventions like energy storage technologies and electric vehicles. What are the biggest bottlenecks in the growth of the power sector? The distribution segment remains the weakest

62 ● Renewable Watch ● November 2017

link in the power sector. The financial health of the discoms has been a major concern. Further, low demand has a cascading effect on other segments of the sector – generation, transmission and the short-term power market. This has also led to generation assets getting stranded. In order to improve the situation, discoms need to carry out proper demand estimation. There is also an urgent need to establish procedures for energy accounting to accurately identify energy losses. Tariff rationalisation needs to be carried out to help the distribution segment improve its financial health. What are some of the key orders passed by the CERC in the past one year? The CERC has issued many landmark orders on a wide range of issues, which have had a significant impact on the development of the sector. Taking into consideration the uncertainty and variability of renewable energy, an order for a framework on the “Forecasting and Scheduling Mechanism for Wind and Solar Technologies” was brought out. This framework requires forecasting by the system operator as well as the wind/solar generator, with the objective of minimising deviations from the schedule. By an order, additional legroom has been provided through a relaxation in the deviation limits. Further, to provide flexibility to respond to the variations in demand and renewable energy generation, the technical minimum in the case of thermal generating units has been reduced to 55 per cent, with a corresponding compensation mechanism for the deterioration in heat rate, auxiliary

PERSPECTIVE

ANNIVERSARY ISSUE energy consumption and oil support. What is your outlook for the renewable energy sector over the next few years? What will be the CERC’s main focus for this segment? Renewable energy generation has witnessed significant growth, with the capacity reaching 58.3 GW from less than 5,000 MW in 2002-03. India has a huge untapped renewable energy potential. Renewable energy has achieved parity in terms of cost per unit vis-à-vis thermal power. However, the demand for renewable power has not been adequate. The creation of substantial renewable generation capacity brings along certain long- and short-term challenges that require the attention of policymakers and regulators. Considering the ambitious targets we have set for ourselves, we need to see how well we are positioned in terms of policy guidelines, regulatory frameworks and a conducive market ecosystem to mainstream and integrate intermittent renewable energy sources. At present, India has a renewable energy capacity of around 58.3 GW. Considering a total renewable energy capacity of 175 GW, a goal determined by the government, grid management is expected to become even more difficult. Therefore, the need for flexibility in thermal generation assumes importance as more and more renewable generation is integrated. Generation from renewable energy sources, especially solar and wind, is inherently variable in nature and as such, needs to be balanced adequately. Given that renewable energy generation has zero variable cost, it is treated as must-run. Coupled with this, we also need to address the issues of variability and uncertainty. Therefore, India needs to plan ahead; more so in the context of the ambitious renewable energy target of 175 GW. These challenges warrant a specific energy “storage” solution to cater to peak demand as well as to address the variability of intermittent generation. RPO is an important part of the renewable

“Some of the key priorities before the commission are a review of the performance of the short-term electricity market, tariff regulations for renewable power, the renewable energy certificate framework and ancillary services operations.” energy market design. The act mandates the state electricity regulatory commissions (SERCs) to specify RPOs. Therefore, the responsibility of RPO enforcement on the obligated entities rests with the respective SERC. Most of the SERCs have specified minimum RPO targets for obligated entities in their states. However, compliance remains an issue. Some SERCs have also allowed the carry forward of RPO compliance targets. The SERCs need to ensure strict compliance of RPO targets by distribution utilities. They may need to consider the creation of a separate fund or provisioning as part of the annual revenue requirement of the discom to meet the expenditure towards RPO compliance. We have been raising this issue in the Forum of Regulators (FoR) at regular intervals. In the last meeting of the FoR, it was decided to evolve a web-based tool for RPO monitoring and compliance. We are working on it. In order to improve the scenario at the ground level, the states have to adopt the framework for effective integration of renewable energy generation. A high-level technical committee has been constituted under the chairmanship of the CERC member, technical, to identify and examine the key issues and suggest suitable methods for the states to effectively adopt regulations for renewable energy integration at the state level. What are the short- and medium-term priorities for the CERC? The short-term priorities before the commission are a review of the status of grid reliability and effectiveness of the deviation settlement mechanism. A review of the performance of the short-term electri-

city market, tariff regulations for renewable power, the renewable energy certificate framework and ancillary services operations are some of the other priorities for the commission in the near future. As regards long-term priorities, the commission would like to work on connectivity, long-term and medium-term open access, the design for further development of electricity markets and frameworks for the integration of renewable energy into the grid. What is your outlook for the power sector for the next few years? We have several issues to deal with in the power sector. What we need is commitment and determination to address them effectively. As regards the present problem of the financial ill-health of discoms, the Ujwal Discom Assurance Yojana has the potential to make a difference and it needs to be implemented in right earnest. The scheme does not just provide financial support; it is also linked to a mutually agreed and do-able performance trajectory. We are currently experiencing a phase of low demand for power, resulting in stranded generation capacities. The market design needs a relook to revive growth in demand. The transmission segment is experiencing problems, chiefly owing to right-of-way issues. Appropriate policy prescriptions need to be put in place to mitigate these problems. The commission considers emerging generation capacities through renewable sources as critical to achieving energy security for the nation. Therefore, firming up a robust regulatory framework for seamless integration of renewable energy is a critical area to focus on. ■ November 2017 ● Renewable Watch ● 63

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Interview with I.S. Jha “The transmission network has become an enabler for ongoing reforms” The country’s biggest power transmission utility, Power Grid Corporation of India Limited (Powergrid), is looing at opportunities in the electric vehicle (EV) charging space. I.S. Jha, chairman and managing director, Powergrid, spoke to Renewable Watch about the company’s performance last year, its key projects, growth plans, rail electrification plans, outlook and the challenges ahead. Excerpts... What, according to you, have been the most notable achievements of the power sector in the past one year?

I.S. Jha Chairman and Managing Director, Power Grid Corporation of India Limited

“Last year was a particularly good year for Powergrid. We commissioned assets worth Rs 320 billion, the highest ever, and awarded contracts worth Rs 302 billion.”

In the previous financial year, various government schemes promoting renewable energy have started showing results. Out of the total generation capacity added (about 29 GW), the share of renewables rose to nearly 45 per cent including the highest ever wind capacity addition. The cost of renewables continued its downward trajectory to achieve some parity with conventional generation. Schemes like Unnat Jyoti by Affordable Lighting for All (UJALA), and affordable 24x7 Power for All have started fructifying. The tariff policy amendment was approved with forward-looking provisions for achieving the above objectives. The Ujwal Discom Assurance Yojana (UDAY) has particularly showed visible results with as many as 12 states reporting a reduction in aggregate technical and commercial losses and 15 states reporting a reduction in the average cost of supply-average revenue realised (ACS-ARR) gap. This development is very positive for the entire sector. Energy efficiency measures were taken up on a large scale by distributing LED bulbs and other equipment. Overall efficiency is improving with the increased role of market mechanisms like power exchanges and open access. The power transmission network has become an enabler for ongoing sectoral reforms, facilitating the availability of power at the most economical price.

and distribution area. UDAY has been successful in reducing the ACS-ARR gap to some extent, but investments in distribution are still an area of concern. Powergrid is willing to invest in these areas in partnership with state utilities. The joint venture with Bihar has been quite successful. Further, we are keen to participate in the distribution business as a “carriage partner”, as and when the opportunity opens up. The second major challenge would be the integration of large-scale renewable capacity into the grid. Renewables are characterised by variability and uncertainty and a short gestation period. The Green Energy Corridors (GEC) project, state-of-the-art static synchronous compensators (STATCOMs) and static VAR compensators (SVCs) are being implemented to maintain the stability of the grid. To further enhance stability and facilitate energy balancing, a forecasting and scheduling mechanism is being implemented at renewable energy management centres (REMCs). What were some of the significant business and growth highlights of Powergrid’s performance in the past year?

What are the biggest unresolved issues and challenges in the power sector?

For our company, the past year was a particularly good year. We commissioned Rs 320 billion worth of assets, the highest ever. We awarded contracts worth Rs 302 billion and accorded investment approvals to projects worth Rs 365 billion. The company added a record 15,000 MW interregional power transfer capacity during the year, which further boosted the smooth exchange of power without any price split.

The biggest challenge in the power sector is the investments required in the sub-transmission

What are your topmost priorities for Powergrid in the short to medium term?

64 ● Renewable Watch ● November 2017

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ANNIVERSARY ISSUE Our immediate priority is to commission the important Champa-Kurukshetra high voltage direct current link and further strengthen the western and northern region corridors. All four poles are expected to be operational in the next six to eight months. Moreover, our order book or work in hand is close to Rs 1,240 billion. Hence, in the near future (three to four years), we expect the commissioning numbers to be similar to 2016-17. Capex to be done is Rs 810 billion. Our priority in the short to medium term is to achieve these targets on time. How are the High Capacity Power Transmission Corridor (HCPTC) and GEC projects progressing? The gestation period of renewable energy projects (about one year for wind and solar) is very low compared to the gestation period of a transmission line (two and a half to three years). Anticipating this, Powergrid has evolved two schemes – GEC I and GEC II – which are basically for the creation of highways for renewable power transmission. So, any new generation plant can tap into these highways and get connected to the grid very quickly. GEC I comprises two systems, one starting from Gujarat, traversing Rajasthan and finally ending in Punjab, and the other in Tamil Nadu. These have been designed in the potential areas of wind and solar. GEC II, on the other hand, is for tapping power from the ultra mega solar parks in different states, including Andhra Pradesh, Madhya Pradesh, Karnataka, Rajasthan and Gujarat. Both these projects are on track and under implementation. Other HCPTCs are also progressing satisfactorily. What are some of the new areas and growth opportunities being explored by Powergrid? How does the company view the EV charging infrastructure segment? Powergrid has plans to leverage its 250,000 towers spread across the country for telecom purposes. Besides this, the company is eyeing railway electrification opportunities. It is also exploring viable energy storage solutions such as batteries

“Powergrid is considering entering the EV charging infrastructure space. There are several business synergies in this area. EVs have the potential to help in grid management, and our expertise in grid control systems puts us in a better place to manage load distortions.” that would help in maintaining grid stability and provide the much-needed balance for controlling the variability of renewable generation in the grid. Large aggregated gridscale batteries help in managing supplydemand imbalances in the grid. Powergrid is also considering entering the EV charging infrastructure space. There are several business synergies in this area. EVs have the potential to help in grid management (peak/off-peak load balancing) if managed smartly, and our expertise in grid control systems puts us in a better place to manage load distortions. What are the company’s plans with regard to rail electrification? As part of its Mission 41K, the Ministry of Railways has embarked upon a plan to increase electrification of an additional 24,000 km route, that is, about 90 per cent of railway broad gauge routes, in the next five years. Powergrid is keen on this opportunity. Initially, the railways allotted the execution of railway electrification works of 761 km route to Powergrid.

What are some of the key challenges for the company at present and how are these being addressed? The key challenge faced by the company is to capitalise the huge number of projects (worth almost Rs 1,240 billion) on time and at the same time focus on emerging areas such as smart grids, smart cities and the EV opportunity. The company is actively looking for opportunities to expand its operations in other countries as well. Dedicated divisions are working towards achieving these seemingly conflicting targets, but we are sure that we will be able to devote enough attention to all these focus areas. What is your overall outlook for the power sector for the next few years? At present, out of the total installed generation capacity, more than 17 per cent constitutes renewables. During the past five years, installed renewable capacity has grown at a compound annual growth rate of more than 18 per cent, and about 35 GW of renewable capacity has been added. Moving ahead, the government has set a target of 175 GW of renewable energy capacity by 2022, which would lead to 35-40 per cent capacity penetration. In energy terms, it would increase from the current 7 per cent to about 18 per cent. So major investments will come in to address the intermittency/variability in the system such as REMCs, STATCOMs and SVCs. Grid-scale energy storage systems may be required after four to five years. EVs will also start acting as a support system for renewables integration. The majority of the investments will be made in the state sector, in both transmission and distribution. ■ November 2017 ● Renewable Watch ● 65

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Interview with K.S. Popli “India will be a key player in the global green bond market” India’s rapidly growing renewable energy sector is likely to gain from the availability of easier finance following the upgrade of the country’s sovereign rating by Moody’s. But the good news may be overshadowed by certain policy and regulatory issues impeding sector growth. In an interview with Renewable Watch, K.S. Popli, chairman and managing director, Indian Renewable Energy Development Agency (IREDA), spoke about the evolving renewable energy financing climate, the key risks and benefits for lenders, and IREDA’s future plans... How has the financing climate changed for the renewable energy sector in the past one year?

K.S. Popli Chairman and Managing Director, Indian Renewable Energy Development Agency

The total investment in renewable energy in the past few years has been around $9 billion per year. With regard to financing, banks and financial institutions are providing finer pricing, and the industry has been able to extract better terms and conditions from banks and financial institutions along with longer loan tenors. The international bond market has also grown exponentially and quite a few companies have been able to raise funds through the international bond market in rupee as well as dollar denominations. As a lender, how would you rate the renewable energy sector’s performance in the past one year? What were the key highs and lows for investors?

“The intense competition amongst bidders is a testimony to their confidence in the sector and has led to more innovation in the financing segment.”

The renewable energy sector performed reasonably well in 2016-17, with record capacity additions of 5.5 GW each in the wind and solar segments. Further, owing to the success of competitive bidding, wind and solar power have become more economical than conventional power generation, leading to grid parity being achieved earlier than envisaged. Mitigation of offtaker risk and payment security to some extent have also helped in bringing tariffs down. The Ministry of New and Renewable Energy (MNRE) has also taken up the issue of unilateral termination of power purchase agreements (PPAs) by states and has issued tariff-based competitive bidding guidelines for power procurement for solar grid-connected projects. Under the new guidelines, several issues such as the unilateral termination or amendment of

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PPAs, land acquisition challenges, connectivity problems and clearance difficulties have been streamlined. We are confident that the sector will continue to grow at a rapid pace, which will obviate the possibility of renegotiation of PPAs at a later date. There has been a paradigm shift in the wind segment, from feed-in tariffs (FiTs) to competitive bidding. The segment also saw the end of generation-based incentives and a reduction in the accelerated depreciation benefit for wind. The sustainability of low tariffs for solar will depend on the stability of cell prices and lower cost of financing. What is your opinion on the growing bond market in India, and green/masala bonds in particular? Green/Masala bonds have become a successful financial instrument for investors to raise funds. Several companies have raised large amounts of money from the primary market by issuing green bonds. IREDA is the latest entrant in the green masala bond market after having successfully raised $300 million through masala bonds listed on the London and Singapore Stock Exchanges, at competitive prices. The issue of green masala bonds is testimony to investor confidence in renewable energy projects. The growth of the green bond market is not limited to India as the global green bond market issuance more than doubled to $92 billion in 2016 from $42 billion in 2015. According to Moody’s analysis, the global green bond market is expected to touch $120 billion in 2017 and India is expected to be a major player as it has ranked eighth in total green bonds outstanding,

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ANNIVERSARY ISSUE as per the latest update by the Climate Bonds Initiative. Established renewable energy players have also been able to attract capital from their promoters and we are seeing some consolidation happening in the sector. Could you comment on IREDA’s bond issue on the Singapore exchange? IREDA has successfully raised Rs 19.5 billion ($300 million) through a five-year rupee-denominated green bond at an annualised coupon rate of 7.125 per cent, which has been the lowest among all the green masala bonds issuances so far by Indian companies. This is a major milestone for IREDA as it continues to enhance its position in financing renewable energy projects in the country. The overwhelming response to IREDA’s masala bond indicates strong investor confidence in the Indian economy and in the renewable energy sector. What is your opinion on initial public offerings (IPOs) as an emerging financial instrument in the renewable energy sector? As companies grow in size, they will require an infusion of equity for expansion. With an established track record of GWsize companies, they will be in a much better position to raise money in the capital market. We will see more issuances from renewable energy players in the future, which will increase the visibility of the sector amongst investors and raising money through IPOs would become easier for renewable energy players. What is the likely trend in market shares going forward? Can we expect major consolidation in 2018? Both the wind and solar segments have matured in India and have established revenue streams. As both segments are now growing through the competitive bidding/auction route, it is expected that serious players with a liberal flow of equity would stay in the sector. The shift towards consolidation is inevitable with increasing

competition in the sector. What are the issues that directly impact the health of renewable energy financing in the country? In the past, renewable energy projects have faced issues such as the weak credit quality of offtakers, land and evacuation constraints, clearance issues and an evolving regulatory framework, which exposed the sector to financing risks and higher cost of financing. However, the introduction of the Ujwal Discom Assurance Yojana for the operational and financial turnaround of discoms, green corridors for dedicated evacuation of renewable power, and the plug-and-play model with a three-tier payment security mechanism for projects in solar parks have helped obtain attractive terms for financing. Further, low implementation risks, a short generation period and robust performance of projects have helped in obtaining better terms for financing of renewable energy projects. However, the reluctance of utilities to sign PPAs for wind and solar projects has dampened the enthusiasm slightly. What is the likely impact of falling tariffs, and the resultant diminishing margins, on the renewable energy financing market? The fall in tariffs has sharply reduced the return on investment for solar and wind power businesses, and triggered consolidation in the sector. The intense competition amongst bidders is also a testimony to their confidence in the sector and in obtaining finance. This has led to more innovation in the financial sector and made the financing market very competitive. What are some of IREDA’s plans for the coming years? IREDA is committed to maintaining its strong position in renewable energy financing. It is also exploring different ways to lower its cost of capital to enable it to lend on more competitive terms. Further, IREDA has recently introduced

several new financial instruments such as a credit guarantee enhancement scheme for the issuance of bonds, and the issuance of a long-term letter of comfort as part of buyers’ credit of three years, etc. It is also keen on exploring future business avenues such as funding of electric vehicles (EVs) and green energy corridors. What are your thoughts on the encouragement of off-grid renewable projects that do not find much financier interest? It is true that off-grid renewable projects are difficult to finance compared to grid-connected projects due to the relative absence of proven business models. IREDA is open to funding off-grid solar power projects and has introduced the Access to Energy Scheme with First Loss Mechanism under the KfW line of credit. Under the scheme, KfW has agreed to refinance up to Euro 20 million to IREDA to promote off-grid energy services in rural areas. Also, an additional grant of Euro 4 million has been provided to IREDA to mitigate credit risks and offer incentives to encourage borrowers to ensure timely repayment and timely project implementation. Further, technological advancements enabling remote access to off-grid installations will improve monitoring, leading to better financing and revenue collection in the future. What will be the key trends in renewable energy financing in the coming years? Market consolidation driven by large players has already begun. As companies consolidate, the initial investor will have the option to exit in the near future. In addition, large financial institutions and banks will increase their exposure to the renewable energy sector manyfold. More and more companies will also start raising resources through the bond and capital markets. Finally, the sector will see EVs, energy storage and offshore wind emerging as new sectors, which may attract significant investor interest. ■ November 2017 ● Renewable Watch ● 67

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Interview with Jatindra Nath Swain “There is an expectation that tariffs will fall further” The Solar Energy Corporation of India (SECI) has played a disruptive role in the solar and wind energy segments, as is evident from the steep decline in tariffs discovered in its recent tenders. It is now set to play a bigger role in the renewable energy sector in emerging segments such as energy storage. In an interview with Renewable Watch, Jatindra Nath Swain, the recently appointed managing director of SECI, speaks candidly about the issues plaguing the sector, the upcoming capacity and tenders, and the outlook for the industry. Excerpts... What have been the key highs and lows of the renewable energy sector in the past one year?

Jatindra Nath Swain Managing Director, SECI

The highs and lows can both be associated with the low tariffs recorded in recent tenders. There are concerns in the industry over the sustainability of these tariffs, and the interest of bidders and project winners in the solar segment. In addition, there is an expectation that tariffs will fall further, fuelling the general reluctance of utilities to sign power purchase agreements (PPAs) at rates that are slightly above the latest auction results. What are your views on the viability of these tariffs? Most of the bidders are confident that the tariffs proposed by them are viable and have, therefore, signed PPAs. Both the bidders have signed PPAs at the proposed tariff of Rs. 2.44 per kWh. If there is pressure on profit margins, there may be some consolidation after one or two years, when the companies may sell their assets. What has been the progress on various solar programmes that SECI has been handling, such as utility-scale and rooftop solar?

“SECI is likely to come up with 7,000 MW-8,000 MW of tenders in the remaining months of 2017-18.”

For utility-scale projects, the progress in the past one year has mostly been as expected. We have now been asked by the ministry to scale up SECI’s role in the segment. The utility-scale segment has not faced many issues in most states, barring a few. For example, in states like Karnataka and Maharashtra, developers are facing land issues and due to the steep timelines (approximately 13 months) they are not able to complete projects. The rooftop programme, on the other hand, still has unresolved conceptual

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issues. Theoretically, rooftop is a better alternative to large solar projects, due to inherent benefits such as fewer transmission issues and better grid balancing. But it faces three key challenges: z The first issue is the “inverted residential tariff structure” prevailing in the country. This essentially means that for residential consumers with electricity tariffs of less than Rs 4 per kWh, a rooftop solar plant does not yield any economic benefits. Rooftop plants are beneficial mainly for the high-paying industrial and commercial consumers. However, discoms are reluctant to allow net metering connections as they lose their prime revenue source. SECI, along with the government, is trying to address these issues. z There are technical issues that remain to be addressed. For example, many state regulators have notified that the allowed rooftop capacity will not be more than the connected load. z Further, some states like Uttar Pradesh have set a very low capacity limit (as low as 20 per cent) that can be connected to a distribution transformer, which can be raised to 70 power cent without affecting the grid, according to a recent report. I expect the rooftop segment to improve within the next one year. There are a lot of players that are now competing heavily in the rooftop space. We may assume that due to increasing competition, some smaller companies may close down but at present, most players are able to canvass orders. What is the current rooftop tariff trend? The incentive factor that is usually provided in government tenders notwithstanding, the tariffs

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ANNIVERSARY ISSUE should be around Rs 4.50 per kWh. However, these may vary from state to state depending on the prevalent regulator regime. Why have there not been many new tenders in the recent past? Tenders will be released soon as they were delayed partly by the goods and services tax (GST) roll-out. SECI is likely to come up with 7,000 MW-8,000 MW of tenders in the remaining months of 2017-18. Which states are currently driving rooftop solar adoption? Haryana and Telangana have good policies in place. Karnataka used to be a leader in this space, but owing to issues in its rooftop programme, the state has not been performing too well. Madhya Pradesh has taken the lead in promoting the industrial and commercial sectors, without any subsidy, by encouraging only loan-based rooftop solar systems. This has been made possible with the assistance of the State Bank of India and Punjab National Bank, which have received multilateral support from the World Bank Group and the Asian Development Bank. What is the current solar capacity to be tendered and under construction? SECI has about 3,600 MW of solar power capacity under commissioning. In addition, the states have tendered about 11,000 MW of solar capacity and 5,500 MW is currently under commissioning. In the ground-mounted solar space, NTPC has about 1,000 MW of capacity and other PSUs have about 700 MW under commissioning as of date. Therefore, nearly 10,960 MW of solar power capacity is under process for which letters of intent have been issued and PPAs signed. Have there been payment defaults since the process of submitting bank guarantees began? No. Since PPAs are now signed only after developers furnish their bank guarantees, developers typically stand to lose about

“SECI would like to play a leading role in the battery energy storage system segment. We are primarily interested in large-scale, grid-connected storage as of now and not quite in electric vehicle-based energy storage.” 10 percent of the project cost. This ensures that the capacity in the pipeline is surely commissioned. What is happening on the wind energy segment? Have PPAs been signed for the last two tenders? The PPA signing is now complete for the first wind tender for which SECI did the bidding and PTC was the trader. For the second one, there are two agreements: the power sale agreement (PSA) and the PPA. Since the PPA is between the developer and SECI, it can be signed immediately. However, it is the PSA that has to be signed with the discoms. We expect that the signing will start by the end of November and will be completed by early December. The prices at which the power will be sold have been indicated to the discoms. What is the plan for upcoming wind tenders? A capacity of about 3,000-4,000 MW will be tendered in the remaining months of 201718. The primary issue in the wind power segment is that developers are now accepting the low renegotiated prices and then conducting reverse bidding for manufacturers. Consequently, manufacturers are left with nearly no margin because of the high competition. This will lead to consolidation, which will help improve the market. Energy storage is an emerging area. What are SECI’s plans for this segment? SECI would like to play a leading role in the battery energy storage system (BESS) segment. About 50 MWh of BESS has been proposed to be procured by the New Delhi Municipal Council. We are primarily interested in large-scale grid-connected storage as of now and not quite into electric vehicle-based energy storage.

What are the issues that need immediate attention in the solar power segment? The quality of modules and other equipment is definitely an issue in the Indian solar segment. These are 25-year-long projects and it is important to ensure good performance over the project lifetime. All stakeholders have to put in place robust testing infrastructure so that poor quality is detected and faulty suppliers are identified. The Ministry of New and Renewable Energy (MNRE) has notified quality standards for solar but it has to be taken up by the Bureau of Indian Standards and the right infrastructure needs to be created. Testing is currently restricted to a few institutions like the National Institute of Solar Energy. Lack of awareness about renewable energy continues to be a challenge as it is often viewed from an ideological angle instead of being based on hard economics. Further, grid integration issues still persist. Power Grid Corporation of India Limited has started setting up regional energy management centres and the MNRE is making efforts to provide better and transparent projections through continuously improving prediction models developed by EY. Where do you see the renewable energy sector heading in the short and long terms? What are the likely hurdles and how will it be positioned in 2022 in terms of the energy mix? I am optimistic about the target of 175 GW by 2022 being achieved. Due to the fall in oil prices, there is an energy surplus situation. We are unable to sell energy also in part due to the inability of discoms to pay power suppliers. So once the discoms' financial health improves, energy consumption is also likely to increase and the increased renewable energy power injected into the grid will be absorbed easily. ■ November 2017 ● Renewable Watch ● 69

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Interview with Sudhir Garg “Indian Railways is very conscious about energy savings and efficiency” Indian Railways (IR) has a target to source at least 10 per cent of its energy requirement from renewable sources by 2020-21, by setting up 1,200 MW of solar and wind power capacity. Part of a broader plan to rationalise its expenditure on electricity, which currently accounts for 25 per cent of IR’s ordinary working expenses, the target does seem ambitious. But Sudhir Garg, executive director, electrical energy management, Ministry of Railways, is optimistic about it. In an interview with Renewable Watch, Garg talks about IR’s experience so far in implementing solar projects, the benefits derived from these, the roadblocks in implementation, new and innovative models adopted by IR and the way forward... What are IR’s total power consumption and associated expenses?

Sudhir Garg Executive Director, Electrical Energy Management, Ministry of Railways

In 2016-17, IR consumed over 18 billion units of electrical energy for its traction applications, which is about 2 per cent of the total electrical energy generated in the country. The bill paid for consuming this energy was about Rs 113 billion which includes Rs 95 billion for traction applications and Rs 18 billion for non-traction applications. As of now, of the total requirement of about 2,000 MW of energy for electric traction, more than 1,000 MW is procured under open access. This has helped us bring down the average cost of power in states where power is procured through open access from Rs 7 per kWh to about Rs 5 per kWh. When and how did IR start its renewable journey? Where does it stand today in terms of achieving the set targets?

“IR plans to meet 100 per cent of its energy requirement from renewables, which is not possible without energy storage.”

IR has been very conscious about energy savings and efficiency, and has been consistently working towards reducing its energy bill on the traction and non-traction sides by adopting multi-pronged strategies, including procuring energy from the open market, introducing latest energy efficient locomotives and adopting energy efficient technologies. Another point to note is that IR’s expenses on diesel-based traction are much higher (about Rs 180 billion) than those on electrical energy despite carrying only about one third of the

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traffic. In a move to expedite complete electrification of the rail network, IR has recently advanced the deadline for 100 per cent electrification of the broad gauge network by two years to 2020-21. Against this backdrop, IR embarked upon its renewable energy journey in 2015, with the aim of achieving an energy transformation through clean energy, which has also proved to be more economical than conventional power. We have set a target to procure 1,200 MW of renewable energy by 2020. This comprises 1,000 MW of solar power capacity and 200 MW of windbased capacity. While this power is initially being used on the non-traction side, we are working towards using renewable energy on the traction side by adopting storage technologies. About 35 MW of solar power capacity has been installed as of October 2017. Of this, 12.35 MW of capacity was installed between April and October 2017. During the same period, another 72 MW of rooftop solar plants were contracted in developer mode. Railway Energy Management Company Limited (REMCL) has also invited tenders for 32 MW of solar capacity while 20.5 MW of wind capacity was tendered in Tamil Nadu, Andhra Pradesh, Madhya Pradesh and Maharashtra. In sum, about 130 MW of capacity has either been set up or is in the process of being allocated. What have been the key challenges in implementing renewables and how were these addressed?

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ANNIVERSARY ISSUE The initial challenge was to convince the organisation that renewable energy can be a successful and economical business alternative to conventional power. The next challenge was to choose from various models to achieve this goal. We finally zeroed in on the public-private partnership (PPP) model as it assured minimal upfront investment by IR. IR faces a challenge in the maintenance of panels located over a large area, for which the PPP model has proved to be a good solution. It further proved advantageous as it ensured the implementation of the latest technologies, such as compact substations and improved cabling. This allowed IR to learn to implement these new solutions in its existing projects. The upgradation of the equipment in a traditional manner would not have been beneficial for achieving the targets. In addition, for developers, there was the challenge of implementing the best financial model to get optimal results, which led to out-of-the-box thinking for technology implementation. The organisation also faces challenges such as ensuring that even smaller stations attract developer interest and not just the major ones, fulfilling its 8 per cent renewable purchase, overcoming interstate transmission issues through open access, and implementing net metering regulations across states so that it does not constrain solar energy fed into the grid, and ensuring an optimum energy mix of wind and solar so as to ensure 100 per cent renewable energy use in the long term. The feasibility of implementing renewables for IR will depend on three factors which are as follows... z Policies governing net metering and open access will directly affect the implementation of renewables, especially in the non-traction segment. z Solar and wind power will need load balancing as they are intermittent and variable. While technologies such as energy storage will be required to ensure consistent supply of this power, currently these are not eco-

“We have set a target to procure 1,200 MW of renewable energy by 2020-21. This comprises 1,000 MW of solar power capacity and 200 MW of wind-based capacity.” z

nomically feasible for IR. IR will need to build internal capabilities including load forecasting, renewable power management, and power trading techniques in order to decarbonise successfully. REMCL is working towards developing these capabilities.

How have solar power tariffs changed over the past two years as far as IR’s tenders are concerned? From 2015 to 2017, IR has seen a significant fall in tariffs. Solar tariffs have fallen by almost Rs 1.50 per kWh, that is, from about Rs 5 per kWh in 2015 to Rs 3.50 per kWh currently. It must be noted that the tenders are open for all interested solar power developers. How much investment has been made in developing renewable energy capacity? What results are you expecting going forward? Till date, about Rs 200 million has been invested in developing solar power projects, but the savings in energy bills are estimated to be much higher. The return on investment is quite good because we are generating solar power at around Rs 4 per kWh, whereas the cost of conventional energy from discoms is about Rs 8 per kWh. This could mean that IR is earning Rs 4 per kWh from a rooftop solar plant. In the Delhi area, we have installed around 5 MW, which is expected to save around Rs 4.2 million per year in electricity bills. Therefore, in 25 years, IR could save a minimum of Rs 100 million, considering the current electricity price offered by discoms in the Delhi area itself. Moreover, we believe that discom rates will keep increasing, which will further increase savings. Now the entire organisation, which was initially sceptical about implementing solar projects and procuring renewable energy, is for the

first time totally convinced about the electrical department’s plan. Has there been any budget allocation for renewables by IR? Traditionally, when the budget is set in the government sector, additional funds are allocated for various purposes. However, in the case of the electricity budget for IR, there has been a trend reversal, as the additional funds have been decreasing over time. We would like to say that the cost-saving energy model employed by IR is possible in all sectors of the government. We have implemented energy efficiency projects across the country by adopting LED lights, LED fans, efficient air conditioners, etc. Till date, about 3,500 railway stations have been provided with 100 per cent LED lights. All remaining stations and railway buildings will be covered in 2017-18. Majority of the work in this area is being done under ESCO model which does not require any investment from IR. This will help in reducing energy consumption by 25 per cent over the next two years. IR’s current bill for this exercise is around Rs 17 billion and in the next one to two years, we hope to save Rs 4 billion-Rs 5 billion, without making any significant investments. Do you have any plans for implementing electric storage technologies in the future? In due course, IR plans to meet 100 per cent of its energy requirement from renewables, which is not possible without energy storage. As a short-term solution, IR plans to use batteries from railway coaches that have completed four years of use and are lying idle. Going forward, the organisation will devise a formal plan to implement battery storage technologies. ■ November 2017 ● Renewable Watch ● 71

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Interview with Ajay Jain “Andhra Pradesh has been promoting renewable energy in a big way” With a sizeable target of 18 GW to be achieved by 2022, of which 6.5 GW already commissioned so far, Andhra Pradesh is among the leading states in renewable energy adoption in the country. Ajay Jain, principal secretary, Energy, Infrastructure and Investments and Capital Region Development Authority, Andhra Pradesh government, talks about the past enablers and future prospects for renewable energy in the state. Excerpts.... What have been the highlights of the renewable energy sector in Andhra Pradesh over the past year? What is the likely capacity addition over the next year?

Ajay Jain Principal Secretary, Energy, Infrastructure and Investments and Capital Region Development Authority, Andhra Pradesh government

The Andhra Pradesh government had announced solar and wind power policies in 2015, which have provided a number of incentives for renewable energy development. We have added about 5,000 MW of renewable energy capacity (2,000 MW of solar and 3,000 MW of wind) during the past three years. The state led in wind capacity addition in the country, adding around 2,180 MW during 2016-17. In the current year, 600 MW each of wind and solar capacity is proposed to be commissioned. We are targeting the addition of 18 GW of capacity by 2022, of which 6.5 GW has already been commissioned. What are the planned policy initiatives in the state?

“PPAs are contractual agreements, which should be honoured by both sides. Any renegotiation of PPAs dents investor confidence and should not be resorted to.”

The solar and wind power policies of 2015 provide a number of incentives like the waiver of transmission and wheeling charges, treatment of renewable energy as must-run plants and other incentives in the allotment of land to wind projects. The government also has a new wind-solar hybrid policy in the pipeline to promote this segment. What is your opinion on promoting open access for renewable energy projects? Has RPO compliance improved in the state? Open access is being granted for all renewable energy projects as per the Andhra Pradesh Electricity Regulatory Commission (APERC) regulations. Renewable purchase obligation (RPO) compliance has increased in the state from 5 per cent in 2015-16 to 9 per cent in 2016-17. For 2017-18, the state is expected to exceed the RPO

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mandate of 9 per cent by sourcing almost 18 per cent of its energy from renewable sources. What are the likely future tariff trends in the state’s wind and solar segments? The state has invited bids for the promotion of solar energy since tariffs have fallen to Rs 3.15 per unit in 2016-17 from Rs 6.49 in 2014. We expect the tariffs to be even lower than Rs 3 in future solar bids. Similarly, in the wind segment, the state has shifted to competitive bidding. Has the state been able to significantly harness its solar-wind hybrid potential? The state has huge potential for solar-wind hybrid energy, particularly in the Anantapur, Kurnool, Kadapa and Chittoor districts. It has decided to develop one solar-wind hybrid farm along with a storage system. The farm will be funded by the World Bank and will have a capacity of 150 MW. What is your view on the renegotiation of PPAs? Power purchase agreements (PPAs) are contractual agreements between two parties which, once signed and approved by the regulatory commission, should be honoured by both parties. Any renegotiation of PPAs dents investor confidence and should not be resorted to. What are some of the key challenges faced by the state’s renewable energy sector? The biggest challenges being faced by the sector are increased difficulty in grid management due to increased renewable energy capacity addition; and the weak financial position of the discoms. ■

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Views of Sanjay Malhotra “We aim to provide reliable, cost-effective power” With the current impetus to capacity addition and inclusion of renewable energy in the network, grid modernisation has become a focus point for the power sector. One state that is making significant headway in modernising its grid network is Rajasthan. At a recent workshop, “Grid Modernisation in Rajasthan”, Sanjay Malhotra, principal secretary, Energy Department, Government of Rajasthan, and CMD, Rajasthan Rajya Vidyut Prasaran Nigam (RVPN), spoke about the state of the grid and the state’s initiatives in grid modernisation. Excerpts...

Sanjay Malhotra Principal Secretary, Energy Department, Government of Rajasthan, and Chairman and Managing Director, Rajasthan Rajya Vidyut Prasaran Nigam

“Discoms have stepped up their IT efforts and awarded many tenders, most of which are at the final stage.”

hile transmission companies have been taking initiatives to improve the efficiency and stability of the grid, now distribution companies too are steering their way forward in this direction. Discoms have undertaken numerous measures to enhance grid management and thereby ensure uninterrupted, quality power to consumers. In this regard, the objectives of both the transmission and distribution companies seem to be aligned. They have been employing IT solutions and advanced techniques to supply reliable, 24x7 cost-effective power to consumers. Various digital measures have gained popularity in the market as well. One such concept is artificial intelligence (AI). AI has gained traction, with several organisations employing it to enhance system efficiency and minimise errors. However, IT cannot act as a substitute to skilled manpower. Utilities can buy the best machines, employ the latest technologies and modernise their grids, but the end delivery has to be carried out by the core team. To this end, RVPN has taken a few steps. To begin with, we are working on the operations and management side. We are trying to develop a system that would provide us information and data on various grid parameters. For this, we have received financial sanctions of Rs 6 billionRs 7 billion, which would be utilised to build a communication backbone up to the 132 kV level. Once this is in place, we plan to move forward to the 33 kV level. This would ensure that the transmission companies have a reliable communication system. The plan is to build an optical fibre layer that would facilitate communication. Orders for this have already been placed. Once all the equipment has been inte-

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grated with the communication backbone, data will be managed through various command control centres. Data on several parameters such as frequency control and power factor will be monitored on not only a routine basis but also a per second basis to control grid operations and ensure its smooth functioning. Another project for which orders have already been placed relates to energy accounting, open access approvals and deviation settlement. The utility has not yet been able to implement measures for deviation settlement and is thus lagging behind on this front. However, the efforts are now at the final stage and the system will be put in place soon. Under this, RVPN will receive data for every 15-minute block and the parameters would be tested accordingly. In the IT space, discoms have stepped up their efforts and awarded many tenders, most of which are at the final stage. CESC, for instance, is working on an ambitious smart metering plan in Kota. Thus, discoms are increasingly coming to the fore and contributing their bit to grid modernisation. As efforts in this space continue to multiply, there is a need to overcome one major challenge – to reduce aggregate technical and commercial losses – in order to maintain the financial health of the discoms. This would help deliver better results for not only the utility but also for consumers in terms of reduced tariffs. There is no difference in what the government aims to deliver and what consumers demand. Our primary objective is to provide reliable and cost-effective power to consumers while making the discoms profitable. Concerted efforts in this direction are likely to deliver positive results. ■

KIRLOSKAR

KIRLOSKAR BROTHERS LIMITED

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Interview with Ankur Gupta “Haryana has a huge target for rooftop solar power” The Haryana government is promoting solar power-based water pumps for irrigation as well as grid-connected rooftop solar projects in a big way. In an interview with Renewable Watch, Ankur Gupta, principal secretary, New and Renewable Energy Department, Government of Haryana, speaks about the various initiatives as well as the progress made so far... What have been the key highlights in Haryana’s renewable energy space over the past year?

Ankur Gupta Principal Secretary, New and Renewable Energy Department, Government of Haryana

The biggest highlight is that the state government provided 750 solar water pumping systems to farmers on a 90 per cent subsidy basis during 2016-17 in 23 safe blocks. What is the installed capacity in utility-scale and rooftop solar segments in the state? What are some of the upcoming state tenders for solar energy? So far, 49.8 MW of ground-mounted solar projects have been set up and 137 MW of capacity is to be set up by private developers for captive consumption or third-party sale. The state power utility is planning to invite tenders for the purchase of 300 MW of solar power. In the rooftop segment, 66 MW of grid-connected rooftop solar plants have been installed. Another 20 MW of grid-connected rooftop plants are to be installed during 2017-18. In addition, 1,451 kWp of off-grid solar power plants have been installed in Haryana. Apart from this, nearly 25 MW of off-grid power plants are to be set up in schools, hospitals and for individual beneficiaries next year. What are the key initiatives that have been taken by the state for promoting rooftop solar, solar pump sets, off-grid renewable energy and bioenergy?

“The state power utility is planning to invite tenders for the purchase of 300 MW of solar power.”

The state government has notified a user-friendly state solar power policy to promote deployment. For grid-connected rooftop plants, the government is providing subsidy to individuals as well as to the institutional and social sectors. For the industrial and commercial sectors, the accelerated depreciation benefit is available. The New and Renewable Energy Department of Haryana is

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promoting the installation of 2,300 solar water pumping systems during 2017-18 by providing 90 per cent subsidy (including the subsidy provided by the Ministry of New and Renewable Energy). To tackle the issue of straw burning and promote paddy straw-based biomass power projects, the Haryana Renewable Energy Development Agency (HAREDA) has floated a request for proposal for setting up six paddy straw-based biomass power projects of about 50 MW capacity. These projects are likely to be commissioned by 2019-20. HAREDA is in the process of formulating the Biomass Policy, 2017 with the aim to set up 150 MW equivalent biomass projects by 2022. What is the current renewable purchase obligation (RPO) compliance status in the state and what are the plans to ensure 100 per cent compliance? Up to 2015-16, of the targeted 420 MUs needed to fulfil the solar RPO, 127 MUs were achieved. Of the targeted 2,282 MUs needed to fulfil the non-solar RPO, 1,172 MUs were achieved. What are some of the key issues faced by the state’s renewable energy sector? For grid-connected rooftop solar projects, the installation of net meters is the key issue. Meanwhile, for ground-mounted projects, the main challenge is the approval of tariffs by the HERC. What is your outlook for the renewable energy segment in the state? The state has a huge target for rooftop solar power. It has plans for setting up 4,030 MW of solar projects by 2022, including 1,600 MW of rooftop solar projects. ■

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Interview with Anil Sardana “The PPA structure needs to be strengthened” According to Anil Sardana, managing director and chief executive officer, Tata Power, the bankability of renewable energy projects has always been an issue owing to offtakers’ inability to absorb power and pay for it. Tata Power currently has one of the largest renewable energy project portfolios and, going forward, it aims to have 30-40 per cent of its capacity through clean energy sources by 2025. In an interview with Renewable Watch, Sardana shared his views on the key issues affecting the sector, the emerging opportunities and the way forward... What have been the most noteworthy developments in the renewable energy space in 2017? What is their likely long-term impact on the sector?

Anil Sardana Managing Director and Chief Executive Officer, Tata Power

“Renewable energy projects backed with battery technology could transform the energy scenario in India.”

The pace of activity in the renewable energy space has clearly been the silver lining in the sector that has otherwise been facing challenging times. This is primarily because of strong government support and the increasing price competitiveness of renewable power. Amongst the various developments that have taken place in the solar and wind power segments this year, the ones that would have a long-term impact on the power sector are: z Bidding in the wind segment, which would mean that utilities would not scout for wind sites and choose wind turbine suppliers through competitive measures. z The government would tender 20,000 MW of solar capacity, which would perhaps be the largest block of capacity to be auctioned in a single tranche for the first time globally. z The government announced that there would be quality standards for imported solar photovoltaic (PV) modules, which would be enforced through inspections. This will help procurers get over 25 years of module life. In your opinion, will the change in management at the Ministry of New and Renewable Energy (with a new minister and a new secretary) impact the pace of decision-making? The government is committed to green energy and is transitioning towards a renewablefocused economy. The new minister and secretary share the same vision and are doing everything needed to expedite renewable capacity

78 ● Renewable Watch ● November 2017

build-up and removing the difficulties being encountered by developers and manufacturers. What is the current financing situation for utilityscale solar and wind projects in India? Can you highlight the major risks for investors in this space? Around 293 global and domestic companies have committed to generate 266 GW of solar, wind, mini hydel and biomass-based power in India over the next 5–10 years. The initiative would entail an investment of $310 billion–$350 billion. For instance, the International Finance Corporation, the investment arm of the World Bank Group, is planning to invest about $6 billion by 2022 in several sustainable and renewable energy programmes in India. The Indian power sector has an investment potential of Rs 15 trillion over the next four to five years, which indicates immense opportunities in power generation, distribution, transmission and equipment. While there is plenty of capital chasing the opportunities in the renewable sector, there are several risks that need to be kept in view, including counterparty risks both in terms of developers and procurers. How do you see the role of storage solutions in the context of renewable energy? What are Tata Power’s plans in the area of energy storage? The renewable energy storage system market in India is at a nascent stage. The market is expected to witness robust growth, perhaps in the next 5-10 years, once the cost of storage declines, which is likely to happen because of the sheer volume growth through the electric vehicle route.

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ANNIVERSARY ISSUE Energy storage has now become a complementary solution for renewable energy, which is seasonal and intermittent. The challenge is to ensure that there is 24x7, robust supply of energy. The thrust on solar and wind projects has increased the challenges in maintaining system stability, which is encouraging developers to support power grid networks with battery storage to help manage the variations in power supply. Renewable energy projects backed with battery technology could transform the energy scenario in India. However, the challenge is to develop a technology that is suitable for large renewable energy projects. As per industry reports, the deployment of energy storage is anticipated to grow over 40 per cent annually in the next 10 years, with around 80 GW of additional storage capacity. Tata Power has undertaken proof-of-concept in battery energy storage systems, wherein large lithium-ion battery banks are being deployed in Delhi. What should be done to address the challenges/risks pertaining to the renegotiation of existing power purchase agreements (PPAs), especially in the wind power space? One of the key concerns plaguing the renewable energy sector is the delay in the signing or non-signing of new PPAs

“The pace of activity in the renewable energy space has clearly been the silver lining in a sector that has otherwise been facing challenging times.” and reneging on old PPAs. Bankability of renewable energy projects has always been an issue in India, owing to off-takers’ inability to absorb power and pay for it. We have also seen that the renewable energy certificate mechanism did not take off as expected. So, the PPA structure needs to be strengthened to make renewable energy projects more bankable. There are states which, owing to their fiscal challenges, are not encouraging the must-run status of renewables and are forcing such capacities to back down when wind velocities are favourable. The government must, therefore, enforce must-run status as an obligation for all consumers to buy a good proportion of clean and green power. What have been Tata Power’s key achievements in the renewable energy sector in the past year? What is the energy mix that the company is targeting, going forward? With a gross generation capacity of 3,210 MW through clean non-fossil sources, Tata Power is one of India’s largest renewable energy players. The compa-

ny’s renewable portfolio in India registered a healthy profit of Rs 1.73 billion in the second quarter of 2017-18, a 101 per cent increase over the corresponding period in 2016-17. In line with the government’s objective of promoting renewable energy, Tata Power has a welldefined growth plan and is working towards achieving the same. The company aims to build a total capacity of 20,000 MW by 2025, of which 30-40 per cent of its portfolio would be based on non-fossil fuel. In 2016-17, we added about 1,400 MW of capacity. We have various projects in the pipeline. Tata Power Renewable Energy Limited (TPREL) has emerged as one of the leading independent power producers (IPPs) in India. Does the company have any plans for consolidation or capital market listing? TPREL is, at present, is in the consolidation phase and has to stay focused on operating its assets well and also grow its portfolio to maintain its market share. What are the other key unaddressed challenges of IPPs that need to be resolved at the earliest? What are the possible solutions? The private sector participated aggressively in the capacity addition programme due to the fast-paced developments in the sector and eventually landed up with all the capacity not being absorbed. The key challenges faced by power producers are high fuel supply risk, time overruns at plants, and the limited paying capacity of the financially weak distribution utilities. Power producers are facing delays in payments, which are sometimes as much as a year, from state-run power distribution companies. Some IPPs are also locked in PPAs that have become unviable. High exposure to offtaker risk and fuel shortages are some of the other challenges that are concerning IPPs. ■ November 2017 ● Renewable Watch ● 79

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Viability Concerns Developers’ views Solar and wind project allocations slowed down considerably in 2017, compared to the allocations in 2016. Moreover, aggressive bidding and the sharp fall in prices raised concerns about these segments suffering the same fate as thermal power or the road sector where irrational pricing led to many projects being abandoned or getting financially distressed. Leading renewable energy developers express their views on the emerging trends, challenges and policy requirements for the sector... What have been the major highs and lows for the renewable energy sector in 2017?

Sanjay Aggarwal The year 2017 saw tariffs fall significantly, making solar energy one of the cheapest sources of power in the country. Although this made the segment financially attractive to the discoms, it has resulted in delayed long-term power procurement on the expectation of a further fall in prices. The year also saw a shift in the wind power procurement methodology from feed-in tariffs (FiTs) to reverse auction-based competitive bidding, which resulted in tariffs declining to Rs 2.65 per unit, almost at par with solar.

Mahesh Makhija One of the biggest developments has been the wind industry’s move away from the FiT structure to competitive bidding. The tariffs that have emerged are fantastic for the segment. However, the supply side has been adversely affected and is struggling to adjust to the new scheme of things. Some developmental challenges, especially those relating to grid connectivity, have already emerged following the first wind auction that concluded in February 2017, making us a bit cautious as developers.

Manoj Upadhyay Solar power has become more affordable with a decline in tariffs, leading to large-scale acceptability by distribution utilities. The decline in tariffs is attributed to the notification of the Renewable Fuel Standard (RFS)/power purchase agreement (PPA) framework by the government for transparent bidding, the solar park concept and the decline in the project costs. The availability of affordable power near the consumption point will reduce technical losses and under-recovery on the sale of power. These factors have increased the demand for solar power. Meanwhile, policy uncertainty on the goods and services tax claims and tariff revisions by the Central Electricity Regulatory Commission (CERC) and the state electricity regulatory commissions, confusion over the classification of solar modules under CTH 8541/8501 at customs, the unknown value of the anti-dumping duty and global solar panel supply constraints were the lows for the industry.

Gaurav Sood One of the key positive developments in 2017 was the advent of competitive bidding in the wind energy segment, which resulted in tariffs that are sustainable and

attractive to the offtakers. This will, in the long run, lead to a much bigger market for wind, which has been lagging behind solar for some time. It has also led to ensuring a level playing field for industry participants. Another significant highlight has been the CERC’s draft Grant of Connectivity and General Network Access to the Inter-State Transmission System Regulations, directed towards providing a level playing field for industry participants and promoting sector growth. The year also witnessed some hindrances such as the initiation of anti-dumping duty investigations into solar modules in light of the limited domestic manufacturing capacity and lack of clarity in the RFS of tenders regarding coverage of the same under change of law. Another hurdle has been the classification of solar photovoltaic modules under 8501, attracting basic customs duty at 7.5 per cent ad valorem, resulting in module shipments getting stuck at ports and leading to project delays. What is your opinion on the declining tariffs in light of the changing cost structure and competitive landscape? What does it imply for developers/engineering, procurement and construction (EPC) companies and the government?

Sanjay Aggarwal

Mahesh Makhija

Manoj Upadhyay

Managing Director,

Director,

Founder, Chairman

Fortum India

Renewables,

and Managing

CLP India

Director, ACME Group

80 ● Renewable Watch ● November 2017

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ANNIVERSARY ISSUE Sanjay Aggarwal Solar power tariffs in the country witnessed an unprecedented fall in the past couple of years, primarily owing to the fall in imported solar panel prices and the competitive bidding dynamics in the industry, which has helped in achieving more than 20 GW of installed or underinstallation solar capacity. Unfortunately, this has also resulted in delayed signing of PPAs. Global developments such as the extension of the solar programme in China or the verdict in Suniva’s case in the US, which have led to a shift/increase in domestic demand in these markets, have not augured well for Indian developers. Therefore, project developers have to keep looking for niche areas to stay competitive in future bids.

Mahesh Makhija A live auction always carries an element of aggression where the numbers do not make sense to a lot of people, especially those with the losing bids. The FiT regime implies multiple inefficiencies in the entire value chain. With the auctions being overseen by the Solar Energy Corporation of India, risks will be priced differently, eventually lowering the cost estimates. While the government is quite happy about the decline in tariffs, EPC companies and developers have been adversely impacted, with the biggest blow being felt by turbine manufacturers. Developers will now have to become more innovative and discover more profitable sites. Turbine manufacturers have to focus on cost control and on making their operations more cost efficient.

Manoj Upadhyay Lower tariffs indicate a cost reduction across the entire value chain owing to inno-

Gaurav Sood Chief Executive Officer, Sprng Energy

vation, technology improvement, greater economies of scale, higher investment in research and development, and lower cost of finance. This advancement in technology is useful for you, me and all stakeholders. Lower costs will help utilities to improve their balance sheets, freeing up capital for upgradation and expansion of infrastructure, and providing payment security to power generating plants and power to people living on the margins of society. This will lead to an increase in the demand for power, ultimately benefiting project developers with the award of more projects, creating more opportunities to grow business, attract investment and create employment opportunities for people.

which would be operated using Fortum’s cloud-based system. The company has also recently signed an MoU with the Nagpur Municipal Corporation for the planning, designing, investment and operations of charging infrastructure. We are engaging commercial and industrial consumers for providing them with longterm on-site (rooftop/ground-mounted) or off-site (open access) solar power and aim to become the custodian of all their power requirements in the future. We have already installed a 1 MWh energy storage project in Finland and are keenly evaluating the solar-with-storage potential in India.

Mahesh Makhija Gaurav Sood The decline in tariffs has been aggressive on account of limited tenders and high competition in the sector. It leaves very little error margin for developers and in case of any unforeseeable risks, projects could come under stress. The example of module prices going up by about 6 cents per Wp in the past few months highlights this risk. For the government to provide a sustainable ecosystem, a continuous flow of tenders in line with its overall targets should be a key consideration.

Rooftop solar has emerged as an extension of solar projects. For the offshore wind energy segment, the government has begun framing a policy. Further, windsolar hybrid projects may see an FiTbased auction mechanism. Meanwhile, EVs, storage and smart cities present a number of opportunities for growth. We are focusing on these opportunities at our “Innovation and New Energy Group” located in Hong Kong.

What are the emerging areas of opportunity for project developers (rooftop, solar-wind hybrids, EVs, storage, offshore wind and smart cities)? How are you planning to leverage these?

We have over 1 GW of wind and solar capacity, 1,320 MW of coal capacity and 650 MW of gas capacity. While we rely on a balanced fuel mix, renewable energy projects are available in the market and that is where our focus will be.

Sanjay Aggarwal

Manoj Upadhyay

Being a pioneer in electric vehicle (EV) charging networks in the Nordic countries, our company is looking at setting up a promising number of EV charging stations in India, keeping in mind the government’s larger vision. Starting with the pilot launch in New Delhi, Fortum is aiming to set up 150-160 chargers over the next 12-18 months across different cities. The company also aims at building awareness and providing assurance of services associated with e-mobility in order to increase the acceptability of EVs in India. Fortum has recently installed a 22 kW AC charger on a pilot basis in the New Moti Bagh area,

The emerging areas in the renewables space would be more neighbourhood solar power plants and innovative solutions for solving the water crisis in coastal areas by desalination, using low-cost solar energy. The increasing role of electricity in transportation using EVs and energy storage would be the trends in future. The demand for energy storage is going to increase with the rise in renewables in the energy mix to ensure grid stabilisation, considering the intermittent nature of renewable energy. Since all these are at the initial stage, continuous government support and investments are needed. November 2017 ● Renewable Watch ● 81

PERSPECTIVE Gaurav Sood Solar-wind hybrids and storage are the emerging areas of opportunity. We would like to participate in tender opportunities in both these areas, which would lead to better grid infrastructure utilisation and stability. What are the unaddressed challenges today and what are the key recommendations for policymakers as well as the industry?

Sanjay Aggarwal The government has done a remarkable job in the past couple of years by boosting demand and ensuring smooth implementation, which contributed to the record solar tariffs achieved early this year. However, it is important that the pace of change and certainty in regulatory policies continue unhindered for India to achieve the 100 GW target by 2022. The recent uncertainties regarding the anti-dumping duty, customs clearances, power evacuation delays/constraints, renegotiation of tariffs, and must–run status are the challenges that developers had not factored in when committing to the capacity at low tariffs. These risks, if they materialise, would be detrimental to investor and developer confidence. Also, the sector suffers from issues of quality in installations. There should be better measures for quality control of solar panels so that they last the stipulated 25 years. Another challenge for the sector is the slowing power demand from discoms. The present power-surplus situation indicates a decline in solar power demand, which may continue for three to four years. A conducive policy framework that balances the demands of manufacturing and project development is the need of the hour.

Mahesh Makhija After the first auction, getting evacuation approvals has been a nightmare for some developers because the transmission utilities continued to follow the first come, first served approach. Thus, some developers with PPAs did not have connectivity, whereas others with connectivity lacked PPAs. Further, each state has its own set of challenges. The government should look at 82 ● Renewable Watch ● November 2017

ANNIVERSARY ISSUE making the implementation process easier. Mega auctions, recently proposed by the government, are an excellent idea to give assurance to the industry. To counter these issues, the government has already begun work on grid integration. The dialogue over forecasting and scheduling has ensured that most states have put the required mechanisms in place. During the introduction of competitive auctions, a large number of projects that had been commissioned lacked approved PPAs. This is the category of PPAs that is facing difficulty in execution. Therefore, I would not categorise it as PPA renegotiation but as negotiation on the regulated tariff before the PPAs are signed. However, it does not augur well for investors.

Manoj Upadhyay My key recommendation to policymakers would be to ensure a transparent bidding mechanism, remove uncertainties owing to frequent policy changes, and create a strong framework agreement and a fast dispute resolution cell. This will help the industry to attract global investors and lenders, and encourage Indian companies to invest more in this sector.

Gaurav Sood Grid curtailment is a key unaddressed challenge in the sector despite must-run status for renewable energy projects. This issue could be addressed by looking at it from the lens of having a solution to store and utilise energy at the required time. Late payments by offtakers are also a concern for developers. The offtakers need to be incentivised for investing in storage solutions in the form of funded energy storage on a pro-rata basis if they opt for higher RPOs over and above those set by the SERCs. This will help them in managing the difference in peak and off-peak demand, renewable variations, trading of surplus power at exchanges, reduced demand-side management-based penalties and thereby control the curtailment of renewable power. What is the future outlook for the renewable energy sector?

Sanjay Aggarwal Owing to the plunging solar and wind energy costs as well as the anticipation of a more carbon-constrained future, the Indian renewable energy space is witnessing increasing growth. The solar segment is still at the growing stage and continues to face many challenges. To diversify resource-based risks, more investment is required to fund projects across regions and asset classes. India’s renewable energy growth is primarily propelled by a few factors such as considerations to meet energy demand, sustainability, energy security and lower costs.

Mahesh Makhija The outlook is fantastic not only for India but for the whole world. Apart from some core services that should be powered by conventional sources, capacity addition will most likely come from renewable sources only. The government has no plans to hold auctions for conventional energy. In the private sector, renewable energy will dominate in the foreseeable future.

Manoj Upadhyay Going forward, the sector will witness a mix of consolidation and expansion as, with the maturity of the sector many small players will merge with genuine players to form GW firms and solar power will witness continuous expansion. The sector will also observe greater demand for energy storage on a large scale for providing stability at affordable rates. This integration of renewable energy with storage will lead to more demand for renewable energy and reduce the demand for coal-based power plants.

Gaurav Sood Overall, the renewable sector in the country has a bright future. We will have the maximum growth in energy consumption per capita and a large part of this requirement would be met through renewable sources, as per the plans of the government. India is amongst the few countries in the world where industry participants could build large energy platforms to deliver competitive renewable energy to the people. ■

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Waiting to Take Off Manufacturers’ opinion Renewable energy equipment manufacturers are stretched due to the demand slowdown resulting from delayed project allocation as well as the continuously declining solar and wind tariffs. The manufacturing community is also divided as far as the case for imposing anti-dumping duties on imported solar cells and modules is concerned. Leading manufacturers comment on the noteworthy developments in the past one year and their impact on the industry... What have been the key developments in the renewable energy sector over the past year and what are their implications for the manufacturing segment?

Allen Cao There have been several developments over the past year that have affected the renewable energy market in India. These include the implementation of the goods and services tax (GST), anti-dumping investigation, steep fall in tariffs and uncertainty over the signing of power purchase agreements (PPAs). The market is, therefore witnessing a slowdown. The entire capacity of tenders released so far for the next year stands at about 5 GW; however, in my opinion, all of this will not be commissioned in that duration. Moreover, with elections impending in 2019, the political environment too could lead to policybased changes. In sum, the market is now getting smaller, but increasingly competitive. There is an increased demand for modules from the Chinese

market, so the prices are expected to be higher in the short term, which could lead to extensions or cancellations of some projects. Since costs are now falling, developers will look at other measures to save costs and increase profits. Therefore, we believe that the demand for solar trackers will increase, especially in southern India where more tenders are expected to be released.

Ashish Khanna Currently, the total installed solar capacity stands at 15 GW, of which more than 5 GW has been added this year. The year 2018 looks even more promising with an estimated addition of 8 GW. While initially, the industry’s focus was on large, gridconnected projects, with institutions, corporates and individuals adopting solar in a big way, there is now an increased focus on rooftops as well. Although the adoption has been slower than utility projects, it is currently slightly more than 1 GW as against the target of 40 GW by 2022.

In 2017, we saw tariffs fall to below Rs 2.50 per kWh for the first time, making solar cheaper than coal in some cases. This was owing to the streamlining of processes and price competition rather than technological advancement. This means that there is pressure on margins, especially for serious developers with a long-term focus. There still exists a significant difference in price, not all of which is due to economies of scale or better manufacturing processes. A significant reason for the difference is state subsidy and the availability of long-term and low-cost loans. While the solar industry has been going through robust times, manufacturing in India is still facing challenges and cannot compete with imports.

Sujoy Ghosh It is expected that 2017 will be another year of record growth for renewable capacity addition, especially in the solar segment,

Allen Cao

Ashish Khanna

Sujoy Ghosh

Director,

Executive Director

Country Head,

Arctech Solar

and Chief Executive

First Solar

Officer, Tata Power Solar

“The demand outlook for next year will depend on the antidumping tax levied by the government.”

84 ● Renewable Watch ● November 2017

“The solar segment is seeing explosive growth; however, the domestic manufacturing sector has not been able to follow a similar trajectory.”

“Given the paucity of fresh auctions and the fact that utilities have not executed PPAs for some auctions, growth could slow down in 2018.”

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ANNIVERSARY ISSUE fuelled primarily by the auctions that took place in the previous year. However, given the paucity of fresh auctions in 2017 and the fact that for some of the auctions the utilities have not executed PPAs, growth is expected to slow down in 2018. Maintaining the demand growth for solar through renewable purchase obligations is critical, and the central government and regulators would need to enforce the obligations on consumers.

front-runner in showcasing many of these developments. This year, the country issued its first tender for solar power projects with energy storage. As the foundation for large-scale solar becomes stronger in the country, we will see increased adoption of distributed energy, off-grid systems and local storage options. What are the key issues and concerns faced by manufacturers and what steps need to be taken to resolve these?

Sundeep Gupta A key development in the solar segment over the past year has been the implementation of GST, which caused temporary turbulence in the market. Another development was the stabilisation of solar module prices as they increased slightly, from 29 cents to 36-37 cents, after a free fall for about four to five years. This happened primarily due to a surge in demand from China and the US. However, the market expects prices to fall again in January 2018.

Allen Cao

Donald Leo

Ashish Khanna

On account of falling solar and wind energy tariffs and the need to move towards a more carbon-constrained future, several developments have taken place in the renewable energy sector. These include government policies, technological advancements, project deployment, and activity in the utility and residential segments in global and local markets.

We know that the Indian solar segment is seeing explosive growth; however, the domestic manufacturing sector has not been able to follow a similar trajectory. Consequently, domestic manufacturing has not been able to take advantage of this unprecedented growth in the solar segment. We are still dependent on imports for raw materials for cell manufacturing. We believe that domestic manufacturing is one of the two legs of the Jawaharlal Nehru

During the past year, India has been a

The primary concern right now is the low prices discovered in the recent tenders and whether these projects can be executed or not. In the event that these projects, with a collective capacity of over 1 GW, are unable to move forward, the capacity installed next year could fall from 5 GW to less than 4 GW. Therefore, the market has to find a way to procure cheaper modules or the PPA prices will have to be renegotiated.

Sundeep Gupta

Donald Leo

Vice Chairman and

Managing Director,

MD, Jakson Group

Asia South, JinkoSolar

“Anti-d dumping duties will have to necessarily be levied in the solar industry. The question is no longer if but when.”

“The anti-d dumping duty and any such trade barrier may pose a threat to the achievement of the solar target.”

National Solar Mission. Not only can manufacturing help us in becoming self-reliant from an energy standpoint, but it also has the potential to generate employment, boost exports and thus bring foreign exchange and contribute to the overall growth of the economy. There is a need to focus on building and strengthening the domestic solar ecosystem and the technology that is best suited for Indian requirements. For the domestic sector, technology has not been the major problem; it is the lack of a sustainable pipeline that has hit the business at the budding stage. Consequently, the lack of capacity ramp-up results in the short supply of domestic modules in the market. This is a vicious circle. In this context, the government’s impetus in terms of policy support and building a favourable ecosystem for the sector can pay significant dividends. Greater focus on the manufacturing industry is the key to bringing down the volume of imports. Solar has a long way to go and if certain fundamentals can be rectified to enable a level playing field for the domestic sector, it can surely be a game changer for increasing the deployment of made in India products.

Sujoy Ghosh On a strategic basis, the key challenge is the lack of visibility regarding the longterm and cyclical nature of demand, despite clear policies being in place, which affects our ability to plan capacities. On a more tactical basis, the recent challenges faced by importers with regard to the interpretation of harmonised system codes by Indian customs authorities is a big problem that should not exist as there is ample clarity and prior precedence on the implementation of codes. The Ministry of New and Renewable Energy has, in an earlier instance, given its clarification on this matter but cognisance has not been taken of it. This has been delaying the clearance of solar modules at various ports in the country and creating a negative perception about November 2017 ● Renewable Watch ● 85

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the ease of doing business in India.

Sundeep Gupta One of the major challenges for the Indian solar market remains the lack of cost competitiveness of domestic cells and modules as compared to their Chinese counterparts, despite being at par in terms of quality. The market for Indian modules is largely restricted to the rooftop segment, which has a domestic content requirement but has not been able to penetrate the large capacity solar power segment. Another challenge is the confusion surrounding GST and the tax brackets for non-solar-specific components. Chennai Port is reportedly charging 7.5 per cent customs duty on the import of solar modules, as opposed to no duties charged by other ports, creating an unnecessary issue for the solar market and developers importing through that port.

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What is your perspective on the anti-dumping investigation? How will it affect manufacturers?

Allen Cao The primary purpose of the anti-dumping investigation is to protect local manufacturers. However, it will not affect the government’s renewable energy target. The government will have to work out a reasonable anti-dumping tax rate that can allow local vendors to compete with international vendors at the same price level. In this way, local vendors will find their way to survive, and the entire market capacity will not shrink dramatically. If the tax is too high for international modules to be sold in India, it could lead to only 1 GW or 2 GW of capacity being executed, as the market would not be able to survive only on the back of local vendors. On the other hand, if the tax is too low, domestic manufacturers would not be protected and the purpose of levying the tax would be defeated.

Donald Leo Some of the challenges faced by manufacturers are low solar tariffs with the reverse auction process driving module price downwards, tender/auction delays impacting planning, project deferment by developers, low-quality modules flooding the market and causing confusion in product differentiation, GST-related uncertainties and, of course, the recent antidumping issues. 86 ● Renewable Watch ● November 2017

strategic and it is quite possible in some cases that it does not even cover the input cost. However, it dents domestic manufacturing capabilities in many ways.

Ashish Khanna In 2016-17, 89 per cent of the solar modules used in India were imported. The proliferation of these low-cost modules in the Indian market fuelled aggressive bidding. Lower pricing ensures higher accessibility to solar. However, low pricing can sometimes affect the quality as developers seek to protect margins. We need to be aware and understand that pricing can be

To make the Indian solar segment vibrant and competitive, there should be a consistent and transparent policy framework, investment in R&D, skill development, creation of special economic zones with fast-track project clearances and a focus on quality.

Sujoy Ghosh In my opinion, dumping is an unfair business practice and protective measures against it are a legitimate right of the domestic industry of any country. With regard to the specific anti-dumping investigation instituted in July 2017 based on a petition filed by the Indian domestic module manufacturers, our assessment is that the industry’s revenues have grown while costs have dropped, and hence profitability has improved in the same period that the manufacturers claimed injury. Therefore, the very basis of the claim appears to be inconsistent as per the data submitted and we expect the investigators to take cognisance of this aspect as they evaluate the case.

Sundeep Gupta Anti-dumping duties will have to necessarily be levied in the solar industry. The

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question is no longer if but when, as it is only a matter of time for these duties to be applicable. The industry has more or less accepted this as well as the consequent price rise. As of now, nearly 80 per cent of the modules are imported from China, which defeats the purpose of having a national solar mission, as it does not help domestic manufacturers. It is yet to be seen if anti-dumping is the right solution, perhaps it is in the short run, but there has to be a proper mechanism for promoting domestic manufacturing of solar cells and modules. The Make in India initiative has also not done enough to boost domestic manufacturing in the solar segment.

Donald Leo India has a hefty solar installation target of 100 GW by 2022. The anti-dumping duty and any such trade barrier may pose a threat to the achievement of this target. The government will have to weigh the pros and cons of introducing this duty, as it will affect the pace of installation on the ground. What is the demand outlook for the manufacturing sector for the next year? What kind of investment environment is expected over the medium to long term?

Allen Cao The demand outlook for the next year and onward will depend on the anti-dumping tax being levied by the government. If the market yield remains the same, most companies will remain unaffected. However, if it declines, the margins of all stakeholders will be affected, as everyone will be competing for the handful of projects available. There is, therefore, a lot of uncertainty in the market.

Sujoy Ghosh In order to create manufacturing capacities that are competitive with the global supply chain, there needs to be a clear policy around incentivising fresh investment. The additional capacities need to be of a large scale and should be completely integrated such that they can compete against the existing supply chain. 88 ● Renewable Watch ● November 2017

The policy must address the issue of how domestic capacity can be competitive by evaluating the subsidies provided by other countries such as China, Malaysia and Taiwan. A combination of tax holidays and lower cost of capital is required to match the subsidies provided by other countries, or else manufacturing will always be disadvantaged from a cost standpoint and hence not be sustainable.

Sundeep Gupta The rooftop segment is likely to grow up to 3 GW in the next two years. There are market forces in place that will enable the growth of this segment. It is also a key focus area for us as we look to add another 20-25 MW to our existing portfolio of about 75 MW (installed and EPC combined). The industrial and commercial sectors are expected to be the biggest demand drivers for rooftop solar in the near future, while the residential segment will pick up gradually. For the next two years, the demand for ground-mounted solar projects is expected to remain stagnant. Meanwhile, demand from hybrid solutions is likely to grow. In 2017-18, the installed capacity in the solar segment is expected to be in the vicinity of 5 GW, while the overall renewable energy space is likely to be a bit damp given the slowdown in the wind energy segment.

The government must work towards resolving the issues associated with GST in order to remove the confusion in the market. We expect significant consolidation in the manufacturers’ segment in the solar market as companies look to grow their portfolio.

Donald Leo In order to support India’s growing solar energy demand, quality manufacturing will be the key to support this growth. We are likely to witness a heavy demand for utility projects, which will touch 8.8 GW by the end of this year. Meanwhile, the rooftop market is also making a move towards maturity with corporates, institutions and commercial entities showing interest in rooftop systems. Around 11.9 GW of rooftop solar capacity is expected to be added between 2017 and 2022. India is aggressively pushing local manufacturing and has set out around $3 billion in state funding for developing the country’s solar panel manufacturing infrastructure. Besides, the global investment community is mobilising to back solar activity, with over $100 billion in commitments. In addition, India is coming up with innovative financing options including green finance and is planning to set up its first green bank. This will go a long way in supporting local banking options through unique public-private mechanisms. ■

DHANUSH ENERGY LIMITED BUSINESS ASSOCIATES: Dhanush Infrastructures Pvt. Ltd., Boyapati Solar Pvt Ltd., Ammu Abhi Solar Pvt. Ltd., Mahalaxmi Properties, Belmin Ventures Pvt. Ltd., Shri Kenchamba Solar Pvt. Ltd., Patel Shanthi Steels Pvt. Ltd., Athnoor Solar Pvt. Ltd., Arvind Exim Inc, N.Gajendran & Co., Bhagwan Aditya Powers Pvt. Ltd., N. Kotappa Naidu & Co., Solaries Vigour Pvt. Ltd., Anushree Greentech India Pvt. Ltd., Vajrakaya Energy Pvt. Ltd., Trisha Engineers , A. Veeraswamy & Co., D. Jayarama Reddy & Co, Anand & Associates

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PERSPECTIVE

ANNIVERSARY ISSUE

Positive Sentiment Financiers’ views With falling solar panel prices and improving wind technology yields, not only has renewable energy become cost competitive, but it also offers low feedstock risk vis-a-vis conventional power. This makes it a preferred asset class for investors. The government thrust on renewables has further boosted investor confidence in this sector, thereby leading to heightened activity in the deal space as well as the debt domain. Experts from the financial community provide their perspective on the current investment scenario, the key risks and challenges, and their future plans for the sector... What is the biggest concern for a financier as far as the solar and wind power segments are concerned?

Manish Chourasia Proper enforcement of signed power purchase agreements (PPAs) is a must to retain investor confidence. This is a big concern as tariff and counterparty risks directly impact the debt-servicing capability in cash flow-based lending projects. This risk has amplified further post the recent competitive auctions, in which significantly lower tariffs were discovered as compared to the feed-in tariffs (FiTs) of various state governments. Land acquisition is another key risk, considering the sensitivities and complex administrative processes involved. Further, as both wind and solar are “infirm” sources of power, an increase in the power generated through solar and wind increases the load on the grid. Investments in suitable evacuation infrastructure should, therefore, be of prime importance.

Dr Ashok Haldia The biggest concern stems from the irresponsible conduct of the discoms. Till recently, this was limited to their payment behaviour. But now, with the discovery of low prices in recent auctions and often under the pretext of public interest, the discoms have started threatening to renegotiate PPAs. This creates uncertainty, which should be avoided at this juncture because it will slow down the influx of investments. What the discoms and the state governments need to understand is that they are risking the future of investments in renewable energy projects. Renegotiation of existing PPAs is thus a short-sighted approach and would, in fact, end up being against the public interest. Another concern, as a financier, is the potential risk of over-leveraging of renewable energy assets. These days, most developers get their project loans refinanced with a top-up loan. Renewable energy projects are not like the class of infrastructure assets that have revenues linked

to availability, such as power transmission projects or build-operate-transfer annuity projects. Hence, excessive leverage can prove to be counterproductive and potentially lead to stress in debt repayment.

Neeraj Jain The biggest challenge being faced by financiers today is the uncertainty over PPA enforcement with discoms, which are changing course as lower tariffs are being discovered and the FiT era comes to an end. Another big concern is the quality of solar panels being imported. How has the investor perspective changed post developments such as the tariff crash in the solar and wind segments, the introduction of competitive bidding for wind and the slowdown in project allocation?

Manish Chourasia The high capital costs and low tariffs are making it tough for smaller players since it is difficult for them to achieve economies of scale. Therefore, significant consolida-

Manish Chourasia

Dr Ashok Haldia

Neeraj Jain

MD, Tata

MD and CEO,

Vice-President,

CleantechCapital

PTC India Financial

Project Advisory

Limited

Services Limited

and Structured Finance, SBICAP

“Proper enforcement of signed PPAs is a must in order to retain investor confidence.”

90 ● Renewable Watch ● November 2017

“Tariffs have reduced and so have the risks and uncertainties. These have lowered the cost of capital.”

“Accelerated consolidation is the way ahead as investors seek to achieve economies of scale.”

PERSPECTIVE

ANNIVERSARY ISSUE tion is expected in the industry, with large players looking to grow inorganically. Some investors are also making speculative and aggressive assumptions on future equipment prices, debt refinancing, etc. Any volatility in the price of solar modules on account of an increase in international prices or adverse movement in currency will pose a key challenge to the solar segment.

growth to inorganic growth via mergers and acquisitions. There have already been some big transactions in this space and accelerated consolidation is the way ahead as investors seek to achieve economies of scale.

Additionally, there has been a standstill in the addition of new wind projects as the wind segment is transitioning from an FiT regime to tariff-based auction regime. Recent wind auctions have witnessed aggressive bidding by many players, with wind turbine manufacturers consenting to provide turbines at significantly lower costs on account of excess capacity triggered by the sudden withdrawal of the FiT regime.

Manish Chourasia

Dr Ashok Haldia

The tariff reduction is a result of a number of factors, besides the reduction in capex. These include the removal of inefficiencies in the system of land procurement, power evacuation approval through solar parks and improvement in the credit profile of the Solar Energy Corporation of India (SECI). Moreover, each tender has its unique characteristics, which decide the tariff. These include payment security and offtaker risk, location, size and timing of the tender, bidding mechanism, availability of land evacuation infrastructure, and deemed generation benefit.

Both the wind and solar energy segments will continue to see an increase in investments. Performance uncertainties are less in solar projects than in wind projects. However, of late, the solar segment has been reeling under the pressure of increasing module prices due to the cost impact of the goods and services tax and the possible imposition of a trade barrier in the form of duties. Once these uncertainties are done away with or priced in, investments will begin to flow in once again.

Which renewable energy segments are likely to see an increase in investments in the coming year?

Rooftop solar can be a major investment driver in the coming years. Developers, which traditionally looked at groundmounted projects, are actively looking to expand their rooftop portfolio in order to diversify their risks and earn better tariffs. In addition to rooftop solar, the other segments of interest in the coming years will be around energy storage technologies and energy efficiency projects.

Neeraj Jain Tariffs have come down and so have the risks and uncertainties, and this has brought down the cost of capital. As far as the price of modules is concerned, the slowdown is temporary on account of uncertainties in the global market. Further, wind auctions have only recently been adopted and hence there could be some teething issues that have to be dealt with.

Domestically, the discovery of solar tariffs has been under way for some time now and it is not unreasonable to expect that we are at the end of that cycle. Wind tariffs, on the other hand, are just emerging with the advent of competitive bidding. Overall, in the short term, solar and solar–wind hybrid structures may see greater traction over other segments.

Neeraj Jain

What are the new and emerging modes of financing in the renewable energy sector in the backdrop of various players having built large asset portfolios?

The evolving nature of the renewable energy sector globally is resulting in investors shifting their focus from organic

Manish Chourasia We have seen various new products like green masala bonds, credit enhanced bonds and plain vanilla offshore bonds. Infrastructure debt funds have also become quite active, which attempt to widen the investment pool to include pension and insurance funds. This is expected to substantially boost the funds available for deployment in the renewable sector. Going forward, we may also see the emergence of InvITs for the monetisation of assets, as we have seen in the power transmission and road sectors. Besides, for nascent sectors like rooftop solar and energy efficiency, a number of multilateral global banks have come forward and are offering concessional lines of credit.

Dr Ashok Haldia We are witnessing an increase in the refinancing of renewable energy projects, once they are operational. While one of the primary reasons for this is a benign interest rate environment, other contributory factors are increasing investor confidence. Refinancing definitely enhances equity returns as it reduces the cost of capital. However, a fusion of refinancing and top-up loans, which effectively end up freeing up partial equity of the developer, should be treated with caution. Another instrument that has hitherto been used by companies in the transmission and the roads and highways sectors is infrastructure investment trusts (InvITs), which can be used as a vehicle to free the locked-up equity of investors. From a cash flow yield perspective, InvITs can offer better returns, but from a cash flow risk perspective, InvITs need to be structured in a way that they derisk the assets from the perpetual problem of delayed payments from discoms.

Neeraj Jain Considering the momentum in the renewable space today, there is increasing interest from various equity investors looking for steady and guaranteed payouts over the medium and long terms. Investors are willing to bring in convertible instruments November 2017 ● Renewable Watch ● 91

PERSPECTIVE

with the idea of refinancing them at a later stage once the certainty of PPA enforcement is established. Also, various multilaterals and development financial institutions are willing to participate in achieving the government’s target of 175 MW of renewable energy by 2022. We have also seen that investors are trying to refinance the facility through green bonds. Do you see rooftop solar as an upcoming investment opportunity? What are the risks and positives in this space?

Manish Chourasia The rooftop solar market has grown at a compound annual growth rate (CAGR) of 98 per cent over the past four years. The commercial and industrial segment currently makes up almost 63 per cent of this market, while the residential and government segments account for 25 per cent and 12 per cent respectively. This is much lower than other key markets such as the US (46 per cent), Germany (73 per cent), China (18 per cent) and Australia (97 per cent). We expect India to catch up with the trend soon. In the current fiscal, the cost of generating solar power from rooftop projects is estimated to be Rs 5.30 to Rs 5.60 per unit (without capital subsidy) for projects not claiming accelerated depreciation (AD) 92 ● Renewable Watch ● November 2017

ANNIVERSARY ISSUE

and Rs 4.30 to Rs 4.80 per unit for those claiming AD benefits. At present, the commercial and industrial segment pays between Rs 11 and Rs 12.50 per unit. As per our estimates, rooftop solar installations will grow at a CAGR of 70 per cent in the next five years. Capacity addition is expected to be concentrated in Delhi, Gujarat, Maharashtra, Andhra Pradesh, Telangana, Karnataka and Tamil Nadu. The key issue in this segment is the requirement of “net meters”. As the supply from solar power is infirm, it necessitates an arrangement for the supply of the excess power to the grid and evacuation of power from the grid in case of excess demand. However, some public utilities do not encourage the net metering scenario as it leads to them losing their highrevenue customers. This issue will find a permanent solution only once battery storage becomes economical.

Dr Ashok Haldia Rooftop solar is one of the most efficient ways of producing and consuming renewable energy because of its decentralised nature. It has immense potential as an investment opportunity. The cost of electricity generation through rooftop solar is less than the discom tariff for commercial or industrial consumers and hence, there is a business case for

investment. The internal rate of return can also be potentially better than grid-connected solar projects. The industrial consumer segment is the most profitable for most discoms and that is where the discoms hide their inefficiencies and losses. The increasing adoption of rooftop solar can potentially lead to the disciplining of discoms and rationalisation of the tariff structure. As a lender, the credit risks are more with regard to the quality of the offtake arrangement. If the offtaker is of good credit quality and the arrangement has adequate safeguards that deter the offtaker from renegotiating PPAs, the projects are bankable.

Neeraj Jain Rooftop solar did not see too much activity initially on account of teething troubles like establishing offtaker credibility and finding the right roofs to work with. However, with institutions like SECI and Indian Railways stepping in with largesized tenders, increased activity is being seen. Timely commissioning and achievement of the projected capacity utilisation factor remain to be seen in order to establish the credibility of this burgeoning space. With subsidised financing now available from large banks, we expect the pace of growth of this segment to speed up. ■

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PERSPECTIVE

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New Records, New Challenges Consultants’ perspective If the renewable energy story in 2017 was to be described through three trends it would be plunging tariffs, hyper-competition and a weak project pipeline. Leading consultants talk about the sector’s performance in 2017, the key risks and challenges, the possible solutions and future outlook... How has the renewable sector performed over the past year? Which states have done well in terms of capacity addition, RPO compliance, discom payments and policy implementation?

lower tariff was a welcome step. On the other hand, Madhya Pradesh’s curtailment issue was disconcerting. Overall, the policy framework around the renewable energy sector is still evolving.

Pallavi Bedi As of end September 2017, the installed renewable capacity stood at 60,157.83 MW, accounting for 18 per cent of the total installed capacity. Wind energy continued to dominate India’s renewable energy industry with an installed capacity of 32,700.64 MW. In 2016-17, the states that performed well in the wind energy segment were Andhra Pradesh, Gujarat and Karnataka while those in the solar segment were Telangana, Tamil Nadu and Andhra Pradesh. In 2015-16, Karnataka and Andhra Pradesh exceeded their renewable purchase obligation (RPO) targets with compliance beyond 100 per cent. However, discom payments continued to be a challenge even though the Ujwal Discom Assurance Yojana (UDAY) has provided a fillip to the state discoms. The impact of this scheme is still awaited. The recent direction issued by the Karnataka government under section 108 to honour the tariffs determined in the wind power purchase agreements (PPAs) signed prior to Karnataka Electricity Regulatory Commission (KERC) order of a

Anish De While 2016-17 was a record year for both wind and solar with the highest capacity addition and lowest tariffs, the first seven months of 2017-18 have been slow in terms of capacity addition especially for wind. Around 5.5 GW each of solar and wind capacity was added in 2016-17 while the first six months of 2017-18 have seen only 2,483 MW of solar and 420 MW of wind capacity addition. However, at the same time, record low tariffs have been achieved for both wind (Rs 2.64 per kWh) and solar (Rs 2.44 per kWh). The payment cycle of states such as Rajasthan and Madhya Pradesh has also improved. With regard to total installed capacity, Tamil Nadu (7.86 GW), Gujarat (5.34 GW) and Maharashtra (4.77 GW) are leading in the wind segment while Telangana (2.79 GW), Rajasthan (2.22 GW) and Andhra Pradesh (2.15 GW) have the highest installed solar generation capacity. States such as Andhra Pradesh and Telangana have taken proactive steps to promote rooftop solar projects through

government schemes for setting up projects on state-owned buildings.

Amit Kumar Although India has made remarkable progress in the past seven years, starting from the introduction of the Jawaharlal Nehru National Solar Mission, the 14 GW of solar capacity installation is not as impressive as it sounds. India needs to install 86 GW of solar capacity in the next five years at the rate of 18 GW per year, which is quite significant. In 2016-17, India missed its RPO target, both solar and non-solar. The actual non-solar renewable energy procurement stood at 5.51 per cent, as against a targeted 8.75 per cent. Meanwhile, the solar RPO target was 2.75 per cent, whereas the actual procurement was just 1.11 per cent. The overall renewable energy generation was 6.62 per cent against the procurement target of 11.50 per cent. During the period April to August 2017, wind energy generation in India was up 28 per cent compared to the previous year, while solar power generation was up 84 per cent. Total renewable energy generation was up 25 per cent compared to the previous year. Tamil Nadu, Andhra Pradesh and Telangana have emerged as the fastest growing states and this year too, nearly 60 per cent of the total new capaci-

Pallavi Bedi

Anish De

Amit Kumar

Partner,

Luthra & Luthra

KPMG in India

Clean Energy, PricewaterhouseCoopers

94 ● Renewable Watch ● November 2017

PERSPECTIVE

ANNIVERSARY ISSUE ty addition is expected to come from the southern states of Telangana, Andhra Pradesh and Karnataka.

FiTs to the auction model. RPO compliance remains very poor and there have been nasty surprises like tenders getting cancelled and PPAs being renegotiated.

Sabyasachi Majumdar The installed renewable energy capacity in India has increased by 11.32 GW in 2016-17 while the cumulative capacity as of September 30, 2017 stands at 60.2 GW, contributing 18.2 per cent to the Indian power sector. The large capacity addition during this period was supported by factors such as favourable policy, shorter gestation periods and improving tariff competitiveness for solar energy. In the wind energy segment, the capacity addition was higher-than-expected triggered by the removal of generation-based incentives and reduction of accelerated depreciation benefits in April 2017. These apart, independent power producers were trying to utilise the feed-in tariff (FiT) regime in states while it was still in place. However, the wind segment witnessed a slowdown in the first half of 2017-18 given the ongoing transition from FiT-based PPAs to competitive bidding-based PPAs.

Vinay Rustagi It has been an eventful year for the renewable energy sector. Demand from discoms has slowed down and new tenders for solar projects are down by more than 30 per cent. But on-the-ground construction activity has been picking up despite severe delays in many cases and we expect 2017 to be a record year for utility-scale solar with an estimated capacity addition of 9.4 GW, a 115 per cent increase over the previous year. Wind energy saw very encouraging numbers until March 2017, but activity in the segment has now come to a standstill because of the transition from

Dr Gireesh Shrimali The total installed renewable energy capacity stood at about 59 GW in September 2017. The renewable energy sector closed 2016-17 with a record capacity addition of 11.32 GW, though it fell short of its target (16.6 GW) for the year. In 2015-16, around 7.1 GW of capacity was added. So the achievement in 2016-17 was almost 155 per cent more than what was achieved in 2015-16, which is commendable! In light of the record low wind and solar tariffs witnessed in the past year, how do you foresee the tariff trends in the coming years?

aggressive for both wind and solar power mainly on account of a reduced project pipeline. Going forward, if the proposed wind tenders by the Solar Energy Corporation of India (SECI) come through, the wind tariffs might see an increase from the current low of Rs 2.64 per kWh. On the solar front, while the pressure on developers will remain due to the lack of a pipeline, the tariffs are expected to be less aggressive at Rs 3-Rs 3.5 per kWh with the increase in module prices. The increase in the share of renewables in the total generation will also increase the need for scheduling and forecasting, which needs to be factored in seriously by project developers in the price bids going forward.

Amit Kumar

Earlier this year, the market expected wind and solar tariffs to fall further, which seems unrealistic now. The solar tariffs may see an upward revision in view of the increased Chinese module prices, Chinese domestic market requirement, the proposed anti-dumping investigation and goods and services tax (GST) roll-out. For the wind segment, the tariffs post competitive bidding fell to Rs 2.64 per kWh for a host of reasons including higher efficiency wind turbines being available without an increase in cost. In the coming years, the number and capacity of bids for wind and solar projects would contribute to lower tariffs. As for the past year, the quantum of bids has not met the developer expectations.

In 2017, tariffs have already tumbled to a record low of Rs 2.44 per kWh for solar and Rs 2.64 per kWh for wind. One of the key reasons for this was the easy availability of equipment, access to cheaper debt and low return expectation. There was a demand-supply glut of solar PV modules in the Chinese markets while wind original equipment manufacturers (OEMs) were sitting on a huge inventory. We see tariffs getting stabilised in the coming months and they may even increase from the current bidding prices due to the increase in the execution price post GST, the likely imposition of anti-dumping duties and the expected increase in the global PV market demand. In the long run however, the tariffs would go down further with improvements in technology, larger bid sizes and fierce competition among global OEMs to capture the growing Indian market.

Anish De

Sabyasachi Majumdar

The latest tariff bids were seemingly

Solar tariffs witnessed a sharp reduction,

Pallavi Bedi

Sabyasachi Majumdar

Vinay Rustagi

Dr Gireesh Shrimali

Managing Director,

Director, Climate

Senior Vice-

BRIDGE TO INDIA

Policy Initiative, India

President, ICRA Limited

November 2017 â&#x2014;? Renewable Watch â&#x2014;? 95

PERSPECTIVE with the lowest tariff of Rs 2.44 per unit discovered in the bidding held in May 2017 for the Bhadla solar park in Rajasthan. However, the recent increase in imported module prices could adversely impact the viability of projects with tariffs lower than Rs 3.5 per unit. As per ICRA estimates, a 6 cent per Watt increase in module prices may result in an increase of about 11 per cent in the capital cost. With respect to wind energy, competitive bidding has led to a reduction in tariffs to Rs 2.64 per unit in the second 1,000 MW auction held by SECI. The viability of competitively bid tariffs (in wind and solar) depends highly on the capital cost, the plant load factor and debt structuring including the cost of debt.

Vinay Rustagi Our strong belief is that the tariffs have bottomed out. Most winners in recent auctions will struggle to implement projects with the ongoing rise in module prices, extra costs due to GST implementation and import duties. In addition, there is the new threat of anti-dumping duties for solar projects. There is still a lot of capital chasing projects, but the renewable gold rush is over in our view. We expect many of the small and mid-sized developers to simply go out of the market and even the largest developers should become cautious going forward. What are the factors impeding the growth of the renewable sector? What solutions can be implemented to address these issues?

Pallavi Bedi Some of the factors impacting the growth of renewables are rising solar module prices, poor discom credit ratings, policy uncertainty, weak transmission infrastructure and grid instability. A more recent issue is the uncertainty around the existing PPAs executed at higher tariffs. A Gujarat Urja Vikas Nigam Limited case requesting reduction in the 2011 solar PPA tariffs is pending before the Supreme Court. These issues can be addressed by government intervention and a clear policy framework. Initiatives such as the 96 â&#x2014;? Renewable Watch â&#x2014;? November 2017

ANNIVERSARY ISSUE Green Energy Corridor, waiver of interstate transmission charges for renewable energy, deployment of energy storage technologies and increase in domestic battery manufacturing would help strengthen the renewable energy sector.

action plans steered by a national-level committee for renewable energy development can help in monitoring of renewable energy development in the states. Discoms can tie up with SECI and a single tendering agency can be made responsible for undertaking the tender process.

Anish De The slow growth in demand is one of the major factors considering the majority of the states are reportedly in a power surplus situation. The lack of evacuation infrastructure is another factor leading to delays in project commissioning. Green corridors intended to support renewable energy evacuation are being implemented with delayed timelines. States like Rajasthan and Madhya Pradesh are facing issues in power evacuation. The wind segment in particular is going through a transition from FiT-based allocation to an auction-based one. The states have been delaying the signing of FiT-based PPAs on account of the lower wind tariff discovered in the recent SECI bids. In solar as well, the reduction in the tenders being on offer can be seen, with SECI announcing only one tender (Bhadla 750 MW) this year in comparison to 5 GW of tenders in 2016. There have been expectations of new tenders being issued in select states like Chhattisgarh, Karnataka, Andhra Pradesh and Bihar, but none of these have materialised till now. Furthermore, SECI has again extended bid submission timelines for the ongoing Bhadla-III (250 MW) and Bhadla IV (500 MW) tenders. With RPOs still not being enforced strongly, there is a shortfall in the demand for PPAs. In order to increase renewable penetration, the states need to plan the efficient and flexible operation of coal and other resources. With solar and wind generation now being cheaper than conventional plants, a state-level framework needs to be in place for the operation of conventional plants as balancing power managed by the state load despatch centres. A clear pipeline of the state and central tenders in line with targets set for 2022 will enable a sustainable development of renewable energy projects. State-level

Amit Kumar Factors impeding the growth of the renewable sector are as follows: z Discoms are reluctant to sign new PPAs citing surplus power and weak demand situation: The power surplus Maharashtra State Electricity Distribution Company recently agreed to supply electricity for two months to discoms in the power-deficit Uttar Pradesh. Similar efforts need to be taken by other companies as well, possibly using enabling platforms like the Discovery of Efficient Electricity Price to facilitate short-term bidding of power. z Sluggish power demand: The demandsupply deficit has reduced significantly from 8.71 per cent energy deficit and 8.98 per cent peak demand deficit in 2012-13 to 0.70 per cent and 1.63 per cent in 2016-17 respectively. If you look at the demand pattern, 40 per cent of the demand comes from industries, and it has not been picking up. The electricity requirement of commercial entities, which account for 10-15 per cent of the total power demand, has also dropped. z Grid congestion and renewable energy despatchability: About 60 per cent of the current installed generation capacity comes from coal plants, most of which are based on sub-critical coal technologies. These are designed to operate primarily as base load units and are not fully capable of quickly ramping up and down to match the needs of the new netload curve. Renewable energy and energy storage will be an optimal solution to stabilise the electric grids under high penetration scenarios.

Sabyasachi Majumdar The renewable energy sector continues to face regulatory challenges such as wide variance in RPO norms across states, weak RPO compliance with no penalty en-

PERSPECTIVE forcement and the risk of forced backdown by the utilities. The RPO compliance level was very low (less than 60 per cent) in Assam, Bihar, Odisha, Telangana, Uttar Pradesh and West Bengal in 2015-16, whereas it was between 70 per cent and 85 per cent in Chhattisgarh, Gujarat, Haryana, Madhya Pradesh, Maharashtra, Rajasthan and Tamil Nadu. The alignment of the RPO trajectory with the targets specified by the Ministry of Power along with improvements in RPO compliance remains crucial for achieving the 2022 targets. Renewable energy players remain exposed to significant counter-party credit risks as utilities in many states have weak financial profiles. While UDAY has improved the liquidity profile of discoms to some extent, the operational improvement remains to be seen. Meanwhile, the tariffs remain inadequate in relation to the cost of supply for the discoms. For improvements in discom finances, efforts are required to improve efficiency levels, and ensure timely tariff revisions by regulators and timely and adequate subsidy release by state governments.

Vinay Rustagi There are two main challenges, and there is no easy answer for either of these. First, the power demand-supply situation remains in surplus. Unless demand grows at a sustained rate of 7-8 per cent for a few years, this scenario is not going to change and the total renewable capacity addition will remain well short of annual targets. Second, the policy environment in India is volatile and affected by poor enforcement. State regulators do not have sufficient control over discoms and the sector is subject to constant political interference. We would like to see state regulators coming under the ambit of the Central Electricity Regulatory Commission with no intervention from state agencies.

Dr Gireesh Shrimali In the context of increasing electricity demand in a growing economy and its historic overdependence on fossil fuels, India has set an ambitious target of 175 GW of renewable energy target by 2022 100 GW of solar power, 60 GW of wind 98 ● Renewable Watch ● November 2017

ANNIVERSARY ISSUE power, 10 GW of waste-to-energy and 5 GW of small-hydro power. Climate Policy Initiative (CPI) India, which focuses on the financial aspects of clean energy, has established that $190 billion in additional investment will be required to achieve this capacity addition target. There may be an expected shortfall of 29 per cent on the equity side and 27 per cent on the debt side. While the renewable sector is growing rapidly, some factors may constrain its growth. The following are the key risks and possible solutions: z Off-taker risk (a payment delay due to unwillingness and inability to pay for power purchased or refusal to off-take power on the part of discoms): A transparent mechanism along with adequate risk coverage through payment security funds is needed to address these issues. z Lack of liquid instruments/structures and market: New financial practices such as the securitisation of renewable energy assets is an attractive option to drive institutional investors’ capital to the renewable energy sector, particularly in rooftop solar. z Currency risk: Foreign investors usually use foreign currency (such as USD) instead of local currency (INR) to lend in the emerging market. This forces foreign currency borrowers to buy currency swap to hedge currency risk. It is clear that public-private collaboration is essential to raise the finance needed for India’s clean growth. While the right domestic policies will be the key to facilitating finance, greatly scaling up investment from the private sector will be the only way to mobilise the full amount of capital needed to meet India’s renewable energy targets. What are the emerging technology trends in energy storage and electric vehicles? What will be their likely impact on renewable energy?

Pallavi Bedi Energy storage is imperative to meet India’s renewable energy targets. While a few tenders for solar projects with energy storage have been floated by SECI, none

have been awarded as yet. The government this year announced its target to replace the country’s entire passenger vehicle fleet with electric vehicles (EVs) by 2030. However, for the success of this initiative, a clear policy framework and strengthening of the existing infrastructure to establish renewable energy-based charging stations are needed.

Anish De In the next five to eight years, both EVs and energy storage are expected to turn economically viable alternatives to conventional technologies driven by the reduction in the cost of lithium ion batteries, which is expected to reduce by almost 60 per cent in the next decade. EVs are likely to add to the power demand, which, if managed properly, can help in better grid management. By 2030, if the Indian government’s 100 per cent EV nation goal is achieved, EVs would add 10-15 per cent to the power demand. However, in order to achieve the above goal, support is needed from both the government and the private sector. The development of policy with adequate incentive mechanisms and creation of demand are the principal responsibilities of the government. This should be followed by supply fulfilment and better manufacturing standards managed by the private sector. Energy storage in EVs and otherwise can help in reducing variability in energy supply. Energy storage can thus contribute towards grid stability and allow discoms to procure more renewable energy without worrying about supply variation. Renewable energy-based mini-grids will emerge as an increasingly low-cost option in rural areas with the reduction in the storage cost and thus allow the latent demand to be tapped. There is an urgent need for drafting robust policies to promote energy storage.

Amit Kumar The EV industry has seen a staggering growth in the past five years. However, battery costs have been the major hindrance to EV adoption. Lithium-ion batteries are the major driver for EVs, and they are getting cheaper at a very significant rate. The cost of this technology

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PERSPECTIVE has fallen 30-40 per cent in the past three to four years, and this has given a boost to EV adoption. A combination of EVs, batteries and renewables will be the future. In the coming months, the market will see new and existing players plunging into different segments of the EV value chain. These would include charging infra developers, EV and battery manufacturers, and aggregators. There is a long way to go before an EV ecosystem is established with an enabling infrastructure, credible EV manufacturers and supporting ancillaries.

Vinay Rustagi These are promising technologies with huge synergistic benefits for renewable energy. But we are still a good three to five years away from any concrete on-theground progress. Most of the ongoing energy storage tenders have been scrapped because of demand or cost reasons. We feel that storage costs need to come down by another 30-40 per cent before renewables and storage can become a genuine alternative to base load power. Similarly, it will take some time for the government to create a charging infrastructure and for the private companies to build the necessary ecosystem for the manufacturing and servicing of EVs. If you see EV growth around the world, it is still underpinned by substantial government subsidies and high cost remains a barrier. How do you see the renewable energy sector evolving in the near future? What is the likely capacity addition in 2017-18 and by 2022?

Pallavi Bedi The sector’s growth potential is huge. It is perhaps the most sought after industry in the Indian market from the investors’ perspective. If targets are to be achieved, a large number of solar and wind tenders would need to be released by the state governments and nodal agencies. Further, market consolidation would remain the dominant trend in this sector in the near future. The sector would most likely see growth in capacity addition, though chances of achieving the 175 GW target seem grim. 100 ● Renewable Watch ● November 2017

ANNIVERSARY ISSUE Anish De The wind segment, as mentioned earlier, is undergoing a transition from the FiT regime to the auction-based regime. With only SECI tendered projects in the pipeline, mild growth is expected during this fiscal. In the solar segment, projects are being executed and thus there would be significant capacity addition this year. However, the tender pipeline is weak and if more tenders are not planned, the next fiscal may not see capacity addition at a scale witnessed during 2015-18. Going forward, the rooftop solar segment is likely to gain momentum with capacity building efforts being done at all levels across the value chain. The World Bank through State Bank of India has already identified projects worth $625 million for financing. Further, the Ministry of New and Renewable Energy has received support from the Asian Development Bank and KfW to create fund availability in the solar rooftop segment.

Amit Kumar There has been a significant slowdown in the announcement of utility-scale solar power plants from SECI and NTPC in 201718. They have announced only one tender (750 MW) for the Bhadla solar park this year in comparison to over 5 GW of new tenders in 2016-17. SECI has again extended bid submission timelines for the ongoing Bhadla III (250 MW) and Bhadla IV (500 MW) tenders. A weaker project pipeline and shift to competitive bidding have marred the positive sentiment in the sector and OEMs have reported the lowest quarterly profit in a year. Given the current landscape of solar PV and wind auctions, 6-7 GW of solar PV capacity addition is expected in 2017-18 with the overall capacity reaching almost 19 GW including grid-connected rooftop PV, whereas the wind installed capacity would hover around 35 GW by the end of 2017-18.

Sabyasachi Majumdar The long-term demand outlook for renewable energy is strong, aided by favourable policy support from the central and key state governments as well as the improving tariff competitiveness of wind and solar

power. Based on a conservative assumption of the overall RPO at 15 per cent by 2021-22, the cumulative renewable energy requirement for 2017-22 is estimated at 63 GW. Of this, the share of wind and solar energy would be 35 per cent and 55 per cent respectively. Further, ICRA expects solar capacity addition of 7-7.5 GW in 2017-18, which is likely to be higher than the wind energy capacity added during the period. Given the ongoing transition from FiT-based PPAs to competitive bid-based PPAs, wind capacity additions are likely to be affected in the current fiscal.

Vinay Rustagi There is no doubt that renewable energy is the technology of the future. In many ways, India has already made the energy transition leap with renewable capacity addition exceeding the combined capacity addition from all other sources in 2016-17. But the sector is likely to face significant challenges in the near future due to weak demand growth and aggressive bidding. The decision to impose anti-dumping duty could be a major swing factor for capacity addition. Our estimate for total renewable energy capacity addition during 2017-18 is 12 GW. For 2022, we estimate a total renewable capacity addition of 15-16 GW.

Dr Gireesh Shrimali As the renewable sector flourishes, the credit must go to the policymakers and the market participants who have shown tremendous faith in the sector. Still, to support further capacity addition and make up for the shortfalls, financing must be made available with more attractive terms. Moreover, India needs a greater focus on distributed renewable energy solutions and catalytic financing to scale up renewable energy investments. Distributed solar power projects – rooftop solar, solar mini-grids, off-grid solar and smallscale grid connected solar projects – are promising alternatives to improve quality energy access in India. The US-India Clean Energy Finance managed by CPI, is India’s first project preparation facility to scale up distributed solar power projects and drive long-term financing. ■

Solar Plant Performance in India 2017-18 India Infrastructure Research (a sister division of Renewable Watch magazine) is currently developing and will soon release the “Solar Plant Performance in India 2017-18” research report. The key objective of the report is to provide an overview of performance of solar power projects commissioned so far in various states. This is the fourth edition of this report which is based on information and data gathered from both secondary and primary sources including SLDCs, state departments and project developers. The first part of the report will provide an analysis of solar project performance by state, developer-type, year of commissioning, etc. based on the state-wise and project-wise data collected by India Infrastructure Research. The discussion on plant performance is followed up with a chapter on case studies, illustrating the experience of 10-12 solar power projects in terms of implementation, technology choice, and plant performance. The final chapter of this report is the database of solar power projects, which provides project- wise information on generation, capacity utilisation, technology, cost, etc. With this background, the report will have thirteen chapters:

ep wr

Solar Power Sector Overview

Plant Performance by Developer Type

Review of Solar Plant Performance

Plant Performance by Key Developers

Plant Performance by Year of Commissioning

Plant Performance by Key Module Manufacturers

Plant Performance by State

Plant Performance by Key EPC Contractors

Performance by Plant Size

Plant Performance by Key Inverter Manufacturers

Plant Performance by Technology

Case Studies (This chapter will include 10-12 case studies of operational solar projects covering details related to technology, vendors, performance analysis – seasonal and annual, location, plant size, implementation challenges, tariff, scheme, operational challenges, O&M practices, etc.)

Database of Plants Tracked (This database will include month-wise power generation, developer, location, size, EPC contractor, etc.)

The report is priced at Rs. 60,000 (plus 18% GST) or USD 1416. However, we are offering a special pre-publication discount. The price is Rs. 54,000 (plus 18% GST) or USD 1274 for orders/payment received before or on December 15, 2017. There is an additional 15% discount on the combined purchase of “Solar Plant Performance in India 2017” and “Rooftop Solar Market in India 2017” reports. The two reports will cost Rs 84,150 (plus 18% GST) or USD 1986. The report will be delivered in a PDF format along with an excel-based database and is expected to release by end-December, 2017.

To order a copy, please send a cheque or draft payable to “India Infrastructure Publishing Pvt. Ltd.” and mail to:

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PERSPECTIVE

ANNIVERSARY ISSUE

Storing Renewable Energy A sizeable but untapped opportunity By Dr Rahul Walawalkar, Executive Director, and Girish Shivakumar, Director, Policy and Regulatory, India Energy Storage Alliance

ith the rapid reduction in solar and wind energy costs in the country, we now need solutions for renewable energy integration. Energy storage technologies are seen as enabling technologies that can help the government achieve many of its programmes such as the National Solar Mission (NSM), National Wind Mission, Mission for Energy Access and National Electric Mobility Mission. This transition is supported by the significant push for developing Giga factories for advanced energy storage technologies such as lithium-ion that drive down the cost of energy storage at a pace even faster than the solar photovoltaic (PV) cost reductions witnessed in the past decade. Grid-scale energy storage projects have witnessed costs falling below $500 per kWh (at system level) from over $1,000 per kWh about six years back.

options to shift the energy from 2-4 hours per day to meet the evening ramps. With the right policy support, largescale solar parks with 100 MW and above capacity can easily adopt energy storage to help improve power quality and reliability issues that the grid is likely to face with the rapid integration of solar energy.

Greening the Islands

It is anticipated that by scaling up deployment and setting up local manufacturing facilities, we can witness a further reduction of at least 20-30 per cent within the next five years. Already, we are seeing a large number of MWh-scale projects getting implemented globally in the US, Europe, China, Japan and Australia, and even in Southeast Asia.

The Ministry of New and Renewable Energy (MNRE) has been tasked with increasing renewable energy penetration in the Andaman & Nicobar Islands and Lakshadweep. As per recent data, including a response made by the power minister in Parliament in 2016, 90 per cent of the installed power capacity and 94 per cent of the total power generation in the islands is from diesel generation, and the balance 10 per cent of installed capacity and 6 per cent generation is from renewable sources. The annual cost of providing power to the islands is about Rs 6 billion. The “Greening the Islands” programme proposes to deploy 40 MW of distributed grid-connected solar PV power projects with capital subsidy from the MNRE.

Energy storage can play two critical roles in the solar power segment which is expected to scale-up rapidly under the National Solar Mission (NSM). First, energy storage would be required to deal with the short duration intermittency caused by cloud/dust, and second, it will provide

An objective of the initiative is to reduce the cost of generation, which at present is over Rs 25 per kWh. The Ministry of Power’s (MoP) “Power for All” programme envisages 40 MW of solar PV by 2019, spread across the islands. The plan projects a levellised cost of electricity of Rs 7-

102 ● Renewable Watch ● November 2017

Rs 12 per kWh depending on different scenarios. A significant benefit from the switch to renewable energy would be reduced dependency on diesel for powering the islands, which consumed 73.5 million litres of fuel in 2014-15, as per government records.

Microgrids and resiliency In the wake of the recent hurricane strikes in the Caribbean and the US, microgrids are gaining further prominence among electricity utilities and government planning agencies. The impact of hurricanes Harvey and Irma were catastrophic from the electric grid perspective as the island grids collapsed and only renewable energy microgrids were able to withstand the aftermath. The development of microgrids was one of the major initiatives undertaken by the various state governments in the US, following the havoc wreaked by Hurricane Sandy in 2012. The proposed microgrid projects in the Andaman & Nicobar Islands under the Greening the Islands programme are well positioned to deliver the much-needed grid resiliency in the region. The six microgrid projects in Andaman in the range of 30 kW-1.5 MW are being jointly developed with the Swedish Energy Agency.

Tendering delays to shake industry confidence Despite tremendous potential for the integration of renewable energy and energy storage, we have lost significant time in just discussing these issues. The MoP and the MNRE have created a number of commit-

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PERSPECTIVE tees on the large-scale renewable integration challenges, and energy storage and hybrid systems. There is a separate committee for the Greening the Islands programme and also different groups that have worked with donor agencies such as the United States Agency for International Development and GIZ. The MNRE has twice issued expressions of interest to develop demonstration projects in energy storage and the Solar Energy Corporation of India has issued at least three bids for 8-10 renewable energy and storage projects. In the past four years, the industry has enthusiastically supported all these efforts and submitted detailed proposals to the government. Unfortunately, none of the requests for proposal has resulted in the actual commissioning of projects. This is creating a huge concern for the industry both in India and globally. The Greening the Islands programme was announced in 2016, and while the bids for a 28 MWh energy storage project were closed in end-August 2017, we have not seen any traction on ground. According to reports, the winning bid for the project tendered by NLC India Limited has offered a price that works out to be less than 50 per cent of the current energy cost for the islands over a 25-year period. However, there has been reluctance on part of the central government in approving funds for

ANNIVERSARY ISSUE

Projected all-India net load curve with 100 GW of solar PV - 2022

this project. The project along with other projects by NTPC had gained significant interest from energy storage solution providers and renewable energy project developers. But two NTPC projects were scrapped without any clarification to the industry. The lack of progress in this regard, besides dampening the spirit of all the stakeholders, raises questions on whether the objective of phasing out the use of diesel generators for electricity generation would be achieved. Failure to execute this round of energy storage tenders will see India missing out on a good opportunity to adopt large-scale energy

Solar plant output with and without energy storage systems (kW)

104 ● Renewable Watch ● November 2017

storage solutions, which is also a technocommercially viable option for phasing out diesel generators. The ripple effects will cause global renewable energy developers and energy storage equipment manufacturers to abandon their plans for India. This could impact the government’s ambitious renewable energy target of integrating 175 GW of renewable energy by 2022 as energy storage provides the much-needed flexibility in a high renewable energy scenario.

Making India a global hub for advanced energy storage manufacturing If we can start “walking the talk” and deploying energy storage projects in a systematic manner, it can create significant interest for local manufacturing and system integration capabilities. Over 1.5 GWh of advanced energy storage has already been deployed in India for distributed applications such as telecom towers in the past two years. The India Energy Storage Alliance anticipates the energy storage market in India to grow to 150-200 GWh by 2022. The global supply chain is gearing up to supply to this market, and even Indian industries are ready to invest in local manufacturing. ■ (The authors can be reached at rwalawalkar@ces-ltd.com and gshivakumar@ces-ltd.com)

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COMPANIES

ANNIVERSARY ISSUE

Company Highlights Key developments in the past 12 months

ndia is betting big on renewable energy and companies across countries and verticals are taking notice. There has been a flurry of domestic and international players trying to establish a footprint in a market that has the potential for developing 115 MW of additional renewable capacity over the next five years. Established independent renewable energy producers with access to low-cost funds are competing with private equity (PE)-backed players, diversified players, new entrants and strategic investor led-companies to win projects through the auction route, thus driving tariffs to record low levels. While on the one hand, a sizeable number of companies crossed the 1 GW mark in 2017, making them a good candidate for a capital market listing, on the other, there are players that have not been able to keep up with competition, especially in the manufacturing domain. A number of captive power players have either sold off or are in the process of selling off their wind and solar assets to independent power producers (IPPs) in order to focus on their core businesses. A snapshot of the developments pertaining to key players in the developer, manufacturer and engineering,

106 ● Renewable Watch ● November 2017

procurement and construction (EPC) segments over the past year...

through its corporate finance group. This was the second tranche of funding to ACME Solar Holdings. Prior to this, Piramal Finance, in partnership with APG Asset Management, had provided a funding of Rs 4.99 billion. In May 2017, ACME Solar won a 200 MW project in an auction for setting up capacity at the Bhadla Solar Park Phase III. In February 2017, ACME had bid a record low tariff of Rs 2.97 per kWh to build a 250 MW plant in Rewa. The power purchase agreements (PPAs) for the project were signed with Madhya Pradesh Power Management Corporation Limited (MPPMCL) and the Delhi Metro Rail Corporation (DMRC).

Adani Power Limited ACME Cleantech Solutions Private Limited

ACME Cleantech Solutions was incorporated in 2003 and has since then expanded its portfolio significantly. It operates in the solar segment through ACME Solar Holdings Limited and has a portfolio of around 2 GW, which it intends to take to 7.5 GW by 2019. In October 2017, ACME Solar Holdings Limited filed preliminary papers with the Securities and Exchange Board of India (SEBI) to raise Rs 22 billion through an initial public offering (IPO) at a face value of Rs 10 per share. In September 2017, the International Finance Corporation (IFC) approved a loan of $150 million for ACME Jaipur Solar Power Private Limited, a wholly owned subsidiary of ACME Solar, for the development of a 250 MW solar project at the Rewa Solar Park in Madhya Pradesh. In July 2017, Piramal Finance sanctioned an additional funding of Rs 7 billion for ACME Solar Holdings Limited

Adani Power Limited, a part of the Adani Group, is involved in conventional and renewable power generation. It has installed the world’s largest single-location solar photovoltaic (PV) manufacturing plant. In October 2017, Adani Power won the rights to develop a 50 MW wind power project in an auction conducted by the Solar Energy Corporation of India (SECI) for 1 GW of wind power projects. In the same month, it agreed to set up plants at a renegotiated tariff of Rs 4.95 per kWh for projects greater than 25 MW of capacity and Rs 5.16 per kWh for those under 25 MW for a project it had won earlier in Jharkhand. In September 2017, Adani Power gave a contract to Inox Wind to install 50 wind turbines of 2 MW each at a 100 MW wind project site in Kutch, Gujarat. Adani Power commissioned five solar projects of 10 MW each in June 2017 in Mahoba, Uttar Pradesh. The projects were developed under the National Solar Mission (NSM) at a cost of

COMPANIES

ANNIVERSARY ISSUE

Rs 3.15 billion. In April 2017, the company procured single-axis PV trackers from NEXTracker for a 105 MW solar project. In January 2017, it won 50 MW of capacity under SECI’s 100 MW solar PV tender for projects to be set up in the Ananthapuramu Solar Park under the domestic content requirement (DCR) category of the NSM. In December 2016, the Adani Group announced the completion of the Kamuthi solar power project in Tamil Nadu. The 648 MW plant covers almost 4 square miles and comprises 2.5 million solar modules. The plant was built at a cost of $679 million and was completed in eight months. During November 2017, Adani Green Energy Limited commissioned Punjab’s largest solar power plant of 100 MW at an investment of Rs 6.4 billion at Sardargarh and Chughe Kalan in Bathinda district. During the same month, Adani Enterprises Limited announced plans to demerge its renewable energy business into its associate company, Adani Green Energy Limited.

MW of solar PV projects in various states over the next three to four years.

Atria Power Corporation Private Limited AMPL Cleantech Private Limited

z AMPL Cleantech Private Limited, a subsidiary of the Atha Group, was incorporated in 2006 and currently has over 200 MW of solar and wind power projects. The company is targeting 500 MW of solar power projects by end-2017-18 and 1,000 MW by end-2020. In March 2017, AMPL Cleantech commissioned a 10 MW solar PV plant near Chitradurga district in Karnataka. Its other operational projects are located in Madhya Pradesh, Telangana and Karnataka.

Amplus Energy Solutions Private Limited

Amaranto Solar Power India z Part of Italy’s Amaranto Group, Amaranto Solar Power India aims to acquire 500 MW of PV projects in India by 2018. Londonbased Amaranto Global Asset Management has sponsored the Indian arm of the company. In May 2017, Amaranto Solar Power India secured exclusive rights to purchase a 110 MW solar project, which was tendered by SECI at $80 million. Amaranto will act as the general contractor through its own engineering, procurement and construction (EPC) company, Energia Prima. Amaranto Solar will also act as the co-investor and industrial operator of the plant, providing operations and maintenance (O&M) and asset management services. In December 2016, the Amaranto Group signed a 50:50 joint venture (JV) agreement with Mumbai-based solar developer CPEC Ananta to build 200

500 MW tender released by SECI.

z Amplus Energy Solutions Private Limited owns a portfolio of operational and under-construction plants of approximately 160 MW. It is backed by I Squared Capital, a global PE fund, focused on developing long-term sustainable infrastructure assets. The company specialises in rooftop solar power plants and operates on a build-ownoperate-transfer (BOOT) basis. In June 2017, the State Bank of India (SBI) announced that it would provide Rs 4 billion to private developers to finance 100 MW of grid-connected rooftop solar projects in India. Amplus was among the developers that benefited from the programme. Amplus Energy Solutions was, in February 2017, appointed to install 1 MW of rooftop solar projects for Snapdeal at its warehouses across various locations. The project entailed an investment of around Rs 50 million for Snapdeal’s logistics arm Vulcan Express. In January 2017, Hindustan Aeronautics Limited (HAL) commissioned a 3.5 MW solar energy project at its airport facility in Bengaluru. Amplus Solar executed the project with an investment of Rs 250 million spread across 23 acres of land. In December 2016, Amplus Solar won 14.5 MW of rooftop projects under a

A subsidiary of the Atria Group, Atria Power Corporation Private Limited has a portfolio of 46.6 MW mini-hydro and 75.1 MW wind projects. The company plans to develop 1 GW of power projects and scale up its investments to Rs 30 billion in the next five years. In November 2016, the Atria Power Corporation awarded a turnkey order to Gamesa for a 130 MW solar project to be commissioned in Karnataka and Andhra Pradesh. The company is responsible for handling the complete value chain of design, EPC, commissioning and O&M of the project. Gamesa will supply 96 units of the E-1.37 MW hybrid cooled solar inverter.

Axis Energy Ventures India Private Limited

z Axis Energy Ventures India Private Limited is the flagship energy generation company of the Axis Energy Group. The company has sanctions for 4,150 MW of projects and focuses on power generation through renewable energy. It has signed an agreement with the Andhra Pradesh government to develop 6,500 MW of renewable energy projects. In January 2017, Axis selected Suzlon to supply and install 105 MW of wind turbines at a project site in Anantapur, Andhra Pradesh. Under the contract, Suzlon will supply 50 units of its S111 90 metre tubular tower wind turbines with a rated capacity of 2.1 MW.

Azure Power India Private Limited z

Azure Power India Private Limited operates in both the solar utility-scale and rooftop solar segments and has an operational portfolio of over 1 GW. In January 2016, Azure Power launched its IPO, backed by IFC, Helion Venture Partners and German development finance institution November 2017 ● Renewable Watch ● 107

COMPANIES

DEG, on the New York Stock Exchange. In October 2017, it commissioned the final phase of the 50 MW grid-connected solar project, spread across 300 acres of land in Uttar Pradesh. The project was tendered by NTPC Limited. In the same month, Azure Roof Power won a tender to develop 1.3 MW of rooftop solar capacity for the Ministry of Health and Family Welfare. Azure Power also won 260 MW of the 500 MW solar power auction in Gujarat, at a bid price of Rs 2.67 per kWh. Indian Railways (IR) in October 2017 awarded a contract to Azure Power for a 20 MW rooftop solar project to be set up at IR’s facilities across 17 states and union territories. In September 2017, Azure Power signed a contract with SECI to develop 50 MW of rooftop solar power capacity on government buildings and institutions across 10 states and union territories. The company also won 25.26 MW of the 67.38 MW of rooftop solar projects auctioned by Railway Energy Management Company Limited (REMCL) for IR. Azure Power raised nearly $500 million in July 2017 through the sale of bonds to overseas investors. The issue was oversubscribed two times as investors offered to invest around $1 billion against the bond size of $500 million. In July 2017, SBI issued a loan of Rs 68.3 million to Azure Power. In June 2017, Azure Power commissioned a 100 MW solar power plant at Andhra Pradesh’s Kurnool Ultra Mega Solar Park. In May 2017, Hareon Solar India agreed to invest $76.6 million for acquiring a 45 per cent stake in Azure Power ThirtySeven Private Limited, a wholly owned subsidiary of Azure Power. Azure Power commissioned 137 MW of solar capacity in March 2017. While 130 MW of capacity is in Chitradurga, Karnataka, 7 MW of projects have been set up at defence establishments under the Union Ministry of Defence. Azure Power completed the first phase of its 14 MW project for DMRC in January 2017. Azure Power also commis-

108 ● Renewable Watch ● November 2017

ANNIVERSARY ISSUE

sioned three solar power projects with a cumulative capacity of 150 MW in Punjab in the same month. The company won these projects under Punjab’s Solar Power Policy Phase III. In January 2017, Azure Power won a 50 MW project in an auction by SECI for the Ananthapuramu Solar Park under the DCR category.

Bharat Heavy Electricals Limited z

Bharat Heavy Electricals Limited (BHEL), which was set up in 1964, has over three decades of experience in solar PV manufacturing. It supplied 176 MW of solar modules last year. In July 2017, BHEL received an order from Gujarat Alkalies and Chemicals Limited to set up a 15 MW solar plant at Charanka in Gujarat on an EPC basis. This was BHEL’s first ground-mounted solar PV project in Gujarat. BHEL received an order from Power Grid Corporation of India Limited (Powergrid) in January 2017 for the augmentation of three extra high voltage substations in Karnataka on a turnkey basis. The Rs 960 million order was won under the Asian Development Bank (ADB)-funded international competitive bidding tender and is a part of the green energy-linked transmission corridor project. In January 2017, ABB along with its consortium partner BHEL, secured orders worth Rs 57 billion from Powergrid to construct a transmission link from Rajgarh in Madhya Pradesh to Pugalur in Tamil Nadu. The project involves the construction of a 1,830 km long transmission link with 800 kV ultra high voltage direct current capacity. The transmission link will facilitate grid integration of renewable energy projects along the route and is expected to be completed by 2019.

Bhilwara Energy Limited z

Bhilwara Energy Limited is the flagship company of the LNJ Bhilwara Group in the energy sector. It is the principal holding company for all the power

ventures of the group. In March 2017, Bhilwara Energy Limited planned to sell its wind power portfolio of 103.5 MW capacity. The portfolio comprises four wind power projects including two 20 MW projects in Rajasthan and two projects (49.5 MW and 14 MW) in Maharashtra. The company appointed YES Bank as the financial adviser for the transaction. HFE plans to acquire 83.5 MW of wind projects out of the total 103.5 MW of projects across two states – a 49.5 MW project in Satara and a 14 MW project in Bhendewade in Maharashtra, and a 20 MW project in Jaisalmer, Rajasthan.

Canadian Solar India Private Limited

z Canadian Solar India Private Limited is the Indian arm of Canadian Solar, a manufacturer of solar PV modules. In March 2017, Canadian Solar signed 25-year PPAs with SECI for 80 MW alternating current (AC) solar power projects in Maharashtra. The company was originally awarded the projects through competitive bidding for 450 MW (AC) capacities. In November 2017, Canadian Solar entered into a JV with the Suzlon Group for two solar projects of 15 MW each located at Ramannapet and Kamareddy in Telangana. Canadian Solar has acquired a 49 per cent stake for an aggregate amount of Rs 264 million in Avighna Solarfarms Limited and Amun Solarfarms Limited, the special purpose vehicles set up by Suzlon for executing these two projects. According to the agreement, Canadian Solar will arrange the financing for these two projects.

Central Electronics Limited z

An enterprise of the Government of India, Central Electronics Limited (CEL) was established in 1974 to commercially exploit indigenous technologies developed by national laboratories and research and development institutions in the country. CEL works independently as well as in

COMPANIES

collaboration with premier national and international laboratories, including defence laboratories. CEL extended the bid submission deadlines for the implementation of rooftop solar projects in offices and railways. The tender notice for the 100 MW rooftop project was extended to May 4, 2017. The scope of work included site survey, design, manufacturing, supply, erection, as well as testing and commissioning, including warranty and O&M of rooftop solar systems for a period of 25 years.

ANNIVERSARY ISSUE establishment of grid-connected solar PV-based minigrids for agricultural pump sets in these states.

Essel Infraprojects Limited z Essel

Energy Efficiency Services Limited

z Energy Efficiency Services Limited (EESL) is a JV of four public sector enterprises – NTPC, the Power Finance Corporation (PFC), Rural Electrification (REC) and Powergrid. EESL was founded under the Ministry of Power in 2001 and operates as a super energy service company (ESCO). It also serves as the resource centre for capacity building for state distribution companies, electricity regulatory commissions, state development authorities, upcoming ESCOs, financial institutions, etc. In September 2017, EESL announced a global tender for the procurement of 10,000 electric vehicles (EVs) to be used by government departments and agencies. Under this, the EVs will be procured in two phases. Under Phase I, 1,000 EVs will be procured for New Delhi and the National Capital Region (NCR). Under Phase II, 9,000 EVs will be procured for use across India. In August 2017, EESL launched a tender for 200 MW of solar projects to be developed near pooling substations across Maharashtra. The successful bidders had to provide design, engineering, supply, construction, erection, testing and commissioning services for the solar power project along with O&M for the project lifetime. EESL tendered 300 MW of solar projects in June 2017. It also signed contracts with the Andhra Pradesh and Uttar Pradesh governments for the

110 ● Renewable Watch ● November 2017

Infraprojects Limited, a subsidiary of the Essel Group, operates across the solar, wind and hydropower segments. The company’s current portfolio comprises 12 solar projects (six operational), one hydro project under operation (20 projects under development) and six new wind projects. The company has an order book value of $1.5 billion. Its total project portfolio comprises 685 MW of solar, 163 MW of hydro and 560.5 MW of wind power. During the past year, Essel Infraprojects commissioned solar power projects aggregating 55 MW. This includes a 50 MW solar plant in Jalaun, Uttar Pradesh, and a 5 MW solar plant in Bijapur, Karnataka. The quoted tariff and PPA duration for the Jalaun project is Rs 7.02 per kWh and 12 years. For the Bijapur project, it is Rs 5.50 per kWh and 25 years.

Gujarat Industries Power Company Limited

Fortum Finnsurya Energy

z Fortum Finnsurya Energy is the Indian arm of Finnish energy company Fortum. The company entered the Indian market in 2013 with the acquisition of a 5 MW solar power plant in Bhilwara, Rajasthan. Soon after, the company set up a 10 MW greenfield solar plant in Kapeli, Madhya Pradesh. Fortum has commissioned a 70 MW solar plant at the Bhadla Solar Park. The company won the contract in a reverse auction in January 2016 and signed the PPA with NTPC Limited. Fortum currently has 85 MW of solar capacity in the country, with three solar power plants in Rajasthan and Madhya Pradesh.

Greenko Energies Private Limited z The Greenko Group’s renewable energy portfolio comprises wind, biomass and run-of-the-river hydro projects as

well as conventional energy projects, including those based on natural gas. The company has over 2.7 GW of capacity under operation, and has 800 MW of projects under construction. While the full commissioning of the 1 GW Kurnool Ultra Mega Solar Park was delayed from April 2017 to July 2017, Greenko, which was allotted 500 MW of capacity, completed its project on time. In December 2016, Germany-based solar inverter manufacturer SMA Solar Technology AG secured an order for 616 MW of inverters from Greenko Energies Private Limited. Greenko will use the SMA Sunny Central 1000CP XT inverters for solar power plants in Karnataka and Andhra Pradesh.

z Gujarat Industries Power Company Limited (GIPCL), which was incorporated in 1985 as a public company, is involved in electrical power generation. The company operates in both the renewable energy and the conventional energy sectors. GIPCL’S total project portfolio comprises 929.4 MW of capacity. As of March 2017, the company had 112.4 MW of wind power projects across Gujarat. Vikram Solar commissioned two projects of 40 MW each at the Charanka Solar Park for GIPCL in September 2017. These projects were developed under the Gujarat Solar Park Projects, NSM Phase II Batch IV Tranche I. SECI provided the viability gap funding (VGF) for these projects. The company will also provide O&M services for 10 years. In July 2017, GIPCL tendered 200 MW of wind capacity to be developed in Gujarat on a turnkey basis. Single bidders had a minimum of 25 MW and a maximum of 200 MW capacity at a single site or multiple sites of their choice. In April 2017, GIPCL commissioned a 21 MW wind project at the Kuchhdi wind farm located in Porbandar, Gujarat. The project consists of 10 turbines of 2.1 MW each. The Gujarat Energy Development Agency (GEDA) has issued the certifi-

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Water Intake and Conduit Systems

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Control and Automation Systems

Cost and Tariff Economics

Transformers and Switchyards

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COMPANIES

cate of commissioning for the same. GIPCL signed a PPA with Gujarat Urja Vikas Nigam Limited for 27.3 MW of wind power capacity in February 2017. This was a part of the 50.4 MW capacity being set up by the company at the Kuchhdi wind farm. GIPCL commissioned two wind turbine generators (WTGs) of 1.5 MW each at Kotadapitha village in Amreli, Gujarat, in December 2016. The certificate of commissioning was issued by GEDA. Earlier in November 2016, GIPCL had commissioned two WTGs of 2.1 MW each at the Nakhatrana wind farm in Kutch, Gujarat.

Hartek Power Private Limited z

Incorporated in 2007, Hartek Power Private Limited is a part of the Chandigarh-based Hartek Group. The company has quickly grown its portfolio across the energy value chain, with solutions for the power, furnace oil, solar energy and manufacturing industries. The company completed 300 MW of solar grid connectivity in 2016 as well as one of Andhra Pradesh’s largest solar projects. The company connected 270 MW of solar power projects to the grid during April-December 2016 on an EPC basis. These include a 150 MW project in Muktsar, Punjab, a 70 MW project in Mahoba, Uttar Pradesh, and a 50 MW project in Itagi, Karnataka.

ANNIVERSARY ISSUE

The Hero Group entered the Indian renewable energy market with Hero Future Energies Private Limited (HFE) in 2013. The company has a wind power project pipeline of over 1,000 MW as well as 500 MW of solar projects. At present, its total installed capacity stands at 360 MW, with 200 MW of wind projects under construction and another 250 MW under development. In the solar segment, 300 MW of projects are under construction and over 200 MW of projects are under development. In February 2017, HFE bid to set up a

112 ● Renewable Watch ● November 2017

Hindustan Power Projects Private Limited z The

Hero Future Energies Private Limited z

capacity of 150 MW under SECI’s 1 GW tender for wind power projects. The companies that bid for setting up 250 MW of projects each in Tamil Nadu included Inox Wind, Mytrah, Sembcorp and Leap Green. Gamesa and Adani had also bid for setting up capacity of 150 MW each in the state. HFE raised $125 million in equity infusion from IFC in January 2017. The proceeds will be used by Hero to fund the construction of solar and wind power plants. Earlier, in December 2016, Hero Solar Energy won 13.2 MW of rooftop solar projects in SECI’s auction for 500 MW of rooftop projects.

renewable energy arm of Hindustan Power Projects Private Limited (HPPPL) has developed solar farms across the country and globally. The company has a cumulative installed capacity of around 600 MW and aims to commission 2 GW by end2017. It installed India’s first solar power plant of 5 MW. In April 2017, Macquarie Infrastructure and Real Assets, managed by Australia’s Macquarie Group, was in talks with HPPPL to acquire 320 MW of its solar power assets for about Rs 19.4 trillion. The sale of these assets will help HPPPL reduce its debt obligations and fund the development of renewable energy projects. During the same month, HPPPL commissioned a 50 MW solar plant in Punjab under Phase III of the Punjab Solar Policy. The Rs 3.25 billion contract was won by the company in 2016 at a tariff of Rs 5.98 per kWh. A 25-year PPA was signed with Punjab State Power Corporation Limited for the sale of power.

Inox Wind Limited

IL&FS Energy Development Company z

IL&FS started its energy business in 2008 through its subsidiary IL&FS Energy Development Company Limited (IEDCL), with the objective to develop,

own and operate power generation and transmission assets in India and abroad. Maintaining a 50:50 balance between renewable and thermal energy, IEDCL has over 3,000 MW of capacity already in operation across diverse fuel sources. An additional 15,000 MW of capacity is at various stages of development. In June 2017, IL&FS was among the companies banned by the government from participating in rooftop solar project tenders for a year owing to its failure to furbish updated details of the projects it has executed so far. The other banned companies included Amra Raja Electronics Limited, Cleantech Synergy, Hollandia Power Solutions and Jindal Green Technologies.

z The $3 billion Inox Group is a diversified conglomerate operating in the industrial gases, chloromethanes, refrigerants, fluoropolymers, multiplexes, wind turbine manufacturing and cryogenic engineering segments. In the renewable energy sector, the group operates primarily in the wind turbine manufacturing space. It recently exited the wind farming space. Inox Wind won 250 MW of projects in a 1 GW wind projects auction conducted by SECI in October 2017. Wind power tariffs fell to a record low of Rs 2.64 per kWh. The winning bid for Inox was Rs 2.65 per kWh. Other winners include ReNew Power, Orange Sironj Wind Power, Green Infra and Adani Green Energy. In September 2017, Inox Wind planned to develop a 100 MW wind power project for Adani Green Energy, a part of the Adani Group, in Kutch, over a period of six to nine months. Under the EPC contract, Inox Wind will install 50 wind turbines of 2 MW each, and provide O&M services. In March 2017, the Inox Group agreed to sell its 260 MW operating wind farms to Leap Green Energy for an undisclosed amount. Inox Renewables, a wholly owned subsidiary of Gujarat Fluorochemicals and Inox Renewables Jaisalmer, entered into agreements for the sale of

Rooftop Solar Market in India 2017-18 India Infrastructure Research (a sister division of Power Line and Renewable Watch magazines) has just released a special report on “Rooftop Solar Market in India 2017-18”. From being a side-story in the Indian solar sector, rooftop solar segment is beginning to become the mainstream growth driver. The government has announced attractive policies such as net metering, subsidies for select customers and cheaper debt financing for the segment, although there is huge scope for improvement on every front. Railways, metro authorities, airports, ports, etc. are significantly driving growth in this space. A number of other large and medium industrial/commercial users are investing in this space to optimise their energy bills as well as to meet their RPOs. With this background, the report is divided into twelve chapters: z

Rooftop Solar Overview

State-wise Tender Analysis

Policy and Regulatory Framework

Financing Trends

Business Models and their Suitability/Application

Cost Economics

SECI’s Rooftop Programme

Project Pipeline

Key Project Profiles

abl

now

il ava

(Each profile includes information on current operational capacity, business models, tenders, future plans, etc.) z

Key Developer/EPC Players Profiles (Each profile covers the details related to their business models, existing and in-pipeline project portfolio, installed capacity, geographical presence, future plans, O&M practices, etc.)

Key Inverter Manufacturers Profiles (Each profile provides information on market share, product portfolio, projects they have supplied to, future plans, etc.)

Database of Projects Allocated under various State and Central Level Schemes (This includes details pertaining to winner, tariff, capacity, project location, project size, etc.)

The report is priced at Rs 50,000 (plus 18% GST) or USD 1180 and is available in PDF format. We are offering a special post-release discount. The price is Rs 45,000 (plus 18% GST) or USD 1062 for orders/payments received before or on December 15, 2017. There is an additional 15% discount on the combined purchase of “Solar Plant Performance in India 2017” and “Rooftop Solar Market in India 2017” reports. The two reports will cost Rs 84,150 (plus 18% GST) or USD 1986. To order a copy, please send a cheque or draft payable to “India Infrastructure Publishing Pvt. Ltd.” and mail to:

COMPANIES

their operating wind farms to Leap Green Energy Private Limited. The company decided to exit the wind farm business and focus on its core businesses including wind turbine manufacturing. Inox Wind won 250 MW of projects in a 1,000 MW auction of wind power projects organised by SECI in March 2017, through reverse competitive bidding. Other winners included Mytrah Energy, Green Infra and Ostro Energy, which also won 250 MW of projects each. Inox Wind received an order from SJVN Limited for a 50 MW wind power project to be set up in Gujarat in December 2016. The project was scheduled for commissioning in November 2017. As per the order, Inox Wind will supply and install 25 units of its advanced 2 MW DFIG 113 metre rotor diameter WTGs to SJVN Limited. In the same month, Inox Wind received an order from NTPC Limited for a 50 MW wind power project in Gujarat. The project, to be executed on a turnkey basis, was scheduled for commissioning in June 2017. Inox Wind was to supply and install 25 units of its advanced 2 MW DFIG 100 metre rotor diameter WTGs.

ANNIVERSARY ISSUE z

114 ● Renewable Watch ● November 2017

Larsen & Toubro z

Jakson Engineers Limited z Power solutions company Jakson Engineers Limited entered the solar segment in 2011. The company is an EPC contractor, an IPP and a manufacturer of solar products such as PV modules and inverters. It currently has 70 MW of monocrystalline and polycrystalline module manufacturing capacity in Noida and an installed capacity of 500 MW of module mounting structures. The company has plans to increase its solar manufacturing capacity to 1.5 GW by 2020. In August 2017, Jakson Engineers Limited, under the guidance of the Indian Railways Organisation for Alternative Fuels, developed the first 1,600 horsepower solar-powered diesel electrical multiple unit train for IR. The train has power backup and can run on battery for at least 72 hours.

The Jakson Group secured a contract to install a rooftop solar plant of 508 kWp capacity at Rashtrapati Bhavan in New Delhi in December 2016. The company will design, install, commission and maintain this plant. The project will generate about 741,000 units per year.

Larsen & Toubro (L&T) operates in the solar segment through its solar EPC company L&T Construction. The company has an indigenous capability to design solar PV systems, balance of systems and the requisite power evacuation systems. It operates in the gridconnected PV, concentrating solar power, microgrid and mega rooftop segments. The company’s largest project was of 40 MWp in Pokhran, Rajasthan. L&T won a contract to supply 2.5 million smart meters to EESL in October 2017, after emerging as the lowest bidder for an international tender for procuring 5 million smart meters. L&T quoted a price of Rs 2,722 per single-phase smart meter. The price quoted by L&T was 40-50 per cent lower than the prevailing market rate. In July 2017, IFC invested $103 million in L&T Infrastructure Finance Company by subscribing to the green bonds issued by it. L&T Infrastructure Finance, a wholly owned subsidiary of L&T Finance Holdings, will use the funds generated to provide loans to solar power projects in India.

Mytrah Energy Limited

Mahindra Susten Private Limited z Mahindra Susten Private Limited, the solar energy arm of the Mahindra Group, is a solar EPC company that offers extensive expertise in energy solutions and engineering. The company started operations in 2011 by offering turnkey EPC services for solar projects. So far, the company has commissioned over 1,090 MW of solar projects and has approximately 502 MW of projects under execution.

In October 2017, Mahindra Susten emerged as the lowest bidder in an auction conducted by the NLC India Limited for a 20 MW solar power plant with a 28 MWh battery energy storage system. The company quoted a cost of Rs 2.988 billion to develop the entire project. This includes EPC as well as O&M costs. The contracts were to be awarded after NLC’s evaluation of the viability and feasibility of the project. The Madhya Pradesh government entered into two agreements with Mahindra Susten, ACME Solar Holdings and Solenergi Power on April 17, 2017, to develop the 750 MW Rewa Utltra Mega Solar Park. The project developers signed PPAs with MPPMCL and DMRC on April 17, 2017. Mahindra Susten, Acme Solar Holdings and Solenergi Power bid record low tariffs of Rs 2.979 per kWh, Rs 2.97 per kWh and Rs 2.974 per kWh respectively to win contracts of 250 MW each.

z Mytrah Energy Limited (MEL) operates as an IPP in both the solar and wind energy segments. The company currently has 1,000 MW of operational wind capacity and another 3,000 MW is in the pipeline. MEL executes and maintains projects across 10 states. In September 2017, MEL raised Rs 18 billion from the Piramal Group’s financial services companies. The funds are invested in the form of non-convertible debentures with a tenor of seven years. The funds will be used to refinance the company’s debt and provide an exit to some of its current investors. During the same month, MEL won 30.87 MW of the 67.39 MW of rooftop solar power capacity auctioned by REMCL for IR. These projects will be developed across the country on premises owned by IR. MEL won 250 MW of projects of the 1 GW of wind power projects auctioned by SECI in March 2017 through reverse competitive bidding. Other winners included Green Infra, Inox Wind and

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COMPANIES

ANNIVERSARY ISSUE

Ostro Energy, which won 250 MW of projects each.

NEXTracker

z Founded in 2013, NEXTracker was acquired by Flextronics International Limited in September 2015. The company is involved in the designing and manufacturing of single-axis PV trackers. In April 2017, NEXTracker started expanding its operations in India. So far, NEXTracker has supplied its trackers for two projects in India – a 105 MW solar project developed by Adani Power and a 30 MW solar project by CleanMax Solar. The company plans to manufacture additional structural components of its solar tracking systems in India. It has almost 20 projects, either completed or under development, in the country.

NHPC Limited z

NHPC Limited was incorporated in 1975 with the objective of planning, promoting and organising integrated and efficient development of hydroelectric power. Later, NHPC expanded its scope to include the development of power through conventional and non-conventional sources in India and abroad. In November 2016, NHPC Limited issued an EPC tender for a 50 MW grid-connected solar PV project in Tamil Nadu. The scope of work included O&M services for a period of 10 years. In July 2017, L&T won the tender at an estimated project cost of Rs 2.87 billion. NHPC is planning to develop a 50 MW solar park in Manipur. SECI, NHPC, the Manipur State Power Distribution Company and the Manipur Renewable Energy Development Agency will be the nodal agencies for the planning and development of the project. It is likely to cost between Rs 2.5 billion and Rs 3 billion.

NTPC Limited z NTPC

has been working as a nodal entity under the NSM for awarding projects

116 ● Renewable Watch ● November 2017

to solar power developers. In addition, the PSU has been making equity investments in solar energy in an independent capacity. It has set a target to source about 11 per cent of its planned capacity of 128 GW by 2032 from renewable energy sources. The company had a very successful year in terms of tendering and implementing wind and solar power projects. NTPC’s solar tenders include a 250 MW tender for the Kadapa Solar Park in Andhra Pradesh, a global tender for 250 MW capacity under the DCR category at multiple locations across the country, a 225 MW tender for single-block capacity in Bilhaur, Uttar Pradesh, a 241 MW tender for capacity development in Gujarat, Madhya Pradesh and Rajasthan under the DCR category, and 35 MW of solar power projects under the DCR category at NTPC Simhadri in Andhra Pradesh (20 MW) and NTPC Ramagundam in Telangana (15 MW). The company also commissioned multiple solar power projects, including 115 MW of capacity at the Bhadla Solar Park in Rajasthan and 225 MW at Mandsaur in Madhya Pradesh. A first of its kind, NTPC commissioned a 100 kWp floating solar plant in Kayamkulam district of Kerala, for which NTPC Energy Technology Research Alliance developed the platforms in collaboration with the Central Institute of Plastics Engineering and Technology, Chennai. In addition, NTPC’s JVs and subsidiaries tendered capacities at several locations across India. NTPC-SAIL Power Company Limited tendered a 20 MW solar project at the Durgapur Steel Plant in West Bengal, while NTPC Vidyut Vyapar Nigam Limited tendered 15.52 MW of grid-connected rooftop solar capacity under the capex model on behalf of the central PSUs under the Ministry of Steel. The company also tendered a 6 MW solar project under the DCR category on behalf of the Cement Corporation of India in Tandur, Telangana. During the past one year, NTPC has tendered five wind projects of 50 MW

each, which are to be developed across Gujrat, Andhra Pradesh, Karnataka and Madhya Pradesh. It issued a tender for a 3.5 MW wind-solar hybrid project to be located at its Kudgi Super Thermal Power Plant in Karnataka. NTPC, moreover, forayed into the solar thermal segment by awarding a contract for Asia’s first integrated solar thermal power plant to Thermax and concentrating solar power company Frenell. During the year, NTPC also raised Rs 20 billion through the issue of green masala bonds in the overseas market under its $4 billion medium-term note programme. The bond was listed on the London Stock Exchange and the proceeds will be used for financing renewable energy projects in accordance with the applicable guidelines and regulations of the Reserve Bank of India. The five-year bonds have been issued at an annual interest rate of 7.37 per cent.

Orient Green Power Limited

z Orient Green Power Limited (OGPL) is a subsidiary of the Chennai-based Shriram Group and was established in 2006 as an IPP in the wind and biomass energy segments. The company has a total wind capacity of 414 MW and biomassbased generation capacity of 106 MW in Tamil Nadu, Andhra Pradesh, Gujarat, Karnataka, Telangana, Rajasthan, Maharashtra and Madhya Pradesh. The company is currently in the process of demerging its wind and biomass entities into two separate companies – OGPL (wind) and Biobijlee Green Power Limited (biomass). Following the demerger, OGPL will have an operating wind capacity of 425 MW with an additional 43 MW under construction. Reportedly, it is in talks with IL&FS Wind Energy for a potential merger of the wind generation businesses of both entities. The merged entity will have 1.2 GW of operating wind capacity and will be by far the largest listed renewable energy company in India. However, IL&FS will have a larger stake as its wind energy generation capacity is higher.

8th Annual Conference on

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August 2018, New Delhi Agenda/Structure: Key Trends and Outlook

Renewable Energy Certificates

MNRE's Perspective: Policy Roadmap to Achieve the 60 GW Target

Operations and Maintenance Practices

SECI's Perspective: Competitive Bidding-based Wind Project Allocation Regulatory Roundup State Policies and Programmes: Moving from FiT to Reverse Auction

Technology Trends and Innovations

Developers' Perspective

Legal and Fiscal Issues: Focus on PPAs, EPC Contracts and GST

Domestic Manufacturing and Exports

Spotlight on Energy Storage

Grid Integration and Management

NIWE's Perspective

Forecasting, Scheduling and Imbalance Handling

Emerging Opportunities: Offshore Wind and Wind-Solar Hybrids

Investment and Financing

Repowering of Wind Farms

Discom Finances and Offtake Risks

Etc.

For registration opportunities, please contact: Kanan Kumar, Conference Cell India Infrastructure Publishing Pvt. Ltd., B-17, Qutab Institutional Area, New Delhi-110016. Tel: 011-41034615, 9891210461 Fax: 011-26531196, 46038149. E-mail: conferencecell@indiainfrastructure.com

COMPANIES

ANNIVERSARY ISSUE

Ostro Energy z

The company has over 350 MW of wind and solar energy capacity, contracted or under active development, across Andhra Pradesh and Madhya Pradesh. In addition, Ostro recently won 250 MW of wind power capacity under SECI’s 1 GW wind tender. It currently has commissioned wind projects aggregating 234 MW in Rajasthan and Madhya Pradesh. In November 2016, Ostro Energy and the Suzlon Group entered into a JV for the development and construction of a 50 MW solar project in Telangana. Ostro Energy will acquire 49 per cent stake in Prathamesh Solarfarms Private Limited, an special purpose vehicle (SPV) set up by Suzlon for the execution of this project.

(MNRE) press release, Uttar Pradesh will buy 499.9 MW, Bihar 200 MW, Jharkhand 200 MW, Delhi 100 MW, and Assam and Odisha will buy 50 MW each. In April 2017, PTC India’s subsidiary, PTC Energy Limited (PEL), commissioned five wind power projects aggregating 238.8 MW in Andhra Pradesh and Karnataka. Of the total capacity, 190 MW is located in Andhra Pradesh and 50 MW in Karnataka. PEL has PPAs spanning 25 years with the respective state discoms. Besides, it has a 30 MW wind power project at Ratlam and a 20 MW wind power project at Mandsaur in Madhya Pradesh. PEL’s target is to develop 300 MW of renewable power capacity by March 2018 and it is well on track.

stakeholders. More than 1,000 farmers will benefit from this project by receiving a regular monthly income. The company also commissioned a 9 MW solar power project in Tumkur district, Karnataka, in September 2017, as a part of the Karnataka Farmers Solar Programme. The project uses single-axis trackers with fixed tilt technology.

ReGen Powertech z

Punj Lloyd z

Premier Solar Limited

z Premier Solar manufactures a wide range of solar products such as PV modules, lanterns, street lighting systems, pumps and home lighting systems. It has been an active player in the Indian energy space since 1995. In August 2017, Premier Solar set up a 200 MW automated solar module manufacturing facility in Sangareddy, Telangana, taking the total module manufacturing capacity of the facility to 375 MW. The unit also has a 50 MW solar cell manufacturing line. The company plans to expand the cell manufacturing line to 1 GW, with the first phase of 250 MW to be commissioned by September 2018.

118 ● Renewable Watch ● November 2017

ReNew Power Ventures z

Rays Power Infra

PTC India In May 2017, PTC India signed memorandums of agreement with the discoms of Uttar Pradesh, Bihar, Jharkhand, Delhi, Assam and Odisha for 1,050 MW of capacity allocated under the previous 1,000 MW wind tender. As per the agreements, these discoms will buy wind power from PTC to meet their renewable purchase obligations. According to the Ministry of New and Renewable Energy’s

In March 2017, Punj Lloyd and India Power Green Utility Private Limited (IPGUPL) partnered to develop a 20 MW solar plant in Uttarakhand. The project execution is planned in two phases of 10 MW each. In addition, IPGUPL had acquired a 49 per cent stake in PL Sunrays Power and PL Renewable, both wholly owned subsidiaries of Punj Lloyd. In November 2016, Punj Lloyd sold its three solar projects with a cumulative capacity of 45 MW in Punjab and Rajasthan to IDFC Alternatives for around Rs 1 billion.

z Rays Power Infra began operations in 2011 as an EPC company and has commissioned multiple solar power projects over the past few years. It commissioned a 5.75 MW solar PV project in Medak district of Telangana for Earth Solar on a turnkey basis. The project was executed within seven months of its inception at a remote location taking its solar portfolio in the state to 76 MW. In May 2017, it commissioned a 78 MW solar power project in Bhagwanpur, Uttarakhand, which allowed the local farmers to become

Wind energy converter developer ReGen Powertech was incorporated in 2006. It offers services such as turnkey solutions, wind resource assessment, project management, O&M and wind turbine testing. In October 2017, the company won 250 MW of wind capacity at a tariff of Rs 2.80 per kWh in SECI’s 1,000 MW Tranche II wind auction. The company expects to win more such tenders as reverse bidding has revived the country’s wind power segment.

Established in 2011, ReNew Power Ventures currently has an asset base of over $1.5 billion. The company has a wind and solar power portfolio of about 1,600 MW , of which 700 MW has been commissioned. In February 2016, Japan-based power company JERA, a JV between Tokyo Electric Power and Chubu Electric Power, acquired a 10 per cent stake in ReNew Power Ventures for $200 million. In addition, there have been reports of the company contemplating an IPO. The company has been one of the key players in the wind and solar space. It has recently won 250 MW of wind power capacity under the second 1 GW tender released by SECI. In the rooftop space, it was allocated projects aggregating 49 MW of capacity in SECI’s 500 MW rooftop tender. The company won bids for 5 MW of solar installations from IR across pan-Indian locations. This was the first set of allocations by IR to any company in the PPA mode.

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COMPANIES z

ReNew Power has been actively raising funds domestically and internationally, to finance its current and upcoming renewable energy projects. In November 2016, the company raised Rs 5 billion through the issue of green bonds certified under the Climate Bonds Initiative, to finance its wind energy projects in Dhar and Ujjain districts of Madhya Pradesh. The fiveyear bonds have a face value of Rs 1 million each and have been rated A+ on a stand-alone basis. ReNew Power has announced a long-term debt financing of $390 million from ADB. The company will use the proceeds to develop and expand capacities in Andhra Pradesh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh and Telangana. The company has also raised equity worth $265 million from the Abu Dhabi Investment Authority, Goldman Sachs and the Global Environment Fund (GEF), taking the total funds raised to $655 million. In this round of funding, the Abu Dhabi Investment Authority has committed $200 million for a minority stake in ReNew Power, while existing investor Goldman Sachs has chipped in $50 million to raise its investment in the company to $370 million. Another existing investor, the GEF will be investing $15 million to increase its exposure to $35 million.

ANNIVERSARY ISSUE z

Schneider Electric India

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z Schneider Electric’s presence in the solar segment has grown over 50 per cent in the past one year. In February 2017, Schneider Electric India announced the powering of more than 2 GW of solar capacity in the country through its inverters, transformers and other medium voltage equipment. The company claims that of the country’s cumulative solar capacity of 10,000 MW, 20 per cent flows through Schneider Electric’s equipment. The company plans to supply and commission equipment for another 500 MW of solar projects, taking its total to 2.5 GW.

Solar Energy Corporation of India z

SB Energy z SB Energy, formed in June 2015, is a three-way JV between Bharti Enterprises Limited, the Foxconn Technology Group and the SoftBank Corporation. In May 2017, SB Energy secured 400 MW of solar power capacity in two auctions that offered a total of 750 MW of capacity at the Bhadla Solar Park. The company bid the lowest-ever tariffs for solar power projects in India in both the auctions. It secured the right to develop 100 MW of capacity out of the 250 MW offered by Adani Enterprises at the Bhadla Solar Park by bidding Rs 2.63 per kWh. The company won the remaining 300 MW capacity from IL&FS at Rs 2.45 per kWh.

The company commissioned a 350 MW solar power project in Kurnool, Andhra Pradesh, under the MNRE’s solar park scheme on March 29, 2017.

In October 2017, SECI announced the bid results of its 1 GW wind tender. The tariff dropped to a record low of Rs 2.64 per kWh. The winners are ReNew Power (250 MW at Rs 2.64 per kWh), Orange Sironj Wind Power (200 MW at Rs 2.64 per kWh), Inox Wind (250 MW at Rs 2.65 per kWh), Green Infra (250 MW at Rs 2.65 per kWh) and Adani Green Energy (50 MW at Rs 2.65 per kWh). BLP Energy, Sprng Energy, Hero Wind Energy and ReGen Powertech were amongst the other bidders that quoted tariffs between Rs 2.72 and Rs 2.80 per kWh. The new wind tariff was observed to be only 8 per cent higher than the lowest solar tariff of Rs 2.44 per kWh quoted for 500 MW at the Bhadla Solar Park. In addition, SECI released a 200 MW solar EPC tender under the DCR category on behalf of Coal India Limited (CIL) for development at the Neemuch-Mandsaur Solar Park in Madhya Pradesh. It will comprise blocks of 100 MW each for Northern Coalfields Limited and South Eastern Coalfields Limited, subsidiaries of CIL. NTPC Limited and SECI have an-

nounced tenders for 230 MW of gridconnected solar projects under the DCR category. SECI also released an EPC tender for 5 MW of solar capacity in Ibrahimpatam, Telangana, on behalf of Bharat Dynamics Limited. In September 2017, SECI gave a contract to Azure Power to develop 50 MW of rooftop solar power capacity on government buildings and institutions across 10 states and union territories at a tariff ranging from Rs 3.19 to Rs 3.97, depending on the location. SECI cancelled 950 MW of solar capacity tendered at the Kadapa and Pavagada solar parks under NSM Phase II Batch IV in August 2017. The cancelled projects include 500 MW under the open category and 150 MW under the DCR category in the Kadapa Solar Park Tranche IV, 100 MW under the open category in the Kadapa Solar Park Tranche V and 200 MW at the Pavagada Solar Park Tranche VI. The cancelled tenders for the Kadapa Solar Park Tranche V and the Pavagada Solar Park Tranche VI included provisions for battery energy storage systems of 5 MW and 2.5 MWh rated capacity. The tenders were cancelled following the non-signing of PPAs with discoms due to falling solar tariffs. SECI plans to retender the capacity and is in negotiations with the states. In the same month, SECI issued a 200 MW solar project tender on behalf of CIL for the Neemuch-Mandsaur Solar Park. The successful bidder will provide O&M services for a period of 10 years. In addition, SECI announced the bid results of its 500 MW rooftop auction. The lowest tariff was Rs 2.20 per kWh quoted by Mundra Solar PV Limited for an 11 MW project under the renewable energy service company (RESCO) model in the Andaman & Nicobar Islands (special category state). The final list of winners is yet to be released by SECI. In July 2017, SECI issued a tender for an 8 MW (DC) grid-connected rooftop solar project on behalf of Banaras Hindu University, Varanasi. The project is planned to be developed for captive

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power consumption by the university. The successful bidder will provide O&M services for a period of five years. In May 2017, the MNRE approved another 1,000 MW tender under its wind programme for which SECI will be the implementing agency and will sign 25-year PPAs with the developers. In addition, SECI received technical bids aggregating more than 8,500 MW for a tendered capacity of 750 MW at the Bhadla Solar Park. The tender, which was oversubscribed 12 times, had a benchmark price of Rs 3.15 per kWh and had been postponed repeatedly since November 2016. In April 2017, SECI was appointed as one of the nodal agencies for the planning and development of a 50 MW solar power park proposed in Manipur. In March 2017, SECI signed 25-year PPAs with Canadian Solar for 80 MW (AC) solar power projects in Maharashtra. Canadian Solar had bid for VGF support of Rs 1.99 million per MW for the projects, due to start operations by end-2017. In February 2017, SECI released the results for the 750 MW Rewa Solar Park tender. Mahindra Renewables, Acme Solar Holdings and Solenergi Power bid record low tariffs of Rs 2.979 per kWh, Rs 2.97 per kWh and Rs 2.974 per kWh respectively to win contracts for building a 250 MW plant each. Under the awarded contracts, there will be a tariff escalation of Re 0.05 per annum for 15 years. Further, a levellised tariff of around Rs 3.30 per unit will be levied. A total of 20 national and international players had submitted their bids. The 750 MW park will be developed in three segments of 250 MW each and will be spread across 1,500 hectares of land in Gurh. During the same period, SECI’s 1 GW tender for wind power projects was oversubscribed, with 13 developers submitting bids equivalent to 2.6 GW of capacity. Around 69 per cent (1,794 MW) of the bids were for Tamil Nadu, 27 per cent (700 MW) for Gujarat and the remaining (100 MW) for Karnataka. In January 2017, SECI declared the results of its 100 MW solar tender for

Andhra Pradesh. Adani Power and Azure Power won 50 MW of capacity each in the auction for projects to be set up in the Ananthapur Solar Park under the DCR category. Both Adani and Azure will develop the projects on a build-own-operate basis for SECI, which has signed a 25-year fixed PPA for this capacity at Rs 4.43 per kWh. The entire capacity is expected to be commissioned in 2017. In December 2016, SECI declared the results for its 500 MW rooftop projects tender. Around 130 bidders participated in the bid, in which ReNew Power was allocated 49 MW of projects, the highest capacity allocated to any winner. Other notable winners included Amplus Solar with 14.5 MW, Hero Solar Energy with 13.2 MW and Germany’s Bosch with 10.4 MW. Amplus quoted the lowest winning tariff of Rs 3 per kWh for the projects it won in Uttarakhand, Himachal Pradesh and Puducherry. Of the 500 MW capacity, 400 MW was set aside for larger rooftop projects ranging from 25 kW to 500 kW, with the remaining 100 MW earmarked for rooftop projects with less than 25 kW of capacity.

Senvion z

Siemens Gamesa

Sembcorp Green Infra z

Sembcorp Green Infra (SGI) has recently won a 250 MW project under SECI’s 1 GW tender. In August 2017, Singapore-based Sembcorp Industries decided to acquire a 28 per cent stake in its Indian unit, Sembcorp Green Infra, from PE firm IDFC Alternatives for around Rs 14.1 billion. Following the acquisition, Sembcorp has become the sole owner of Sembcorp Green Infra. In February 2015, Sembcorp Industries acquired a 60 per cent stake in SGI for about Rs 10.6 billion, marking its entry into India’s renewable energy market. This was gradually increased to 72 per cent by mid-August 2017. As of August 2017, the company had close to 1,200 MW of wind and solar power capacity in operation and under development.

Senvion is a German wind turbine manufacturing company, which was formerly a subsidiary of Suzlon Energy. In December 2016, Senvion secured its first contract in India from a leading IPP for supplying 220 units of WTGs with a cumulative capacity of 500 MW. The company will begin the supply and installation of turbines by end-2017. The first site is expected to be commissioned by end-2017.

z In October 2017, Siemens Gamesa received an EPC contract for setting up a wind-solar hybrid energy project in Karnataka. The project involves the hybridisation of an existing 50 MW wind farm with a 28.8 MW solar power plant to be installed at the site. Gamesa India announced that it won seven new orders totalling 278 MW in March 2017. According to the company, it will supply, install and commission turbines for all the seven projects that were scheduled for commissioning between March 2017 and October 2017. During February 2017, Gamesa planned to invest Rs 175 billion in Andhra Pradesh to set up 2.5 GW of solar, wind and solar-wind hybrid power projects. Gamesa will be responsible for the construction, commissioning and O&M of these projects. Meanwhile, the company also launched a new wind blade manufacturing facility in Nellore, Andhra Pradesh. In November 2016, Gamesa secured five orders for the supply of 304 MW of wind turbines. The company will supply, install and commission the turbines, as well as undertake O&M at all the facilities. The projects were to be commissioned during the first quarter of 2017. In the same month, Gamesa secured a contract from ReNew Power for a 50 MW project at Amba, Madhya Pradesh. As per the contract, Gamesa was to supply 25 units of G114-2 MW T106 turbines and manage the entire infrastructure required for the installation and operation

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of the facility. Further, Atria Power awarded a 130 MW solar project to Gamesa to be commissioned in Karnataka and Andhra Pradesh. The company was to undertake design, EPC, commissioning and O&M of the project. This entailed supplying 96 units of the E-1.37 MW hybrid cooled solar inverters.

Solairedirect

z z

Solairedirect, a subsidiary of France-based ENGIE, was established in February 2016. In March 2017, Solairedirect raised Rs 6.75 billion from the Infrastructure Development Finance Company in a 70:30 debt-equity ratio to develop its solar project in Bhadla. The company was recently acquired by Actis Capital. In December 2016, Solairedirect India signed an agreement with Ecoppia to deploy the latter’s automated cleaning solution in Solairedirect’s 168 MW section of the Bhadla Solar Park. With this, Solairedirect is expected to save over 1.5 billion litres of water and cut down on the production loss associated with the maintenance of panels.

Suzlon z

In February 2017, Suzlon crossed the 10,000 MW wind capacity installation benchmark in India. According to the company, it has so far installed 35 per cent of the total wind power capacity across the country. Over the past years, the company has entered into multiple JVs to expand its wind and solar energy business. In November 2016, the Suzlon Group announced a JV with the Unison Energy Group for the development and construction of a 15 MW solar PV project in Adilabad, Telangana. During the same period, the company entered into a JV with Ostro Energy for the development and construction of a 50 MW solar project in Telangana; and another JV with Canadian Solar for two solar projects of 15 MW each located at Ramannapet and Kamareddy in Telangana. The two solar

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power units are expected to be commissioned in 2017-18. In January 2017, Suzlon partnered with AMP Solar for developing a 15 MW solar power plant at Achampet in Telangana. According to the contract, AMP Solar will acquire 49 per cent stake in Rudra Solarfarms Limited, an SPV set up by Suzlon for executing this project. In the wind segment, Suzlon has secured multiple EPC contracts. These include the 63 MW project from Tehri Hydro Development Corporation of India Limited in December 2016. The order comprised the installation of 30 units of the S97 120 metre hybrid tower turbines with a rated capacity of 2.1 MW each, located at Kandorna and Bhanwad in Dwarka, Gujarat. The project was commissioned in April 2017. Suzlon also secured a contract for a 27.3 MW project in the Kuchhdi wind farm, Gujarat. Further, in May 2017, it won a contract from ReNew Power to supply WTGs aggregating 100.8 MW of capacity for the Limbwas wind project in Madhya Pradesh. Suzlon will install 48 units of its S111 120 metre WTGs with a capacity of 2.1 MW each. Reportedly, this is the fifth such contract that Suzlon has received from ReNew Power. The company is developing three projects in Ananthapuram, Andhra Pradesh. These comprise a 50.4 MW project consisting of 24 units of S95 90 metre tubular tower with a rated capacity of 2.1 MW, a 226.8 MW project and a 105 MW project secured from Axis Energy for 50 units of its S111 90 metre tubular tower wind turbines with a rated capacity of 2.1 MW. In January 2017, Suzlon was reportedly planning to raise Rs 8 billion from PE investors Asia Climate Partners and Olympus Capital Asia to create an independent renewable energy platform. Suzlon will use this platform to invest in and acquire new renewable energy projects. The company is targeting to bring 500-1,000 MW of assets on the platform. In 2016, the company inaugurated its aerodynamic technology rotor blade manufacturing facility at Badnawar in

Dhar district, Madhya Pradesh. The facility has an annual production capacity of 400 MW and is spread across 19 acres. It will manufacture rotor blades for its S111 2.1 MW turbine, with a blade length of 54.8 metres, designed to enhance wind generation, especially at low wind sites, decrease the cost of energy and increase the return on investment for customers.

Tata Power Renewable Energy Limited

z Tata Power Renewable Energy Limited (TPREL) is a leading renewable energy developer, which has set an ambitious target for the growth of renewables in the coming years. Industrial Energy Limited, a JV between Tata Power and Tata Steel, launched a solar microgrid project at Baliapal village in Kalinganagar, Odisha, in April 2017. The project will be managed by the village development committee comprising 20 people. In March 2017, NTPC announced the commissioning of TPREL’s 65 MW solar project in Bhadla. During the same month, the company synchronised its 15 MW solar plant with the grid at Bellampalli in Telangana. The project was won under the 2 GW tender allocated by the Telangana government. With this, Tata Power’s total installed capacity has crossed 10,500 MW. In January 2017, the company commissioned a 36 MW wind power project in Nimbagallu, Andhra Pradesh, and a 49 MW solar power project in Kathayar, Tamil Nadu. While the wind power project is a part of the 100 MW wind farm being developed by the company, the solar power project is a part of Welspun’s portfolio, which TPREL acquired in 2016. With the commissioning of these projects, TPREL’s total renewable energy capacity reached 1,876 MW. This includes 841 MW of wind, 915 MW of solar and 120 MW of waste heat recovery projects. In November 2016, TPREL signed a PPA with SECI for a 100 MW solar pro-

COMPANIES

ANNIVERSARY ISSUE z

In March 2017, the company commissioned two projects of 65 MW capacity each at the Bhadla Solar Park.

Virtuaal Infrapower Private Limited z

Virtuaal Infrapower Private Limited has been involved in the renewable energy business with a focus on small hydroelectric projects. The company is a part of the Virtuaal Group, which was founded in 1988. In December 2016, Virtuaal Infrapower entered into an agreement with Singapore-based InfraCo Asia Private Limited to raise $5 million for funding two smallscale projects in Arunachal Pradesh. The funds are being raised through two compulsory convertible debenture facilities of up to $1.8 million and $3.2 million to facilitate the development of these projects and thereby strengthen electricity supply in the Northeast.

Vivaan Solar ject at the Ananthapuram Solar Park in Andhra Pradesh. The project was secured through bidding in the open category under the Jawaharlal Nehru National Solar Mission.

Nashik, Maharashtra.

Vikram Solar z

Ujaas Energy

z In September 2017, Ujaas Energy was awarded 22.03 MW of grid-connected rooftop solar capacity across India under three different tenders. Of the total capacity, 20.03 MW was awarded by SECI to be developed on government buildings across the country while 1.5 MW was awarded by the West Bengal Renewable Energy Development Agency to be developed at various locations in West Bengal. The remaining 0.5 MW capacity was tendered through an EPC contract to develop rooftop solar projects for Oil India Limited. This project will be executed at the Oil India Pump Station in Jorhat, Assam. In June 2017, Ujaas Energy won a contract to develop a 15 MW solar AC ground-mounted EPC project for HAL on HAL’s Ojhar township premises in

In September 2017, Vikram Solar commissioned two projects of 40 MW each at the Charanka Solar Park for Gujarat Industries Power Company Limited. These projects have been developed under the Gujarat Solar Park Projects, NSM Phase II Batch IV Tranche I. SECI provided the VGF for these projects. The company will also provide O&M services for 10 years. In May 2017, the company commissioned a 10 MW solar project in Chittoor, Andhra Pradesh, for Tirumala Tirupati Devasthanams. During the same time, Vikram Solar commissioned two 10 MW solar projects for Jindal Aluminium in Karnataka. The projects are connected to the Mayakonda substation. One of the 10 MW projects is a part of the Karnataka government’s initiative to develop 1,200 MW of solar projects across 60 talukas. Another 10 MW project has been developed under the Karnataka IPP programme.

z Founded in 2012, Vivaan Solar is an EPC company and a subsidiary of the Bianco Group. In June 2017, Vivaan Solar won bids to develop 500 kW of rooftop solar projects at the Rail Spring Factory in Gwalior, Madhya Pradesh. The project was tendered on a design-build-finance-operate-transfer basis. The company won the bid quoting the lowest tariff of Rs 5.74 per kW. This is the fourth time that Vivaan has won a rooftop solar project from IR, the others being in Delhi-NCR, Bengaluru and Jhansi.

Zynergy Solar Projects and Services

z Zynergy Solar Projects and Services is a vertically integrated solar services company founded in 2011. In April 2017, the company announced its plans to set up a solar module and solar cell manufacturing unit in Nellore, Andhra Pradesh. The state government had extended several concessions under the Andhra Pradesh Electronic Policy to the company. ■

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Steady Flow of Funds Significant domestic and foreign capital infusion despite cautious sentiment By Ashay Abbhi

ndia’s installed renewable energy capacity currently stands at a little over 60 GW. While technological advancements and a progressive policy and regulatory framework have played a key role in achieving this capacity, the financing community has also been instrumental in driving growth in the sector. There has been considerable progress on both the equity and debt financing fronts. The sector witnessed a spurt in green/masala bond issues and direct multilateral financing, along with fund-raising through capital market products like infrastructure investment trusts, especially in the past one year. There has been a sizeable growth in the overall investment quantum as well. A report by the Frankfurt School-United Nations Environment Programme (UNEP) has estimated that in 2016, about $9.7 billion was invested in the Indian renewable energy sector. Of this, the solar segment received the highest share of 57 per cent ($5.5 billion), while the share of wind energy stood at 39 per cent ($3.8 billion). These were followed by the small-hydro segment with 3 per cent share ($300 million) and biomass and waste-to-energy, which cumulatively accounted for 1 per cent ($100 million). According to Mercom India, the first three quarters of 2017 (January to September) witnessed an infusion of about $4.2 billion of funds into the renewable energy sector through corporate funding, project funding and merger and acquisition deals. This is more than double the investment made during the same period in 2016.

Equity financing Private equity (PE) funding has given the 124 ● Renewable Watch ● November 2017

much-needed push to the renewable energy sector and continues to be the dominant source of financing, despite the introduction of new financial tools. For the first nine months of 2017, India recorded a 47 per cent spike in private equity financing over that in 2016 for the wind and solar energy segments. This is in contrast to the low capacity addition expected this year. However, due to a strong pipeline from the previous year and significant capacity additions in the first quarter of 2017 (January-March), the overall investment trend has improved. The sector saw nine key deals totalling $920 million during the period JanuarySeptember 2017. In comparison, there were 10 deals for $630 million during the corresponding period in 2016 and 14 deals aggregating $979 million during the corresponding period in 2015. The key PE deals in the wind and solar energy segments were a $250 investment in Hindustan Power Projects, a $200 million capital influx by IDFC Alternatives in

First Solar, JERA’s investment of $2,500 million in ReNew Wind Power, Warburg Pincus’ investment of $108 million in Cleanmax Enviro Energy Solutions, and the Abraaj Group’s $100 million investment in Engie Abraaj, a joint venture with the France-based Engie. IDFC Alternatives exited Mytrah Energy while the Piramal Group invested $18 billion in the company in the form of nonconvertible debentures. It also exited Sembcorp Industries Limited’s renewable energy arm by selling its 28 per cent stake for Rs 25 billion, nearly 3.2 times its initial investment and the largest exit for the company so far. However, with the internal rate of return at 19 per cent, the company’s exit is considered to be in the low to medium category of returns. Other notable deals include the Dino Energy Corporation’s acquisition of Prestige Ocean Holding and Investment’s upcoming 100 MW solar power project in Haryana, the purchase of Inox Wind’s 260 MW wind power portfolio across Rajasthan,

FINANCE

ANNIVERSARY ISSUE Maharashtra, Madhya Pradesh and Tamil Nadu by Leap Green Energy for an undisclosed amount, and the Abu Dhabi Investment Authority’s investment in ReNew Power Ventures. Speaking about the emerging equity instruments, C.M. Khurana, chief general manager, India Infrastructure Finance Company Limited (IIFCL) says, “Quasi-equity instruments are also on the table, by way of which we fund 10 per cent of the project cost. When the borrower is unable to raise equity, we provide debt on which interest is charged but not recovered for the first five years. Credit enhancement is also available to wind project developers. Through this instrument, we help them in tapping the bond market for more capital. Further, IIFCL provides a guarantee whereby the developer’s rating automatically becomes ‘AA’ or ‘AAA’, which makes it investible, enabling it to borrow from the bond market.”

Debt financing Green bonds have emerged as an attractive new debt financing tool, with the renewable energy sector raising $2.1 billion through various bond issues in the first seven months of 2017. This has placed the country firmly on the green bond map of the world, which has seen issuances of $180 billion since the inception of the concept in 2007. India’s first green bond was issued by YES Bank in 2015 for $3,300 million with a term of seven years. Over the past two years, several companies have issued green bonds including NTPC, NHPC and Axis Bank. Primary among these are masala rupee bonds worth Rs 20,000 million issued by NTPC in October 2016. These bonds have a fiveyear maturity and an interest rate of 7.48 per cent. NHPC issued corporate bonds worth Rs 45,000 million, while Axis Bank issued maiden green bonds of $500 million in June 2016. The market grew to cumulatively reach $2.7 billion in 2016, making India the seventh largest green bond market in the world. However, green bonds need to be issued carefully with a strong portfolio of customers. Continuum, backed by Morgan Stanley, issued a $400

million bond, but failed to raise any capital due to the poor profile of its customers, which primarily comprised the financially stretched discoms. There is increasingly a trend of multilateral banks and non-banking financial institutions (NBFCs) getting into the commercial lending space, which was earlier dominated by domestic banks. In the past year, 24 debt deals from multilateral banks and NBFCs were recorded in the segment. The Asian Development Bank (ADB) gave a $390 million loan to ReNew Power and Rs 11,375 million to Mytrah Energy Limited (on a project finance basis). ADB also provided a $1 billion loan to Power Grid Corporation of India Limited (Powergrid) to strengthen grid infrastructure. In an institution-to-institution deal, ADB loaned another $200 million to the Indian Renewable Energy Development Agency, which provides low-interest capital for renewable energy development. The World Bank Group has provided $1.02 billion worth of loans to the government, in addition to $625 million to the State Bank of India as a long-term loan exclusively for the development of the renewable energy sector. Germany-based government bank KfW has given loans worth Rs 3,000 million to the state governments of Kerala and Maharashtra for the development of two large floating solar park projects with a capacity of over 40 MW. It has given another $1 million as a soft loan to the central government for

Renewable energy investment in India, by segment (2016) (%) Biomass and waste-toenergy: 1

Wind: 39

Source: Frankfurt School-UNEP

Small hydro: 3

Solar: 57

investing in green projects. In addition, the New Development Bank (erstwhile BRICS Development Bank) has provided Canara Bank with loans worth $250 million for investing in the sector.

Outlook While the renewable energy industry is looking at huge investments to meet its yearly targets, there is also a cautious sentiment among lenders and investors, owing to the rapidly changing business dynamics. The steep fall in tariffs and consequent decrease in profit margins, the reneging of power purchase agreements (PPAs) by discoms and grid unavailability are some of the key challenges facing the sector. Rupesh Singh, senior manager, larger corporate-credit, Axis Bank, says, “Although there is a sense of caution in the wind energy segment, which can be attributed to a number of factors such as renegotiation of PPAs, delays in payments and inconsistency of power generation, we remain positive that the segment will become stronger.” The wind power segment, which was once considered a safe investment, has now become a riskier proposition. Sitesh Kumar Sinha, vice-president, PTC India Financial Services Limited, says, “Before the introduction of bidding, wind was considered a more secure segment than solar, not only in terms of generation but also in terms of construction and operation. However, with the tariff decline and the resultant PPA renegotiation issues, the longevity of these issues has become our biggest concern. The central and state governments must work towards settling these issues for the wind industry to get back on track.” Streamlining of policies and a targetbased approach to the renewable energy sector will be needed to attract larger investments. While the government will need to work towards it, the market is also expected to play a significant role as it stabilises over the next two years, bringing back the investor confidence that is necessary to achieve the targets. ■ November 2017 ● Renewable Watch ● 125

FINANCE

ANNIVERSARY ISSUE lal Nehru National Solar Mission. A special purpose vehicle, Solaire Urja Private Limited, was formed to channelise the loan from IDFC. The timeframe for the loan repayment is 18 years and the company will have to pay 11 per cent interest during the construction period and 10.5 per cent interest after the start of commercial operations.

Key Financings Major debt and equity deals

n order to achieve the ambitious renewable energy target of 175 GW by 2022, an estimated investment of over $100 billion will be required. While this is a sizeable amount, India’s renewable energy capacity expansion plans have already attracted significant domestic and international interest. In step with the current pace of development, there has been a significant increase in financing on both the debt and equity fronts. Industry players have been exploring new and innovative financial mechanisms as well as alternative instruments to lower the cost of capital, and thereby seeking long-term commitments from global institutions. A number of capital market listings have also taken place. Renewable Watch takes a look at the key financial developments that have taken place in the sector in 2017…

Commercial loans z

In October 2017, Reliance Money, a part of Reliance Commercial Finance Limited, secured a Rs 3 billion loan from the Indian Renewable Energy Development Agency (IREDA). The loan will be used to develop renewable energy and energy efficiency projects in the country. In August, ReNew Power Ventures raised $50 million from YES Bank to refinance the debt of the 44 MW Amba wind power project in Madhya Pradesh. YES Bank will exclusively arrange for funds through the issue of non-convertible debentures (NCDs). The move is a part of ReNew Power’s cost reduction strategy to lower interest costs for the project. In the same month, the Rural Electrification Corporation (REC) sanctioned a loan of Rs 130 billion for Maharashtra State Power Generation Company Limi-

126 ● Renewable Watch ● November 2017

ted. The loan is not restricted to renewable energy projects and can also be utilised to set up thermal power plants as well as auxiliary equipment such as flue gas desulphurisers. In June, the State Bank of India (SBI) announced that it would provide Rs 4 billion to private developers to finance 100 MW of grid-connected rooftop solar projects. The loan has been provided under the SBI-World Bank Grid Connected Rooftop Solar Photovoltaic [PV] Programme for a period of 15 years, with an interest rate of 8.35 per cent per annum. The developers benefitting from the programme are Azure Power, Amplus and Cleanmax. The capacity of the projects and programmes financed range from 25 kW to 16 MW. In February, the Infrastructure Development Finance Company (IDFC) provided Rs 6.75 billion in a 70:30 debt-equity ratio to Solairedirect Energy India’s solar project in Rajasthan. The project is being developed at Bhadla under the Jawahar-

Multilateral financing z

The European Investment Bank (EIB) has committed to providing funds for affordable solar energy development in solar-rich countries as part of its collaboration with the International Solar Alliance. Under this, in October 2017, the EIB announced its decision to provide Euro 800 million or nearly Rs 61.3 billion worth of funds for renewable energy investments across India. This includes renewable energy financing in partnership with IREDA and the India Infrastructure Finance Company. In addition, the EIB is set to finalise a Euro 200 million credit line for renewable energy projects in association with YES Bank. In September, the International Finance Corporation (IFC) approved a $150 million loan for ACME Jaipur Solar Power Private Limited, a wholly owned subsidiary of ACME Solar, to develop a 250 MW solar project at the Rewa Solar Park in Madhya Pradesh. IFC plans to issue

FINANCE

ANNIVERSARY ISSUE

up to $50 million through NCDs and will help mobilise up to $100 million from other lenders. The loans will have a long tenor and a fixed rate of interest. In August, the Asian Development Bank (ADB) decided to provide a $500 million government-backed loan and $500 million of non-sovereign lending to Power Grid Corporation of India Limited (Powergrid), with co-financing from the Asian Infrastructure Investment Bank. The proceeds will be used to finance additional power transmission network components that will complement the Green Energy Corridors and other grid strengthening and expansion projects. In the same month, IFC granted a $150 million loan to Arinsun Clean Energy, a subsidiary of Solenergi Power Private Limited, for the development of its 250 MW solar project at the Rewa Solar Park. IFC plans to issue $50 million through NCDs and an additional $100 million from other lenders. The funds will be utilised by Arinsun Clean Energy for engineering, procurement and construction (EPC), as well as operations and maintenance (O&M) of the project. In August, a consortium of 12 British and Indian universities including Oxford University, Cambridge University, Brunel University and Imperial College, London, received a grant of GBP 7 million from the UK government to build five self-sufficient, solar-powered buildings in remote Indian villages. The grant by the Global Challenges Research Fund is a part of the SUNRISE solar project, which is aimed at developing printed PV cells and new manufacturing processes that can be used to manufacture solar energy products in India. In June, the World Bank provided lowcost financing to solar rooftop developers under a $625 million Programme for Results routed through SBI. A loan for 100 MW of projects was approved earlier. Such programmes are aimed at derisking financial flows and improving the availability of debt financing for the rooftop segment. As part of the Partnership to Advance Clean Energy programme, in June, the

US Department of Energy announced its decision to provide $7.5 million to India for grid improvement. The programme envisages research, development and deployment of smart grid and new energy storage technologies that will help modernise the grids of both the countries and thus increase grid resilience and reliability. In May, ADB approved the first tranche of the $500 million multi-tranche finance facility for funding the Solar Rooftop Investment Program approved by it in 2016. The first tranche, worth $100 million, will be given to the Punjab National Bank. This will help it finance large rooftop solar systems on industrial and commercial buildings in several states. The Government of India is a guarantor of the loan. Of the $500 million, $330 million will be provided from ADB’s ordinary capital resources and $170 million from the Clean Technology Fund (CTF). The World Bank approved funds worth $100 million in March for the development of solar parks in India. The funds include a $75 million loan from the International Bank for Reconstruction and Development with a maturity period of 19 years and a five-year grace period, a $23 million loan from the CTF with a maturity period of 40 years and a 10-year grace period, and a $2 million interest-free CTF grant. The funds will be provided to IREDA, which, in turn, will provide subloans to select states to invest in various solar parks that are included in the Ministry of New and Renewable Energy’s (MNRE) solar park programme. In the same month, ADB granted a loan of $200 million to Energy Efficiency Services Limited (EESL) to finance energy efficient lights and water pumps in India. EESL will provide loans to municipalities for installing LED street lights and bulbs, tube lights, electric fans and water pumps. The loan has been granted using ADB’s ordinary capital resources and will have a 20-year tenor, including a grace period of five years, with an annual interest rate determined in accordance with ADB’s London Interbank Offered Rate (Libor)-based lending facility.

ADB also approved a $175 million loan to Powergrid to expand its solar power transmission network. Further, ADB will provide a $50 million co-financing loan from multi-donor funding agency CTF. Powergrid will use these funds to upgrade the transmission network of the 2,500 MW solar park in Bhadla, Rajasthan, and the 700 MW solar park in Banaskantha, Gujarat. It will also back two additional sub-projects, which will increase solar power generation by 4.2 GW. EIB approved a Euro 200 million loan for SBI, which will be used to develop large-scale solar projects in India. The loan has a tenor of 20 years. In February, ADB signed an agreement to provide a $500 million loan to Powergrid for the development of green energy corridors. The funds will help Powergrid develop the 6,000 MW Raigarh-Pugalur high voltage direct current (HVDC) system and the 2,000 MW Pugalur-Trichur HVDC transmission line, covering Chhattisgarh, Tamil Nadu and Kerala. The total cost of the projects is $2.58 billion. ADB’s loan amount will account for 19 per cent of the total project cost, while Powergrid will provide $2.08 billion. The loan has a 20-year term, including a five-year grace period, and an annual interest rate determined in accordance with ADB’s LIBOR-based lending facility. In January, ReNew Power announced a long-term debt financing of $390 million from ADB. The funds will be utilised by the company to develop and expand capacities in Andhra Pradesh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh and Telangana. In January, KfW provided a soft loan worth Euro 1 billion for the development of green energy corridors in India. The loan agreement for financial assistance of Euro 500 million has been signed by Powergrid for interstate transmission projects under the Green Energy Corridors project, which are likely to be completed by 2018. For intra-state transmission projects, various states have signed loan agreements with KfW for financial assistance of around Euro 500 million. November 2017 ● Renewable Watch ● 127

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ANNIVERSARY ISSUE

Bonds and debentures z

In September 2017, Mytrah Energy raised Rs 18 billion from the Piramal Group’s financial services companies. The funds were invested in the form of NCDs with a tenor of seven years in two Mytrah Group entities: Mytrah Energy (India) Private Limited (Rs 9.8 billion) and Mytrah Ujjwal Power Private Limited (Rs 8.2 billion). The funds will be used to refinance the company’s debt and enable the exit of some of its current investors, such as IDFC Alternatives Limited, AION Direct Singapore Private Limited and Merrill Lynch International, before its planned initial public offering (IPO). In August, IDFC Alternatives successfully raised Rs 2.5 billion (approximately $39 million) through its India Infrastructure Fund II by selling NCDs to infrastructure debt funds and financial institutions. The funds will be used to repay the company’s existing debt and refinance two solar projects recently acquired from Punj Lloyd in Punjab. In July, Azure Power raised nearly $500 million through the sale of bonds to overseas investors. The issue was oversubscribed two times as investors offered to invest around $1 billion against the bond size of $500 million. This is despite the fact that Azure Power will offer a yield of around 5.5 per cent, which is less than even the primary lending rate of the Reserve Bank of India. The proceeds from the bond sale will be used to purchase rupee-denominated debentures and finance the loans of subsidiaries that directly own several solar power projects across India. In July, IFC invested $103 million in L&T Infrastructure Finance Company by subscribing to the green bonds issued by it. This was in line with IFC’s strategy to support the growth of renewable energy infrastructure in India. L&T Infrastructure Finance, a wholly owned subsidiary of L&T Finance Holdings, will use the funds generated to provide loans to solar power projects. In June, ADB raised $217 million by issuing offshore Indian rupee-linked, fiveyear bonds. The proceeds from the

128 ● Renewable Watch ● November 2017

bonds will be used to support ADB’s lending in India. ADB’s increased activity in the rupee capital market is proving catalytic to its local currency lending programme. The orders were oversubscribed three times. This is ADB’s largest single, offshore, Indian rupee-linked bond issue. During the same month, REC raised $450 million through the sale of green bonds listed on the London Stock Exchange. The bonds have a 10-year tenor with an interest rate of 3.97 per cent per annum. The bonds were oversubscribed by 3.9 times on the final order book and garnered strong investor interest internationally, with Asian investors accounting for 68 per cent of the total subscriptions and investors from the Europe, Middle East and Africa region accounting for the remaining 32 per cent of the order book. The green bond issue is the first of its kind to be traded on the London Stock Exchange’s new International Securities Market. The funds raised will be used to develop solar, wind and biomass power projects, as well as sustainable water and waste management projects in India. In May, the union cabinet approved the MNRE’s proposal to raise Rs 23.6 billion in bonds through IREDA in 2017-18. These funds will be used by the MNRE for approved programmes/schemes for solar parks, green energy corridors, generation-based incentives for wind projects, central public sector undertakings and defence solar projects, viability gap funding for solar projects, rooftop solar, offgrid/grid-distributed and decentralised renewable power, and investment in corporations and autonomous bodies. In May, NTPC floated its second fiveyear masala bond offering for Rs 20 billion in the international market. This is the eighth offering since 2006, under the company’s Rs 256.8 billion medium-term note (MTN) programme, taking the cumulative amount raised under the programme to nearly Rs 222.16 billion. The bonds are priced at a coupon rate of 7.25 per cent, payable annually. In April, Fotowatio Renewable Ventures

raised $29 million in NCDs from IFC to fund 100 MW of solar projects in India. FRV is developing two solar projects of 50 MW each at the Ananthapuramu Solar Park (Tranche IV) in Andhra Pradesh. The expected project cost is $119 million, which will be funded through 75 per cent debt and 25 per cent equity. In March, NTPC raised Rs 20 billion through the issue of green masala bonds in the overseas market under its $4 billion MTN programme. The five-year bonds have been issued at an annual interest rate of 7.37 per cent and have been listed on the Singapore Stock Exchange and the London Stock Exchange. In December 2016, Virtuaal Infra Power Private Limited entered into an agreement with Singapore-based InfraCo Asia Private Limited to raise $5 million for funding two small projects in Arunachal Pradesh. The funds are being raised through two compulsory convertible debenture facilities of up to $1.8 million and $3.2 million to facilitate project development and thereby strengthen electricity supply in the Northeast.

Private equity and venture capital z

In October 2017, Oorjan Cleantech raised $450,000 through online seed funding in which Globevestor, a US-based venture capital firm, is the primary investor. The other investors are a group of senior officials from banks and financial services companies. The company plans to use the funds to scale up its operations, augment sales efforts and build its technology advantage. In July, New York-based private equity firm Warburg Pincus invested Rs 6.5 billion in CleanMax Solar. The funds will be used by CleanMax Solar to expand its footprint in the rooftop solar and open access markets in India, the Middle East and Southeast Asia. Currently, CleanMax is reported to have a market share of 3 per cent (1,341 MW of capacity as of March 2017) in the open access solar market in India. In July, Piramal Finance, a subsidiary of Piramal Enterprises, sanctioned an additional funding of Rs 7 billion to

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ACME Solar Holdings Limited through its Corporate Finance Group. The funds have been approved under a new product, Flexi Line of Credit, which is aimed at making a line of funding available to the borrower based on operational projects, and providing flexibility to draw and repay funds during the tenor period. This is the second tranche of funding to ACME Solar Holdings. Prior to this, Piramal Finance, in partnership with APG Asset Management, had provided a funding of Rs 4.99 billion to ACME. In April, Hareon Solar India, a wholly owned subsidiary of Hareon Power Singapore, decided to invest $76.6 million for acquiring a 45 per cent stake in Azure Power Thirty-Seven Private Limited, a wholly owned subsidiary of Azure Power. According to Hareon Power Singapore, the funds will be utilised to develop 118 MW of solar projects in Telangana. Amaranto Solar Power India, the new arm of Italy-based renewable energy firm the Amaranto Group, launched an investment vehicle dedicated to acquiring PV projects in India in April 2017. It has already secured exclusive rights to purchase a 110 MW solar project that was tendered by SECI for $80 million. Amaranto will act as the general contractor for this plant via its EPC company Energia Prima. Amaranto Solar will also act as the co-investor and the industrial operator of the plant, providing O&M and asset management services. Amaranto’s aim was to raise funds worth $100 million in the first half of 2017, and another $200 million by end2017. It is targeting to acquire 500 MW of capacity by 2018. In March, solar EPC firm Oriano Solar raised a Series A funding of Rs 200 million from the Samridhi Fund, which is managed by SIDBI Venture Capital Limited. The investment comprises a mix of equity and debt. The company has so far executed over 85 MW of solar projects and will use the investment for project management, business development and working capital requirements.

130 ● Renewable Watch ● November 2017

ANNIVERSARY ISSUE z

In March, Actis Capital raised funds worth nearly $2.75 billion, of which it has kept aside $500 million for investing in solar and wind power projects. It recently acquired Solairedirect India from French utility Engie. Another key investment of the fund in India is the acquisition of Ostro Energy, which won 250 MW of capacity in the recently concluded auctions for wind power projects. Actis plans to build a 2 GW solar power portfolio.

IPOs z

The Indian Energy Exchange’s IPO, which opened for subscription on October 9, 2017, received bids for 12.05 million shares on the third and final day of the bidding and was oversubscribed 2.28 times. The board of directors had allocated 0.79 million equity shares at Rs 1,650 per share to 23 anchor investors including SBI Mutual Fund (MF), Birla Sunlife MF, ICICI Prudential MF, and Nomura. The price band of the IPO was fixed at Rs 1,645-Rs 1,650 per share. The IPO subscription closed on October 11, 2017. In September 2017, ACME Solar Holdings filed preliminary papers with the Securities and Exchange Board of India to raise Rs 22 billion through its IPO, at a face value of Rs 10 per share. The company is considering a pre-IPO placement of up to 5,222,079 equity shares to investors for up to Rs 5 billion. The company’s IPO will be managed by ICICI Securities, Citigroup Global Markets India, Deutsche Equities India and Link Intime India Private Limited. Out of the funds raised, around Rs 4,356.9 million will be used to repay debt to Primal Finance and Innovador Traders, and Rs 5,410 million to ACME Cleantech, while Rs 8,690 million will be used to finance the company’s 200 MW solar power project in Bhadla.

Mergers and acquisitions z

In October 2017, Adani Enterprises Limited (AEL) announced plans to demerge its renewable energy business into its associate company, Adani

Green Energy Limited (AGEL), to simplify its overall business structure. The boards of the two companies have approved the demerger scheme and AGEL will be listed on the Bombay Stock Exchange and the National Stock Exchange. According to a company statement, AGEL plans to issue 761 new equity shares for every 1,000 equity shares of AEL and the existing equity shares held by AEL in AGEL will be cancelled. However, all shareholders of AEL will be provided direct shareholding in AGEL. The demerger is expected to be closed by the first quarter of 2018, depending on regulatory approvals. In August, Sembcorp Industries entered into an agreement to acquire the remaining 28 per cent stake in Sembcorp Green Infra (SGI), a wind and solar project developer, from IDFC Private Equity Fund III, at $220.2 million. With this acquisition, Sembcorp Industries will become the sole owner of SGI. This acquisition will be financed through a mix of internal funds and loans. The deal is expected to be completed in the first quarter of 2018. In March, the Inox Group agreed to sell its 260 MW operating wind farms to Leap Green Energy for an undisclosed amount. Inox Renewables, a wholly owned subsidiary of Gujarat Fluorochemicals, and Inox Renewables (Jaisalmer), a wholly owned subsidiary of Inox Renewable Limited, both a part of the Inox Group, entered into definitive agreements for the sale of their operating wind farms to Leap Green Energy Private Limited, following their decision to exit the wind farm business and focus on their core businesses including wind turbine manufacturing. In February, Japan-based power company JERA, a joint venture between Tokyo Electric Power and Chubu Electric Power, acquired a 10 per cent stake in ReNew Power Ventures for $200 million. With this latest round of investment, the valuation of ReNew Power has reached $2 billion. The deal has also marked the entry of Japanese investors in the Indian renewable energy market. ■

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WORLD VIEW

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Global Trends Market snapshot and growth potential

n 2015, several countries across the world signed the Paris agreement to tackle the climate change problem. A total of 189 countries submitted their national commitments with targets to increase investment in renewable energy, energy efficiency, sustainable infrastructure, and climate-smart agriculture, signalling businesses and investors that a low-carbon future is coming. If the commitments are realised, they would create over $23 trillion of investment potential across 21 large emerging markets by 2030. A recent IFC Climate Investment Opportunities Report, “Creating Markets for Climate Business”, provides a snapshot of the progress in grid-connected and off-grid renewables and the upcoming opportunities in clean energy in the areas of climate-smart agriculture, green buildings, climate-smart urban transport and logistics, climate-smart urban water infrastructure and climate-smart urban waste management. The following are excerpts from the report...

Grid-connected renewable power Renewable power deployment continued to break records in 2016. More than 160 GW of new renewable power capacity was added in 2016, the highest-ever annual capacity addition in the sector. This represents about 62 per cent of the total power added to the grid that year, which means renewables outpaced fossil fuels by a ratio of almost 2:1.41. Amongst renewables, solar photovoltaic (PV) recorded the highest capacity addition, with 75 GW added in 2016, followed by wind (55 GW) and hydro (25 GW). Investment in renewable energy (including large hydropower) stood at $297 billion in 132 ● Renewable Watch ● November 2017

2016, a marginal decrease of 3 per cent on account of falling costs and fewer hydro plants coming online. Emerging markets accounted for over half of this investment. China remained the largest investor, accounting for almost 30 per cent of global renewable financing in 2016. After China, India ($8.7 billion) and Brazil ($7 billion) were the other two developing countries among the top 10 markets for non-hydro renewable energy investment. Renewable power markets are expected to maintain their strong growth. As per the International Energy Agency, the total deployed renewable capacity is expected to grow from about 2,100 GW in 2016 to 2,800-3,000 GW by 2021 at an investment

of $7 trillion-$11 trillion in the sector. Between 2009 and 2016, the costs of wind and solar power decreased by 66 per cent and 85 per cent respectively. These costs are expected to reduce further by 2020, with a 66 per cent decrease in solar PV, 47 per cent in onshore wind and 71 per cent in offshore wind. These projected reductions can be largely attributed to cheap technology and equipment, better operations and maintenance regimes and increased efficiency, especially in wind. According to Bloomberg New Energy Finance, installed solar capacity is expected to increase 14fold by 2040, while wind is projected to grow fourfold. The nascent energy storage market is also poised for growth. Clean Technica expects global energy storage to grow sevenfold, from about 3 GWh in 2016 to more than 20 GWh in 2025. Although costs are more difficult to predict, a steep fall in the cost of energy storage is anticipated. The year 2016 saw a 12 per cent drop in utility-scale lithium-ion batteries

WORLD VIEW

ANNIVERSARY ISSUE over the previous year. This trend is expected to continue as production ramps up globally. Favourable prices and policies have led to increased corporate interest. Commercial and industrial demand is becoming a key growth driver for the renewable industry. Corporate renewable energy demand has increased from about 500 MW in 2010 to a peak of 5.3 GW in 2015, with 3.25 GW in the US alone. Although the demand dropped to 4.5 GW in 2016, largely due to changes in the US market, record capacity addition in Europe, the Middle East, Africa and the Asia-Pacific region helped sustain demand. Initiatives like RE100 are enabling further growth, with some of the largest companies in the world committed to procuring 100 per cent of their electricity from renewable sources.

Solar PV Solar PV overtook wind as the fastest growing renewable energy technology in 2016. A total of 75 GW of solar PV capacity was built around the world in 2016, the equivalent of 31,000 panels installed every hour. China was the global leader, followed by the US, Japan, India and the UK, which together accounted for 85 per cent of the new construction. The largest additions in Africa were by South Africa (over 500 MW), followed by Algeria (over 170 MW), while Zambia recorded the lowest solar PV bid on the continent. Continued cost reductions may see the global solar PV market double by 2021. In 2016, the solar PV segment attracted $114 billion in investment. This represents a decline of about 4 per cent year on year, demonstrating that cost reductions are allowing more capacity to be built at less investment. Achieving cost-competitiveness is expected to increase investment in solar, creating major demand for energy storage. Installed solar PV capacity is expected to increase from 303 GW at the end of 2016 to 550-650 GW by 2021. Meanwhile, grid-tied distributed solar – that is, rooftop solar – for residential and com-

mercial consumers is set to grow in key emerging markets like India. In 2016, nearly $40 billion was invested in rooftop and other small PV projects. The US accounted for the highest investment of over $13 billion, followed by Japan at $8.5 billion (down from about $27 billion in 2015) and China at $3.5 billion. India’s small-scale solar industry is poised for growth, given the government’s ambitious target to install 40 GW of rooftop solar by 2022.

Wind power Wind power remains the second largest source of renewable energy after hydro, with a 22 per cent share in the total renewable capacity. A total of 55 GW of wind power was built in 2016, increasing the total global wind capacity by about 12 per cent to 487 GW. China led the segment, adding 23.4 GW of wind capacity, followed by the US, Germany, India and Brazil. Major investment and cost reductions may see wind power capacity more than double by 2026. The sector attracted $112 billion in 2016, down 9 per cent year on year. However, it recorded a higher capacity addition owing to the low cost of installation. The average total cost of installing wind power capacity has fallen by two-thirds between 1983 and 2014, and may fall by a further 12 per cent by 2025. The cost of electricity from new turbines is likely to fall even further because of efficiency gains, increased use and better logistics, potentially falling by up to 34 per cent by 2025. The total installed wind power capacity is expected to rise from 487 GW at the end of 2016 to around 1,110 GW by 2026.

Utility-scale storage Utility-scale energy storage is emerging as a high-growth market that can play a key role in supporting renewable energy development. Energy storage technologies can be broadly categorised into mechanical (such as flywheel and pumped hydro), electrochemical (batteries), chemical (hydrogen and synthetic natural gas), thermal and electromagnetic (capacitors) technologies.

These are deployed to address different needs such as managing demand and supply, and balancing loads. There is no single best storage technology. The optimal choice depends on parameters such as density, round-trip efficiency, cycle life, ambient temperatures, safety needs and cost. The cost of different storage options depends on their scale, application and siting. At present, the cost of large gridscale battery storage systems is approaching $300-$350 per kWh, and is expected to be around $250 per kWh in the early 2020s. This is based on the current cost of a lithium-ion battery pack at $220 per kWh. Pumped storage remains the largest storage technology by capacity, while battery storage is also growing fast. Pumped storage is a conventional technology used in hydropower plants wherein water is pumped uphill into a reservoir during times of excess capacity, and then released through a hydroelectric turbine to generate electricity when needed. It accounts for 96 per cent of the world’s installed storage capacity. However, lithium-ion electrochemical storage technology has become the subject of growing interest, since it is the most common battery type used in electric vehicles (EVs). The technology has benefitted from major research and development investment in recent years, which has led to a 65 per cent reduction in its cost between 2010 and 2015. Clean Technica expects global energy storage capacity to grow from about 2.9 GWh at the end of 2016 to 21 GWh by 2025. Half of this capacity will be installed on the customer’s side to reduce the customer’s utility bill. By 2025, the largest markets for grid-connected energy storage will be the US, Japan, China, Germany, Australia, the UK and India, with energy storage expected to cross 1 GWh capacity in these countries. Storage activity is also growing in Kenya, South Africa and the Philippines, although these markets are relatively much smaller.

Off-grid solar All off-grid solar systems – solar lanterns November 2017 ● Renewable Watch ● 133

WORLD VIEW and solar home systems, minigrids and microgrids, and off-grid storage – are developing rapidly. The most active markets are in Bangladesh, East Africa, Ghana, India and Nigeria. The largest market for solar home systems is India, where sales rose from 2.6 million units in 2015 to over 3 million units in 2016. The top five countries in sub-Saharan Africa with the highest sales in 2016 were Kenya with sales of 1.2 million systems, Ethiopia (0.5 million), and Tanzania and Uganda (0.4 million each). With a low electrification rate (35 per cent of households connected to electricity), sub-Saharan Africa has the highest growth potential for off-grid solutions, though opportunity also exists in Bangladesh, India, Indonesia and Pakistan. South Central Asia is the second largest market for distributed solar systems, with sales growth of 19 per cent between 2015 and 2016.

Off-grid solar home systems Solar PV costs are falling rapidly, a trend that is expected to continue, making solar home systems an increasingly attractive solution. Increased production and innovations have reduced the price of solar PV by 58 per cent since 2010. Increased cell efficiency has driven down costs by reducing the surface area and associated materials needed to produce the same output. Additional cost reductions are to come from improved solar modules and other components, with the total cost of rooftop systems expected to fall by more than 20 per cent by 2021 in countries like India and China. Sales of off-grid solar systems are also growing rapidly, particularly in India. The use of off-grid solar systems (including pico-solar and systems less than 100W) grew by 42 per cent globally between 2015 and 2016 to 8.1 million systems, representing about 50 per cent of the total sales of off-grid products during the year. The sales of off-grid solar systems in 2016 were led by India (3.1 million systems), followed by Kenya (1.2 million) and Ethiopia (500,000 million). Pico-scale 134 ● Renewable Watch ● November 2017

ANNIVERSARY ISSUE products which are lightweight and portable solar panels are the most common types of systems, comprising 94 per cent of all off-grid solar products. SubSaharan Africa and South Asia together accounted for more than 80 per cent of global sales in 2016. The pay-as-you-go (PAYG) business model is changing the viability of rural electrification, and companies which have adopted this model are attracting significant investment, especially in East Africa. PAYG solar companies raised $223 million in 2016, up from just $3 million invested in 2012. This model allows people to make small payments over time, making solar products accessible to low-income households. It is being used by over 32 companies across 30 countries. Companies such as Lumos Global, Mobisol, M-KOPA, d.light, and BBoxx are already connecting thousands of homes each month using rooftop solar home systems. The model is now being applied to other areas such as clean cooking and water pumping. Mobile PAYG is particularly well established in East Africa, where mobile phone penetration is relatively high, and is also gaining popularity in West Africa and southern Asia. In the future, data from PAYG customers may be used to establish credit histories and improve access to finance. New business models will expand energy storage markets. But high upfront costs for residential products remain a challenge, especially among poor households. Another major challenge for distributed energy storage is developing ways to share the financial benefits of energy storage systems between consumers and project developers.

hours, so that systems can be turned off when there is insufficient renewable energy to meet demand. In addition, mini-grid systems that can provide constant power are widely available. Small islands are becoming an attractive market for distributed solar and storage mini-grids. This is largely driven by the need for small islands to reduce their overreliance on imported petroleum products, which pose cost, ecological and energy security risks. The World Bank’s Energy Sector Management Assistance Program is behind the Small Island Developing States “DOCK” Support Program, which provides advice and investment support to small island developing states looking to transition to clean technology. Solar projects include the Regional Solar PV Scale-up Project in the Caribbean and the Cabo Verde Distributed Solar Energy Systems. Tesla and SolarCity recently helped the island of Ta’u in American Samoa to completely move from petroleum to solar and storage. Distributed energy service companies are attracting investment for micro- and minigrids. These companies tend to provide fee-for-service electricity and usually follow a build-own-operate structure. Distributed energy service companies typically use solar hybrid systems with smart metering technologies, although applying the PAYG model to the companies’ mini-grid systems is also being explored. In 2016, $75 million was raised in debt and equity finance by distributed energy service companies in East Africa and Southeast Asia alone. Blended finance approaches can help accelerate commercial viability for new business models by encouraging new investors to enter the market.

Mini-grids The falling cost of renewables is making micro- and mini-grids more cost-effective than extending the grid in some markets. Investment in micro- and mini-grids continued to accelerate in 2016, with the global market expected to reach $200 billion. The markets are maturing to allow grids to accept power for less than 24

Off-grid storage Major investment and deployment is expected in energy storage, which is a key component of off-grid systems. Energy storage in emerging markets is likely to grow by more than 40 per cent annually in the coming decade, adding about 80 GW of new storage capacity to the existing 2

WORLD VIEW

ANNIVERSARY ISSUE GW, though only a small fraction of this will be for off-grid applications. Annual investments in storage in emerging markets are expected to grow from about $2.5 billion in 2016 to $23 billion in 2025. About half of the growth is expected in China. India is likely to witness investments of $7 billion followed by $4 billion in South Asia, $3 billion in North Africa and the Middle East, $2.5 billion in sub-Saharan Africa, and $2 billion in Latin America and the Caribbean. Including energy storage in off-grid systems increases reliability and user satisfaction, and allows mini-grids to provide power 24 hours a day.

ous year. Most of this investment was in developed countries, as well as in China and India, which accounted for 19 per cent and 2 per cent respectively. Markets for constructing buildings are expected to grow at the highest rate in the Asia-Pacific region, led by China. This creates an opportunity to create new markets for green buildings, driven by the increased uptake of green practices, standards and technologies in new construction. Among building types, the residential sector shows highest growth potential.

Climate-smart urban transport Lithium-ion batteries are the dominant storage technology for off-grid applications, and continue to decrease in price. The cost of these batteries used in portable electronics and EVs has fallen by 65 per cent since 2010, opening up new off-grid applications that were previously too expensive. Cost reductions have been driven by rapidly increasing production capacity, as well as technical advances, including thicker electrodes and higher voltages. Lithium-ion batteries are estimated to account for 80 per cent of global energy storage installations by 2025.

Green buildings Resource-efficient building practices are helping economies move on to a greener development path. Green building is the practice of creating and using more resource-efficient and environment-friendly models of construction, renovation, operations, maintenance and demolition. While environmental pressures are compelling reasons to build responsibly, green buildings create additional benefits. Operational savings quickly recover capital costs; renewable energies reduce infrastructure investment; innovative products stimulate job creation; and reduced reliance on fossil fuels leads to energy security. About $388 billion of the $4.6 trillion spent on construction was invested in green buildings in 2015. Global investment in energy-efficient buildings in 2015 was $118 billion, up 9 per cent from the previ-

Rapid urbanisation in emerging markets presents transport challenges and opportunities. By 2050, an additional 2.5 billion people are expected to live in urban areas. According to the International Transport Forum’s Transport Outlook 2017, global demand for urban mobility will be 95 per cent higher in 2050 than in 2015, with a 185 per cent increase in non-OECD (Organization for Economic Co-operation and Development) countries. Global road freight activity is also expected to more than double between 2016 and 2050. Emerging market countries, particularly China and India, will account for 90 per cent of that increase. Making urban transportation and logistics sustainable will require new thinking in terms of urban design, infrastructure investment, energy efficiency technology and business models. Most developing country cities will require efficient cars and new technologies, as well as new investment in public transport infrastructure. Businesses are already responding with mobility and logistics solutions that reduce trip lengths, reduce carbon emissions and enhance non-motorised transport options. Electric vehicle (EV) sales are increasing rapidly, with China leading the growth. EV markets are growing faster than anticipated. In 2016, annual sales grew by 40 per cent year on year to reach 750,000. Today, the total global stock of EVs exceeds 2 million. Annual sales in China reached over

330,000, followed by 160,000 in the US, 215,000 across Europe, and most of the remainder in Japan and Canada. About 60 per cent of these sales were of battery EVs, with plug-in hybrid EVs making up the balance. China also leads in the electrification of other modes, with 200 million electric two-wheelers, up to 4 million low-speed EVs, and more than 300,000 electric buses. Market penetration remains concentrated in the developed world – Norway leads with a 29 per cent market share, followed by the Netherlands with more than 6 per cent, and Sweden with over 3 per cent. China, France and the UK have a collective market share of nearly 2 per cent.

Summing up Rapid growth in the clean energy sector is expected to continue. Bloomberg New Energy Finance projects $6 trillion in new investment in wind and solar power by 2040. Global electricity markets will be completely reshaped, with wind and solar emerging as the two largest power generation sources and fossil fuels making up less than a third of capacity. Almost half of the global investment in new power capacity up till 2040 will be in Asia-Pacific, with $4 trillion going to China and India. Successful markets for the climate business will also be on the rise. Around $388 billion was invested in energy-efficient buildings globally in 2015, up 9 per cent from the previous year. While this investment has been centred in developed countries, rapidly growing urban populations in countries like China and India will account for much of the new growth. Energy-efficient heating, ventilation and air conditioning is currently a $76 billion global market. Businesses and cities are collaborating to develop a resilient lowcarbon urban infrastructure to provide citizens with sustainable transport, water and waste management services. Over the next decade, trillions of dollars will be invested in transport infrastructure, opening up many climate-smart investment opportunities for businesses, including EVs, BRT, light rail, and multimodal transport and logistics. ■ November 2017 ● Renewable Watch ● 135

PHOTOGALLERY

ANNIVERSARY ISSUE

Highlights of 2017

harge) for ependent C of State (Ind r hird from te (t is in es M gy, and Min al, Former d er En le ab Piyush Goy dia (secon Renew ssador to In l, New and ergy er US Amba En Power, Coa rm an Fo le C a, ia ichard Verm the US-Ind announce left), and R ew Delhi an event to N at in , e ft) iv le at from cility Initi Finance Fa

Piyush Goyal addresses the audience at the International Solar Alliance (ISA) event in New Delhi, in the presence of (from left) Agrim Kaushal, Economic Adviser; Upendra Tripathy, Former Secretary, Ministry of New and Renewable Energy (MNRE); and Rajeev Kapoor, Former Secretary, MNRE

136 â&#x2014;? Renewable Watch â&#x2014;? November 2017

(From left) K.S. Popli, Chairman an Campbell Ke d Managin ir, Chairman g Director, , Shell Kaza Secretary IREDA; khstan; S. (ABC), Min Selvakumar istry of Fina of Sustainab , Joint nce; and G le Finance, avin Templ Green Inve eton, Head stment Bank UK Energy , UK, at the for Growth IndiaPartnership event

Former President Pranab Mukherjee inaugurates the Bio-SolarWind Microgrid Centre and the Centre for Water and Environment Research at the Indian Institute of Engineering Science & Technology, Shibpur, West Bengal

PHOTOGALLERY

ANNIVERSARY ISSUE

tes India’s s, inaugura of Railway r te with solaris n in ai M tr hu, Former ultiple-unit ab m c Pr ri h ct es le facility ur -e S diesel ttery bank horsepower a unique ba ith w ed first 1,600 pp aches equi powered co

Piyush Goyal (left), greets Raj Kumar Singh, the new Minister of State (Independent Charge) for Power and New and Renewable Energy

Anand Kum ar, Secreta ry, MNRE, Annual Con at Renewab ference on le Watch's “Solar Pow 10th er in India” , in New D elhi

Anand Kumar delivers the keynote address at Renewable Watch’s “Wind Power in India” conference

Raj Kumar Singh (centre) launches the Trading of Energy Saving Certificates as Gireesh B. Pradhan, Chairperson, Central Electricity Regulatory Commission (left), looks on

November 2017 ● Renewable Watch ● 137

PEOPLE

ANNIVERSARY ISSUE

Changes at the Top Key moves in the past year

he renewable energy sector has been witnessing a flurry of activity with the government’s increased focus on its development. The industry today has a large number of players, both domestic and international, along with an extensive manufacturing base and supply chain. A number of new players have entered this market, resulting in a greater demand for experienced management personnel. The industry is, therefore, witnessing a high churn while also attracting people from diverse backgrounds. The year 2017 also witnessed some key changes in top government positions, including the appointment of a new minister to steer the sector. Renewable Watch takes a look at the key movements in the renewable energy sector over the past year… Raj Kumar Singh, Minister of State (Independent Charge), Ministry of Power, and New & Renewable Energy Raj Kumar Singh assumed independent charge of the Ministry of Power (MoP), and New and Renewable Energy on September 5, 2017. He replaced Piyush Goyal, who was handling the ministries of power, coal, mines, and new and renewable energy. Goyal was elevated to cabinet rank and appointed minister of railways. He continues to be minister of coal. Singh served with the Indian Police Service for a year before joining the IAS in the Bihar cadre in 1975. He is a member of Parliament from Arrah, Bihar, as well as a member of the parliamentary standing committees on health and family welfare, personnel, pensions and public grievances, and law and justice. He has served in the government in multiple roles including secretary, Department of Defence Production from 2009 to 2011. During this tenure, production from the ordnance factories, defence shipyards and other defence manufacturing facilities reportedly touched record levels. Earlier, in Bihar, he served as principal secretary, Road Construction Department, from 2006 to 2009 and is credited with having transformed the road network to one of the best in the country. From 2000 to 2005, he was joint secretary, Ministry of Home Affairs, and is known for his contribution to schemes for police modernisation and prison modernisation, and for laying down a framework for disaster management. Singh has a bachelor’s in English from St Stephen’s

138 ● Renewable Watch ● November 2017

College, Delhi, as well as a bachelor’s in law. He later went on to study at RVB Delft University in the Netherlands. Anand Kumar, Secretary, MNRE In June 2017, following a bureaucratic reshuffle, Anand Kumar, managing director (MD), National Highways and Infrastructure Development Corporation Limited (NHIDCL), was appointed secretary, Ministry of New and Renewable Energy (MNRE). Rajeev Kapoor, former secretary, MNRE, moved to the Department of Chemicals and Petrochemicals. Kumar is a 1984 batch IAS officer from the Kerala cadre. He has an M.Phil from Delhi University and an MBA from the University of Queensland, Australia. After starting his career as assistant collector in his home cadre, he held many important positions, including special officer and additional director, tourism; secretary, finance, Government of Kerala; and under secretary, Ministry of Surface Transport, and Commerce and Industries. He also served as deputy election commissioner in the Election Commission of India and conducted the landmark Bihar Legislative Assembly elections in 2005. He was appointed chief technical adviser for the Nigerian General Elections in 2007 by the United Nations Development Programme (UNDP). He served UNDP, Nigeria, from 2006 to 2008. Prior to joining NHIDCL, of which he was the founding MD, he served as joint secretary in the Ministry of Tourism, where he is credited with several award-winning campaigns for promoting tourism. R.K. Verma, Chairperson, CEA Ravindra Kumar Verma is chairperson of the Central Electricity Authority (CEA), as well as member, grid operation and distribution, CEA. He has nearly 38 years of experience, working in different capacities in the organisation. As chairperson, CEA, he is responsible for the formulation of the national power policy and plans, integrated resource planning and optimisation of resource utilisation, policies for safe, secure and economic operation of the regional and national grids, techno-economic evaluation of power projects, renovation and modernisation schemes, investigation of accidents on electrical installations, environ-

ANNIVERSARY ISSUE

mental aspects of generation projects, monitoring of rural electrification, etc. He has been associated with various committees including those for the development of the Indian Electricity Grid Code and the Electricity Act, and the formulation of various government schemes. An electrical engineer from the Delhi College of Engineering, Verma later passed the Combined Engineering Services Examination conducted by the UPSC for the prestigious Central Power Engineering Services in 1979. He joined the CEA in 1981. J.N. Swain, Joint Secretary, MNRE, and MD, SECI In May 2017, Jatindra Nath Swain was appointed joint secretary, MNRE, for a period of five years or until further orders. He replaced Santosh D. Vaidya. Swain was also recently given interim charge as MD, Solar Energy Corporation of India (SECI). A 1988 batch IAS officer of the Tamil Nadu cadre, Swain was earlier serving as commissioner in the Survey and Settlement Department. Sunil Wadhwa, MD, GE T&D India In March this year, Sunil Wadhwa was appointed managing director of GE T&D India Limited. He was earlier MD of IL&FS Energy Development Company Limited (IEDCL). Wadhwa has over 31 years of experience in business operations, project management, finance and corporate governance. He joined the IL&FS Group in 2012 after a quarter of a century with the Tatas, where his last assignment was as MD of Tata Power Delhi Distribution Limited (TPDDL). Wadhwa’s 25-year-long innings with the Tata Group began in 1986 as chief financial officer (CFO) of Hitech Drilling Service India Limited, a joint venture of Tata Industries and Schlumberger of France, in the oil and gas drilling business. During his 10-year tenure with TPDDL, the company received several awards including for the Best Utility of Asia, the Thomas Edison Award for Use of Technology in the Power Business, and the Hall of Fame recognition for balanced scorecard implementation from Dr Robert Kaplan. The company reduced its AT&C losses from 58 per cent to around 10 per cent during his tenure. At an individual level, Wadhwa was adjudged the most inspirational chief executive officer (CEO) in the power sector across Asia by Asia Power (Singapore) for the year 2008. Sushil Bhagat, CFO, Azure Power Azure Power appointed Sushil Bhagat, former CFO of Hindustan Power Projects, as its new CFO in October 2017. A former investment banker with over 30 years of experience, Bhagat raised over $12 billion of funds and led advisory, and merger and acquisition assignments

PEOPLE

across infrastructure sectors. At Hindustan Power Projects, he supervised 1,200 MW of thermal plants and over 400 MW of solar power assets. In the past, he has served in various corporate leadership roles at Coastal Projects, Wachovia, Axis Bank and the State Bank Group. At Azure Power, Bhagat has replaced S.K. Gupta, who has been appointed executive vicepresident, operations and maintenance. Rahul Mishra, CEO, Rays Future Energy India In June 2017, Rays Power Infra appointed Rahul Mishra as CEO for its new business initiative, Rays Future Energy India, which focuses on distributed solar generation including rooftop solutions, energy storage, evehicles and associated infrastructure, and solar energy-based products. Prior to joining Rays Future Energy India, Mishra was working with Nereus Capital, a private equity fund focused on investing in the renewable energy sector. He also worked with AES India, the Power Finance Corporation and GE. At GE, Mishra was involved in setting up the operations of GE Energy Financial Services in India and Southeast Asia. Ravinder Shan, CEO, Hartek Solar The Hartek Group appointed Ravinder Shan as CEO of its solar venture, Hartek Solar, in May 2017. Shan has earlier worked with Amitasha Enterprises and Tazy. He was also the founder and CEO of Phoebus Power. Shan also serves as guest faculty at the PTU Nalanda School of TQM and Entrepreneurship, where he had developed the energy management course for B.Tech students. Gaurav Sood, CEO, Sprng Energy In March 2017, Gaurav Sood was appointed CEO, Sprng Energy, which is the energy arm of private equity fund Actis Capital. Sood was earlier MD of Solairedirect Energy India Private Limited, which is a part of the French utility ENGIE. Gajanan Nabar, CEO, CleanMax Solar CleanMax Solar appointed Gajanan Nabar as its CEO in February 2017. Prior to joining CleanMax, Nabar worked as MD and CEO of Praj Industries. He was also CEO at Praxair India for eight years. Ajai Nirula, Management Consultant and Mentor In July 2017, Ajai Nirula resigned as chief operating officer (COO) of IEDCL. Nirula, who has extensive experience in the energy sector, is now practising as an independent management consultant. He has spent the majority of career (about 24 years) at Bharat Heavy Electricals Limited. He has also served as COO, TPDDL, and worked with Chambal Fertilisers and Chemicals Limited. ■

November 2017 ● Renewable Watch ● 139

DATA AND STATISTIC S

ANNIVERSARY ISSUE

Renewable Energy Growth Progress in 2017-18, by programme/scheme Renewable energy programme/system

Target for 2017-18

Achievement during 2017-18

Cumulative achievement (as of September 30, 2017)

Grid-interactive capacity (MW) Wind

4,000.00

420.88

32,700.64

Solar (ground mounted)

9,000.00

2,348.81

13,981.64

Solar (rooftop)

1,000.00

134.22

790.22

Small hydro

200.00

9.70

4,389.55

Biopower (biomass, gasification and bagasse cogeneration)

340.00

0.00

8,181.70

Waste-to-power (urban and industrial)

10.00

0.00

114.08

14,550.00

2,913.61

60,157.83

Waste-to-energy (urban and industrial)

15.00

3.21

174.29

Biomass (non-bagasse) cogeneration

60.00

9.50

661.41

Biomass gasifiers (rural and industrial)

7.50

0.92

163.37

Aerogenerators/Hybrid systems

0.50

0.14

3.29

Solar photovoltaic systems (>1 kW)

100.00

66.23

528.77

Total

183.00

80.00

1,531.13

0.11

4.56

150/25

2,690/72

Total Off-grid/Captive power capacity (MWeq)

Other renewable energy systems Family-size biogas plants (million) Watermills/Micro hydel (no.) Source: Ministry of New and Renewable Energy

140 â&#x2014;? Renewable Watch â&#x2014;? November 2017

Special Report

OPEN-ACCESS FOR RENEWABLES India Infrastructure Research (a sister division of Renewable Watch magazine) has released a special report on “Open Access for Renewables”. Indian power sector offers renewable energy generators several options for sale of power. This permits investors with different risk-return profiles to participate in the market. One of the power sale models is open access, wherein developers can supply output to any third-party end user at mutually negotiated rates. Regulators typically levy a predefined cess on such sales to compensate the utilities for the loss of high-value customers. In some states, the cess is waived off or is kept low to permit competition. For renewable companies, these markets offer an opportunity for sale at a higher margin, and the end user gains from negotiated lower energy prices as well as claiming renewable energy certificates (RECs) wherever possible. With this backdrop, the report covers the following areas: z

Current Status of Open Access

Industry Structure and Business Models

Central Regulatory Framework on Open Access

State-wise Open Access Charges and Exemptions (for Solar and Wind Power)

REC Market Trends

Open Access-based Project Viability vis-à-vis other Power Sale Options

Arbitration Cases - Success and Failures

Key Players in the Market

Evolving Policy and Regulatory Scenario

Bottlenecks, Recommendations and Outlook

abl

now

il ava

The report is priced at Rs 50,000 (plus 18% GST) or USD 1180. The report is available in a PDF format. To order a copy, please send a cheque or draft payable to “India Infrastructure Publishing Pvt. Ltd.” and mail to:

Aayushi Lahoti Information Products India Infrastructure Publishing Pvt. Ltd., B-17, Qutab Institutional Area, New Delhi 110016, India Tel: +91-11-46038153, 41034600, 41034601; Fax: +91-11-26531196 Mobile: +91-7838751085 Email: lahoti.aayushi@indiainfrastructure.com

DATA AND STATISTIC S

ANNIVERSARY ISSUE

Renewable Energy Capacity By source and by state Installed capacity as of June 2017 (MW) State/Union territory

Small hydro

Wind

Tamil Nadu

123.05

7,870.41

Maharashtra

347.37

4,771.33

1,225.73

3,774.70

1,452.00

Karnataka Gujarat

Biomass/Cogeneration

Waste-to-energy

Solar

Total

878.00

8.05

1,697.32

10,576.83

2,065.00

12.72

452.37

7,648.79

1.00

1,180.38

7,633.81

16.60

5,434.37

65.30

–

1,262.10

6,778.37

241.98

3,721.25

378.20

58.16

2,011.10

6,410.69

23.85

4,281.72

119.30

–

1,961.22

6,386.09

Madhya Pradesh

86.16

2,497.79

93.00

3.90

857.04

3,537.89

Uttar Pradesh

25.10

–

1,933.00

5.00

359.00

2,322.10

–

100.80

158.10

–

1,609.27

1,868.17

170.90

–

179.00

9.25

809.45

1,168.60

Andhra Pradesh Rajasthan

Telangana Punjab Himachal Pradesh

835.31

–

0.73

836.04

Uttarakhand

209.32

–

73.00

–

233.49

515.81

Chhattisgarh

76.00

–

228.00

–

128.86

432.86 424.64

West Bengal

98.50

–

300.00

–

26.14

Kerala

213.02

51.50

–

74.20

338.72

Bihar

70.70

–

113.00

–

111.52

295.22

Haryana

73.50

–

96.40

–

81.40

251.30

Odisha

64.63

–

50.40

–

79.42

194.45

Jammu & Kashmir

158.03

–

1.36

159.39

Arunachal Pradesh

104.61

–

0.27

104.87

Others

–

4.30

–

58.31

62.61

Delhi

–

16.00

40.27

56.27

52.11

–

0.00

52.11

Sikkim Assam

34.11

–

11.78

45.89

Mizoram

41.47

–

0.10

41.57

Nagaland

30.67

–

0.50

31.17

Meghalaya

31.03

–

0.01

31.04

Jharkhand

4.05

–

23.27

27.32

Tripura Chandigarh Andaman & Nicobar Islands Daman & Diu Manipur Dadra & Nagar Haveli Goa Lakshadweep Pondicherry Total

16.01

–

5.09

21.10

–

17.32

5.25

–

6.56

11.81

–

10.46

5.45

–

0.03

5.48

–

2.97

0.05

–

0.71

0.76

–

0.75

–

0.08

4,384.55

32,508.17

8,181.70

114.08

13,114.85

58,303.35

Source: Ministry of New and Renewable Energy

142 ● Renewable Watch ● November 2017

DATA AND STATISTIC S

ANNIVERSARY ISSUE

Solar Manufacturing Installed and operational capacities Solar cell manufacturing capacity as of May 2017 (MW) Company

Installed capacity

Operational capacity

Company

Installed capacity

Operational capacity

Indosolar

240

Central Electronics Limited

Moser Baer Solar

250

100

Premier Solar Systems

Tata Power Solar Systems

300

270

Mundra Solar PV Limited (Adani Group)

Websol Energy System

200

Euro Multivision

1,200

Jupiter Solar

133

Dev Solar

Jupiter International

260

Bharat Electronic

–

3,164

1,667

Surana Solar

120

100

XL Energy

Renewsys India

130

IYSERT Energy Research

Udhaya Energy Photovoltaics Maharishi Solar Technology Bharat Heavy Electricals Limited

115

Kl Solar Company Total

Source: Ministry of New and Renewable Energy

Solar module manufacturing capacity as of May 2017 (MW) Company

Operational capacity

Company

Installed capacity

Operational capacity

Moser Baer Solar

230

Green Brilliance Energy

Tata Power Solar Systems

400

300

120

Websol Energy System Surana Solar Udhaya Energy Photovoltaics Maharishi Solar Technology Bharat Heavy Electricals Limited Central Electronics Limited

Installed capacity

Andromeda Energy Technologies

100

Kotak Urja

Gautam Solar

Topsun Energy

Modern Solar

226

Rajasthan Electronics & Instruments Limited

3.8

Ajit Solar

Premier Solar Systems

100

Evergreen Solar Systems

Waaree Energies

500

Enfield Solar

Vikram Solar

500

Photonix Solar

Emmvee Photovoltaics

500

PV Power Technologies

Titan Energy Systems

100

Microsol Power

Lanco Solar

175

Icon Solar-En Power Technologies

Alpex Exports

300

150

Navitas Green Solutions

Shan Solar

Rolta Power

Jain Irrigation Systems

Jakson Solar

Sova Power

200

150

Goldi Green Technologies

125

HHV Solar Technologies

100

Ritika Systems

Photon Energy Systems

Integrated Solar

Source: Ministry of New and Renewable Energy

November 2017 ● Renewable Watch ● 143

DATA AND STATISTIC S

ANNIVERSARY ISSUE

Solar module manufacturing capacity as of May 2017 (MW) Company

Installed capacity

Operational capacity

Company

Radiant Solar

Aditi Solar

Microsun Solar

Kcp Solar Industry

175

Akshaya Solar Power

Jyotitech Solar Llp

Tamilnadu Energy Solutions

Blue Bird

Omsun Power

Genus Solar

JJ PV Solar

Synergy Solar

Mainframe Energy Solutions

Solex

Sunrise Solar Solutions

Saatvik Green Energy

Arion Solar

Sunshine Power Products

XL Energy

Deity Fuel

Access Solar

Greentek

USL Photovoltaics

Andslite

0.75

Mx Power

Avi

Solarmaxx Mas Solar

Operational capacity

210

–

Plaza Power & Infrastructure

Reliance Industries – Solar

–

Krishma Solar

HBL Power

SLG Solar Systems

Nucifera Renewable Energy Systems

Kohima Solar

Prosun

Vimal Electronics

Installed capacity

–

Savitri Solar

–

JP Solar

–

Stellar Solar

–

Empire Photovoltaic

Agrawal Solar

–

Rhine Solar

Shukra Solar

–

Vinova Energy Systems

VRV Solar

–

H.R. Solar Solution

Vipul Solar

–

100

Brawn Battery

–

Junna Solar Systems

Neety Euro Asia Solar Energy

Deshmukh Solar Energy

Seemac Private Limited

Himalayan Solar

100

Sonali Energees Dev Solar

Enkay Solar

Sunbless Green Enertech

180

IYSERT Energy Research

Electromac Solar System

Sungrace Energy Solutions

Bharat Electronics Limited

Satyam Enterprises

Sunfuel

Mas Solar Systems

Novergy Energy Solutions

Powertrac Solar

Innovative Solar Solutions

Sun Solar Techno

Mundra Solar (Adani Group)

1,200

Sahaj Solar

Total

8,398

5,507

Renewsys India Raajratan Ventures Jupiter Solar

Amv Energy Systems

ITI

Source: Ministry of New and Renewable Energy

144 ● Renewable Watch ● November 2017

DATA AND STATISTIC S

ANNIVERSARY ISSUE

Power from Waste Current and upcoming MSW-based power projects Operational MSW-based power plants Company/Developer

Location

Installed capacity (MW)

Average quantity of MSW utilised/processed (tonnes per day)

Ramky Group

Narela-Bawana, New Delhi

24.0

756

Jindal Urban Infrastructure Private Limited

Okhla, New Delhi

16.0

1,818

IL&FS Environment Infrastructure and Services Limited Ghazipur, New Delhi

12.0

502

Essel Infra

Jabalpur, Madhya Pradesh

11.4

1,140

Solapur Bio-energy Systems Private Limited

Solapur, Maharashtra

Total

3.0

300

66.4

4,516

MSW: Municipal solid waste Source: Ministry of New and Renewable Energy

MSW plants under construction, supported under the Swachh Bharat Mission State

City

State

City

Andhra Pradesh

Guntur

Total capacity (MW) 15.00

Madhya Pradesh

Bhopal

Total capacity (MW)

Andhra Pradesh

Tirupati

6.00

Madhya Pradesh

Rewa

6.00

Andhra Pradesh

Vizianagaram

4.00

Madhya Pradesh

Indore

20.00

Andhra Pradesh

Tadapalligudam

5.00

Madhya Pradesh

Gwalior

10.00

Andhra Pradesh

Machilipatnam

4.00

Maharashtra

Nagpur

11.50

Andhra Pradesh

Kadapa

5.00

Manipur

Imphal

2.00

Andhra Pradesh

Anantapur

4.00

New Delhi

Kidwai Nagar, New Delhi

1.60

Andhra Pradesh

Nellore

4.00

Odisha

Bhubaneswar and Cuttack

11.50

Andhra Pradesh

Karnul

1.00

Punjab

Amritsar

11.50 15.00

20.00

Andhra Pradesh

Visakhapatnam

5.00

Rajasthan

Jaipur

Bihar

Patna

10.00

Rajasthan

Kota

7.00

Chhattisgarh

Durg-Bhilai

5.00

Rajasthan

Jodhpur

3.00

Chhattisgarh

Raipur

5.00

Tamil Nadu

Pallavapuram and Tambaram Venkatamangalam Project

4.00

Goa

Pernem

5.00

Telangana

Cluster of 18 ULBs (Shalivahana MSWM Green Energy Limited)

12.00

Gujarat

Surat

13.50

Telangana

Cluster of 16 ULBs (Hemasri Power Projects Limited)

12.60

Haryana

Karnal

3.50

Telangana

Greater Hyderabad Municipal Corporation (RDF Power Projects Limited) 11.00

Haryana

Sonepat

5.00

Telangana

Greater Hyderabad Municipal Corporation (SELCO)

6.60

Haryana

Bandhmadi

10.00

Uttar Pradesh

Kanpur

15.00

Haryana

Faridabad

10.00

Uttar Pradesh

Agra

10.00

Himachal Pradesh

Shimla

1.70

Uttar Pradesh

Rampur

8.00

Jammu & Kashmir

Srinagar

6.50

Uttar Pradesh

Meerut

10.00

Jharkhand

Ranchi

11.00

Uttarakhand

Roorkee (cluster of 18 ULBs)

11.00

Jharkhand

Dhanbad

12.00

Punjab

Amritsar cluster (including Amritsar, Jandiala, Patti, Tarn Taran, Raja

12.00

Sansi, Majitha, Rayya, Khemkaran) Karnataka

Bengaluru (7 plants)

20.00

Kerala

Kochi

10.00

Total

412.50

Source: Ministry of New and Renewable Energy

November 2017 â&#x2014;? Renewable Watch â&#x2014;? 145

DATA AND STATISTIC S

ANNIVERSARY ISSUE

REC Trading on IEX and PXIL Growth between October 2016 and October 2017 Trading summary Particulars

IEX

PXIL

October 2016

October 2017

October 2016

October 2017

Solar

Non-solar

Solar

Non-solar

Solar

Non-solar

Solar

Non-solar

Buy bids (no.)

19,932

157,273

–

342,121

15,676

98,048

–

Sell bids (no.)

2,300,940

8,269,834

–

7,611,747

1,347,938

4,743,346

–

19,932

157,273

–

342,121

15,676

98,048

–

3,500

1,500

–

1,500

3,500

1,500

–

Cleared volume (no.) Cleared price (as per REC)

Category-wise participation (no.) Participant category

IEX

PXIL

October 2016 Participants

15,358

294,600

47,705

119

18,132

52,338

54,202

29,389

13,681

–

600 60,000 400 40,000 200

20,000

0 June 2017

July 2017

August 2017 September 2017 October 2017

1,500

1,000

350,000

1,200

300,000

1,000

250,000

800

200,000

600

150,000

400

100,000 50,000

200

0 May 2017

Market clearing price (Rs per REC)

1,000

Market clearing price (Rs per REC)

80,000

0 0

0 April 2017

May 2017

June 2017

July 2017

August 2017 September 2017 October 2017

IEX market clearing price

PXIL market clearing price

IEX market clearing price

PXIL market clearing price

IEX cleared volume

PXIL cleared volume

IEX cleared volume

PXIL cleared volume

Sources: Indian Energy Exchange; Power Exchange India Limited

146 ● Renewable Watch ● November 2017

400,000

1,400

Cleared volume (no.)

800

Cleared volume (no.)

100,000

April 2017

1,600

120,000

1,000

1,500

Price and volume trends (non-solar) 140,000

Cleared volume

107,645

Price and volume trends (solar)

Participants

1,200

Cleared volume

296

Voluntary buyers

October 2017

Participants

1,500

Captive consumers

Cleared volume

1,500

Open access

October 2016

Participants

1,500

Discoms

October 2017

Cleared volume