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Volume 6

No. 1

November 2015

5TH

ANNIVERSARY ISSUE

Volume No. 6 Issue No. 1

PUBLISHING

EDITORIAL

Alok Brara

EDITOR Nandita S. Kochhar (Senior Editor, Copy)

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

EDITORIAL

With this issue we celebrate our fifth anniversary. The year was marked with several significant developments in the renewable energy sector. Enhanced competition and the entry of large international and domestic players led to a sharp dip in solar prices; the need for capacity scale-up and efficiency improvements led to consolidation in the wind power space; a greater policy push led to large investment commitments by big-ticket financiers; and the announcement of the Make in India initiative led many global manufacturers to plan to set up shop in the country.

Shreya Chakravertty (Sr. Subeditor) Nidhima Gambhir (Sr. Subeditor) Nilanjana Chakraborty (Subeditor) Sugandha Khurana (Subeditor)

RESEARCH

In light of energy security and sustainability consideration, policymakers put a lot of thought, resources and political capital into the renewable push, especially in the solar power space. The biggest push came in the form of the government’s announcement, setting a target of 175 GW of renewable energy capacity by 2022. Of this, 100 GW would be solar (grid-connected and rooftop).

Associate Director: Dolly Khattar Analysts: Meera Bhalla, Rahul Jain, Bhavya Laul, Shambhavi Sharan, Mridula Pandey Associate: Puneet Kumar Arora

BUSINESS DEVELOPMENT Raman Dev Narang (Senior Vice-President) Mohit Shrimal (Manager)

DESIGN Joybroto Dass (Art Director) Jaison Jose (Graphic Designer)

ADMINISTRATION Jose James

CIRCULATION Sumita Kanjilal

PHOTOGRAPHY Pallee

PRINTING/PROCESSING

Other major efforts came in the form of devising a stable policy and regulatory structure, ensuring a steady project pipeline and facilitating adequate financing. Realising that issues like weak discom financials, inadequate transmission infrastructure, renewable resource intermittency, growing skill shortage and insufficient project development funds could spoil the renewables party, the government was seen working towards addressing these issues throughout the year. Accordingly, funds for the Green Energy Corridors project have been arranged and the scope of the project increased; a revival package has recently been unveiled by the central government to improve the financial health of discoms; and a number of storage awareness campaigns and pilots are also being carried out. However, there are several areas that remain unaddressed. Two segments in which there has been very little progress are bioenergy and small-hydro, and the targets for both have been lowered. One strong argument for not putting much emphasis on promoting these segments is the lack of commercial advantage in making investments in these projects vis-à-vis wind and solar energy. Within the bioenergy segment though, biofuels is emerging as a key area of interest and may gain momentum going forward. Overall, it has been a good year for the sector. The initial apprehensions about the new targets have been largely allayed and the sector now seems to be headed for a strong run.

IPP Ltd

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November 2015 ● Renewable Watch ● 3

CONTENTS

ANNIVERSARY ISSUE

Big strides

Positive sentiment

New wave of optimism in renewables

Growing investor interest in solar

100

Segment review

Company highlights

Progress so far and future outlook

Key developments in the past 12 months

CONTENTS NEWS BRIEFS

TRENDS AND DEVELOPMENTS

Big strides: New wave of optimism in renewables Positive policies: States take the lead in promoting renewable energy development Bigger play: Government widens the scope of the JNNSM REC market update: Regulatory developments stir the sluggish REC market

Unused potential: State support needed to tap bioenergy resources Sluggish pace: SHP growth hindered by high costs Off-grid fillip: Segment receives strong government backing

42 46 48

24 FINANCE 26 30

Positive sentiment: Growing investor interest in solar Key financings: Major debt and equity deals

50 56

OPINION

SEGMENT REVIEW Solar success: Central and state support takes segment to new heights Primed for growth: Industry trends indicate promising future for wind segment

4 â&#x2014;? Renewable Watch â&#x2014;? November 2015

Finding favour: Tapping the rooftop solar potential

32 COMPANIES 38

Company highlights: Key developments in the past 12 months

100

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CONTENTS

ANNIVERSARY ISSUE

Upendra Tripathy, MNRE “We need to invest a lot more in grid connectivity”

Ajay Jain, Government of Andhra Pradesh “Andhra Pradesh is leading in the promotion of solar parks”

Varsha Joshi, MNRE “The government is as keen on promoting wind power development as solar”

Anirudh Tewari, Government of Punjab “Punjab has fixed a target of 4,200 MW of solar capacity by 2022”

Dr Ashvini Kumar, SECI 66 “The solar industry will move towards largercapacity projects”

Arvind Kumar, Government of Telangana “The state’s solar policy offers attractive fiscal benefits”

PERSPECTIVE

Growing optimism: Developers expect further improvements in the investment scenario In growth mode: Manufacturers ride on the Make in India initiative

76 80

Funding renewables: Taking steps to enhance financing in the segment Poised for growth: Consultants upbeat about the sector’s future outlook A challenge and an opportunity: Off-grid segment makes progress, but problems remain

86 90 94

WORLD VIEW

Global trends: Wind leads renewable capacity addition while solar comes a close second

116

PEOPLE

Changes at the top

120

PHOTOGALLERY

124

DATA AND STATISTICS

REC trading on IEX and PXIL: Growth between October 2014 and October 2015

6 ● Renewable Watch ● November 2015

126

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

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National News Regulations

he Odisha Electricity Regulatory Commission has issued the Procurement of Energy from Renewable Sources and its Compliance Regulations, 2015. The regulations will be applicable to all obligated entities, which include all distribution licensees and any person consuming electricity generated by either conventional captive generating plants with a capacity of 1 MW or above or procured through open access and third-party sale. The regulations have set year-wise renewable purchase obligation (RPO) targets for all obligated entities till 2019-20. For 2015-16, the total RPO target has been set at 3 per cent, with the solar and non-solar components constituting 0.5 per cent and 2.5 per cent respectively. For 201920, the total RPO target is 11 per cent, with both solar and nonsolar components being 5.5 per cent each. Further, the regulations exempt procurement of renewable energy from third-party sale from payment of cross-subsidy surcharge.

he Ministry of New and Renewable Energy (MNRE) has requested the Tamil Nadu Electricity Regulatory Commission (TNERC) to review the current tariff for biomass power. This comes after the Biomass Power Producers’ Association of Tamil Nadu approached the ministry claiming that the current tariff is unviable. The MNEREhas recommended that the tariff in the state should be set in accordance with the formula recommended by the Central Electricity Regulatory Commission (CERC). While TNERC has set a tariff of Rs 4.70 per kWh for all plants commissioned between September 2009 and July 2012, the tariff according to the CERC formula comes out to be Rs 7.20 per kWh.

Policies and programmes

he central government has decided to exempt the parts and components used in wind turbine generators such as towers, nacelles, rotors and blades from excise duty. The move is in line with the government’s objective of promoting large-scale renewable energy development and is expected to benefit a large number of wind turbine manufacturers in India.

he MNRE has invited the Indian Institute of Technology, the National Institute of Technology and private consultants to submit

8 ● Renewable Watch ● November 2015

ANNIVERSARY ISSUE proposals for the identification of new potential small-hydro power sites and the preparation of detailed project reports (DPRs). The ministry will provide financial support of Rs 600,000 for each project of up to 1 MW capacity and Rs 100,000 for projects with a capacity of over 1 MW and up to 25 MW.

arnataka Renewable Energy Development Limited has issued a request for proposal for developing 1,200 MW of grid-connected solar power projects in Karnataka under the state’s solar power policy. The projects will be developed across 60 districts. The minimum and maximum capacity that can be developed in each district has been fixed at 3 MW and 20 MW respectively. Power generated from the plants will be sold to the state electricity distribution companies.

he Uttarakhand Renewable Energy Development Agency has declared the results of the 170 MW solar tender floated by the agency in October 2015. The state received bids aggregating 474 MW and allotted 181.4 MW to various developers. The lowest winning bid of Rs 5.57 per kWh was quoted by Rays Power Infra, while the highest capacity was won by ACME, which secured 50 MW at tariffs ranging from Rs 5.58 per kWh to Rs 5.78 per kWh. Other developers that won significant capacity are Punj Lloyd Infrastructure Limited, which secured 30 MW of capacity at tariffs ranging from Rs 5.64 per kWh to Rs 5.99 per kWh, and Omkar PowerTech India, which secured 30 MW at Rs 5.82 per kWh to Rs 5.95 per kWh.

he Karnataka government has signed an MoU with the Netherlands government for setting up a waste-to-energy plant (WtE) in Bengaluru. As per the MoU, the Netherlands government will provide 70 per cent of the funding as a soft loan, along with the technology, and the remaining 30 per cent will be funded by the project developer selected through a tendering process. The plant will entail an investment of Rs 4.7 billion and utilise 600 metric tonnes of waste to generate 7 MW of power per day. The power generated from the plant will be purchased by the state government as per the rates fixed by the Karnataka Electricity Regulatory Commission.

he Uttar Pradesh government has made it mandatory for buildings with an area of more than 5,000 square feet to install solar power systems. Owners will be required to reserve 25 per cent of the area for this purpose. This measure has been undertaken to promote the use of solar power in the state.

he Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) and Dakshin Haryana Bijli Vitran Nigam (DHBVN) have decided to jointly float a special purpose vehicle (SPV) dedicated to supplying solar power to industrial areas in Gurgaon. HSIIDC and DHBVN will hold 51 per cent and 49 per cent stake in the company respectively. The SPV will undertake the development of 5,000 MW of solar power projects by 2022.

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Projects

he renewable energy sector has reported significant growth in new capacity addition during the first half of 2015-16. The sector added 1,629 MW of new capacity from various sources during April-September 2015 as compared to 1,094 MW during the same period in the previous year, registering a rise of about 49 per cent. Besides, 58 MW of off-grid/captive power generation capacity was added during this period. During the reporting period, the wind sector contributed about 933 MW of capacity (as compared to 865 MW in the first half of 2014-15) and the solar sector added 593 MW of capacity (as compared to 135 MW), while the rest was contributed by the small-hydro (92 MW) and WtE (12 MW) segments.

ANNIVERSARY ISSUE Bharatpur-Kota section of the Delhi-Mumbai trunk route. The project entailed an investment of Rs 1.5 billion and was developed by the Railway Energy Management Company (REMC), a joint venture (JV) of IR and RITES Limited. IR is planning to source 1,000 MW of solar power over the next five years besides establishing 132 MW of wind power projects through REMC.

uzlon has received an order from Hero Future Energies for supplying and installing 31.5 MW of wind turbine generators (WTGs) in Telangana. As per the order, Suzlon will install 15 units of its S97 WTG with a hub height of 120 metres and a rated capacity of 2.1 MW each at Zaheerabad in Medak district of Telangana. The project is expected to be commissioned by June 2016.

unEdison, Inc. has won the entire 500 MW of solar capacity offered through auction by the state-run utility NTPC in Andhra Pradesh. The US-based company offered a tariff of Rs 4.63 per unit for 10 solar power projects of 50 MW each. This is the lowest tariff for solar power and beats the previous record of Rs 5.05 quoted by SkyPower for a 150 MW project in Madhya Pradesh. NTPC’s tender received 30 bids, totalling 5,500 MW of capacity.

amesa has won an order from Bengaluru-based Atria Power for setting up a 50 MW wind power project at Kayathar in Tamil Nadu on a turnkey basis. As per the order, Gamesa will be responsible for handling the entire infrastructure required to operate the project, besides installing and commissioning 25 units of its G97 WTGs with a rated capacity of 2 MW each. The project is expected to be commissioned by March 2016.

TPC Limited has invited bids for setting up five projects with a capacity of 10 MW each under the domestic content requirement (DCR) category and 35 projects of 10 MW each under the open category in Telangana. The projects will be developed under the Jawaharlal Nehru National Solar Mission (JNNSM) Phase II Batch II Tranche I. Of the total 400 MW, the maximum capacity that will be allotted to a single developer (including parent, affiliate or group company) has been fixed at 50 MW. Bids for allotting projects under the DCR category will be opened on December 16, 2015 while projects under the open category will be allotted on December 10, 2015.

oal India Limited (CIL) is planning to invest Rs 60 billion to set up 1,000 MW of solar power generation capacity over the next five to six years. As a first step, CIL has prepared a DPR for setting up 200 MW of solar generation capacity. The company is also looking to set up floating solar panels on waterbodies that are formed when a mine is closed down.

nox Wind Limited has commissioned an 800 MW blade manufacturing facility at its integrated wind equipment manufacturing facility at Barwani in Madhya Pradesh. The unit will have an annual production capacity of 400 rotor blade sets, and eventually an annual manufacturing capacity of 400 nacelles and hubs and 300 towers. With the commissioning of this facility, Inox Wind’s production capacity has doubled to 1,600 MW.

ndian Railways (IR) has commissioned a 26 MW wind power project in Jaisalmer, Rajasthan. The plant will generate 50 MUs of electricity per year, which will be utilised to power three traction substations – Bharatpur, Hindaun and Ramganj Mandi – on the 10 ● Renewable Watch ● November 2015

ays Power Experts has won a turnkey engineering, procurement and construction (EPC) project from SJVN Limited to execute a 5 MW solar plant at the Gujarat Solar Park, Charanka. The company will be responsible for the design, engineering, procurement and supply, erection, and testing and commissioning of the Rs 280 million project along with its interconnecting transmission line of 66 kV with the state grid on a turnkey basis. Rays Power Experts will carry out the operations and maintenance (O&M) of the project for five years.

he Visakhapatnam Port Trust (VPT) is in the process of developing a 10 MW solar power project, which is likely to be commissioned by March 2016. The port issued a letter of intent to Jakson Engineers Limited and the company was entrusted the annual maintenance contract for seven years. The total cost of the project is Rs 600 million. The project is being set up across 50 acres of port land adjacent to the runway, where no construction is allowed. The site was identified by experts of the Solar Energy Corporation of India. VPT is the first among the major ports in the country to take up a solar power plant.

estas Wind Systems is planning to set up a new blade factory in India at a cost of about Euro 50 million. The plan was included in the Danish manufacturer’s third-quarter earnings report. Once completed, the factory will support Vestas’ operations in the Indian market and servicing activities in other markets.

harat Light and Power (BLP) has entered into a JV with Statkraft, a state-owned Norwegian power company, to offer solar energy solutions in India. This is the second partnership that BLP has announced in the past two months. In September 2015, Italy’s Enel

A dv e r t o r i a l

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silver usage. SmartWire Connection technology uses <2.4gr of silver per 60 cell module when combined with Heterojunction technology. While the heavy busbar 'fingers' need to be fired and soldered at high temperature, the thinner SWCT fingers adhere using lower temperature processes which also helps prevent micro-cracks. Minimal light and potential induced degradation effects Another important downstream benefit of combining HJT and SWCT technologies is the significant reduction of light induced or potential induced degradation (LID or PID) effects. LID effects can result in efficiency losses in a solar module of up to 3%. PID is induced by ions migrating from the glass to the cell surface where their electrical field interferes with the

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Heterojunction technology is ideal for thinner wafers and reaches its optimum on wafers of 80-120 Îźm thickness. With diamond wire cutting technology from Meyer Burger, high quality and ultra-thin wafers which are ideally suited for HJT cell process can be manufactured. The Swiss technology company offers solutions along the whole photovoltaic value chain from wafering to solar systems. Perfectly combined with SmartWire Connection technology The combination of Heterojunction cell technology with SmartWire Connection technology (SWCT) results in significantly increased module efficiency. In contrast to the standard busbar technology where each finger routes the electrical currents to a busbar, SWCT connects all fingers directly together on the surface of the cell. This dense contact matrix creates up to 2,600 connecting points on the solar cell compared to 165 on a standard 3busbar cell. Lower electrical resistivity and thus lower power dissipation are the result of the busbarless approach and allow an increase of module power performance of up to 7% compared to 3-busbar technology. Another important benefit of the lack of busbar fingers is the significant savings in

emitter. HJT cells have an extremely conductive ITO coating on both sides which electrically protects the cell like a Faraday cage, thus eliminating the possible efficiency loss of up to 2% which would otherwise be incurred. Robust combination The robust high efficiency modules built with HJT and SWCT technologies have passed extended acceleration stress tests according to IEC and UL standards. Damp heat testing has shown stable results over 4,000 hours of testing. Thermal cycling testing has shown only minimal power losses between 1-2% after 800 cycles. Heterojunction and SmartWire Connection technologies are appealing thanks to their high efficiency, simplified production process, stable performance and longer lifetimes. Robust, high-efficiency Heterojunction cell architecture combined with SmartWire Connection technology is the way forward to achieve maximum energy efficiency. Author: Hemal Ghelani Vice President & General Manager Meyer Burger India

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NEWS BRIEFS Green Power had acquired the majority stake in the company’s utility-scale wind and solar subsidiary BLP Energy, for about Euro 30 million. Statkraft is Europe’s largest generator of renewable energy and produces hydropower, wind power and gas-fired power. The JV, Statkraft BLP Solar Solutions Private Limited, will provide both rooftop and ground-mounted solar solutions to industrial and commercial consumers.

amesa India has entered into a twin agreement with Ostro Energy for the turnkey supply, erection and commissioning of 200 MW of wind power projects to come up in Madhya Pradesh and Andhra Pradesh. While the 100 MW project in Madhya Pradesh is planned to be commissioned by February 2017, the 100 MW project in Andhra Pradesh is likely to be rolled out by December 2016. As part of the agreement, Gamesa will provide complete turnkey solutions for the dual project, which will involve the supply and erection of 50 units each of its G97 2.0 MW turbines, which have a hub height of 104 metres.

nox Wind Limited has commissioned a 220 kV substation at Rojmal in Gujarat. The substation is part of the common infrastructure facility at the site and is capable of supporting the evacuation of up to 400 MW of power. Along with the transmission line, the company has commissioned a cumulative capacity of 116 MW for Sembcorp Green Infra, Tata Power, and Gujarat Alkalies and Chemicals Limited. The projects are expected to save approximately 0.17 million tonnes (mt) of coal and curtail about 0.2 mt of carbon dioxide emissions annually. Inox will also undertake longterm O&M of the projects. Meanwhile, the company is planning to raise Rs 1,500 million through the issuance of non-convertible debentures on a private placement basis. The bonds will be issued in one or more tranches over the next one year.

ind turbine manufacturer Gamesa has received a contract from Hero Future Energies to supply and install 100 MW of wind turbines. As per the contract, Gamesa will supply 50 units of its G972.0 MW turbines at Dhar in Madhya Pradesh. The project is expected to be commissioned by March 2016.

ANNIVERSARY ISSUE Gamesa expects to use its project management expertise in the wind power business to gain success in the solar power segment as well.

aaree Energies has commissioned a 27.5 MW solar power project for Roha Dyechem Private Limited at the Bhadla Solar Power Park in Rajasthan. The project is spread over 125 acres and utilises 305 Wp and 310 Wp polycrystalline solar panels. The project was allocated to Roha Dychem under the Rajasthan Solar Policy, 2011 (Phase I) and was commissioned in 116 days. Power generated at the plant will be supplied to Rajasthan Renewable Energy Corporation Limited under a 25-year power purchase agreement.

ays Power Experts has won an order worth Rs 3 billion from NHPC Limited for executing a 50 MW solar power project on an EPC basis at Sattur in Virudhunagar district of Tamil Nadu. The scope of the contract includes designing, engineering, civil works, installation, testing and commissioning of the project. Rays Power Experts has 402 MW of solar power projects in its portfolio – 165 MW of commissioned projects and 237 MW of projects that are currently under execution.

terling and Wilson has won an order from Singapore-based Sindicatum Renewable Energy for developing a 23 MW solar power project in Clark Freeport Zone in the Philippines. With this order, Sterling and Wilson’s order book in the Philippines has grown to 101 MW.

anco Solar Private Limited, a subsidiary of Lanco Infratech Limited, has signed an MoU with the Chhattisgarh government to set up a 100 MW solar cell manufacturing plant in the state. As per the agreement, Lanco will offer 150 acres of the 250 acre special economic zone (SEZ) located in Rajnandgaon, Chhattisgarh, to domestic and foreign players for setting up solar equipment manufacturing facilities. The SEZ has all approvals in place and a ready supply of land, water and power. Lanco is developing a 150 MW integrated solar photovoltaic (PV) manufacturing facility within the SEZ. The plant, being developed at an investment of Rs 12 billion, will include facilities for polysilicon refining and wafer and module manufacturing. It is expected to be commissioned by September 2016.

eGen Powertech has received two orders worth Rs 16 billion from Hero Future Energies and Sembcorp Green Infra. ReGen will supply and install 150 MW of wind turbines in Andhra Pradesh for Hero Future Energies and 60 MW for Sembcorp Green Infra in Madhya Pradesh. ReGen has an installed capacity of 1,800 MW across the country and is expected to commission 400 MW of wind power projects during 2015-16.

jaas Energy has won contracts worth Rs 369.8 million from the electricity department of Daman and Diu for developing 6 MW of solar power projects in the union territory. Ujaas will also be responsible for O&M of the project for a period of five years.

amesa has commissioned a 9 MW solar power project in Madurai, Tamil Nadu, which is its first in the country. This marks the re-entry of Gamesa into the solar power space after its exit in 2004. In July 2015, the developer announced that it will begin offering EPC services for megawatt-scale solar power projects as well as expand its inverter solutions business. 12 ● Renewable Watch ● November 2015

he Bengaluru-based real estate developer Embassy Group has diversified into renewable energy and is developing a 200 MW solar power project in Karnataka. The project, which entails an investment of Rs 14 billion, will be developed by the company’s newly floated subsidiary, Embassy Energy, and will be completed in two phases of 100 MW each, which is expected to be commis-

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NEWS BRIEFS sioned by 2017. The company is aiming to build a portfolio of 1,000 MW of renewable energy assets over the next five years.

he China-based Sany Group and Chint Group have decided to invest about $5 million in the Indian solar industry. While the Sany Group will invest $3 million to develop about 2,000 MW of solar power projects in India by 2022, the latter will invest $2 million in developing projects and manufacturing solar equipment.

uawei Technology has won contracts from Waaree Energies to supply 100 MW of string inverters and smart PV solutions for solar power projects being executed by the latter in India.

s part of its explorations for geothermal energy, the Centre of Excellence in Geothermal Energy (CEGE) at the Gujarat-based Pandit Deendayal Petroleum University has been successful in drilling the state’s first geothermal borewell in Ahmedabad. The hot water produced from the well would be used for power generation using the organic rankine cycle technique. With its first success, CEGE now plans to drill another well at Utthan, about 3 km from Dholera village. The other sites identified for the purpose are in Gandhar and Unai.

Financings

he Asian Development Bank (ADB) and the Government of India have signed a $200 million loan agreement to support lending by the Indian Renewable Energy Development Agency (IREDA) to eligible renewable energy subprojects in India. The loan is the first tranche of a $500 million multitranche financing facility to IREDA for the Clean Energy Finance Investment Program. The programme aims to leverage public sector resources to catalyse private sector investments in renewable energy subprojects including wind, biomass, hydropower, solar and cogeneration technologies. The programme is expected to leverage an estimated $300 million in equity and other investments from subproject sponsors, and at least $200 million of additional debt funds from unrestricted sources for a total investment of around $1 billion. This translates into approximately 990 MW of additional renewable energy capacity.

elspun Renewables has received fresh funding of $617 million from its promoters, existing and new investors through a combination of debt and equity infusion. In 2014, ADB and General Electric had made significant investments in the company’s operations. Welspun is planning to add 5 GW of renewable energy capacity by 2022, with 1 GW to be commissioned in 2015-16.

eNew Power Ventures Private Limited has raised $265 million of fresh equity funding from investors. The latest round of fundraising was led by the Abu Dhabi Investment Authority (ADIA), which has invested $200 million in the company. ReNew’s existing investors, Goldman Sachs and the Global Environment Fund 14 ● Renewable Watch ● November 2015

ANNIVERSARY ISSUE (GEF), have invested $50 million and $15 million respectively in the current round of funding. After this round of funding, the company has raised a total of $655 million of equity. Of this, the largest share of investment is from Goldman Sachs with $370 million, ADIA is the next largest investor with $200 million, ADB has invested $50 million and the GEF has invested $35 million.

ata Power has decided to hive off its renewable energy business to its subsidiary Tata Power Renewable Energy Limited (TPREL) in order to enhance its focus on renewable energy capacity addition. The former will aggregate its renewable energy assets, which include 376.5 MW of wind assets in Gujarat, Maharashtra and Tamil Nadu, 3 MW solar assets in Mulshi and 120 MW of waste heat recovery-based power plants at Haldia, West Bengal, under TPREL and its subsidiaries. TPREL’s current installed capacity is 220 MW (158 MW of wind and 54 MW of solar). It also has 250 MW of renewable energy projects under construction. Post restructuring, TPREL’s total installed capacity will reach 720 MW.

R is planning to issue green bonds in order to raise funds for its green energy and energy efficiency projects. However, the details of the issue are yet to be finalised. IR has undertaken a series of clean energy projects such as the setting up of solar and wind and WtE plants to reduce its dependence on conventional energy.

ind power developer Mytrah Energy is looking to raise Rs 10 billion-Rs 12 billion of equity and Rs 40 billion of debt to fund its solar power projects. The company, which currently has an installed wind power capacity of 580 MW, expects to achieve financial closure for 380 MW of solar power projects in the next six to eight months.

rient Green Power Limited has decided to divest 26 per cent equity stake in Sanjong Sugars and Eco Power Limited to Chandrabhan Katewa. The divestment will take place through an investment vehicle to be identified by the latter.

Miscellaneous

he Indian government has proposed to establish the International Solar Alliance (ISA), comprising solar resource-rich countries lying fully or partially between the Tropic of Cancer and the Tropic of Capricorn. The alliance will provide these countries a platform to address the issues and challenges in the segment. The ISA will work with partner countries to identify national opportunities to accelerate the development and deployment of existing clean solar energy technologies.

une-based bearing and lubrication system supplier SKF has been awarded the highest “Leadership in Energy and Environmental Design” rating by the Indian Green Building Council for its Pune office. The building has been designed with a focus on energy and water efficiency. ■

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NEWS BRIEFS

International News C

anadian Solar has signed an agreement with Mashiki Town and Kumamoto Prefecture to build a 47 MW solar photovoltaic (PV) plant in Japan. The project is scheduled for completion in early 2017, and is expected to generate 57,000 MWh per year. Further, Canadian Solar has signed a 20-year power purchase agreement (PPA) with Kyushu Electric Power Company at JPY 36 per kWh.

ustralia-based Windlab has partnered with Japan-based Eurus Energy Holdings for the development of a 1.2 GW solar and wind hybrid power plant in Queensland, Australia. The construction of the plant is expected to begin in 2016. In the first phase of the project, six wind turbines and 64,000 solar panels will be installed at a total cost of around $102 million.

ANNIVERSARY ISSUE

urkey-based Uçgen Ruzgar Enerjisi Elektrik Uretim Anonim Sirketi has awarded a contract to Nordex for the supply of seven units of N117 turbines with a capacity of 3 MW each for a project in western Turkey. Meanwhile, Turkey-based coal firm Super Enerji has awarded a contract to Nordex to supply four units of N117 turbines of 3 MW each for the Cataltepe project near Istanbul. Nordex has also won a contract from REA Elektrik to supply five units of N117 turbines for the 12 MW Zincirli project in Kayseri, central Turkey.

razil-based Votorantim Energia has awarded a contract to Gamesa for the supply, transportation, installation and commissioning of 98 units of G114 wind turbines of 2 MW each at seven wind farms in eastern Brazil. The turbines are expected to be delivered in two years, and commissioned by end-2017. The turbines will be equipped with Gamesa’s MaxPower technology, which is expected to boost the farm’s output from 196 MW to 205.8 MW.

apan-based Solar Frontier has sold the 15 MW Morelos del Sol PV project in California to Southern Power and Turner Renewable Energy. The construction at the plant commenced in July 2015 and is expected to be completed by end-November 2015. DEPCOM Power is the engineering, procurement and construction (EPC) contractor for the project and will also provide O&M services. The electricity generated from the plant as well as the associated renewable energy credits will be sold to the Pacific Gas and Electric Company under a 20-year PPA.

K-based Infinis has awarded a contract to Senvion for the supply of nine units of MM92 turbines of 2.05 MW each for the North Steads Wind Farm. The turbines will be installed at a hub height of 78.5 metres. They are scheduled to be delivered in April 2016 and the project is expected to be commissioned in September 2016. Senvion will also provide operations and maintenance (O&M) services for the project for five years, with an option to extend the same by another five years.

hina-based wind turbine manufacturer Envision Energy has acquired a controlling stake from Vive Energia in a portfolio of 600 MW wind projects in Mexico. The construction of the projects is scheduled to begin in early 2016, with operations expected to begin by end-2016. Envision Energy and Vive Energia have also announced a strategic partnership to develop 1.5 GW of wind energy capacity in the country by 2020.

cottish and Southern Energy has awarded a contract to Siemens for the supply, installation and commissioning of 54 direct drive wind turbines of 3.2 MW each for the extension of the Clyde wind farm project in South Lanarkshire. The delivery and installation of the turbines are scheduled for June 2016, and the project is expected to be completed by June 2017. The wind farm already has 152 operational Siemens turbines with an aggregate capacity of 350 MW.

elgium-based Nobelwind NV has awarded a contract to a joint venture between Mitsubishi Heavy Industries (MHI) and Vestas for the supply of 50 units of V112 turbines with a capacity of 3.3 MW each for a project located 45 km off the Belgian coast in the North Sea. The project is scheduled to be online in 2017. MHI and Vestas will also service the turbines for 15 years. Meanwhile, Jan De Nul has been awarded a contract to make the foundations and install the turbines at the project, and Bladt Industries and Semco Maritime have received a contract to supply the project’s offshore substation. 16 ● Renewable Watch ● November 2015

he Korea Electric Power Corporation has awarded a contract to Germany-based SMA for the supply of 24 Sunny Central Storage 1000 battery inverters and system technology for a 200 MW project in the country. As per the contract, SMA’s Korean partner Bosung Powertec will install the inverters, which will be used in conjunction with large lithium-ion batteries from a Korean manufacturer. Following completion, the system will be tested over a six-month period.

hile’s Ministry of Energy has released a renewable energy roadmap for the country till 2050. As per the roadmap, at least 70 per cent of the country’s total power demand will have to be met through renewable energy sources by 2050. To this end, the government has increased the target for both solar and wind energy to more than 20 GW by 2050. With this, 19 per cent of the country’s demand in 2050 would be met from solar energy, 23 per cent from wind energy and 29 per cent from small-hydro reservoirs. The roadmap has also included the need to install mechanisms for intelligent regulation of demand and storage technologies.

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hina-based Yugan GCL has awarded an EPC contract worth RMB 440 million to Power China Beijing for a 50 MW solar PV project in the country’s Jiangxi province. The project forms the first phase of a fisheries PV power station, which is scheduled to be connected to the grid in January 2016.

hina-based Trina Solar has signed strategic cooperation agreements with CITIC Financial Leasing Company Limited and CITIC Bank Corporation Limited (Changzhou Branch) for five and three years respectively. Under the terms of the agreements, Trina Solar will receive comprehensive, one-stop customised financial products and services including credit facilities of RMB 5 billion from CITIC Financial Leasing to support equipment upgrade and downstream projects. Further, CITIC Changzhou will provide an additional line of credit worth RMB 5 billion in the form of short-, medium- and long-term loans. The contracts include access to foreign currency loans to help Trina Solar expand its overseas operations.

hina-based Trina Solar has secured a five-year revolving loan worth $60 million from US-based Wells Fargo. The loan will help Trina Solar replenish its working capital and support its business operations in the US. Further, the company has secured a line of credit worth $30 million from Barclays Bank, which will be used for expanding its operations in the Asia-Pacific region.

he Mississippi Public Service Commission has granted approval to Strata Solar for developing a 50 MW solar park in the state. The project will be developed in collaboration with Mississippi Power, which will receive all the energy generated at the plant, along with the associated renewable energy credits. Construction of the project is scheduled to begin in early 2016. The power generated at the solar park is expected to meet the energy needs of 7,800 households.

hina-based Envision Energy has awarded a contract to Skanska for construction of the 23.5 MW Kafjarden wind power project in southeast Sweden. As per the contract, Skanska will be responsible for designing and laying project roads, crane bases and foundations for the turbines being installed at the site. Envision Energy will install four units of EN-120 turbines and five units of EN-115 turbines, each with a capacity of 3 MW and 2.3 MW respectively. The project is expected to be commissioned in 2016.

he China-based Hanas Group has awarded a contract to Vestas for the supply of wind turbines aggregating 200 MW for the Azuoqi 1A and Azuoqi 1B projects in Mongolia. As per the contract, Vestas will supply 75 units of V110 turbines and 25 units of V100 turbines with a capacity of 2 MW each. It will also provide maintenance services for two years. The turbines are scheduled to be delivered and commissioned in early 2016.

-Power Systems Corporation, a subsidiary of Japan-based Sumitomo Electric Industries Limited, has awarded a contract to

18 ● Renewable Watch ● November 2015

ANNIVERSARY ISSUE DeepOcean 1 UK Limited for providing all marine works for the Nemo Link Interconnector Project. The project involves the development of a 1 GW subsea power link, which will allow wind and other forms of renewable power to be exchanged between the UK and Belgium. As per the contract, DeepOcean will undertake the installation and trenching of a bundled cable system, route surveys, presweeping in sandwave areas and crossings construction. The project will be executed over a three-year period starting 2016, with the offshore works scheduled to be completed in 2018. The link is expected to be commissioned in 2019.

enmark-based DONG Energy has awarded a contract to Van Oord for the transportation and installation of wind turbine foundations at the Walney Extension offshore wind farm in the UK. The wind farm will comprise 40 units of Vestas turbines and 47 units of Siemens turbines with an aggregate capacity of 660 MW. The installation work is scheduled to begin in 2017 and the project is expected to be completed in 2018. Following completion, the wind farm is expected to supply electricity to 460,000 households.

S-based Community Energy has sold an 80 MW solar PV project in east Virginia to Dominion Energy. Construction of the project is expected to begin in late 2015. The project has already secured a long-term PPA from Amazon Web Services and interconnection agreements have been signed with Delmarva Power.

he International Renewable Energy Agency (IRENA), in collaboration with the Abu Dhabi Fund for Development (ADFD), has invited applications for the fourth round of funding to support renewable energy projects in developing countries. The funding round will finance projects worth $50 million and is part of a $350 million commitment by ADFD to provide concessional loans to projects endorsed by IRENA over seven funding cycles. In the first two cycles, the facility had allocated around $100 million to cover up to 50 per cent of the project costs for 11 renewable energy projects. The results of the third funding cycle will be announced in January 2016. Meanwhile, applications for the fourth round can be submitted till February 15, 2016.

ecurrent Energy, a wholly owned subsidiary of Canadian Solar, has secured a $115 million syndicated loan from Rabobank, Santander Bank, NordLB, Key Bank, and CIT Bank, as well as a tax equity investment commitment from the US Bancorp Community Development Corporation. The proceeds from these will be used for financing Recurrent Energy’s 60 MW Barren Ridge solar power project. The construction of the project has already started with Swinerton Renewable Energy serving as the EPC contractor. The solar project is expected to meet the power requirements of 17,000 homes. The electricity and the associated renewable energy certificates generated by the facility will be sold under a long-term PPA to the Los Angeles Department of Water and Power. ■

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TRENDS & DEVELOPMENTS

Big Strides New wave of optimism in renewables

ANNIVERSARY ISSUE

he renewable energy sector’s total installed capacity has been increasing at a brisk pace. With 38 GW at the end of October 2015, it contributed almost 15 per cent to India’s total installed power capacity. These achievements sound impressive till they are compared to the humongous renewable energy contribution target India has committed towards the Paris climate change agreement: 40 per cent of the country’s installed capacity by 2030. This implies that 300,000-350,000 MW of renewable energy will have to be set up. To put this in perspective, India is aiming to add 175,000 MW from clean energy sources by 2022: 60 per cent from solar energy, 30 per cent from wind, and the balance from biomass and small-hydro.

Success factors Among different fuel sources, renewables have had the steepest rise, with the sector registering a compound annual growth rate (CAGR) of over 15 per cent in the past five years, compared to a 10 per cent CAGR in the rest of the power sector. Overall, India added a total renewable energy capacity of 2,311 MW during April-September 2015, with wind remaining the leading technology and adding 1,234 MW. Much of this success has been possible because of a strong and sustained policy push, coupled with a consistent and stable regulatory environment. The government has taken several policy measures over the past year in support of the sector. The Electricity Act amendment proposes to increase the renewable purchase obligation (RPO) target to 10.5 per cent, while the amendment to the National Tariff Policy is expected to make it easier for states to reflect RPO costs in consumer tariffs. In addition, interstate transmission charges are being waived, states have been advised to lower their intra-state open access charges, the renewable energy certificate pricing regime has been reworked into a more realistic form, the National Offshore Wind Mission and 20 ● Renewable Watch ● November 2015

TRENDS & DEVELOPMENTS

ANNIVERSARY ISSUE Solar Park Policy are in place (a similar solar zone policy is in the works), most states have announced net metering policies, and the rooftop solar subsidy is expected to be reinstated. Central- and state-led project allocations have also picked up pace. According to estimates, the tenders for project development and engineering, procurement and construction issued by the Solar Energy Corporation of India and NTPC add up to 3.9 GW, and several new tenders are expected as well. The underdevelopment projects, recently concluded allocations, and ongoing state-level allocations add up to over 7 GW. Of this, the new allocations are spread across Punjab (500 MW), Haryana (150 MW), Bihar (150 MW), Tamil Nadu (1,240 MW), Telangana (2,000 MW), Madhya Pradesh (300 MW), Andhra Pradesh (500 MW) and Jharkhand (2,000 MW). Another major step in the solar segment was taken in September 2015, with the Adani Group and Jindal Steel and Power Limited (JSPL) sending proposals to the Jharkhand Renewable Energy Development Agency for setting up a combined solar capacity of 2 GW. This is JSPL’s first major entry into the Indian solar segment, and for Adani, it represents the latest of seven major solar initiatives announced in 2015 that have a total new capex of $16 billion. If these proposals progress, they will represent a manifold expansion of solar compared to Jharkhand’s currently installed capacity of only 16 MW. India is also receiving a growing demand from internationally funded entities in the renewable energy landscape. These include US-based companies like SunEdison and First Solar and French firms Fonroche, Solairedirect and EDF EN (through subsidiary ACME Solar). During the year, Japan-based SoftBank and Taiwan’s Foxconn pledged $20 billion in solar investments in India.

ment for augmenting green energy corridor investments, which will directly connect load centres with solar energy generation centres like solar parks and other distributed generation systems. Meanwhile, solar tariffs have been declining rapidly over the years and have almost reached grid parity, as is evident from the results of NTPC’s latest reverse e-auction for 500 MW in Andhra Pradesh under the national solar mission. In this, leading developers were competing at solar tariffs of under Rs 5 per unit before the hammer went down at an all-time low of Rs 4.63 per unit. The list of recent winners in the highly competitive central- and state- level auctions included several developers with sound track records and enough domestic and international experience to understand the viability of bid figures.

Segment

Installed capacity

Wind

24,376.26

Solar

4,344.91

Small-hydro

4,146.90

Biopower

4,550.55

Waste-to-energy

127.08

Total

37,413.70

These prices compare fairly with the price discovery in some thermal power bids over the past couple of years. In the recent coal-based bids for the purchase of thermal power by Andhra Pradesh, the tariffs were in the range of Rs 4.27-Rs 4.98 per unit, providing a reassurance that in the long run, solar power need not lead to any burden on the financial health of dis-

State-wise renewable power target to be achieved by 2022 (MW) State

Solar

Wind

SHP

Andhra Pradesh

9,834

8,100

–

543

Bihar

2,493

–

244

Chhattisgarh

1,783

–

Delhi

2,762

–

Gujarat

8,020

8,800

288

Haryana

4,142

–

209

Biomass

Himachal Pradesh

776

–

1,500

–

Jammu & Kashmir

1,155

–

150

–

Jharkhand

1,995

–

Karnataka

5,697

6,200

1,500

1,420

Kerala

1,870

–

100

–

Madhya Pradesh

5,675

6,200

118 2,469

Maharashtra

11,926

7,600

Odisha

2,377

–

Punjab

4,772

–

244

Rajasthan

5,762

8,600

–

Sikkim Tamil Nadu Telangana Uttar Pradesh

–

8,884

11,900

649

–

2,000

–

10,697

–

3,499

900

–

700

197

West Bengal

5,336

–

North Eastern region

1,205

–

615

–

Others

1,436

600

–

120

99,533

60,000

5,000

10,000

Uttrakhand

All India

Multilateral development agencies are also working in tandem with the govern-

Grid-connected renewable energy capacity as of September 2015 (MW)

Source: MNRE

November 2015 ● Renewable Watch ● 21

TRENDS & DEVELOPMENTS

ANNIVERSARY ISSUE

coms. Distributed generation channels like solar irrigation pumps will also contribute to lowering the burden on discom finances by reducing the grid power demand from agriculture.

Andhra Pradesh are working towards it.

The road ahead

Wind looks up In India, most of the attention is currently on solar power. However, the country is already operating the fourth-largest global wind farm fleet of 25 GW, behind only China, the US and Germany. The government has stated its target to increase this to 60 GW by 2021-22, and after developments like the equity recapitalisation of ailing Suzlon Energy in May 2015 and the re-entry of Spanish player Vestas into the market, the wind segment is again looking energised. In September 2015, Hong Kong’s China Light and Power Group, operating as CLP India, announced a new green bond issue of Rs 6 billion at 9.15 per cent per annum with a tenor of three to five years. This will assist in financing 1,000 MW of its committed new wind projects across six states. CLP India already has the largest wind fleet in the country, with a commissioned wind energy capacity of 724 MW. In order to overcome site availability constraints, the government is also looking to promote the repowering of existing wind farms and replacing older 0.2-0.3 MW turbines with modern turbines of 2-3 MW capacity each, giving a tenfold increase to the existing output. In September 2015, a new policy was adopted for India’s offshore wind industry. The Ministry of New and Renewable Energy is now authorised to start allocating offshore blocks for wind development, representing another step forward in India’s renewable energy pursuit of 175 GW by 2022. However, the industry expects offshore wind to make a material contribution only over the next decade. Upbeat about the improved regulatory and financial environment, both independent power producers (IPPs) and industri22 ● Renewable Watch ● November 2015

al power consumers are driving wind capacity growth. While the IPPs march ahead with the help of generation-based incentives, tax-driven investments from small and medium-scale enterprises and captive users are also up for resurgence with the accelerated depreciation benefit. According to industry estimates, about 3.5 GW of projects are likely to be added in the current financial year, while the total installed wind power capacity is set to cross 28 GW by March 2016. However, several barriers remain. These relate to the lack of basic infrastructure to transport heavy equipment like towers and blades to wind farms; inadequate transmission lines; unreliable power offtake; difficulty in land acquisition; and tariff revision delays. Wind power itself has limitations: it peaks during the monsoon and at night, when demand is low. As the installed capacity scales up, issues related to the infirm nature of this energy will only increase. Policymakers as well as industry players are making efforts to resolve the aforementioned issues. The solutions include the Green Energy Corridors project, which will help meet transmission needs, and the norms related to forecasting and scheduling, which will help resolve the issue of invariability. In addition, the government is taking steps to ensure the enforcement of RPOs. Many states are working towards a multiyear tariff (MYT) policy that will keep tariffs within a specific range. Gujarat and Madhya Pradesh already have an MYT policy, while Rajasthan, Maharashtra and

As the renewable energy sector rapidly moves towards grid parity, it will play an important role in ensuring energy security in India, especially in light of the issues being faced by conventional sources of power. However, there are many factors that will define the success of renewable energy targets in the years to come, prime among them being the overall treatment of power sector issues. While there have been some success stories in India’s power sector over the past four to five years, the road ahead is dotted with innumerable challenges. Multiple gaps exist between the planned achievements and what has actually been delivered. As has been the case in recent times, the challenge is the deteriorating coal supply at one end of the value chain, and on the other, the poor financial outlook of discoms, whose losses have been reaching levels that are far higher than those in previous years. This is a matter of great concern as merchandise buyers have to be solvent and efficient, failing which the fiscal health of all associates in the value chain gets affected. This will lead to a vicious cycle of uncertainty and unviability. In addition, power distribution remains a segment that needs significant reform intervention. Going forward, there is a need for a combination of increased power tariffs, distribution reforms, open access, and the enforcement of the “obligation to service”.

Summing up Supported by a range of policy commitments, the power sector is continuing to gain momentum towards a greener portfolio. To achieve its goals, India needs to find a way to source the significant capital needs of $200 billion over the duration of the target period, and unearth solutions for infrastructure-related bottlenecks and the financial troubles of discoms. Above all, there must be a mechanism to bring all states onto the same page regarding the interstate transmission of power. ■

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ANNIVERSARY ISSUE

Positive Policies States take the lead in promoting renewable energy development By Rahul Jain

ver the past few years, there have been a series of policy and regulatory developments in the Indian renewable energy sector. The emphasis of successive governments on promoting renewable energy and increasing its share in the total energy mix has led to several positive policy initiatives. The current government has given renewables a further push to tap its huge potential and provide affordable power to the people while reducing carbon emissions. The government has set an ambitious target to increase the installed renewable energy capacity to 175 GW by 2022, of which solar will contribute 100 GW, wind 60 GW, biomass 10 GW and small-hydro power (SHP) 5 GW. To this end, it has announced some significant initiatives in the past year. Among these, the most important are the draft Renewable Energy Act, 2015; the Electricity Amendment Bill, 2014; the solar park guidelines; the development of 50 solar cities; and the grant of priority

24 â&#x2014;? Renewable Watch â&#x2014;? November 2015

sector lending status to renewable energy. While these announcements have driven industry interest, especially in the solar segment, the creation of a strong policy and regulatory framework is still in progress. The sector continues to face several shortcomings, such as the poor enforceability of renewable purchase obligation (RPO) norms, the weak financial health of state discoms, the limited availability of low-cost funds and non-uniform regulations and tariffs across states. Interest in the bioenergy and SHP segments, meanwhile, continues to be low, with solar and wind power finding greater favour. A look at the key policy and regulatory developments in the renewable energy sector in the past yearâ&#x20AC;Ś

States take charge in solar While the central government had been running the show till 2012, state governments have now taken the lead in driving

solar growth. In the past year, several states, including Andhra Pradesh, Telangana, Punjab and Madhya Pradesh, awarded a total of about 3.5 GW of utilityscale solar projects. This aggression was supported by a strong regulatory push. Andhra Pradesh, Telangana and Gujarat have released solar policies, while Maharashtra has issued a renewable energy policy to drive solar capacity addition, with the support of incentives. One of the biggest drivers of this capacity addition is expected to be solar parks, which have assumed considerable importance in all state policies. They have been gaining modest traction and attracting more investor interest. The Ministry of New and Renewable Energy (MNRE) has issued guidelines for solar park development, following the finalisation of the solar park development scheme with a targeted capacity of 20 GW. States like Gujarat, Madhya Pradesh, Punjab, Rajasthan, Telangana, Andhra Pradesh, Karnataka and

TRENDS & DEVELOPMENTS

ANNIVERSARY ISSUE Tamil Nadu have shown keen interest in developing solar parks with a capacity of 500 MW or more.

by private and government organisations like the Central Warehousing Corporation and the Food Corporation of India.

Rooftop systems have also been identified as crucial for achieving the 100 GW solar goal. Over the past year, states like Rajasthan, Maharashtra and Punjab issued solar rooftop photovoltaic (PV) system regulations and net metering guidelines. This augurs well for commercial and industrial establishments that have been looking for clarity as they plan a shift to solar rooftop solutions due to rising conventional power tariffs. The central government has also been pushing for the higher adoption of rooftop PV systems, but some industry experts feel that the decision to limit the subsidy for these systems to 15 per cent could act as a deterrent in the short term. In fact, commercial and industrial consumers have been totally excluded from any kind of rooftop PV subsidy. However, with the continuous fall in the cost of solar PV systems, solar power from non-subsidised systems is expected to become more commercially viable vis-à-vis conventional power in the long term. Meanwhile, Haryana has made it mandatory for the owners of all buildings with an area greater than or equal to 500 square yards to install solar rooftop PV systems under a 30 per cent subsidy scheme on a first come, first served basis by September 2015. Though the current status of rooftop installations is unknown, even the modest enforcement of this policy will result in significant adoption, especially in places like Gurgaon and Faridabad.

Tariff boost for wind segment

Meanwhile, the MNRE is making a concerted effort to involve governmentowned entities and other ministries in setting up solar power systems. For instance, it has launched a scheme for defence establishments to set up gridconnected and off-grid solar projects aggregating 300 MW for captive consumption. Similarly, the Solar Energy Corporation of India has invited interest in the development of grid-connected solar rooftop PV projects at warehouses owned

Despite the government’s strong push for solar energy, the wind segment continues to surpass it in terms of capacity addition as it is more mature and involves fewer risks. The reinstatement of accelerated depreciation and generation-based incentives in mid-2014 also gave a boost to investor confidence in the Indian wind industry. The situation improved further following the upward revision of feed-in tariffs for wind energy projects by many states, including Rajasthan, Punjab, Karnataka, Andhra Pradesh and Kerala, even though the increase was marginal in a few cases. A major positive development took place in Tamil Nadu, when the Tamil Nadu Electricity Regulatory Commission ordered state utilities to observe the must-run status accorded to wind projects and stated that these should be the last power sources to be backed down after nuclear projects. This is expected to provide significant encouragement to developers who are not being able to operate their wind projects as well as to prospective developers, considering the state’s high wind energy potential. Meanwhile, the cabinet approved the National Offshore Wind Energy Policy, thereby allowing the MNRE and the National Institute of Wind Energy to conduct a preliminary assessment and allocation of offshore wind en-ergy sites for development. Given the relatively large size of projects, the offshore segment will enable the government to achieve the 60 GW target if the success of onshore wind projects is replicated.

and the National Clean Energy Fund. As per the draft, refinancing will be provided for up to 30 per cent of outstanding loans at an interest rate of 2 per cent per annum, with an upper limit of Rs 150 million per project and a maximum repayment period of 10 years, though no moratorium will be granted. The government also issued a draft national mission for the revival of the SHP segment, under which state governments will be encouraged to renovate old SHP projects and improve their efficiency. New potential sites will also be identified and special emphasis laid on the development of micro-hydro and watermills in hilly regions.

Resolution of sector shortcomings Considering that the Indian renewable energy sector is still at a nascent stage, it continues to be plagued with several challenges. The government’s efforts to address them include the recent approval of a revival plan for financially beleaguered state discoms under the Ujwal Discom Assurance Yojana, which is expected to result in savings of $30 billion by 2018-19. As per the plan, state discoms will convert their debt to state bonds, among other things.

Other segments

Meanwhile, the Supreme Court’s May 2015 order on the non-compliance of RPO regulations will also provide relief to investors and developers who have already set up projects or are planning to set them up under the renewable energy certificate (REC) category. The Supreme Court has favoured the imposition of RPO mandates on captive and open access consumers, which would supersede the orders of different high courts that have put a stay on such matters. This is expected to ensure stronger enforcement of RPO norms and higher REC uptake.

In the past year, not much policy and regulatory growth was seen in renewable energy segments other than solar and wind. Nevertheless, the government has been taking steps to revive bioenergy and SHP. The MNRE has issued draft guidelines for the refinancing scheme of the Indian Renewable Energy Development Authority

To sum up, while the government has been making the right moves to drive renewable energy adoption, issues like grid infrastructure constraints, non-uniform policies, and funding challenges must be addressed to attract more investments in the sector. ■ November 2015 ● Renewable Watch ● 25

TRENDS & DEVELOPMENTS

ANNIVERSARY ISSUE

Bigger Play Government widens the scope of the JNNSM By Meera Bhalla

n June 2015, the union cabinet approved the scaling up of the Jawaharlal Nehru National Solar Mission’s (JNNSM) total capacity addition target from 22 GW to 100 GW by 2022. The new target aims to set up 60 GW of grid-connected projects and 40 GW of rooftop solar. With an eye on the target, the government is focusing on well-tested mechanisms like viability gap funding (VGF) and capacity bundling through various schemes. Bundling solar power with relatively inexpensive thermal power from the government’s unallocated quota made solar projects more viable and helped attract investments in Phase I of JNNSM. The potential of the VGF scheme has also been tested during Batch I Phase II, where it was observed to not only help reduce solar generation prices but also increase the participation of independent power producers (IPPs). As pure-play solar IPPs cannot avail of tax

incentives through accelerated depreciation (AD), separating such tariffs provided them a level playing field, resulting in greater participation. In the past year, the government announced schemes for Batch II, Batch III and Batch V of JNNSM Phase II, which has a cumulative capacity addition target of 18,000 MW. Bids have already been invited for 3,940 MW, and a scheme has been announced for setting up 300 MW of solar projects on defence land under the VGF scheme. Also, 650 MW solar projects of the total allocated capacity of 750 MW under Batch I Phase II were commissioned. The Ministry of New and Renewable Energy (MNRE) is also shifting its focus to solar parks. In 2015, a scheme was approved for developing 25 solar power parks and ultra mega power projects with a cumulative capacity of 20 GW over five

JNNSM Phase I

Batch I

Target: 1,000 MW Scheme: Bundled Nodal agency: NVVN Bids: – Batch I; Rs 10.95-12.76 per kWh; – Batch II; Rs 7.49-Rs 9.39 per kWh Achievement: 821.3 MW (340 MW Batch I, 340 MW Batch II, 90.8 RPSSGP and 50.5 migration) Status: Completed

Target: 750 MW Scheme: VGF Nodal agency: SECI Fixed tariff: Rs 5.45 per kWh without AD VGF: Rs 2.04-3.99 per kWh without AD Average tariff: Rs 8.77 per kWh Achievement: 650 MW (325 under DCR and 325 under open category)

Batch II

Batch III

Target: 15,000 MW Scheme: Bundled (3,000 MW), with capital subsidy (5,000 MW) and without any government support (7,000) Nodal agency: NVVN Status: Bids invited for 2,750 MW

Target: 2,000 MW Scheme: State-specific VGF Nodal agency: SECI Tariff: Rs 5.43-Rs 6.43 per kWh Status: Bids invited in Maharashtra (500 MW), Gujarat (250 MW) and Uttar Pradesh (440 MW)

Source: Renewable Watch

26 ● Renewable Watch ● November 2015

Phase II

300 MW on defence land under Batches II and III, Tariff: Rs 5.50 pe kWh with VGF scheme without AD

Batch V Target: 1,000 MW Status: Scheme announced Scheme: VGF Nodal agency: SECI VGF: Rs 10 million per MW (DCR) and Rs 5 million per MW (open)

years, from 2014-15 to 2018-19. An amount of Rs 40.5 billion has been set aside for this, which will be made available to solar park implementation agencies as central financial assistance (CFA). The ministry has received consent for 26 solar parks of a cumulative capacity of more than 17.4 GW from 20 states. As of October 2015, land had been identified for 23 parks of a total capacity of over 16.3 GW. Land for the majority of this capacity had been identified in Andhra Pradesh (3.5 GW), Rajasthan (3.2 GW), Madhya Pradesh (2.8 GW), Karnataka (2 GW) and Telangana (1 GW). Initiatives are also being planned for promoting rooftop solar projects. Capacity addition Since the scheme’s announcement in 2010, close to 1,500 MW of grid-connected solar capacity has been added under JNNSM; about 821.3 MW under Phase I and around 650 MW under Phase II Batch I. The rising competition, declining cost of solar projects, and growing investor confidence are the key outcomes of the largescale adoption of solar projects under JNNSM. The mission’s success stories have also encouraged state-level initiatives and increased the country’s total installed solar capacity to more than 4,861 MW as of October 2015. The government has taken several proactive steps, like bundling solar power with unallocated coal-based power through NTPC Vidyut Vyapar Nigam Limited (NVVN); implementing renewable purchase obligations for solar power; instituting a payment security scheme; and undertaking measures for promoting local manufacturing. During Phase II, the VGF scheme was adopted as well. The key highlight of the bidding results of Phase II Batch I was the low VGF sought by developers, making the government payouts for allotted solar projects lower than the initial estimates. Rather than the Rs 18.75 billion reserved for these projects, it will have to pay only Rs 12 billion, thereby leaving a fund surplus of 36 per cent.

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Bids invited by NTPC under the 3,000 MW State Specific Bundling Scheme of JNNSM Phase II Batch II Tranche I Project location

Capacity (MW)

Type

Category

Telangana

5x10

Non-solar park

DCR

December 14, 2015

Due date

Telangana

35x10

Non-solar park

Open

December 8, 2015

Pavagada Solar Park in Tumkur, Karnataka

2x50

Solar park

DCR

November 2, 2015

Pavagada Solar Park in Tumkur, Karnataka

10x50

Solar park

Open

November 6, 2015

Uttar Pradesh

10x10

Non-solar park

Open

October 12, 2015

Rajasthan

10x10

DCR

September 4, 2015

Rajasthan

13x10

Open

September 7, 2015

Bhadla Solar Park Phase II in Jodhpur, Rajasthan

6x70

Solar park

Open

July 27, 2015

Gani Sakunala Solar Park in Kurnool, Andhra Pradesh

1x350

Solar park

DCR

July 31, 2015

Gani Sakunala Solar Park in Kurnool, Andhra Pradesh

3x50

Solar park

Open

July 31, 2015

Ghani Solar Park in Andhra Pradesh

10x50

Solar park

June 30, 2015

NA: Not applicable Source: MNRE

So far, JNNSM has faltered mainly on two counts: the failure of concentrating solar projects to stick to deadlines; and the lax development of the off-grid segment. Upcoming capacity under Phase II Among the most significant schemes announced by the MNRE under JNNSM Phase II is the implementation of 15,000 MW of grid-connected solar photovoltaic (PV) projects through NVVN in three tranches, which makes up Batch II of Phase II. For the first tranche, 3,000 MW will be allocated through a state-specific bundling scheme under which NTPC has invited bids for 2,750 MW of projects in Telangana, Karnataka, Uttar Pradesh, Rajasthan and Andhra Pradesh under the domestic content requirement (DCR) and open categories. Of this, 2,020 MW will be in existing or new solar parks. The second tranche includes the addition of 5,000 MW under the capital subsidy scheme. Under the third tranche, the ministry will set up 7,000 MW without any government support. Of this, the Solar Energy Corporation of India (SECI) has already received approval for 2,000 MW and is likely to announce its tender by end-2015. Since the solar industry is highly dependent on government subsidy, setting up 7,000 MW without any support could prove to be quite a difficult task. 28 ● Renewable Watch ● November 2015

In August 2015, the MNRE announced a scheme to implement 2,000 MW of gridconnected solar projects using the VGF mechanism. This forms Batch III of Phase II, under which only 250 MW has been announced for the DCR category, while the remaining is under the open category. The funds for VGF support have been estimated as Rs 21 billion (Rs 10 million per MW under the open category and Rs 13.1 million per MW under the DCR category), which will be disbursed through the National Clean Energy Fund. Solar projects of 2,000 MW under the state-specific VGF scheme will be set up in various states. These can be set up in various solar parks to be developed by central and state agencies. The levellised tariff has been set at Rs 5.43 per kWh for the initial year, with an escalation rate of Re 0.05 per kWh for the next 20 years, resulting in a maximum allowable tariff of Rs 6.43 per kWh at the end of the 21st year. Bidders will be free to avail fiscal incentives like AD, concessional customs and excise duties, and tax holidays. Under this, SECI has invited bids for the construction of 500 MW of projects in Maharashtra, 250 MW in Gujarat, and 440 MW in Uttar Pradesh in August and September 2015. In December 2014, the union cabinet gave its approval for setting up over 300 MW of grid-connected and off-grid solar PV pro-

jects by defence organisations under the Ministry of Defence and Para Military Force VGF Scheme of JNNSM Batch II and III. They will be implemented during the fiveyear period from 2014 to 2019. In January 2015, the MNRE announced Batch V of JNNSM Phase II, under which 1,000 MW of grid-connected solar projects are to be set up by central PSUs and government organisations over a span of three years from 2014-15 and 2016-17 with an estimated CFA of Rs 10 billion. NTPC, Coal India Limited, NHPC, the Indian Renewable Energy Development Agency, Indian Railways, etc. will participate in this scheme and sign power purchase agreements with state discoms or utilities with the mandate of procuring cells and modules from domestic manufacturers. It will be handled by SECI. Conclusion The aforementioned developments have definitely improved the investor sentiment. The industry, which was sceptical about the JNNSM’s 22 GW capacity addition target, is now enthusiastically working towards 100 GW by 2022. However, to make this endeavour a success, it is crucial to expand the transmission network, improve the financial health of discoms and the availability of low-cost financing, and create a stable policy framework. ■

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ANNIVERSARY ISSUE

REC Market Update Regulatory developments stir the sluggish REC market By Mridula Pandey

he renewable energy certificate (REC) mechanism, which was launched with the aim of facilitating renewable energy procurement by obligated entities in resource-deficit regions, has failed to impress investors. Although much effort has been put in to encourage REC sellers to participate in the market, demand for these certificates continues to be subdued. The market has been witnessing trading at floor prices and there is a huge pile-up of unsold inventories. The situation, however, improved slightly owing to a number of policy and regulatory developments over the past one year.

Market trends The volume of RECs available for sale on the exchanges has been increasing constantly even as the demand for these certificates has been fairly low. While the total number of solar buy bids on the Indian Energy Exchange (IEX) was 271,401 between November 2014 and October 2015, the total solar sell bids during the same period stood at 15.1 million. For non-solar, the total buy and sell bids over the same period were 2 million and 80 million respectively. A similar scenario was witnessed in the trading of RECs on Power Exchange India Limited (PXIL). The total solar buy bids placed on the exchange were 76,908 as against 7 million solar sell bids between November 2014 and October 2015. Similarly, non-solar buy bids and sell bids stood at 1.5 million and 59.8 million respectively during the same period. As far as the sell bids are concerned, these have been consistently exceeding buy bids across the two segments as well as the two exchanges. The demand-supply gap has resulted in a huge pile-up of unsold inventories of over 30 â&#x2014;? Renewable Watch â&#x2014;? November 2015

16.8 million RECs as of October 2015. This scenario has made the mechanism unattractive for new investors. The total number of projects registered under the REC mechanism has declined significantly, from 226 during the period November 2013 to October 2014 to 104 between November 2014 and October 2015. While the overall condition of the market is dismal, the month-wise breakdown of data indicates some positive results. In December 2014, the Central Electricity Regulatory Commission issued amendments to the existing REC framework. The amendments made the discoms an eligible entity for REC issuance and dealing if the renewable energy bought by the discom in the previous year is in excess of the renewable purchase obligation (RPO) target. Further, the validity of the certificates expiring in 2014-15 has been increased by another 365 days, taking the total validity period to 1,095 days from the date of issuance. Apart from these, the commission revised the floor and forbearance prices of solar projects to Rs 3,500 and Rs 5,800 per REC respectively. Besides, vintage-based multipliers for solar power projects were also introduced. The amendments resulted in a sudden jump in the number of buy bids being

placed on the two exchanges. While the number of solar buy bids placed on the IEX increased from 366 in December 2014 to 39,385 in March 2015, the number of non-solar buy bids increased from 177,960 to 279,205 during the same period. PXIL witnessed a similar scenario, with the number of solar buy bids increasing from 1,693 in December 2014 to 29,597 in March 2015 and non-solar buys bids increasing from 157,763 to 375,780 during the same period. The increase can be partly attributed to the fact that many state electricity regulatory commissions direct the state discoms to meet their RPO targets by the end of the financial year. However, the impact of the amendments was clear as the increase in the buy bids was much more pronounced as compared to that in the previous year. While the number of solar buy bids on the IEX had increased from 6,893 in December 2013 to 7,211 in March 2014, the number of nonsolar buy bids had risen from 250,722 to 361,842 during the same period.

Regulatory update The momentum led by these amendments was sustained by subsequent regulatory developments. In May 2015, the union cabinet approved the proposed amendments to the Electricity Act, 2003. The amendments included certain provi-

TRENDS & DEVELOPMENTS

ANNIVERSARY ISSUE

9,300 9,300

10,000

9,300 9,300

Market clearing volume and price of solar RECs at IEX and PXIL 80,000 70,000

7,000 60,000 6,000 50,000 3,500 3,500

3,500 3,500

40,000 30,000

3,000 20,000

2,000

10,000

1,000

0 January 2015

Sources: IEX; PXIL

February 2015

March 2015

April 2015

IEX market clearing price

May 2015

June 2015

July 2015

PXIL market clearing price

August 2015

September 2015

Cleared volume at IEX

October 2015 Cleared volume at PXIL

1,500 1,500

1,600

1,500 1,500

Market clearing volume and price of non-solar RECs at IEX and PXIL 400,000

1,400

350,000

1,200

Clearing price (Rs)

450,000

300,000 1,000 250,000 800 200,000 600 150,000 400

Cleared volume (no.)

In another development, the Appellate Tribunal for Electricity stated that SERCs should allow the carry-forward of RPOs only when there is a non-availability of RECs in the market or under exceptional circumstances. Both the orders are expected to have far-reaching impacts and enable stronger RPO enforcement in the near future.

3,500 3,500

4,000

3,500 3,500

5,000 3,500 3,500

Clearing price (Rs)

8,000

November December 2014 2014

In May 2015, the Supreme Court pronounced a landmark judgment in a case between Hindustan Zinc and the Rajasthan Electricity Regulatory Commission. Hindustan Zinc had argued that the RPO is applicable only to discoms and not to captive power consumers as they are delicensed as per the Electricity Act, 2003. The Supreme Court, however, rejected the appeal and held that RPO applicability on captive and open access consumers is well within the ambit of the act and hence, captive consumers are obliged to comply with the RPO regulations of the state. This judgment has removed all ambiguity regarding the status of captive consumers among various state electricity regulatory commissions (SERCs) and other stakeholders. As a result of this order, there has been an increase in the number of captive consumers in the REC buyer mix. The number of non-solar RECs bought by the captive consumers of renewable power on the IEX shot up from 46,168 in March 2015 to 180,546 in May 2015. Similarly, in the solar REC segment, the number increased from 14,695 to 78,385 during the same period.

90,000

9,000

Cleared volume (no.)

sions for the strengthening of the renewable energy sector, such as the removal of the cross-subsidy surcharge for open access consumers of renewable energy and the introduction of a renewable generation obligation, which will make it necessary for coal-based generators to produce at least 10 per cent of their total thermal generation capacity from renewable energy sources and pass this on to the discom as bundled power. Once finalised, these amendments are likely to spur renewable energy capacity addition as well as the REC market.

100,000

200

50,000

0 November December 2014 2014

Sources: IEX; PXIL

January 2015

February 2015

March 2015

April 2015

IEX market clearing price

Key challenges and the way forward Although the recent regulatory developments have generated some interest in the market, it is far from being efficient. There are still a number of challenges that restrict market growth. Most importantly, there are not enough checks and balances on the state nodal agencies (SNAs) responsible for enforcing RPOs. In fact, many SNAs are unaware of the obligated entities in the state. While RPO enforcement is being strengthened in many states, there are some that still allow carry-forwards in meeting the RPO, without imposing any penalties. Further, the market suffers from a lack of voluntary participation by individuals and corporate entities, and the demand is largely dependent on enforced regulations.

May 2015

June 2015

PXIL market clearing price

July 2015

August 2015

September 2015

Cleared volume at IEX

October 2015 Cleared volume at PXIL

There is an urgent need to address these issues in order to ensure effective functioning of the market. The Ministry of New and Renewable Energy should undertake an RPO awareness campaign and set up a national-level RPO compliance registry. Also, the government should consider a quarterly compliance of RPOs in place of an annual compliance. Further, stricter penalties should be imposed on defaulting entities while entities that comply with their RPO should be incentivised. Lastly, to ensure the longterm sustainability of this mechanism, it is imperative that the market moves towards greater voluntary participation by buyers and sellers alike. ■ November 2015 ● Renewable Watch ● 31

SEGMENT REVIEW

ANNIVERSARY ISSUE

Solar Success Central and state support takes segment to new heights By Meera Bhalla

he Indian solar market is on the cusp of emerging from a seed phase and entering an aggressive growth phase. Since 2010, the installed solar capacity has shown a growth rate of more than 300 per cent. Over the past year, solar contributed 34 per cent to the country’s total renewable energy capacity addition, and its share in the total renewable energy mix went up from 8 per cent to 12 per cent. New targets, opportunities and avenues in the solar segment have come up, which will take it to new heights. There have been notable developments in every possible sphere, be it grid-connected or off-grid; generation or manufacturing; or investment or financing. With states playing a role as important as the Jawaharlal Nehru National Solar Mission (JNNSM), the solar segment is rapidly spreading its reach. Over the past year, Karnataka, Andhra Pradesh, Telangana, Punjab and Uttarakhand have launched solar tenders, with some of these states doing so for the second time.

32 ● Renewable Watch ● November 2015

Meanwhile, the commissioning of projects under JNNSM started again after projects under Phase II Batch I were completed. The slowdown at the central level has been only to revamp the segment for achieving bigger targets and wider objectives. In this context, the policy progress in JNNSM Phase II has been tremendous in 2014, with the government exploring new options and opportunities like solar parks and ultra mega solar power projects (UMSPPs), defence projects and PSU projects. An equal focus has also been placed on the rooftop and off-grid segments. Very broadly, the government is now looking to make these two segments more market-driven than subsidy-based. Some years down the line, it envisages the same for the utility-scale segment. On the policy front, the government took several measures in support of the sector over the past year. Amendments in the Electricity Act, 2003 to increase the renewable purchase obligation (RPO) target to 10.5 per cent, amendments in the National

Tariff Policy to make it easier for states to reflect RPO costs in consumer tariffs, the waiving of interstate transmission charges, suggesting that states lower their intrastate open access charges, amendments in the renewable energy certificate (REC) pricing regime to make it more realistic, the announcement of the solar park policy, plans of announcing a solar zone policy and solar rooftop policy, the announcement of net metering policies or guidelines by several states, and the reinstatement of rooftop subsidy have been the major developments in the Indian solar industry. The government’s increasing focus is creating a lot of excitement in the industry. As per RE-INVEST’s latest update on Green Energy Commitments 2015, it has received commitments for setting up 171 GW of solar capacity from over 50 developers after announcing the 100 GW target. The main highlights among upcoming solar investments are the plans of four of the world’s largest solar manufacturers (Trina Solar, JA Solar Holdings, Hanwha Q

SEGMENT REVIEW

ANNIVERSARY ISSUE CELLS and Xi’an LONGi Silicon Materials Corporation) to set up solar manufacturing capacity in India; three of the world’s top renewable energy utilities (EDF Énergies Nouvelles, ENEL Green Power and ENGIE) acquiring Indian solar projects or firms; four of North America’s top solar development companies (Sky Power of Canada, First Solar, SunEdison and SunPower) accelerating project development in India; and numerous leading Asian innovators and utilities (Taiwan’s Foxconn, Japan’s SoftBank, Singapore’s Sembcorp, Hong Kong’s CLP Group) targeting Indian renewables. Domestic players are expanding their footprint in India as well. Under their REINVEST commitments, Azure Power will develop 11,000 MW of solar, Raasi Solar Energy Private Limited 10,600 MW, ReNew Power 6,500 MW, Welspun Renewable Energy 8,660 MW, and Hindustan Clean Energy 7,000 MW. In addition, over the past year-and-a-half, several conventional energy companies like NTPC, Bharat Heavy Electricals Limited, Oil India Limited and Adani Power have ventured into the segment. Following this trend, big wind turbine manufacturers like Suzlon, Gamesa and ReGen Powertech are also planning to diversify into this market. They are targeting the introduction of the concept-to-commissioning model in solar as it had helped the wind segment grow significantly. These players, with their big land banks, are looking at solar-wind hybrid opportunities. This will help bring consolidation in the solar industry and reduce the cost of setting up projects further. In addition, several independent power producers in the wind segment, like Mytrah and Indowind, are also exploring solar opportunities.

Capacity addition

Across states, the maximum capacity addition was seen in Rajasthan with 529.15 MW coming up in the past year. Of this, 150 MW was from the backlog of solar thermal projects awarded under JNNSM Phase I Batch I. It was followed by Madhya Pradesh, an emerging investment destination in the renewable energy sector, with the addition of 318.5 MW. Punjab and Andhra Pradesh respectively added a notable 164.55 MW and 113.75 MW during the year.

Greater state role The momentum at the central level has been matched with increased traction at the state level. In 2014, Punjab, Madhya Pradesh, Telangana and Andhra Pradesh allocated a cumulative capacity of around 5 GW. The results of the Madhya Pradesh and Telangana tenders were particularly noteworthy as they reflected the lowest ever grid-connected tariffs in the country. The lowest winning bid was Rs 5.05 per kWh under the Madhya Pradesh tender, and Rs 5.17 per kWh under the Telangana tender. The previous lowest tariffs had been quoted by First Solar in October

As per BRIDGE TO INDIA’s estimates, India’s rooftop solar capacity reached 525 MW this year. Despite the lack of specific initiatives, 240 MW was added in 2014: a growth of about 66 per cent over the pre-

Project capacity likely to be commissioned during 2015-16 under state policies (MW) (as on October 1, 2015) State

Tenders issued

PPA signed

Likely to be commissioned by March 31, 2016

Rajasthan

–

Chhattisgarh

–

136

64.9

Madhya Pradesh

620

320

432

Haryana

150

–

Odisha Telangana

–

3,500

825

1,166

729

229

–

Punjab Daman & Diu Andhra Pradesh

With these developments, the Indian government’s 100 GW solar target seems more reasonable now than when it was announced a year ago, especially for gridconnected projects. The pace of growth in the rooftop solar and off-grid segments improved significantly in 2014, but they are still far behind that of the grid-connected segment.

vious year. This can be directly linked to improved project economics. With this momentum, the installed rooftop capacity is expected to reach 6.5 GW by 2020. Tamil Nadu, Maharashtra and Gujarat are leading in terms of the total installed capacity, with Tamil Nadu outperforming all states. Its sterling performance, especially in the industrial segment, can be attributed to consumer awareness, high industrial and commercial tariffs, and the wide gap between energy demand and supply in the highly industrialised state.

As of October 2015, India’s total installed solar capacity stood at 4,575 MW for gridconnected projects. Over the past year, about 1.8 GW of solar was added; 36 per cent of it under Batch I of JNNSM Phase II. Several utility-scale projects were also commissioned for captive consumption by industrial users as well as PSUs, especially under the REC mechanism.

Tamil Nadu

619

614

350

1,214

Uttarakhand

Uttar Pradesh

215

195

105

Karnataka

1,000

700

100

Total

8,001

4,237

3,775

PPA: Power purchase agreement Source: MNRE

November 2015 ● Renewable Watch ● 33

SEGMENT REVIEW 2014 for two 40 MW projects in Andhra Pradesh, for which it bid Rs 5.25 per kWh and Rs 5.35 per kWh. Although First Solar had been allowed an escalation after the first year, this is not the case with the Madhya Pradesh and Telangana tenders. While doubts have been raised about the viability of projects developed at such low tariffs, there is a clear trend towards the average solar power tariff falling between Rs 5.30 per kWh and Rs 6 per kWh. The policy and regulatory environment at the state level has also been changing, with a number of states announcing solar policies. After the expiry of its 2009 solar policy in March 2014, Gujarat announced a new policy in August 2015 with a focus on promoting rooftop and off-grid projects to electrify remote areas. Maharashtra also issued its New and Renewable Energy Policy 2015, which aims to take its installed renewable energy capacity to 7,500 MW by 2020. Andhra Pradesh, Jharkhand and Telangana announced their respective solar policies during the past year as well. While Andhra Pradesh is planning to add 5,000 MW of solar by 2020, Jharkhand is targeting 2,650 MW by the same year. Telangana has also put in place a policy for encouraging solar development. The Delhi Dialogue Commission, the Delhi government’s advisory body, has released the draft Delhi Solar Energy Policy, 2015, which envisages the setting up of 1,000 MW of solar capacity by 2020. Some states are adopting different approaches for developing their solar industries through MoUs with private players. Rajasthan is targeting a capacity of 25 GW by 2020, having signed an MoU with Adani Power, Reliance Power and SunEdison for developing 10,000 MW, 6,000 MW and 5,000 MW, respectively. Meanwhile, Tamil Nadu has signed an MoU with Adani Power for setting up 648 MW of solar plants at an estimated cost of Rs 45.36 billion. These plans and targets augur well for the solar industry as a whole.

Clearer policy and regulatory framework The past year was more about policy and 34 ● Renewable Watch ● November 2015

ANNIVERSARY ISSUE regulatory developments rather than capacity addition or allocation. On the regulatory front, a key development was the notification of the proposed Electricity (Amendment) Bill, 2014. The government intends to take a stringent stance on noncompliance with RPO targets. It is also planning to introduce a renewable generation obligation target in the near term. At the state level, RPO compliance is more or less headed in the right direction, with at least four state commissions imposing penalties for non-compliance. The solar REC market, which has been performing poorly for a while now due to the lax enforcement of solar RPOs and the high floor and forbearance price of certificates, is set to revive with the Central Electricity Regulatory Commission addressing the situation. Another important regulatory development has been the announcement of net metering for solar rooftops and small-scale systems by several states. Central schemes and policies have been the main drivers for the grid-connected utility-scale solar power segment. While states may have come to occupy centre stage in the past one or two years, JNNSM continues to be one of the most sought after and bankable solar programmes for developers as well as financiers. A section of investors still finds state programmes unreliable, and they are justified in doing so considering the delays and uncertainties that several state allocations have been associated with. In 2014, several guidelines or initiatives pertaining to the utility-scale segment were released: z Solar parks and UMSPPs: To take solar power growth to the next level, the Ministry of New and Renewable Energy

The policy progress in JNNSM Phase II has been tremendous in 2014, with the government exploring new options and opportunities.

has introduced the Scheme for Development of Solar Parks and Ultra Mega Solar Power Projects. It envisages the setting up of 25 solar parks, each with a capacity of 500 MW and above, and UMSPPs in various parts of the country where large chunks of land can be spared. The parks will be able to accommodate over 20 GW of solar projects. The solar parks/UMSPPs will be set up over five years, starting from 2014-15 to 2018-19. As of October 2015, 26 solar parks with an aggregate capacity of 17,418 MW had been identified in 20 states. Canal banks and canal-top projects: The MNRE has issued guidelines for developing the Pilot-cum-demonstration Grid-connected Solar PV Project on Canal Banks and Canal Tops. The scheme is aimed at demonstrating the viability of such projects on canal-tops and vacant government land along canal banks. An aggregate capacity of 100 MW is targeted under the scheme, which will be implemented by the Solar Energy Corporation of India (SECI). The projects will be developed by state power generation companies, utilities, or any other state or central government organisation that operates in the power sector or owns canal systems. Central financial assistance (CFA) of Rs 30 million per MW for canal-top solar PV projects and Rs 15 million per MW for canal bank solar PV projects will be given to solar PV project developers. At the state level, Andhra Pradesh, Punjab, Haryana, Uttar Pradesh, Maharashtra and Gujarat have announced various initiatives on this front. Solar projects by defence establishments (under JNNSM Phase II/III): The MNRE has launched the Scheme for setting up over 300 MW of Grid-Connected & Off-grid Solar PV Power Projects by Defence Establishments under the Ministry of Defence and Para Military Forces (under the Ministry of Home Affairs) with Viability Gap Funding under Phases II/III of JNNSM during 2014-15 and onwards. Viability gap funding (VGF) support of Rs 7.5 billion will be provided under JNNSM

SEGMENT REVIEW

from 2014 to 2019. Solar projects by central PSUs and Government of India organisations (JNNSM Phase II Batch V): The Scheme for setting up 1,000 MW of Grid-Connected Solar PV Power Projects by Central Public Sector Undertakings (CPSUs) and Government of India organisations under various central/ state schemes/ self-use/third-party sale/merchant sale with VGF under Batch V of Phase II of JNNSM has been sanctioned. It will be implemented over a span of three years (2014-15 to 2016-17) with an estimated CFA of Rs 10 billion. The process will be carried out through the VGF mechanism under Batch V Phase II of JNNSM. State-specific VGF scheme (Batch III JNNSM Phase II): The MNRE has also issued draft guidelines for the implementation of a scheme for setting up 2,000 MW of grid-connected solar PV power projects under JNNSM Batch III Phase II, or the State-Specific VGF Scheme. SECI is the designated nodal agency for the implementation of MNRE schemes for developing grid-connected solar capacity through the VGF mode.

Rooftop promise Driven by the decline in the cost of solar panels and the operational success of current projects, plans are afoot to promote rooftop solar generation in a big way. At the central level, SECI is executing a panIndian grid-connected rooftop PV programme, while a dozen states have announced rooftop and net metering policies. India’s changing power market dynamics have made rooftop solar economical for investors. In the commercial segment, 26 per cent of states have reportedly achieved grid parity, while the availability of accelerated depreciation has enabled the rooftop solar segment to reach grid parity in 17 per cent of states. Power generation from rooftop solar projects has also become competitive for the industrial consumer segment in Maharashtra, Odisha and Delhi. This situation has given regulators signifi36 ● Renewable Watch ● November 2015

ANNIVERSARY ISSUE cant opportunities to make the segment market-driven rather than incentive-driven. The government has started taking steps in this direction, with one of its most significant measures being the subsidy reduction for rooftop solar projects from 30 per cent to 15 per cent. As per the latest development, the MNRE has indicated that the 15 per cent subsidy provided as CFA for rooftop projects will be available to only four categories of consumers: residential; institutional (educational institutions, medical colleges and hospitals, and public and private research and development institutions); government (central and state government organisations, and all panchayati raj buildings); and the social sector (old age homes, orphanages, common service centres and welfare homes). The industrial and commercial categories have been excluded. The industry has welcomed this move as delays in subsidy disbursement in the past few years have been one of the main deterrents in the development of the rooftop solar market. During 2014, many states came forward to support the centre’s plan by encouraging rooftop solar installations based on net metering. Odisha and Uttar Pradesh plan to install 20 MW of rooftop solar projects by 2018 and 2017, respectively, while Karnataka and Tamil Nadu have set ambitious targets of achieving 400 MW and 300 MW of rooftop capacity. Haryana has made it mandatory for buildings with an area of more than 500 square yards to install rooftop solar systems. Madhya Pradesh and Punjab have respectively allocated 5 MW and 65 MW of rooftop projects to various developers. Uttar Pradesh, Rajasthan, Punjab and Gujarat announced their final net metering guidelines in 2014, while Madhya Pradesh, Himachal Pradesh, and Bihar still have to finalise theirs. In addition, the Joint Electricity Regulatory Commission for Goa and Union Territories (UTs) released regulations for grid-connected ground-mounted and rooftop solar projects and metering in Goa and UTs.

In November 2015, to lay out a plan for meeting the 40 GW rooftop solar capacity addition target, the MNRE announced that it had prepared a rooftop solar panel policy, to be shortly presented to the Union Cabinet for approval. While approving the 100 GW solar capacity addition target in June 2015, the Union Cabinet had mentioned several possible initiatives like the implementation of mandatory rooftop installations for private power consumers, and making net metering compulsory by incorporating measures in the Integrated Power Development Scheme for the rooftop segment. All these initiatives are likely to be part of the upcoming policy.

Outlook Under JNNSM, the government has announced guidelines for about 15 GW of solar projects that are scheduled to come online by 2019. In addition, as per BRIDGE TO INDIA estimates, initiatives for 50 GW of solar have been announced in various states. Significant among them are Rajasthan (25,000 MW), Maharashtra (7,500 MW), Andhra Pradesh (5,000 MW), Telangana (5,000 MW) and Tamil Nadu (3,000 MW). As per MNRE estimates, 3,775 MW of solar projects are likely to be commissioned during 2015-16 under different state-level policies, 330 MW under the JNNSM Phase II VGF scheme and 240 MW under rooftop solar. During 2016-17, a total of 11,062 MW of solar projects are likely to come under different state and government policies, of which 9,297 MW will be implemented with central government support and 1,765 MW with state support. There will be several challenges in achieving these plans, including that of land acquisition, transmission and financing. But the biggest hurdles will be enforcing RPOs and improving discom bankability. However, India’s solar outlook is positive, given the changing dynamics of the power sector, increased regulatory support, declining tariffs, growing concerns about climate change, and the rising cost of conventional energy. ■

Energizing INDIA

SEGMENT REVIEW

ANNIVERSARY ISSUE

Primed for Growth Industry trends indicate promising future for wind segment By Bhavya Laul (NIWE) reassessment of the segment’s potential to 302 GW at 100 metres hub height, the increasing industry interest in large-scale wind-solar hybrid projects, and the notification of a new regulatory framework by the Central Electricity Regulatory Commission (CERC) for scheduling and forecasting. Renewable Watch takes stock of the segment’s current status in terms of the state-wise and year-wise capacity addition dynamics, and analyses its emerging trends, recent developments and future outlook…

Current status

he Indian wind power segment requires strategies that go beyond laying out a standard policy and incentive framework for promoting capacity addition. Despite two key support instruments – generation-based incentives (GBI) and accelerated depreciation (AD) – the segment has not been able to deliver an exemplary performance in the past year. While its performance has certainly improved, capacity addition is not moving at the pace required for fulfilling the government’s 38 ● Renewable Watch ● November 2015

vision of achieving 60 GW by 2022. To meet the target, core issues related to evacuation, grid stability, the financial health of discoms, financing and land need to be resolved at the earliest.

With a cumulative installed base of 24,677.72 MW as of end-October 2015, wind power continues to be the dominant source in the renewable energy sector, accounting for 64.78 per cent of the total installed capacity. In terms of annual growth, the segment added 2,312 MW in 2014-15, surpassing the fiscal’s 2,000 MW target. This was a better performance in comparison with that of previous fiscals in which growth had been affected by the withdrawal of the GBI and AD benefits in 2012-13. In that financial year, a mere 1,700 MW of wind capacity was added. In 2013-14, the segment performed slightly better with the re-introduction of GBI, adding 2,079 MW. The scheme was reintroduced at the end of August 2013 and formally approved in October 2013.

That said, recent developments and prominent trends in the industry have indicated a promising outlook for wind power. Key among these is the notification of the National Offshore Wind Policy, the National Institute of Wind Energy’s

In 2014, the AD benefits were brought back by the government for creating a stimulus for investments from the small and medium enterprises sector. While the move restored industry confidence in the government’s will to promote the segment, it

SEGMENT REVIEW

ANNIVERSARY ISSUE could not make a significant impact in terms of capacity addition. In the 2015-16 fiscal (till October 31, 2015), 1,234.11 MW had been added against a target of 2,400 MW for the year. At the current pace, even though the segment is expected to perform better this fiscal compared to the past two to three years, capacity addition is not expected to go beyond 2,500 MW. At present, the segment is not in a position to deliver as it did in 2011-12 when it had added a record 3,097 MW. The wind power segment was earlier dominated by states like Tamil Nadu, Rajasthan, Gujarat, Maharashtra, but in recent times, others like Karnataka, Andhra Pradesh and Madhya Pradesh have come to the fore. They have been inviting active interest from investors on account of attractive tariffs and relatively untapped and easily accessible sites. In terms of cumulative installed capacity, Tamil Nadu is still in the lead. However, payment delays from the state discom and the lack of adequate transmission and evacuation infrastructure have affected annual installations in the past three years. With steps being taken to implement a scheduling and forecasting framework, the outlook for the state looks modest. In terms of annual capacity additions, as per Directory Indian Windpower 2015, Rajasthan took the lead in 2014-15 by adding 523.5 MW, pursuant to the removal of some policy roadblocks that had hindered growth in 2013-14. It was followed by Madhya Pradesh, which added 456.3 MW. The state has been going strong in the renewable energy sector on the back of an attractive policy regime and an environment conducive for business. Meanwhile, in Maharashtra, which has the second highest installed capacity among states, wind capacity additions have reportedly been affected by issues related to the signing of power purchase agreements.

Re-assessment of potential Through NIWE, the Ministry of New and Renewable Energy (MNRE) has launched the Indian Wind Resource Atlas: Online

GIS, using a scientific combination of satellite and measured ground data from 1,300 locations. Under the MNRE’s direction, NIWE created an online geographic information system (GIS)-based wind atlas at 100 metres hub height with scientific rigor on the basis of the latest available authentic data sets of wind as well as land geographically spread across India. The atlas is an online GIS tool for identifying India’s regional and local wind energy potential. It contains average annual values of wind speed (metres per second), wind power density and capacity utilisation factor calculated for an average 2 MW turbine at 100 metres hub height. In the atlas, the resultant layers are at very high resolutions and joint frequency tables have been derived for the entire country at a 500 metre resolution. A high resolution re-analysis data set, the National Centre for Environmental Prediction’s Climate Forecast System Reanalysis, was used for the study, which enhanced mapping accuracy. The atlas uses a dynamic meso-micro coupled WRF (weather research and forecasting) modelling technique. In April 2010, NIWE performed a potential estimation study corroborating mesoscale derived wind maps and micro-scale measurements and released the Indian Wind Atlas with readings at 50 metre hub height and indicative values at 80 metre hub height with a 5 km resolution in collaboration with RISO-DTU, Denmark. The assessment was carried out at a very high resolution of 500 metres, using the advanced meso-micro coupled numerical wind flow model with the corroboration of almost 1,300 actual measurements spread across India. Land information was derived through a land availability estimation done using authentic land use and land cover data sets in the GIS format with detailed information from Bhuvan Atlas, maintained by the Department of Land Resources in collaboration with the National Remote Sensing Agency.

Offshore onset After a lag of more than two years, the Union Cabinet approved the National

Offshore Wind Energy Policy at the end of September 2015. The government had set up an Offshore Wind Steering Committee in August 2012, which released the draft National Offshore Wind Energy Policy for public consultation in May 2013. With the policy’s notification, the MNRE has been authorised as the nodal ministry for the use of offshore areas within the country’s exclusive economic zones. Meanwhile, NIWE has been authorised as the nodal agency for the development of offshore wind energy and to carry out the allocation of offshore wind energy blocks, and coordinating allied functions with related ministries and agencies.

Wind players enter solar The wind power segment is currently facing stiff competition from solar power. However, this has turned out to be an opportunity rather than a challenge for several wind players. Wind manufacturers like Suzlon Energy, Gamesa and ReGen Powertech have either already diversified into solar or have firm plans for doing so. In addition, several independent wind power producers like Mytrah, Greenko Group and Indowind are exploring opportunities in solar. Apart from looking at standalone solar projects, some players are contemplating the co-location of solar capacities alongside wind farms. The entry of large and experienced wind players can promote consolidation in the solar industry if the concept-to-commissioning model is replicated.

Hybrid horizon While the kW-scale wind-solar hybrid segment is an established concept, the benefits and economics of large-scale windsolar hybrids are different. Solar capacities can easily be added to existing wind farms using the same evacuation infrastructure and land, resulting in reduced costs and efforts as well as the greater utilisation of land and evacuation infrastructure. In the case of old wind farms, repowering, coupled with hybrid solutions, can prove to be particularly beneficial. Wind-solar hybrids also give better generation profiles as they have compleNovember 2015 ● Renewable Watch ● 39

SEGMENT REVIEW

mentary generation patterns: solar energy peaks during the day while wind energy is predominant in the late evening and night. The concept of MW-scale wind-solar hybrids is being keenly eyed by the industry as well as the government. In the past year, some industry players have either entered or announced their plans to venture into the wind-solar hybrid space. Suzlon Energy, for instance, is entering the solar segment with plans of offering wind-solar integrated solutions. Greenko Group also plans to co-locate solar energy projects with existing wind farms. ReGen Powertech is offering wind-solar hybrid systems as well. As a prototype, it has installed a 1.5 MW wind system with 200 kW of solar, which can go up to 750 kW. Meanwhile, the government is working towards formalising the concept through a policy framework.

Forecasting, scheduling and imbalance-handling The large-scale integration of renewable energy sources into the grid has necessitated the implementation of a scheduling and forecasting framework. With the aim of strengthening such a framework and

ANNIVERSARY ISSUE

addressing the design issues affecting its implementation, CERC had issued the draft Framework for Forecasting, Scheduling and Imbalance Handling for Renewable Energy Generating Stations based on wind and solar at the Inter State level on March 31, 2015. On August 7, 2015, CERC released the Framework on Forecasting, Scheduling and Imbalance Handling for Variable Renewable Energy Sources (Wind and Solar). Alongside this, it also notified the Central Electricity Regulatory Commission (Deviation Settlement Mechanism and related matters) (Second Amendment) Regulations, 2015 and the Central Electricity Regulatory Commission (Indian Electricity Grid Code) (Third Amendment) Regulations, 2015. Besides this, the Central Electricity Regulatory Commission (Ancillary Services Operations) Regulations, 2015 applicable to the ISTS (Inter State Transmission System) was also notified. CERC and the Forum of Regulators have agreed on the preparation of draft model regulations on an operational and commercial framework for intra-state wind and solar generators. With the notification of these regulations, the earlier proposed unscheduled inter-

The National Offshore Wind Policy, the growing industry interest in large-scale wind-solar hybrid projects, and the notification of a new regulatory framework by the CERC for scheduling and forecasting indicate a promising outlook for wind. 40 ● Renewable Watch ● November 2015

change mechanism has now been removed and replaced by the deviation settlement mechanism. Forecasting will be done by wind and solar generators that are regional entities, as well as by regional load despatch centres (RLDCs). The responsibility of providing a generation schedule lies with wind and solar generators, who have the option of accepting the concerned RLDC’s forecast for preparing its schedule or preparing schedules based on their own forecasts. A total of 16 schedule revisions have been permitted. The definition for error is [(Actual generation – Scheduled generation)/Available Capacity] x 100 and the payment is as per the schedule power purchase agreement rate. The deviation settlement is within a tolerance band of (+/-) 15 per cent, beyond which a gradient band for deviation charges has been proposed. The on-ground implementation of the framework is expected to ease the resistance of discoms to accept a higher share of renewable energy sources in their systems.

Conclusion An annual addition of 5 GW (starting 2014-15) for touching the 60 GW target is no small task. It seems particularly difficult at the current pace and in the prevailing business environment. The wind power segment stands at a juncture from where further growth will depend on the resolution of fundamental challenges related to land, evacuation infrastructure, financing and the ability of discoms to purchase more renewable power. As the government does its bit with steps like implementing the Green Energy Corridors project and facilitating policy and regulatory amendments that support demand creation, an equal level of participation and coordination is also needed from the industry, including project developers and manufacturers, state governments and financiers. The states need to make the business environment more conducive for the industry through liberalised open access policies, interstate scheduling and rationalised tariff structures. ■

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Unused Potential State support needed to tap bioenergy resources By Shambhavi Sharan

government has set a target of 10 GW of grid-connected biomass by 2022, more than double the current installed capacity. While these targets seem ambitious, industry experts believe these are achievable after taking India’s vast untapped biomass potential into account. Unlike solar and wind, biomass is a relatively more reliable source of renewable energy as it involves no fluctuations in the power produced and neither does it have storage requirements like in the case of solar. The case for biomass is particularly strong for off-grid energy production as it utilises agricultural residue and also creates rural employment opportunities.

Biomass and bagasse

ower generation from biomass resources is a reliable and cost-effective alternative, especially as India’s biomass availability is over 150 million metric tonnes per annum from agricultural and forest residues. However, the segment has remained largely untapped on account of weak policies and a patchy regulatory mechanism. Similarly, growth in the biofuel segment has also been challenging. The bioenergy sector as a whole is facing multiple difficulties. The complex process of collecting biomass from dispersed farmland that is almost entirely owned by smallholders is further complicated by the lack of roads between villages. There is also a lack of incentives for collecting or storing biomass. In recent months, however, the government has started identifying and addressing infrastructure and interstate trade hurdles while supporting farmers and devising plans for using feedstock and agricultural waste in a better manner. Meanwhile, the bagasse cogeneration segment has recorded significant growth over the past two decades.

Performance over the past year The bioenergy sector continued to stag42 ● Renewable Watch ● November 2015

nate over the past year as few initiatives were taken to revive it. India’s total biomass and bagasse cogeneration capacity increased by only 6 per cent from 4,165.6 MW in March 2014 to 4,418.9 MW in March 2015. Moreover, up till September 2015, only 132 MW had been added against a targeted capacity addition of 400 MW. Meanwhile, off-grid capacity additions were more encouraging, with biomass cogeneration (primarily used for captive purposes) growing from 561.6 MW in March 2014 and 591.9 MW in March 2015 to 602.37 MW in September 2015. In terms of cumulative off-grid achievements, biomass gasifiers and non-bagasse cogeneration capacity had reached approximately 772 MW as of September 2015. The variation in the growth rates of gridconnected and off-grid capacity is primarily due to the lack of state effort in the biomass segment as compared to other renewable energy segments like solar and wind. In addition, persistent issues like high fuel procurement prices and the lack of regulatory support continued to impede growth, with no support forthcoming from the centre. In this scenario, the

India’s total bioenergy capacity is 5,463 MW, comprising 4,545 MW of grid-connected biomass (including waste-to-energy [WtE] plants) and 918 MW of off-grid power plants. Of the total grid-connected capacity, 66.1 per cent is bagasse cogeneration, followed by 31.1 per cent of biomass combustion-based power plants, with the remaining share being held by WtE power plants. The states with the highest biomass power and bagasse cogeneration capacity include Maharashtra (940.4 MW), Uttar Pradesh (776.5 MW), Karnataka (603.28 MW) and Tamil Nadu (571.3 MW). These states also have the highest targeted capacity for 2022, with Uttar Pradesh having a target of 3,499 MW, followed by Maharashtra (2,469 MW) and Karnataka (1,420 MW). Policy and regulatory landscape Under the latest Central Electricity Regulatory Commission notification on generalised levellised tariffs for 2015-16, separate tariffs were determined for biomass projects based on different technologies and different fuels for the first time. As a result, the tariffs range from Rs 7.27 per kWh to Rs 7.67 per kWh in Tamil Nadu to Rs 8.29 per kWh to Rs 8.71 per kWh in Punjab. Meanwhile, the tariff for bagassebased cogeneration projects is lowest at Rs 5.41 per kWh for Tamil Nadu and highest at Rs 6.76 per kWh for Haryana. For biomass gasifier projects, it ranges from

SEGMENT REVIEW

ANNIVERSARY ISSUE Rs 7.39 per kWh for Punjab to Rs 6.46 per kWh in Tamil Nadu. Overall, the tariffs were revised upwards to encourage capacity additions but the lack of revisions at the state level has inhibited capacity additions. Only Rajasthan and Punjab revised tariffs for biomass, biomass gasifier- and biogasbased power projects for 2015-16. At present, Punjab, Rajasthan, Maharashtra and Karnataka are the main states with policies that encourage biomass power development. In August 2015, Uttar Pradesh released its draft Biomass Energy Policy with the aim of setting up 1,000 MW of biomass-based plants. The state has been performing poorly in terms of capacity addition, but it should be noted that it has the highest biomass target for 2022. With this policy, it is trying to resolve regulatory issues and invite interest in setting up biomass plants. It is also offering benefits like exemption from stamp duty on land, permission for the wheeling and banking of power, and single-window clearance. At the centre, the government has released various financing schemes to encourage private sector investment in biomass. In September 2015, the Indian Renewable Energy Development Agency disclosed its refinancing scheme for biomass and small-hydro projects using the National Clean Energy Fund. Up to 30 per cent of the associated loans will be refinanced at concessional rates, with an upper limit of

State-wise biomass power and bagasse cogeneration capacity (MW) State

Cumulative installed capacity up to December 2014

Andhra Pradesh

543.0

Bihar

43.4

244.0

Gujarat

43.9

288.0

Haryana

45.3

209.0

Karnataka

603.3

1,420.0

26.0

118.0

Maharashtra

940.4

2,469.0

Punjab

140.5

244.0

Tamil Nadu

571.3

649.0

Uttarakhand

30.0

197.0

Uttar Pradesh

776.5

3,499.0

Other

412.2

120.0

Total

4,013.6

10,000.0

Madhya Pradesh

Source: MNRE

Rs 150 million per project.

tainties or fuel cost escalation.

Apart from this, the Ministry of New and Renewable Energy (MNRE) released its draft MNRE-UNDP/GEF Biomass Power Project Refinance Scheme for reviving biomass projects affected by unforeseen circumstances. The fund availability for the scheme is approximately Rs 150 million, and it is aimed at providing support to projects that can revive operations within a short period of time. While the government is still in the process of inviting comments for it, the scheme is an important step for the revival of biomassbased power plants that have been shut down due to policy and regulatory uncer-

Barriers and challenges India’s biomass market is characterised by a lack of mechanisation in the agriculture sector, fragmented landholdings, and a vast number of small and marginal farmers. Among the biomass fuels used for generating power, bagasse has the highest share due to its availability and captive use case for the sugar industry. The others are paddy straw, cotton stalk and wheat stalk. However, the biomass segment has not taken off primarily due to fuel supply issues. Agricultural biomass is available only for a short period (two or three months in a year) after it is harvested for the purpose of power production. Moreover, in the absence of formal biomass markets, procurement prices vary significantly across regions. Competing uses also affect biomass procurement as it is also used by rural households for cooking purposes and as feed for livestock. In addition, its transportation and storage and the large labour requirements for processing and handling often lead to cost escalations. These issues affect power production and reduce the bankability of projects. Developers also end up spending big on operations and maintenance, leading to payment recovery issues.

Growth in cumulative installed biomass based power capacity (MW) 5,000 4,418.9

4,500

4,165.6

4,000 3,602.2 3,500

3,153.3

3,000

3,008.7 2,800.4

2,664.6

2,500

2,337.4

2,199.3 1,985.2

2,000 1,500

1,752.0 1,406.0

1,667.5 1,338.3

1,048.7 1,000 500

800.0 606.0

703.3

861.0

997.1

1,150.1

1,264.8

1,365.2

1,410.2

2013-14

2014-15

0 2007-08

2008-09

2009-10

Source: Biomass Knowledge Portal, MNRE

2010-11

Target capacity for 2022

380.8

2011-12

2012-13

Biomass power and gasification

Bagasse cogeneration

Total

Thus, there is a need for a robust instituNovember 2015 ● Renewable Watch ● 43

SEGMENT REVIEW tional and market mechanism for the efficient procurement and storage of biomass in the time that it is available. Having recognised this, project developers have been adopting various business models to ensure the provisioning of good quality fuels. They have either established separate wings for handling biomass procurement and transportation or hired third-party companies to undertake this task. They are also investing in research and development (R&D) to develop more efficient biomass conversion technologies that can work with a range of feedstock material.

ANNIVERSARY ISSUE Increased focus on biofuels

The MNRE has been promoting the deployment of small-scale biogas plants for power generation as well as biogas fuel production in rural areas. The uptake of these decentralised projects is increasing significantly, primarily because it is much easier to ensure fuel supply on a smaller scale. Under its Biogas Power (Off-grid) Programme, the government is focusing on small capacity power generation in the range of 3-250 kW. According to data from the MNRE, about 220 biogas plants with a power generation capacity of about 3.8 MW have been set up under this programme, with 32 plants having a generation capacity of 627 kW being installed in 2014-15.

While the biofuel industry has largely been neglected over the past decade, recent government initiatives have been aimed at improving its production. For instance, the National Policy on Biofuels, which was introduced in 2009 with a target of 20 per cent blending by 2017, was recently modified. In July 2015, the cabinet decided to discontinue the use of sugarcane and sugarcane juice for ethanol production and allow only molasses to be used for the purpose. This has led to second-generation biofuel production, thereby overcoming several issues associated with ethanol production for sugarcane molasses. The scattered availability of sugarcane residue and its competing use as feedstock in bagasse production and that of ethanol in the medicine industry leave very little ethanol for the biofuel industry. In contrast, second-generation biofuels utilise a variety of crop residues that are available around the year, making them a more favourable option for meeting the 2017 target. For instance, the Karnataka State Biofuel Development Board has successfully deployed cellulose ethanol by achieving 7.7 per cent blending in diesel. This fuel is being utilised by over 1,000 buses of the Karnataka State Road Transport Corporation. However, the largescale production of cellulose ethanol is still in the pilot stage, with a few companies having set up demonstration projects.

Meanwhile, under its National Biogas and Manure Management Programme, the MNRE is providing financial assistance for setting up family-type biogas plants that generate biogas fuel for cooking purposes. The programme helps supplement the use of liquefied petroleum gas (LPG) and reduces pressure on forests and conventional fuels like coal and kerosene. It also helps reduce indoor pollution while cutting down the cost of refilling LPG cylinders. Up to December 2014, 4.8 million family-type biogas plants had been set up. The total target for 2015-16 is 111,000 plants, with Karnataka having the highest target of 16,000 plants, followed by Maharashtra (14,660), Madhya Pradesh (10,700) and Punjab (10,650).

To encourage biofuel production, the cabinet has deregulated biodiesel prices. At present, the estimated production cost of biodiesel is in the range of Rs 35-Rs 40 per litre while its purchase price has been fixed at Rs 26.50 per litre, with no revisions having taken place recently. Deregulation will allow the disparity between cost and purchase price to be bridged. The cabinet has also allowed private biodiesel manufacturers, their authorised dealers, and joint ventures of oil marketing companies to sell biodiesel directly to consumers. Till now, only state-owned and private oil firms were allowed to retail petrol and diesel. The relaxation will allow biodiesel producers to directly sell the fuel to the automative industry, marking a big

Rural biogas uptake

44 ● Renewable Watch ● November 2015

shift from its current end-users, which have generally been part of the unorganised agricultural sector, like irrigation pumps, mobile towers and kilns. The road transport industry is also working on designing policies to introduce biodiesel and bio-ethanol for public transport vehicles and school buses as a means of reducing air pollution.

The way forward The bioenergy sector, despite recent centre-led initiatives, requires more state support to fulfil its potential. According to the MNRE’s biomass atlas, India’s biomass potential from agricultural residue is almost 18.72 GW, and from forest and wasteland residue about 14.46 GW. This indicates that a lot of biomass capacity can be added to meet state renewable purchase obligation targets as well as sustainable power generation goals. Moreover, supply chain issues, which are the key reason for the lack of capacity addition, can only be resolved with the help of state intervention. Formalising biomass feedstock markets, regulating prices, and regularly revising tariffs on the basis of fuel availability will go a long way in promoting projects. The statelevel biomass capacity addition targets for 2022 can act as a push for more action. The off-grid biogas market, meanwhile, is set to grow rapidly with the help of central schemes and improved rural interest. In fact, the popularity of family-type biogas plants has increased in the past few years as the rural population has benefited by the shift from conventional and expensive fuels like kerosene. The biofuel industry also has potential for reducing carbon emissions from the automotive industry. While there is still a long way to go before secondgeneration biofuels can enter large-scale commercial production, increasing R&D activities and the relaxation in biodiesel regulations can encourage production so that the 20 per cent blending target can be met by 2017. Going forward, the bioenergy sector’s growth will continue to depend on centre and state actions, while government incentives will be crucial for retaining private sector interest. ■

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Sluggish Pace SHP growth hindered by high costs By Puneet Kumar Arora

mall hydro is the classification used for hydropower projects with capacity below 25 MW. Their distinguishing attribute is that they are mostly run-of-the-river projects and do not require the construction of dams. Apart from involving electricity generation from a renewable source, the case for smallhydro power (SHP) projects is strengthened by the fact that they have little impact on the environment. Despite offering several advantages over other renewable energy sources, SHP has been neglected over the past few years. India’s estimated SHP potential is 20,000 MW but the current total installed capacity is about 4,161.9 MW. The segment’s annual capacity addition target has also been reduced. It was set at 250 MW for 2015-16, compared to GW-scale targets for the solar and wind power segments. In 2015-16, only 106.55 MW had been added as of October 2015.

Issues and challenges The low utilisation of India’s SHP potential can be attributed to several factors. Construction risks are the single biggest challenge, since most SHP projects are located in remote hilly regions with major infrastructure constraints. Meanwhile, the lack of technical staff means that state agencies are often unable to properly

assess the detailed project reports prepared by developers, making them unsuccessful in ascertaining the financial viability of projects. Moreover, with only large rivers being properly mapped, hydropower producers have to rely on insufficient data on the water geographies of other rivers. The private sector is no longer finding the SHP segment attractive for investments. The cost of constructing SHP projects has been steadily increasing, while the tariffs offered by state electricity boards have not risen sufficiently. Most states have fixed tariffs that are much lower than the generic tariffs proposed by the Central Electricity Regulatory Commission. These are not attractive enough for project developers. The low rate of the average pooled power purchase price in hydro-rich states and the reduced sales of renewable energy certificates in the open market are the other reasons for the declining interest in SHP. There are also delays in the allocation of sites by states and in the granting of statutory clearances.

Proposed mission In February 2015, the Ministry of New and Renewable Energy unveiled a draft National Mission on Small Hydro to identify the reasons for the slowdown in the SHP segment and address them through

Year-wise capacity addition target and achievement (MW) Target Achievement

2013-14 300 171

* As of December 2014; ** As of October 2015 Source: MNRE

46 ● Renewable Watch ● November 2015

2014-15* 250 187

2015-16** 250 107

suitable policy support. The draft mission lists the following objectives: z The creation of an enabling policy framework with the state governments for the deployment of 5,000 MW of SHP projects by 2019 and the development of a platform for sustainable growth. z Encouraging and enabling all states to participate in the mission and providing the private sector with conducive policy and institutional support. z Assessing the performance of all government-owned SHP projects with a view to renovating, modernising and uprating them. z Developing new technologies and engineering solutions to set up low and ultra-low head SHP projects of 1,000 MW on canals, dam outlets and water outfall structures by 2019. z Developing a network of 5,000 watermills/micro-hydro projects in remote and rural areas and establishing local mini-grids.

The way forward The date of the proposed implementation of the National Mission on Small Hydro had earlier been set as April 1, 2015. However, there has been a delay. Meanwhile, the SHP industry has proposed various changes for improving the draft policy. For instance, it has suggested that the generation-based incentives being given to wind power projects be extended to SHP projects as well. Moreover, since SHP projects generally have longer gestation periods when compared to other renewable energy projects, financial institutions should look at ways of offering funds for such projects at lower interest rates and for longer tenors. In addition, every power purchase agreement should include a clause for increasing the tariff rate if the water available to an SHP project falls below what was promised by the government. To ensure the SHP segment experiences a significant growth trajectory, it is imperative that the National Mission on Small Hydro is launched and implemented in its true spirit and form. However, the segment’s shortterm outlook is not very positive. ■

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SEGMENT REVIEW

ANNIVERSARY ISSUE

Fillip to Off-grid Segment receives strong government backing By Akanksha Mahajan

n recent years, off-grid solutions have not only provided households with better quality lighting but have also had a much broader social, environmental and economic impact. The growing awareness of these solutions, their improving cost economics and better access to finance are making them an attractive option for households that are still unconnected to the grid and those with access to only intermittent power. As per industry estimates, 80 million Indian households or about 300 million people have limited or no electricity access. It has also been forecast that despite the government’s dedicated efforts, as many as 75 million households will continue to be off the grid in 2024, indicating that the number of underserved households is expected to decline by only 5 per cent over the next 10 years. This highlights the massive untapped potential of off-grid power applications for providing electricity to rural households.

In the past few years, the segment has received strong government support in the form of improved policy and regulatory mechanisms as well as greater attention from private sector entities. The current status and emerging trends in the off-grid space are as follows: z Solar dominates the market: Solar energy continues to find the maximum uptake in Indian off-grid applications. While there have been deployments in the wind, hydro and hybrid segments, about 80 per cent of off-grid utilities currently run on solar power. This is because of the government regulations that favour solar energy over other forms of renewable energy. Program48 ● Renewable Watch ● November 2015

mes like the Jawaharlal Nehru National Solar Mission are pushing off-grid solar deployment in a big way by spreading awareness, supporting players and providing financial assistance in the form of subsidies and incentives. A total of 295.87 MWp of solar photovoltaic (PV) off-grid systems/power plants had been sanctioned till December 2014. The major off-grid solar PV projects sanctioned during 2014-15 include 250 1 kWp solar PV plants for the Kinnaur, Lahaul and Spiti areas of Himachal Pradesh, 977 solar charging stations in 15 districts of Odisha, 70 microgrid systems in Uttar Pradesh, the distribution of 10,000 solar lanterns in flood-affected areas in Jammu & Kashmir, the distribution of 10,000 solar lanterns in cyclone-affected areas in Andhra Pradesh, and 6,000 solar power packs for individuals in Bihar. During 2014-15, solar systems with a total capacity of 52.77 MW (including

lanterns, home lights, street lights, pumps and power plants) were installed in various states. For instance, 24,552 solar street lights were set up at various villages in Himachal Pradesh, solar plants with a total capacity of 3,500 kWp were installed at various places in Chhattisgarh, including industries, 18,844 solar street lights were installed at Uttar Pradesh’s Lohiya village, and a 100 kW solar PV plant was installed in the premises of the Legislative Assembly of Meghalaya. As for solar water heating systems, 8.9 million square metres of collector area had been deployed as of end-September 2015. The residential sector dominates this space and accounts for 80-85 per cent of the total installations. The Ministry of New and Renewable Energy (MNRE) has also taken positive steps and measures for installing solar air dryers, particularly in horticulture and animal husbandry. It has partnered with Deutsche Gesellschaftfuer Internationale

SEGMENT REVIEW

ANNIVERSARY ISSUE Zusammenarbiet (GIZ) to implement a project on Solar Thermal Solutions for Space Heating in Ladakh. As part of this, GIZ has already installed two pilot solar air heating systems in Leh. It will also install 60 such systems by involving local state agencies and other stakeholders. z

Achievements in the off-grid segment (MW) Sector

Renewed government focus on solar pumps: The uptake of solar water pumps in India has typically been very low: 8,000-10,000 per year. However, the MNRE has taken up an ambitious programme for installing 100,000 solar water pumping systems a year for irrigation and drinking water in different states. As of July 2015, 63,436 solar pumps had been sanctioned to different state government agencies. In addition, 30,000 solar pumps were sanctioned to the National Bank for Agricultural and Rural Development. They will be installed through bank loans for irrigation purposes to individual farmers. Strong case for solar household systems: So far, solar lanterns have emerged as the most commercialised model among solar off-grid applications. As per industry reports, their market penetration is expected to grow from around 8 per cent to about 35 per cent of the total underserved market by 2018. Solar home systems, along with mini-grids, are also finding increased acceptance in the industry. This is primarily because consumers are now looking at off-grid power to meet traditional lighting and mobile charging needs as well as to run fans, TVs and other electronic appliances. It has been reported that close to 900,000 households were using solar home systems in 2014. However, they are very expensive when compared to small solar lanterns. Thus, easy availability and favourable consumer financing options will play a crucial role in increasing their uptake. Biomass stove systems gain traction: Biomass as a source of renewable energy is getting due attention in the offgrid space. In June 2014, the govern-

Financial year 2015-16 Target Achievement

Cumulative achievement (as of September 30, 2015)

Waste-to-energy

10.00

0.50

146.51

Biomass (non-bagasse) cogeneration

60.00

10.50

602.37

Biomass gasifiers (rural)

2.00

0.00

17.95

Biomass gasifiers (industrial)

6.00

0.00

152.05

Aerogenerators/Hybrid systems Solar PV systems Watermills/Micro hydel

0.13

2.67

46.50

280.85

2.00

0.00

17.21

130.50

57.63

1,219.61

110,000

10,212

4,828,000

0.00

8.90

Total Family biogas plants (no.)

0.50 50.00

Solar water heating collector areas (million square metres)

–

Source: MNRE

ment announced the Unnat Chulha Abhiyan as a follow-up to the National Biomass Cookstove Initiative. Its aim is to deploy improved biomass cookstoves across the country for providing clean cooking energy solutions. The target users are individual households in rural areas who use biomass for cooking purposes, kitchens of the midday meal scheme, anganwadis, forest rest houses, tribal hostels and small business establishments. During 2014-15, a target of 750,000 household-type and 100,000 community-type Unnat chulhas were proposed to be set up with a budgetary provision of Rs 150 million. However, these targets were later revised to 311,000 household-type and 39,000 community-type Unnat chulhas due to budgetary constraints. z

Growing focus on microgrids: Microgrids are emerging as a practical solution for providing electricity in rural setups. They operate independently from the central grid and thus provide quality and reliable power. However, their deployment in India has been limited. As per media reports, an estimated 125,000 rural households are connected to microgrids, mostly in Uttar Pradesh and Bihar. High upfront deployment costs and challenges in securing financing for these systems have been the key deterrents in the commercialisa-

tion of microgrids in India. z

Shift from the subsidy model: As India’s off-grid market matures, particularly for solar energy, the government is slowly phasing out subsidies in certain markets. Subsidies for setting up solar water heaters were discontinued in October 2014. Rooftop solar power has emerged as an attractive option in the commercial and industrial segments even without subsidies. The government, however, will continue providing it in various other markets to help them reach a level where market-determined prices become viable.

The way forward The off-grid segment is poised to play as important a role as grid-connected power in fulfilling the government’s ambitious targets of building 175 GW of renewable energy by 2022, far more than the current 30 GW. The government is already making concerted efforts to give a major fillip to the segment by announcing new schemes and programmes. The shortterm focus now needs to be on ensuring their timely and effective implementation. Over the long term, off-grid systems can be an important tool in the development of renewable energy-based grids in India and aid the improvement of energy security, power quality and reliability. ■ November 2015 ● Renewable Watch ● 49

FINANCE

ANNIVERSARY ISSUE

Positive Sentiment Growing investor interest in solar By Shambhavi Sharan

he positive sentiment and enthusiasm exhibited by the government over the past year to drive renewable capacity additions, particularly solar, have encouraged investments in the segment. However, the increased focus on solar has perhaps subdued the interest in wind, due to which the overall investments were lower than that anticipated. According to

REN 21’s Global Status Report 2015, renewable energy investment in India grew by 14 per cent to reach $7.4 billion in 2014. This value is set to rise, given the influx of foreign investments, in the form of multilateral funding as well as equity support. The foreign funding comes at a time when domestic developers are struggling to procure low-cost debt in order to bid

aggressively for solar projects. However, the foreign lending support received by the Indian Renewable Energy development Agency (IREDA) over the past year, may ease the lending environment in the coming quarters.

Government role in improving investor sentiment In 2015, the government announced an ambitious target of installing 175 GW of renewable energy capacity by 2022, driven mainly by solar (100 GW) and wind (60 GW). This, together with cost reductions in renewable energy generation and an improved regulatory environment, has attracted interest from private equity (PE) players and financial institutions. Later in the year, the Reserve Bank of India granted priority sector lending status to renewable energy, bringing this sector to the forefront of infrastructure financing. Under this, borrowers have been allowed to avail of bank loans with a limit of Rs 150 million for projects based on solar, wind, biomass and micro-hydel power, as well as for street lighting systems and remote village electrification projects based on nonconventional sources of energy. Meanwhile, individual households can avail of loans of up to Rs 100,000 per borrower. While it has been debated whether the limits set under priority lending are high enough for financing GW capacity additions, the sector’s priority lending status has encouraged both domestic and foreign funding in this space. Although its real impact is yet to be witnessed, priority lending is likely to encourage investments in the off-grid and decentralised renewable energy segment where rural and semi-urban populations struggle to procure funds.

50 ● Renewable Watch ● November 2015

FINANCE

ANNIVERSARY ISSUE

Recently issued green bonds and credit enhanced bonds Company/Bank

Date of issue

Amount raised

YES Bank

February 2015

Rs 10 billion

The issue had a coupon rate of 8.85 per cent and a tenor of 10 years. It received interest from insurance companies, pension

Details

Export-Import

March 2015

$1.6 billion

The amount was raised through a five-year Regulation S green bond, with a coupon rate of 2.75 per cent. The offering saw

and provident funds, foreign portfolio investors, new pension schemes, and mutual funds. Bank of India

58 per cent participation from fund managers, 20 per cent from banks, and 18 per cent from sovereign wealth funds and insurance companies.

YES Bank

August 2015

Rs 3.15 billion

The issue had a coupon rate of 8.95 per cent and a tenor of 10 years. It was entirely subscribed by IFC through the funds raised via its "green masala bonds".

CLP India

September 2015 Rs 6 billion

The issue comprises rated, secured, unlisted and redeemable non-convertible debentures in three series of equal amounts.

ReNew Wind

October 2015

Rs 4.51 billion

Issued under Indian Infrastructure Finance Company Limited's (IIFCL) credit enhancement scheme. As per the scheme, IIFCL

(issue size)

will provide a partial credit guarantee, while an irrevocable backstop guarantee will be provided by ADB. The bonds have a

The bonds carry a coupon rate of 9.15 per cent with tenors of three, four and five years. Energy (Jath) Limited

tenor of 18 years.

Source: Media reports

Coming to grid-tied plants, the solar segment is flourishing with support under the Jawaharlal Nehru National Solar Mission (JNNSM). During the past year, Phase II of the JNNSM was kick-started, under which Batch II, Batch III and Batch V schemes were announced with a total capacity addition target of 18,000 MW. Over the past few years, the JNNSM has been attracting investments in the solar industry owing to the provision of viability gap funding and the bundling of solar capacity with inexpensive thermal power. As a result, the most recent auction of NTPC’s 500 MW solar capacity in Andhra Pradesh witnessed the lowest bid of Rs 4.63 per kWh. State-level tenders for solar capacity additions in states such as Madhya Pradesh, Telangana and Andhra Pradesh have also been witnessing aggressive bidding from both domestic and foreign players. This goes to show that government support, both at the central and state level, can facilitate investments and aggressive bids. Moreover, cost reductions for setting up solar projects have allowed investors to bring down the price of solar power generation as well, in order to make it comparable with conventional energy.

Domestic lenders bullish on solar

Meanwhile, in the decentralised and rooftop segment, the government plans to install 40 GW of solar capacity by 2022. The central and state governments are focusing on meeting these targets. In the

Over the past year, Indian lenders have been enhancing their investments in solar to accommodate the 100 GW opportunity. Leading the way is IREDA, which has reportedly provided Rs 18 billion for 58 solar projects as of July 2015. The agency

past year, while the solar rooftop market grew on account of the implementation of net metering policies, the off-grid segment continued to grow at a steady pace on the back of subsidies provided for solar pumps, rural electrification and other solar lighting projects. In wind, the revival of the accelerated depreciation benefit and generationbased incentives in 2014 did little to bring the segment back on its earlier growth trajectory. To resolve the issues faced by wind developers, the government also initiated steps to implement wind forecasting, scheduling and imbalance handling. However, the lack of a policy roadmap to reach 60 GW by 2022 restrained investor interest in the wind segment. Meanwhile, the offshore wind policy has been introduced after a delay of more than two years, and its impact has not been realised yet. Owing to a general lack of interest in this segment, wind developers are either selling off their wind assets or looking to foray into the solar space to improve revenues.

is also facilitating commercial and industrial solar rooftop deployments, where it has recently launched a scheme offering interest rates of 9.9-10.75 per cent. Meanwhile, lenders such as PTC India Financial Services, YES Bank and the L&T Infrastructure Debt Fund have increased the share of solar projects in their renewable energy portfolios. The current debt offerings include interest rates in the range of 11.5 per cent to 13 per cent with a tenor of up to 18 years. Another trend witnessed over the past year is that lenders have been increasingly looking to finance large-scale solar projects, in accordance with the 100 MW-scale capacity that is being awarded across states. For instance, L&T Infra has stated that it does not intend to fund projects that cost less than Rs 700 million-Rs 800 million. It also plans to provide funding for 6.5 GW of solar projects over the next five years. Meanwhile, PTC India is planning to increase its present limit of funding gridtied solar capacity from 50 MW to 100 MW. Another emerging trend is that rooftop and decentralised solar developers have been receiving funds from both domestic and foreign lenders to expand their operations in India. For instance, key players like Azure Sunlight (for rooftop), and Simpa Networks, Claro Energy and Greenlight Planet (for off-grid) have been able to proNovember 2015 ● Renewable Watch ● 51

FINANCE cure funds to scale up their operations in a largely scattered and untapped decentralised solar market in India. Under wind power financing, the majority of the debt funding is still provided on a recourse or limited recourse basis. However, financial institutions such as L&T Infrastructure have been successful in nonrecourse financing. States like Madhya Pradesh, Telangana and Karnataka have reportedly been the popular states for funding of wind projects, while lenders are not comfortable with states such as Tamil Nadu and Maharashtra. The terms of loans provided by financial institutions depend largely on the power purchase agreement (PPA) conditions and the capacity utilisation factor of the project. Thus, a key concern in wind financing is the creditworthiness of the power offtaker as well as the transmission and evacuation infrastructure. Overall, lending activity in the wind segment has remained low in the past year, with a key deal being Mytrah Energy’s Rs 8.52 billion long-term loan agreement for its 150 MW wind project, which is set to be commissioned in early 2016.

PE surge The PE market has witnessed two broad trends during the past year – the sale of wind assets or stakes in wind companies and the influx of PE funds in the distributed solar space. In the wind segment, key players such as Suzlon and Orient Green Power Limited (OGPL) explored possible avenues to reduce their debt. In May 2015, the Suzlon Group completed a 100 per cent stake sale of its German subsidiary, Senvion SE, to Centerbridge Partners. Through this transaction, Suzlon was able to raise around Rs 70 billion, which it intends to use for debt reduction and volume growth. Meanwhile, OGPL sold off its entire stake in its non-operative subsidiary, Theta Wind Energy Private Limited, to Andhra Pradesh-based Axis Energy. Later in the year, the company raised Rs 2,500 million through a preferential allotment of shares. In another major development, Singapore-based Continumm Wind Energy, which owns 242 52 ● Renewable Watch ● November 2015

ANNIVERSARY ISSUE MW of wind power plants in India, was set to be acquired by SunEdison. However, the deal was later called off by the latter, which decided to go slow on its Indian acquisitions. The deal would have provided a quick exit to Continumm’s majority owner Morgan Stanley Infrastructure Partners, as wind infrastructure is considered a long gestation investment bet. Meanwhile, in distributed solar, Havells India Limited marked its entry into the solar segment by acquiring a 51 per cent stake in Bengaluru-based LED and solar lighting products manufacturer Promptec Renewable Energy for Rs 650 million. In addition, Delhi-based distributed solar power company Applied Solar Technologies received PE funding of $40 million led by the Australian government’s sovereign wealth fund, the Future Fund. Recently, Hyderabad-based Fourth Partner Energy, which specialises in solar street lighting and home lighting systems, raised $2 million in Series A funding, led by clean technology fund Infuse Ventures.

Foreign interest grows As the renewable energy policy and regulatory environment improved, so did the foreign investor sentiment. The past year witnessed an important development in foreign investment, which was earlier available in the form of multilateral funding and grants, but now also includes large capital flows from private entities. For instance, Singapore-based Sembcorp Renewables acquired a 60 per cent stake in Green Infra Limited for $227 million in March 2015. The acquisition gives a controlling stake to Sembcorp in the Indian renewable energy sector. Meanwhile, Canada-based Skypower and US-based SunEdison have been acquiring utilityscale solar projects in key states by bidding aggressively. This can be attributed to improving market dynamics. Meanwhile, the key multilateral agencies, KfW, the International Financial Corporation (IFC) and the Asian Development Bank (ADB), continued to provide significant funds to encourage renewable ener-

gy growth in India. German development bank KfW’s focus has been on the Green Energy Corridors project, under which it is providing Euro 1 billion over a period of five years. The central government is also providing support for this project through the National Clean Energy Fund in order to establish transmission infrastructure that can assist capacity additions. Meanwhile, IREDA is tying up with ADB and IFC to provide infrastructure financing for renewable energy projects in India. The primary aim of such agreements is to make domestic financing available within a short-time span and at a reduced cost. Apart from this, the European Investment Bank, the Japan International Cooperation Agency and Export-Import Bank of India have been active in the Indian renewable energy space.

Upcoming financial instruments According to industry experts, the solar power industry is increasingly looking for low-cost funds, which can be achieved through credit enhancement schemes and green bonds. Green bonds, introduced in the Indian capital market in 2015, are being seen as a plausible solution for renewable energy funding. Green bonds had become popular in other Asian capital markets over the past two years, but were not tested in the Indian landscape as developers and banks were waiting for the investor sentiment to improve. The key attribute of these bonds is that the funds raised through the issues are used directly for renewable energy projects, thus increasing investors’ confidence in their investments. In February 2015, YES Bank raised Rs 10 billion through the issue of 10-year green bonds and attracted interest from insurance companies, pension and provident funds, foreign portfolio investors, new pension schemes, and mutual funds. In August 2015, the bank concluded its second green bond issue, which was entirely bought by IFC for Rs 3.15 billion. Later in the year, CLP India issued its first corporate green bonds in the country to secure capex for its renewable energy

FINANCE

ANNIVERSARY ISSUE

Recent acquisitions Company

Details

Month

Sembcorp Industries Limited (Singapore)

Acquired 60 per cent stake in Green Infra Limited for $227 million

February 2015

Axis Energy

Acquired Orient Green Power Limited's non-operative subsidiary, Theta Wind Energy Private Limited

February 2015

Acquired 51 per cent stake in Promptec Renewable Energy, a Bengaluru-based LED and solar lighting product

April 2015

Havells India Limited

manufacturer, for Rs 650 million Surana Telecom and Power Limited

Acquired 51 per cent stake in Arhyama Energy Private Limited, which has 30 MW of solar power plants in its portfolio

April 2015

Rajalaskhmi Group

Acquired a majority stake in Ashok Leyland Wind Energy for Rs 1.7 billion

April 2015

SunEdison (USA)

Signed agreements to acquire Fersa Energias Renovables' Hanumanhatti, Gadag and Bhakrani wind farms with an

May 2015

aggregate capacity of 102 MW Enzen Global Solutions

Acquired Pune-based wind turbine manufacturing company Luminous Renewable Energy Solutions for

May 2015

around Rs 126 million GIC Private Limited (Singapore)

Signed agreement with the Greenko Group for acquiring Greenko Mauritius for a gross cash consideration

September 2015

of about Rs 16.53 billion Enel Green Power S.p.A (Italy)

Acquired a majority stake in Bharat Light and Power Energy, which has an operational wind power portfolio

September 2015

of 170 MW, for Euro 30 million Source: Media reports

projects. The bonds were also issued with the aim of helping the company diversify its financing portfolio. Credit enhancement was also introduced recently, with ReNew Power Ventures issuing bonds worth Rs 4.51 billion under IIFCL’s credit enhancement scheme. Further, ADB is providing the backstop guarantee under this bond issue. While the Indian green bond market is yet to match its global counterpart, it has been able to encourage investments in the renewable energy space through a diverse set of investors. This will prove to be essential in arranging funds to meet the GW-level target by 2022. Another emerging financial instrument is the yieldco, which has not been exercised by an Indian developer so far. A yeildco offers cash flow from renewable energy assets in the form of dividends, thereby offering low-risk returns (or yields) that are projected to increase over time. The benefits of this model can, however, be derived only when the parent company holds a large portfolio of assets, and thus its uptake in India will likely occur when developers reach a certain scale.

Issues and challenges Achieving the 100 GW solar and 60 GW 54 ● Renewable Watch ● November 2015

wind capacity targets is estimated to entail an investment of Rs 10 trillion. While the financing sentiment has improved in solar over the past year, there is still a long way to go to ensure the availability of lowcost and long-term debt. Meanwhile, investments in the wind segment need to pick up to meet the capacity addition targets. Thus, there is a need to reassess the present challenges impacting the funding environment in order to meet the future demand for investments. For instance, maintaining policy stability across all renewable energy segments is essential for achieving targets. In addition, a regular allotment of projects, revision of tariffs, and timely disbursement of funds and subsidies enable lenders to commit to investing in this sector. Also, benchmarks need to be set to control default incidences that can arise out of aggressive bidding. For instance, the recent aggressive bidding witnessed in the solar segment has questioned the viability of projects; however, there is consensus that the outcome of auctions is efficient and reasonable. Currently, the biggest issue affecting the bankability of projects is the distressed financial state of discoms. The Ujwal Discom Assurance Yojana (UDAY) recently

announced by the government is a step towards in reducing discom losses. The programme, once implemented, will initiate the rerating of the sector by the investment community. Moreover, stronger PPAs that can provide protection against curtailment risks and guarantee payments will be required to improve the creditworthiness of renewable investments. Issues pertaining to the grid and transmission infrastructure also need to be resolved to accommodate upcoming capacity additions. This issue also impacts the outlook of financiers as it determines the profitability of renewable energy projects in the long run. The financing outlook for the sector remains positive for the coming year owing to the strong backing of the central government in meeting renewable energy capacity targets. However, as the sector opens up to foreign players, domestic developers are at a disadvantage as the former have access to much lower-cost debt than them. To bring parity, low-cost debt will need to be arranged for domestic players. Going forward, innovative instruments will take centre stage in tackling this issue, but successfully performing projects and a stable policy environment are also important to boost investor confidence and bring down interest rates. ■

FINANCE

ANNIVERSARY ISSUE

Key Financings Major debt and equity deals

n the past year, the financing scenario for renewables was robust owing to an increased policy push and the improving viability of projects. A number of funding moves were seen in the solar segment, mostly in the form of debt. Several decentralised, rooftop solar and off-grid companies were able to raise funds for their projects and expansion plans. The country also witnessed the first green bonds issue, which was well received. Multilateral lending agencies displayed continued commitment to financing renewable energy projects in India. A large part of their lending was towards renewable energy evacuation under the Green Energy Corridors project. On the equity side, several wind players either divested their wind assets or were acquired in order to retire their debt. Renewable Watch takes stock of the key financial developments that took place in the sector between November 2014 and October 2015…

Debt deals In December 2014, Simpa Networks secured $4 million in debt from US-based development finance institution Overseas Private Investment Corporation (OPIC) 56 ● Renewable Watch ● November 2015

and French company GDF Suez. Simpa Networks will use the funds to scale up its operations in rural India, where it is currently engaged in providing solar-as-aservice to households and microenterprises. The new debt facility is expected to help the company provide solar-based electricity services to 200,000 people. In February 2015, Claro Energy received a $2 million credit facility from RBL Bank Limited for scaling up its solar pumping business. The credit facility comprises $1 million as a direct line of credit for meeting the working capital needs of the company and a $1 million commitment towards direct farmer financing for Claro Energy’s solar pumps. The company currently operates in 10 states across India and offers solar pumps for drinking water, irrigation, purification and aquaculture purposes. In the same month, Greenlight Planet raised $10 million from Fidelity Growth Partners India, Deutsche Bank, and impact investing firm Global Partnerships to support its expansion efforts in India and Southeast Asia. Apart from increasing the reach of the company’s solar products, the funds will be used for product research. Greenlight Planet is aiming to reach 100 million off-grid households by 2020.

Also in February 2015, YES Bank raised Rs 10 billion through an issue of 10-year Green Infrastructure Bonds for funding renewable energy and energy efficiency projects. A host of investors including insurance companies, pension and provident funds, foreign portfolio investors, new pension schemes and mutual funds invested in the bonds. The funds raised through this route will be used for the development of green energy projects. In the same month, Mytrah Energy signed a Rs 8.52 billion long-term loan agreement with a leading Indian financial institution. The funds will be utilised as longterm project finance debt for a 150 MW wind power project, which is expected to be commissioned by February 2016. Mytrah Energy has an installed capacity of 543 MW spread across six states and a project pipeline of 3,500 MW. In April 2015, Mytrah Energy Limited raised $60 million of capital from Merrill Lynch International and Aion Direct Singapore Private Limited. About $56 million was raised through India-listed NCDs issued by Mytrah Energy, while the remaining $4 million was in the form of a loan. Introduced in November 2014, the NCDs are a long-term five-year instrument with a cash coupon of 12 per cent per annum. Mytrah Energy intends to use the fresh capital to refinance part of its existing mezzanine facility worth Rs 1,100 million, and the remaining for developing new wind power projects. In September 2015, Azure Power’s subsidiary, Azure Sunlight, raised $20 million in loans from OPIC, facilitated by SAM Consultant. Azure Sunlight intends to use the funds for the development, financing, construction, and operations and maintenance (O&M) of 19 MW of rooftop solar power systems across India. While Azure Sunlight will be the equity owner of the projects, the loan facility will make up the debt component for financing them and be repaid from aggregate cash flows from the projects, for which Azure Power will be the turnkey construction contractor and O&M provider.

FINANCE

ANNIVERSARY ISSUE In the same month, CLP India issued Corporate Green Bonds worth Rs 6 billion for funding the capex of its renewable energy projects. The issue comprises rated, secured, unlisted, redeemable nonconvertible debentures (NCDs) in three series of equal amounts. The bonds carry a coupon rate of 9.15 per cent with tenors of three, four and five years. Standard Chartered Bank, IDFC Limited and the Hongkong and Shanghai Banking Corporation were the lead arrangers for the bond issuance. CLP India has 1,000 MW of projects in its wind power portfolio across six states. Also in September 2015, ReNew Wind Energy (Jath) Limited, a subsidiary of ReNew Power Ventures, issued bonds worth Rs 4,510 million under Indian Infrastructure Finance Company Limited’s (IIFCL) credit enhancement scheme. As per the scheme, IIFCL will provide partial credit guarantee for the first loss to the bondholders. In addition, an irrevocable backstop guarantee will be provided by the Asian Development Bank (ADB). IDFC Limited is the sole arranger and underwriter of the bonds, which have a tenor of 18 years. The funds raised will be used by ReNew Power to re-finance its existing debt. In October 2015, Welspun Renewables received fresh funding of $617 million from its promoters and existing and new investors through a combination of debt and equity infusion. While $405 million was in the form of debt, $165 million was through equity and $47 million through a line of credit.

Equity deals In February 2015, Singapore-based Sembcorp Industries Limited, through its subsidiary, Sembcorp Renewables, acquired a 60 per cent stake in Green Infra Limited (GIL) for $227 million. The shares were acquired from private equity firms IDFC Private Equity [PE] Fund II and IDFC PE Fund III, which were the majority shareholders in GIL. With this deal, IDFC PE Fund II completely exited the compa-

ny, while IDFC PE Fund III continued to hold a 40 per cent share with a secured option for a future exit. The acquisition marked Sembcorp’s entry into the Indian renewable energy sector. In the same month, Orient Green Power Limited (OGPL) sold its entire stake in its non-operative subsidiary, Theta Wind Energy Private Limited, to Andhra Pradeshbased Axis Energy. Theta Wind Energy has a licence for setting up a 200-300 MW wind power project in Andhra Pradesh. Also in April 2015, Hyderabad-based telecom and solar firm Surana Telecom and Power Limited acquired a 51 per cent stake in Arhyama Energy Private Limited. The latter is setting up a 10 MW solar power plant in the Nalgonda district of Telangana, which is likely to be commissioned by December 2015. Surana Telecom will make the remaining investment for completing the project following this acquisition. After this move, the Surana Group’s portfolio will consist of solar plants with a cumulative capacity of 30 MW. In the same month, the Chennai-based Rajalakshmi Group acquired a majority stake in Ashok Leyland Wind Energy for Rs 1.7 billion, along with 63 MW of the latter’s wind energy assets. The group intends to expand its wind power project portfolio to 200 MW and add 53 MW of solar projects in Tamil Nadu over the next four years. The Rajalakshmi Group reportedly has 750 acres of land in Tamil Nadu, which it plans to utilise for augmenting its green energy portfolio. Also in April 2015, the Suzlon Group completed the 100 per cent stake sale of its wholly owned subsidiary Senvion SE to Centerbridge Partners. The transaction closure followed the signing of a binding agreement between Suzlon and Centerbridge Partners on January 22, 2015 for a total cash consideration of Euro 1 billion and a future potential earn-out of up to an add-itional Euro 50 million. The transaction enabled Suzlon to raise approximately Rs 70 billion in cash, of which a substantial portion was intended for debt

reduction and volume growth. As per the agreement, Senvion will give Suzlon a licence for offshore technologies in the Indian market, while Suzlon will give Senvion a licence to sell its S111-2.1 MW turbine in the US market. In April 2015, Havells India Limited acquired a majority stake of 51 per cent in Bengaluru-based LED and solar lighting products manufacturer Promptec Renewable Energy. Valued at Rs 650 million, the acquisition marks Havells India’s entry into the solar energy segment. Promptec’s promoter group continues to hold a 49 per cent stake in the company. In May 2015, SunEdison signed an agreement with Spain-based Fersa Energias Renovables for acquiring the latter’s 102 MW operating wind power plants in India. The plants in question are the Hanumanhatti, Gadag and Bhakrani wind farms in Karnataka and Rajasthan, which have long-term power purchase agreements (PPAs) in place. SunEdison is also planning to buy a 51 per cent equity stake in a 23.1 MW operating solar project in Rajasthan from its partner, Chint Solar Company Limited, after which it will be its sole owner. A PPA has already been signed with NTPC Vidyut Vyapar Nigam. In the same month, Bengaluru-based energy solutions provider Enzen Global Solutions acquired Pune-based wind turbine manufacturing company Luminous Renewable Energy Solutions for around Rs 126 million. Enzen has set aside Rs 1,200 million for completing three to five acquisitions during 2015-16. In June 2015, Delhi-based distributed solar power company Applied Solar Technol-ogies (AST) raised $40 million in funding, led by the Australian government’s sovereign wealth fund, Future Fund. AST’s existing PE investors – Bessemer Venture Partners, the Capricorn Investment Group and the International Financial Corporation (IFC) – also participated in this round of funding, which took AST’s overall PE funding to more than $85 million. November 2015 ● Renewable Watch ● 57

FINANCE In the same month, SunEdison signed an agreement for acquiring Singapore-based Continuum Wind Energy, along with its Indian assets, for an undisclosed amount. The deal is expected to be completed by December 2015. The assets acquired from Continuum will be placed on the operational call rights list of SunEdison’s subsidiary, TerraForm Global, while the O&M of the wind power plants will be taken up by SunEdison Services. Continuum Wind Energy owns and operates 242 MW of wind power plants in Maharashtra and Gujarat, and has more than 1,000 MW of wind plants at various stages of development across six states. In August 2015, Singapore-based Sembcorp Utilities subscribed to the entire Rs 2 billion pro-rata rights issue of its subsidiary Sembcorp Green Infra. However, the other stakeholder – IDFC PE Fund III – did not subscribe to its share of the issue. The funds raised through this route will be used for financing the company’s growth in India’s renewable energy sector. As a result of Sembcorp Utilities’ subscription, its stake in Sembcorp Green Infra increased from 60 per cent to 64.06 per cent. In the same month, the Hyderabad-based Greenko Group signed a non-binding agreement with the Singapore government’s investment arm, GIC, for selling its entire stake in Greenko Mauritius for a gross cash consideration of about Rs 16.53 billion. As a result of the deal, Greenko’s trading activities and assets, including the development, ownership and operation of clean energy projects in India and all associated financial liabilities (including debt and associated minority interests), will be passed on to GIC. As of June 2015, Greenko’s operational renewable power capacity stood at 838 MW. Also in August 2015, OGPL raised Rs 2,500 million through a preferential allotment of shares after receiving board approval. While existing promoter SVL Limited and its subsidiaries subscribed to shares worth Rs 1,500 million, EW Special Opportunities Fund II Private Limited, Ecap 58 ● Renewable Watch ● November 2015

ANNIVERSARY ISSUE Securities Limited and Forefront Capital Management Private Limited subscribed to the remaining Rs 1,000 million worth of shares. The company will use these funds to retire its debt and expand its project portfolio, which currently includes 435 MW of operational wind power assets and 106 MW of biomass-based power projects. In September 2015, Hyderabad-based Fourth Partner Energy raised $2 million in Series A funding, led by clean technology fund Infuse Ventures. Fourth Partner’s existing investor, the Chennai Angels, also participated in the funding round. In addition, Fourth Partner received a significant commitment under the Seed Capital Assistance Facility, implemented through the United Nations Environment Programme and ADB. Under its business model, Fourth Partner offers its industrial and commercial customers the flexibility of choosing the financing model that best suits their needs. This additional round of funding will enable the company to offer more financing options.

Multilateral lending In December 2015, the German government provided support of Euro 500 million for India’s Green Energy Corridors (GEC) project. With this fresh inflow, Germany’s total commitment stands at Euro 750 million. The Euro 500 million financial assistance was given in accordance with the Indo-German Development Cooperation, under which the German government had committed to provide funds worth Euro 1 billion over a period of five years. In addition, three separate loan agreements worth Euro 625 million were signed for the GEC project. The Department of Economic Affairs signed an agreement with German development bank KfW to provide a loan of Euro 76 million to Tamil Nadu and Euro 49 million to the Rajasthan government for intra-state transmission schemes. Meanwhile, Power Grid Corporation of India Limited signed a Euro 500 million loan agreement with KfW for interstate transmission schemes. In January 2015, three US federal agen-

cies committed a total of $4 billion to India’s clean energy segment as part of the US-India Business Summit. While the US Trade and Development Agency will be extending $2 billion in loans for renewable energy projects, OPIC and the US Ex-Im Bank will lend $1 billion each. The loans will be provided for setting up projects and sourcing equipment. In April 2015, the Indian Renewable Energy Development Agency signed a master cooperation agreement (MCA) with IFC to provide infrastructure financing for renewable energy projects in India. The aim of the agreement is to make local currency financing available within short time spans and at reduced costs. It is also expected to standardise the steps that lenders take while co-financing projects with IFC. The MCA was created during the global financial crisis in order to bring together financial institutions for mobilising private sector investments. So far, 27 development financial institutions have signed the agreement. In May 2015, the central government granted Rs 5,150 million from the National Clean Energy Fund for Andhra Pradesh’s Green Energy Corridor plan. KfW is likely to provide another Rs 5,000 million for funding the project. The state government is developing the corridor at an initial cost of Rs 12.89 billion to evacuate power from upcoming wind and solar energy projects in the state. In August 2015, IFC raised $49.2 million by issuing Green Masala Bonds of Rs 10,000 denomination each. The bonds will yield 6.45 per cent per annum and mature on August 10, 2020. JPMorgan Chase and Company was the underwriter to the issue. The issue is a part of IFC’s $3 billion Masala Bond Programme, under which bonds worth $1.66 billion have been sold in a range of tenors for the offshore rupee bond market. IFC will invest the fresh funds in Green Bonds issued by YES Bank, which will use the proceeds to invest in renewable energy and energy efficiency projects in India. ■

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Views of Upendra Tripathy “We need to invest a lot more in grid connectivity” The Ministry of New and Renewable Energy’s secretary, Upendra Tripathy, believes that the new 175 GW by 2022 target set for the sector is achievable. At a workshop organised by think tank Brookings India in September 2015, he talked about the recent initiatives, developments and trends in the sector, as well as the challenges it faces. The following are the key highlights of his address…

ndia has increased its carbon tax from Rs 50 per tonne of coal to Rs 100 per tonne and then to Rs 200 per tonne. No other country in the world has increased its carbon tax in this manner. In fact, it is provided that this can also be increased further to Rs 300 per tonne if desired.

Upendra Tripathy Secretary, Ministry of New and Renewable Energy

The Solar Energy Corporation of India (SECI) has been changed to the Renewable Energy Corporation of India (RECI) because the 175 GW target also includes 60 GW from wind and 15 MW from biomass and small-hydro. To take care of this huge target, we have changed SECI to RECI, thereby expanding its mandate and enabling it to take up more projects. Another initiative that we are working on, which is the prime minister’s idea, is the global solar alliance, called International Solar Policy and Applications Agency. However, this alliance is limited to 110 countries lying between the Tropic of Cancer and the Tropic of Capricorn. We feel that these countries have unique problems and unique geographies and, given the technology available today, the 1 billion people who are still in darkness can be given home lighting systems, solar lights, etc. An international organisation can help achieve this in a given time span.

“We are surprised by the support we have received from various quarters to translate the dream of 175 GW into reality.”

The Reserve Bank of India and the department of finance have together done some wonderful things. For the first time, investments of up to Rs 150 million in renewables have been brought under priority sector lending (PSL). Further, to promote the solar rooftop segment, for which around 40,000 MW is being targeted over the next seven years, the government has said that rooftop loans will be part of the home

60 ● Renewable Watch ● November 2015

improvement loan scheme. This means that the interest rate will be lower and tax benefits will also be available. This also comes under PSL. Aside from this, the renewable purchase obligation, the sole basis on which renewable energy is purchased by the states, is also going to be revised upwards. This is the way in which the share of renewable energy will go up. To address the issues of balancing and wheeling, a national balancing policy is being worked out by the Central Electricity Authority keeping in view the states that have more hydro capacity, pumped storage, and even the gas-based plants that are being thought of. The idea is that it is essential to have a macro plan and a balancing policy and only then can renewable energy reach everywhere. We have also given 100,000 solar pumps. In fact, the number can go up because we find that this is tremendously useful to farmers and a very inclusive process. In some states like Karnataka, they have not only provided solar pumps to farmers but have also allowed them to set up mini-solar power plants of 1-3 MW capacity, from which the farmer can sell power at a very good price. They found that the farmer uses the electricity for 200 days and so, on the other days, he can sell it to the grid. Meanwhile, 21 states have net metering policies in place, whereby individuals can change their house into a powerhouse. They can produce power, consume as much as they want, and then sell the rest. We are also trying to strengthen the grid. The Green Energy Corridors project is being imple-

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ANNIVERSARY ISSUE mented. In the first phase, Rs 440 billion is planned to be spent in eight states. Phase II is also coming up, which will connect the 25 solar parks, of which 21 are in place. Internationally, I am told, the investment in generation and the grid is in the ratio of 1:1. In India, the ratio is 1:0.4, which means we need to invest a lot more in grid connectivity. A lot more needs to be done to ensure that there is a hassle-free flow of energy from one part of the country to the other. Also, we need to strengthen the grid so that solarrich or wind-rich states can feed power into the grid, which can flow to parts of the country that actually require it. In fact, there have been instances in many countries where renewable energy has played an important role in times of crisis to balance the grid. With the type of promising non-siliconbased technologies that are likely to come into the market, and even the siliconbased panels that are malleable and much more efficient, I am sure that in the days to come, renewable energy will be cheaper in terms of grid parity. There is a lot of hidden demand for investment in the renewable energy space. In 2015, the first Renewable Energy Global Investors Meet & Expo was held. That was crucial in

“A lot more needs to be done to ensure that there is hassle-free flow of energy from one part of the country to the other. Also, we need to strengthen the grid so that solar-rich or wind-rich states can feed power into the grid, which can flow to parts of the country that actually require it.” bringing forth the demand for renewable energy. We floated two kinds of certificates – Green Energy Commitment certificates by companies and Green Energy Commitment certificates by banks. The companies made a total investment commitment for 273 GW of renewable energy capacity. For the first time, we got to know that there is a lot of demand from companies to invest in India. The second surprising thing was that the banks made some 70 GW of financial commitments, including the State Bank of India leading with 15,000 MW. This year, when we are tendering 15,000 MW of (solar) capacity, you will be surprised to know that if a state issues a tender for 1 GW, the offer it gets is ten times that. And the prices have come down to about Rs 5.50 per unit from Rs 18 per unit in 2010, which is a substantial achieve-

ment. With equity funds and pension funds also looking to invest in India, this may reduce further. We will require $100 billion worth of investments for realising this dream of 175 GW. That is why we are trying to mobilise funds from the World Bank, the Asian Development Bank, KfW and the European Investment Bank. However, the crucial issue is the hedging cost. You can bring the dollars and spend them, but when you return the money, it works out to around 8 per cent extra while in India, the rate for the loan that the sector gets is 14 per cent. There are challenges that we need to address, apart from balancing. Land is not an issue because we have millions of hectares of wasteland, 200,000 square km of desert, a lot of canal banks and water surface that can be utilised. The cost of capital is an issue. However, I am happy to mention that even the Life Insurance Corporation has been kind enough to consider that it will dedicate a part of its capital towards renewable energy promotion. The Ex-Im Bank too has plans to participate in this revolution. In fact, we are surprised by the support we have received from various quarters to translate this dream of 175 GW into reality. Although many people say that it is very ambitious, I personally or officially don’t find it unachievable. We have a very clear blue print, and the plans, and I am sure we will achieve the target. Of course, there are many challenges related to balancing, wheeling, storage, etc. There are also legal and financial challenges, but these can definitely be handled. ■ November 2015 ● Renewable Watch ● 61

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Views of Varsha Joshi “The government is as keen on promoting wind power development as solar” At a recent Renewable Watch conference on Wind Power in India, Varsha Joshi, joint secretary, Ministry of New and Renewable Energy (MNRE), spoke about the initiatives undertaken and planned by the government for promoting the segment, the key issues and solutions pertaining to the market, and the segment’s outlook. Excerpts…

T Varsha Joshi Joint Secretary, MNRE

he government is as keen on promoting wind power development as it is on solar; however, the paradigms have become very different over time. The wind power segment has become a victim of its own success; it has reached a certain plateau. This needs to be remedied now. It is not as if simply announcing a target supported by incentives will keep the market moving by itself. The industry is in a different scenario today and the government is trying to work accordingly.

Progress, initiatives and recent developments

“Accelerated depreciation has not made much of an impact in terms of capacity addition, but has been more of a signal for the segment.”

The National Institute of Wind Energy has revised the wind segment’s potential to 302 GW at 100 metre hub height. The government is planning to shortly come out with an atlas that would highlight hybrid zones in the country with wind power speeds of over 6 metres per second and a direct normal irradiance of more than 5.5 kWh per square metre per day. It is also very keen to introduce the concept of renewable energy zones with wind and solar capacities, with new industries and manufacturing capacities also being directed to these regions. The most obvious candidates for such areas include Chitradurga in Karnataka, Anantapur in Andhra Pradesh, and some places in Gujarat. We are also likely to come up with a policy for hybrids on behalf of the MNRE. The MNRE is working on a repowering policy with built-in incentives. The states that have the maximum repowering capacity and potential, mainly Tamil Nadu, Karnataka and Andhra Pradesh, are keen to get the concept going. This will help us keep tariffs and costs down. We should first make the best of good potential sites. With regard to evacuation infrastructure, the

62 ● Renewable Watch ● November 2015

Green Energy Corridors project is progressing at a fair pace. Work on its second phase has already begun and the government has been inviting inputs from the industry regarding locations where extra evacuation is required. Tamil Nadu is working the fastest on this front with tenders for most of the first few packages being finalised. The state’s infrastructure should come through in the next two years or so. Tamil Nadu is also working on a second package covering more areas, and the funding for this is likely to come through from KfW shortly. The offshore wind policy has already been announced and the government has been engaging in consultations with the industry to determine how the international competitive bidding process will go through. Mechanisms (viability gap funding [VGF] or bundling) for the same are being worked on. The government has identified some blocks that look viable on the basis of available satellite data and the metrics that have been made available by the concerned agencies. These blocks also look reasonably clean from the point of view of defence and environment clearance. We will delve into these blocks in a bit of detail. For the blocks that we decide to take up for bidding, we are getting some kind of baseline data and weather analysis done from the ministry’s side. The ministry will involve itself till a certain stage, after which the industry is expected to take over. As in the policy, there will be two stages of clearance. We will be providing major clearances from major ministries while secondstage clearance will have to be taken up by the concerned developers. As far as the timelines are concerned, our light detection and ranging system will be in the water only by March 2016,

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ANNIVERSARY ISSUE after which one year will be required to get the basic data in place. We cannot bid without at least one year of data being made available to bidders. Therefore, March 2017 is a realistic estimation. In terms of sites, we are mainly looking at south Gujarat and Tamil Nadu. The MNRE has also taken out an expression of interest for storage projects and is working on an overarching storage policy that would include some kind of target or VGF. That is, however, subjective to fund allocation by the government. The policy should not take long to fructify.

Issues and challenges One of the key issues being faced by the segment relates to resource variability and grid stability. However, there has been significant progress in the past year in terms of the implementation of scheduling and forecasting. The industry and state load despatch centres (SLDCs) are now equally keen to have this done soon. The Central Electricity Regulatory Commission’s (CERC) regulations are out and the Forum of Regulators is looking at intra-state regulations seriously. Tamil Nadu’s experiment, for instance, has worked reasonably well and the state’s forecasts are pretty accurate. At the MNRE, we are pushing the concept of the aggregator because we think it will be a good mid-path, especially since none of the SLDCs has capacities in place yet, except Gujarat. The renewable energy

management centres are going to be tendered out soon and will take about a year to come up. Meanwhile, the industry can be the first mover. Going forward, a lot of new wind capacity can only come through if it’s allowed to flow interstate, which cannot happen unless mechanisms are in place and there is enough evacuation and scheduling technical capacity. A state like Tamil Nadu, for instance, cannot absorb 10 GW of wind all by itself. The government is working to make interstate transfers more viable. The CERC does not seem interested in waiving transmission charges and losses (that typically amount to Re 1 per unit) unilaterally for wind. This can only happen when the government policy comes through. Interstate transmission charges and losses for wind are likely to be waived as an integral part of the New Tariff Policy. In addition, stricter compliance with renewable purchase obligations (RPOs) is being looked at in terms of amendments to the Electricity Act, 2003 and the New Tariff Policy. The amendments to the Electricity Act should be implemented soon enough if Parliament functions properly. The condition of the discoms is another challenge. An announcement of the discom relief package can be expected soon, which will have a great bearing on the quality of RPO compliance, not only in windy states which are already doing

enough, but also other states that can become potential customers for us. In the solar segment, the Solar Energy Corporation of India and NTPC Limited could take steps to ensure payment security, because there is a regime of competitive bidding that allows them to become intermediaries. In wind also, for bringing in payment security and involving an intermediary, bidding will have to be accepted by the industry. A clean, no-nonsense mechanism that is completely under the MNRE’s control can come through only if the industry accepts bidding. Land issues will have to be dealt with on a micro basis. It is impossible for the MNRE to come up with any policy prescriptions on land. We are happy to help on a caseto-case basis, but otherwise it should be taken care of by the state government.

Expectations from the industry As far as industry expectations are concerned, turbine manufacturers need to work on cost reductions and bring in more transparency in costs. The industry needs to get scheduling and forecasting started in states; this should start immediately in states like Andhra Pradesh, Karnataka and Maharashtra. It will also be helpful if the industry does it in a united way for each state rather than by making divisions in them. It should also study the possibility of interstate power sales and the roadblocks that don’t allow it to happen. The ongoing fiscal is not a very big year for the segment. We should be able to reach 2-2.5 GW. That being said, a lot of projects are at different stages of the approval and commissioning process in every state. The financial closures that have taken place in wind are huge, already amounting to 8,000-9,000 MW. Accelerated depreciation has not made much of an impact in terms of capacity addition, but has been more of a signal for the segment. Capacity addition in the next year will depend a lot on whether scheduling and forecasting mechanisms have been put in place as their absence is the main reason states have been wary of wind. ■ November 2015 ● Renewable Watch ● 63

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Interview with Dr Ashvini Kumar “The solar industry will move towards larger-capacity projects” Since its inception in 2011, the Solar Energy Corporation of India (SECI) has played a key role in promoting the country’s solar power sector. Currently headed by Dr Ashvini Kumar, who has been involved with the solar energy sector since 1981, the organisation will soon foray into other renewable energy segments as well. In an interaction with Renewable Watch, Dr Kumar talks about the solar power sector’s performance so far, its key achievements and future outlook… What were SECI’s key achievements in the past year?

Dr Ashvini Kumar Managing Director, Solar Energy Corporation of India

“India can achieve the 100 GW solar target by bringing in storage technologies and grid balancing techniques and encouraging renewable energy hybrid systems.”

SECI’s major achievements during the past year are the success of the 750 MW solar power scheme through viability gap funding (VGF) under the Jawaharlal Nehru National Solar Mission (JNNSM) and the implementation of the pilot scheme on grid-connected rooftop systems through competitive bidding. The VGF scheme was the first scheme under the JNNSM in which the government made a provision to provide upfront VGF to developers to generate solar power at a pre-fixed tariff of Rs 5.50 per kWh for a period of 25 years. The government wanted SECI to securitise the VGF amount and ensure that the selected projects are completed on time. We took a number of steps to ensure this, which includes holding regular meetings with the authorities in states where projects were envisaged, interactions with domestic manufacturers of solar cells and modules for timely supply as well as meetings with various financial institutions. Another challenge was that this was the first scheme of the mission where we envisaged quite a significant amount of capacity for interstate transmission. As far as interstate power transmission is concerned, there are certain requirements. First, a transmission corridor should be in place. Second, long-term open access (LTOA) must be available. However, the states have not put in place a deviation settlement mechanism (DSM) for renewable energy when projects are connected to the state transmission system. In fact, we have faced some issues due to this. In this scenario, the states are treating renewable energy at par with conventional energy and subjecting it to the same DSM rules that are applicable for con-

66 ● Renewable Watch ● November 2015

ventional energy. The states have shown reluctance to schedule solar power for inter-state evacuation in the absence of suitable mechanisms, even though other requirements like the availability of LTOA, etc. were in place. This issue has constrained energy accounting and the subsequent settlement of bills by the states, resulting in payment delays to developers. The main takeaway from this situation is that, as a country, we are not prepared for interstate transmission of renewable energy. If all the states were to follow the CERC regulations on forecasting and scheduling, they would have to map all the generators in the state to understand whether the deviation is arising from conventional or renewable power. Not all states have a ready infrastructure to implement this mechanism. The low point during the past year has been that concentrating solar power (CSP) technology has failed to pick up. The gap between solar photovoltaic (PV) and CSP is widening. What is the status of projects under the JNNSM? The government has significantly increased the target under the JNNSM. During 2016-17, it aims to commission 12,000 MW of capacity. To this end, at least 15,000 MW of capacity should be tendered by 2015-16. The sector is progressing quite well on this front. A number of states have issued large tenders. These include Telangana, Andhra Pradesh, Punjab, Karnataka and Madhya Pradesh. About 2,000 MW of capacity is under the tendering process by SECI, of which tenders for about 1,200 MW are already out: 500 MW in Maharashtra, 440 in Uttar Pradesh and 250 MW in Gujarat. We have also planned to release ten-

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ANNIVERSARY ISSUE ders for 150 MW of capacity in Jharkhand. We had planned 500 MW of capacity in Tamil Nadu but this may be delayed due to court orders, as the matter is sub-judice. SECI has also released tenders for 250 MW of capacity, comprising 50 MW in Kerala and 200 MW in Madhya Pradesh under the Project Management Consultancy portfolio. Many tenders are in the pipeline. What is your view on the financial health of the discoms across states? Concerns regarding the financial health of discoms have arisen from time to time. But, as a developer, we have seen that there have been some delays but no defaults. That’s a big positive. Currently, the central government is working to improve the financial health of the discoms. The major issue with the discoms is that they have huge accumulated debt at high interest rates. At the same time, they are unable to raise tariffs to increase their revenues. The government has proposed that the discoms swap these costly loans with loans at a cheaper rate. This would help in reducing the interest outgo and is the only long-term solution. Investors continue to invest in the power market as they are of the view that because the discoms are government entities, the government will not allow them to go bankrupt. What is the status of the rooftop segment in the country? How has SECI’s experience in the segment been? Solar capacity addition through rooftop systems has huge potential in the country. In the scaled-up target of 100 GW of solar by 2022, 40 per cent of capacity is envisaged through rooftop systems. The Ministry of New and Renewable Energy (MNRE) is working to bring out schemes to give a further boost to this segment. As far as SECI is concerned, we take credit in bringing cost competitiveness in setting up rooftop solar systems through a pilot scheme of the MNRE. I would like to mention that prior to the launch of the scheme, the MNRE provided a subsidy of Rs 130 per Wp for rooftop projects. In the first ten-

der that SECI released, the price dropped to Rs 90 per Wp and has now reached around Rs 60 per Wp. Another important objective of the scheme was to provide exposure to the states with a view to bringing about an enabling policy framework. SECI has implemented the scheme in pilot mode for select cities over a period of two years now. SECI, along with the MNRE, GIZ and other stakeholders, provided a bridge between the states and developers for sharing ground-level feedback. Today, the majority of states have brought out policies on net metering, connectivity norms and tariffs. This makes us believe that now is the time when the solar rooftop segment can take a big leap. Going forward, SECI aims to develop 1,000 MW of rooftop systems and is planning to bring out a 750 MW rooftop solar tender on a pan-Indian basis. SECI’s experience in the rooftop segment brings out some interesting points. These include the proactive role of state discoms, the easy availability of two-way meters in various capacity ranges (domestic and commercial segments), and the development of innovative financing models. There is a visible trend that users prefer to pay for the energy generated from rooftop systems rather than invest in capex for installing the system. In the domestic segment, another key factor that needs to be addressed is the relationship between the inhabitant of a building and its actual owner. For setting up a rooftop system, this relationship has to be positive. One of other important aspects in promoting rooftop systems is the infusion of confidence in the performance and durability of these installations. This would require setting up a quality assurance system and an accreditation model for good quality developers. What are SECI’s plans going forward? SECI envisages developing and executing 9-10 GW of solar capacity over the next five years. This would include 1,000 MW of solar projects under its ownership and the balance capacity through the implementa-

tion of central government schemes. We made given green energy commitments for developing 1,000 MW of capacity and are currently working on obtaining equity funds, which could be through government support, internal accruals and funding from bilateral/multilateral organisations. What is SECI’s view on the fall in solar power prices to Rs 4.63 per kWh at the recently concluded auction by NTPC? The recently discovered price of Rs 4.63 per kWh has been possible because the project is located in a solar park and, therefore, the developer does not have to worry about the land or transmission infrastructure. In my opinion, this bid proves the point that solar parks are viable. Some other factors that have led to the fall in prices are the developers’ ability to access low-cost financing, the good track record of NTPC and the position of Andhra Pradesh’s discoms. What trends do you foresee in the solar power segment in the short, medium and long terms? Solar power will continue to expand and the industry will move towards developing larger-capacity projects and solar parks will gain increasing traction. In the short term, storage capacity will start building up. Further, interstate transmission of power will gain importance. This can be made possible by the forecasting of renewable energy, which would encourage developers to control deviations in power generation through employing energy storage options. Moreover, in the short run, the hybridisation of renewable energy sources will emerge as an attractive segment. In the medium term, there is good scope for CSP projects as it is easy to build thermal storage in these projects. With storage of more than four hours, CSP technology is already cost-competitive with PV. The real issue lies in the identification of good sites with high direct normal irradiance. In the long term, India can achieve the 100 GW solar target by bringing in storage technologies and grid balancing techniques, and encouraging renewable energy hybrid systems. ■ November 2015 ● Renewable Watch ● 67

PERSPECTIVE

ANNIVERSARY ISSUE

Interview with Ajay Jain “Andhra Pradesh is leading in the promotion of solar parks” Andhra Pradesh has taken concrete steps in the past year to tap its potential of an estimated 38.4 GW of solar energy and 22.5 GW of wind energy. In fact, the state has some noteworthy projects in the pipeline, particularly for solar. These projects, if implemented successfully and in a timely manner, can potentially take the state a few positions up on the renewable energy chart. In an interview with Renewable Watch, Ajay Jain, secretary, Energy, Infrastructure and Investment Department, Government of Andhra Pradesh, talks about the state’s renewable energy policies, the achievements so far, the key challenges and the future roadmap. Excerpts.... What have been the key achievements in the state’s renewable energy sector in the past one year?

Ajay Jain Secretary, Energy, Infrastructure and Investment Department, Government of Andhra Pradesh

“The government’s objective is to tap the state’s immense solar and wind power potential, in order to meet the growing energy needs in an environmentally sustainable manner.”

The government is giving priority to the promotion of renewable energy projects, with special emphasis on solar power and wind power projects. In the past one year, the government has taken various steps such as concluding the bidding for 619 MW of solar power, initiating proposals for establishing solar parks, developing green energy corridors, announcing investorfriendly policies, promoting solar pump sets for agricultural operations on a large scale, and promoting grid-connected rooftop systems, canal-top and canal-bund solar power projects. Under the Power for All programme too, a lot of emphasis has been laid on the promotion of renewable energy projects in the state. The government is also prioritising the promotion of manufacturing facilities in the state’s wind and solar sectors by announcing incentives for investors. The renewable energy capacity addition during 2014-15 was 357.9 MW. Of this, the share of wind power was 285.2 MW and that of solar power was 72.7 MW. How will the state’s new renewable energy policy support the growth of the sector? The renewable energy policies announced by the government in February 2015 for the promotion of solar and wind power invited prospective entrepreneurs to come forward to make investments in the state. The policies announced are considered to be the best in the country, and other states have also been advised by the cen-

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tral government to announce similar policies. The policies also have the provision of promoting off-grid solar systems like solar pump sets and grid-connected rooftop solar systems. What is the update on solar park development in the state? What has been the industry response? Andhra Pradesh is leading in the promotion of solar parks. It has planned to develop solar parks with an aggregate capacity of 3,500 MW in Ananthapuramu, Kadapa and Kurnool districts. The Ministry of New and Renewable Energy (MNRE) has sanctioned these solar parks and works have commenced for the 1,000 MW solar park at NP Kunta, Ananthapuramu district, and the 1,000 MW solar park at Gani, Kurnool district. The land acquisition process has already been completed for both these solar parks. Land acquisition is in progress for the balance 1,500 MW of solar parks. NTPC is exclusively developing the 1,000 MW NP Kunta Solar Park and works are in progress for 250 MW of capacity, for which a power purchase agreement was signed by the state discoms (at a tariff of Rs 6.16 per unit). Tenders have been floated for awarding the works for the remaining 750 MW. In respect of the 1,000 MW Gani Solar Park, which is being taken up under the bundling scheme, the request for selection was released in two phases of 500 MW capacity each by NTPC. The lowest tariff arrived at in the financial bidding process for the first phase of 500 MW is Rs 4.63 per unit by SunEdison. The land acquisition process for the 1,000 MW

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ANNIVERSARY ISSUE solar park being developed in Kadapa district is currently under way, and the tenders will be floated by NTPC by offering Dollar Index Tariff. The tariff at which the power is to be sold to discoms has been fixed at Rs 4.75 per unit, and will be constant for a period of 25 years. The Andhra Pradesh Power Generation Corporation is also planning to develop a 500 MW solar power project near Tadipatri, Ananthapuramu district, for which tenders have been floated. What is the status of renewable purchase obligation (RPO) compliance and enforcement in the state? What steps have been taken to help discoms achieve these targets? RPO compliance by discoms stands at around 3.6 per cent (solar compliance is 0.12 per cent). According to the Andhra Pradesh Electricity Regulatory Commission (APERC) regulations, the RPO mandated for discoms is 5 per cent, with a solar power purchase obligation of 0.25 per cent. APERC was requested to fix the RPO target at a level that would encourage investments over the next five years, taking into account the recommendations made in the National Tariff Policy for solar power (8 per cent) and the National Action Plan on Climate Change for the overall RPO trajectory, including solar power (14 per cent), by 2018-19. What incentives are being offered to attract private investment in renewable energy? The incentives offered under the wind power and solar power policies include exemption from transmission and distribution charges for wheeling of power, exemption from distribution losses in the case of solar power injected at voltage levels of 33 kV or below; banking facilities; exemption from electricity duty; exemption from crosssubsidy surcharge and allowing a reduction in contract demand for five years in the case of solar power projects; deemed industry status; exemption from supervision charges payable to Transmission Corporation of Andhra Pradesh Limited (APTRANSCO)/discoms; exemption from

obtaining no-objection certificates/consent for establishment under the pollution control laws; deemed non-agriculture status for the land; and must-run status and single-window clearance facilitation through the nodal agency – the New and Renewable Energy Development Corporation of Andhra Pradesh. In the case of wind power projects, allotment of land on a long-term lease basis and giving advance possession of revenue lands are considered under the policy. In the case of gridconnected solar rooftop systems, both net metering and gross metering facilities have been extended up to 1,000 kWp capacity at a single location. For manufacturing, priority allotment of land on a long-term lease basis and exemption from electricity duty for 10 years are being extended. What has been the progress in the development of the green energy corridor? What is the transmission and evacuation infrastructure availability for renewable energy projects? APTRANSCO has planned the evacuation of 3,150 MW of wind power in Ananthapuramu, Kadapa and Kurnool districts in two phases, at an estimated cost of Rs 33.73 billion. Under Phase I, a 400 kV line from Jammalamadugu to Uravakonda, along with 400 kV substations at both ends, is planned to be set up and is expected to be commissioned before December 2015. Under Phase II, a 400 kV line from Uravakonda to Hindupur with intermittent substations has been planned and it has been proposed that the works be taken up after the completion of Phase I. Further, under the Power for All scheme, APTRANSCO has planned a renewable energy evacuation scheme capable of evacuating 3,000 MW of solar power and 1,000 MW of wind power, with a capital outlay of Rs 18.16 billion as part of the Green Energy Corridors project. In addition, 870 ckt. km of lines and 1,500 MVA of substation capacity will be added as part of the project. What will be the likely mix of solar and wind power in the state’s total renewable energy in

the next four to five years? An addition of 10,000 MW of renewable energy capacity has been proposed by 2018-19. Of this, solar power will account for 5,000 MW and wind power for 4,150 MW – that is, more than 90 per cent of the addition will be from solar and wind. The addition of another 5,000 MW of solar power has been proposed by 2021-22. What are the key challenges in the development of the renewable energy in the state? What initiatives is the state likely to take in the next year for developing the sector? As per National Institute of Solar Energy estimates, the state has a solar power potential of 38.4 GW and as per National Institute of Wind Energy estimates, the wind power potential of the state is 22.5 GW. The government’s objective is to tap the immense solar and wind power potential that exists in the state in order to meet the growing energy needs in an environmentally sustainable manner. The major challenges in this regard relate to the management of the grid and the government is, therefore, planning to strengthen the existing transmission infrastructure by constructing green energy corridors with the support of the Ministry of Power. Adequate planning has been done for the evacuation of green power from potential clusters. The central government is also planning to evacuate green power from states with renewable energy potential through integration with the national grid, with the support of Power Grid Corporation of India Limited. The state is targeting the addition of 1,000 MW of solar power and 800 MW of wind power over the next year. It is expected that 500 MW of solar power and 500 MW of wind power will be added by end-March 2016. It is also promoting solar pump sets on a large scale. So far, 2,000 solar pump sets have been installed and another 5,000 are proposed by March 2016. The government also plans to install 10 MW of grid-connected solar rooftop systems on rooftops of government buildings in the state. ■ November 2015 ● Renewable Watch ● 69

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ANNIVERSARY ISSUE

Interview with Anirudh Tewari “Punjab has fixed a target of 4,200 MW of solar capacity by 2022” Within a rather short period of time, Punjab has managed to attract considerable interest from the industry in its renewable energy space. The state has taken noteworthy steps, particularly in solar, to promote renewable energy capacity addition and the response from the industry has been fairly positive. The availability of adequate infrastructure and sound financial health are some of the key factors that make Punjab conducive for renewable energy investments. In an interview with Renewable Watch, Anirudh Tewari, principal secretary, New and Renewable Energy, Government of Punjab, talked about the state’s recent renewable energy initiatives, their progress and performance so far, the issues and challenges that the sector faces, and the vision for the future…

Anirudh Tewari Principal Secretary, New and Renewable Energy, Government of Punjab

“We hope that after the successful allocation of projects under the farmers’ scheme, private owners too will find merit in leasing out their lands for NRSE projects.”

What initiatives have been taken by the state to promote renewable energy development over the past year? The installed capacity and production from all renewable technologies has increased substantially and the proactive policies of the state government have ensured rapid growth in the renewable energy sector. The state nodal agency, Punjab Energy Development Agency (PEDA), with its strategic initiatives, is playing a vital role in attracting private investment to projects based on new and renewable sources of energy (NRSE). The one-stop clearance mech-anism provided by the Punjab government through Invest Punjab and the New and Renewable Sources of Energy Policy, 2012 has given NRSE developers the confidence to set up projects in the state. The mechanism provides all sanctions/clearances to NRSE projects from a number of government departments/agencies in a time-bound manner. In addition, various fiscal incentives for NRSE projects have helped in achieving capacity additions in the sector. The incentives provided by the Punjab government include 100 per cent exemption from the payment of fee and stamp duty for registration/lease deed charges for the land required for NRSE projects; 100 per cent exemption from entry tax for NRSE equipment required to set up NRSE projects; octroi exemption on NRSE fuels and NRSE device/equipment/machinery; and no change-of-land-use, external development charges or any other charges for the setting up of NRSE projects. Also, various seminars, confer-

70 ● Renewable Watch ● November 2015

ences and exhibitions are held by the government to educate people on the socio-economic benefits of renewable energy and the ways to capture this clean energy. In 2014, Punjab notified the Policy on Net Metering for Grid Interactive Roof-Top Solar Photo Voltaic Power Plants to encourage solar energy and set up solar photovoltaic (PV) plants at available places on the rooftops of individual households, industries, government/semi-government/local body offices, commercial establishments, institutions, residential complexes, etc. The state has installed approximately 2 MW of solar PV capacity under net metering and 1,248 applications for the installation of approximately 24 MW of solar PV projects under net metering have been received till November 19, 2015. The target is to cover 100,000 homes, totalling a capacity of 200 MW, by 2018. What is Punjab’s installed renewable energy capacity in the grid-connected and off-grid spaces? Are you satisfied with the sector’s progress so far? The grid-connected installed renewable capacity in Punjab till September 2015 was 827 MW, which includes 218 MW of solar PV (with another 350 MW expected by March 2016), 63 MW of biomass projects, 410 MW of cogeneration projects, 135 MW of mini- and micro-hydro projects and 1 MW of waste-to-energy projects. What is the current status of solar project allocations and commissioning under the state policy? How much solar capacity addition can be expected

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ANNIVERSARY ISSUE in the state over the next few years? Since the first phase of solar bidding was carried out in 2013, 181 MW of capacity has been successfully commissioned. Under the second phase, 229 MW of solar PV projects were allocated in 2014, and all of them are on schedule to be commissioned by March 2016. Also, 53 MW of rooftop solar PV projects are scheduled for commissioning by March 2016. Recently, in the third phase of solar bidding for 500 MW of capacity, letters of award (LoAs) have been issued to five companies and implementation agreements and power purchase agreements (PPAs) will soon be signed with PEDA and Punjab State Power Corporation Limited. The state has fixed a target of 4,200 MW of solar capacity by 2022. How has the progress been under the solar rooftop, canal-top and farmers’ solar power schemes? Are there any other programmes/ schemes/policies that the state is likely to introduce for the solar power segment in the near term? A total of 53 MW of rooftop solar PV projects have been allocated and the scheduled date of commissioning for these projects is January 2016. A total of 5 MW of canal-top projects have been allocated to two companies and the scheduled date of commissioning for these projects is March 2017. Another 15 MW of canal-top projects are under allocation to three companies. Under the farmers’ solar scheme, projects with a total capacity of 500 MW are under allocation. This process will be completed by end-2015. We hope that Punjab will have solar capacity of 1,200-1,500 MW by March 2017. How is the biomass-based power generation segment performing in the state? So far, the state has 63 MW of installed capacity in the biomass sector. A tender for the allocation of 200 MW of biomass

“The one-stop clearance mechanism provided by the Punjab government through ‘Invest Punjab’ and the New and Renewable Sources of Energy Policy, 2012 has given NRSE developers the confidence to set up projects in Punjab.” power projects in the state is open and proposals were to be submitted by November 16, 2015. What are the upcoming initiatives in the biofuel space? What are the major ongoing projects in this space and by when are these likely to be completed? CVC India Infrastructure Private Limited has signed an MoU with Punjab to set up five second-generation biorefineries with a proposed investment of Rs 50 billion and a potential employment opportunity for 7,500 persons. In addition, Gulf Petrochem FZC has signed an MoU with the Punjab government to set up a bioethanol refinery with a proposed investment of Rs 8 billion and potential employment of 200 persons. Are there any renewable energy equipment manufacturing projects that are coming up in the state? Yes, MoUs have been signed with some companies to set up a solar cell/panel manufacturing plant in the state. What are the state’s renewable purchase obligation (RPO) targets for the solar as well as non-solar segments? What is the status of

RPO compliance in the state? During the current financial year, the RPO target is 0.19 per cent for solar and 3.81 per cent for non-solar. The state utility has complied with the RPO targets during previous years. What are the key challenges being faced by renewable energy developers in the state and how are these being addressed? The real constraint for the progress of the renewable energy sector in Punjab is land. Punjab is an agrarian state and there is no wasteland where renewable energy projects can be set up. Keeping in view the land constraints, the government has taken a major initiative by providing panchayat land on a lease basis to NRSE developers for a period of 33 years. Private landowners too are being encouraged to provide their land on lease to set up NRSE projects. We hope that after the successful allocation of projects under the farmers’ scheme, private owners too would see the merit in leasing out their lands for these projects. What role does the state foresee for itself in terms of achieving the country’s new targets for the renewable energy sector? What are the state’s targets for the sector in the next two fiscals? The state has set its target in line with the Government of India’s RPO target (15 per cent till 2022). The tariff policy is being amended by the central government and the Punjab government has planned accordingly to achieve the RPO targets. The state is planning to set up 5,400 MW of renewable energy projects by 2022, of which 4,200 MW would be solar projects and the remaining non-solar. ■ November 2015 ● Renewable Watch ● 71

International Conference & Exhibition on Smart Grids & Smart Cities 15-19 March 2016 | Manekshaw Center, Dhaula Kuan, New Delhi, INDIA Supported by:

Organised by:

Host Utility:

Ministry of Power Government of India

ISGW 2016: EVENT STRUCTURE Day-1 (15 March 2016, Tuesday)

Technical Tours and Master Classes (Optional)

Day-2 (16 March 2016, Wednesday)

Conference and Exhibition

Day-3 (17 March 2016, Thursday)

Conference and Exhibition

Day-4 (18 March 2016, Friday)

Conference and Exhibition

Day-5 (19 March 2016, Thursday)

Cultural Tours (Optional)

CONFERENCE THEMES z

Role of Smart Grids in the New Programs of

Government of India z

Amendments to the Indian Electricity Act – Separation of Carriage and Content

21st Century Electric Grids – Non-Traditional Players

21st Century Electric Grids – Evolving Trends

in the Industry: Results and Success Stories

Emerging Era of 100% Renewables

Smart Grid Project Outcomes – Experiences and

National Smart Grid Mission (NSGM) in India

Lessons Learned - Global and India Perspectives

Smart City Mission in India

For detailed agenda, visit ISGW website: www. isgw.in

KEY HIGHLIGHTS OF INDIA SMART GRID WEEK IN MARCH 2015 700+ Participants

The First Edition of India Smart Grid Week held in March 2015 in Bangalore witnessed participation of over 700 experts and delegates representing nearly 180 organizations.

94 Speakers from 16+ Countries

ISGW 2015 had the support of MoP, MoUD, MNRE, DoT, DST etc. as well as several

22 Sponsors

Commerce, GSGF, USTDA, European Commission. BESCOM was the host utility for ISGW

international organizations such as IEC, IEEE, ISGAN, CIGRE, UKTI, US Chamber of 2015. All these institutions are expected to support ISGW 2016 which is planned as a

36 Exhibitors Participation from 27+ Utilities 53 Technical Papers Published

Conference and Exhibition that will bring together India's leading Electric Utilities, Policy Makers, Regulators, Investors and world's top-notch Smart Grid and Smart City Experts and Researchers to discuss trends, share best practices and showcase next generation technologies and products. M/s Tata Power Delhi Distribution (www.tatapower-ddl.com) is the host utility for ISGW 2016.

MINISTRIES SUPPORTED ISGW 2015

Ministry of Power Government of India

Minsitry of New and Renewable Energy Government of India

Ministry of Urban Development Government of India

Department of Telecommunications Ministry of Communications & Information Technology Government of India

Ministry of Science & Technology Government of India

SNAPSHOTS OF ISGW 2015

Media and Marketing Partner:

For participation of delegates and sponsorship queries, please contact:

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PERSPECTIVE

ANNIVERSARY ISSUE

Interview with Arvind Kumar “The state’s solar policy offers attractive fiscal benefits” The one-year-old Telangana government has built high expectations around its solar power policy as the state struggles to meet its energy demand. Its 2 GW solar power tender drew interest from investors across the world. In an interview with Renewable Watch, Arvind Kumar, secretary, energy, Government of Telangana, spoke about the state’s efforts to promote clean energy sources. Excerpts…. What has been Telangana’s progress in the renewable energy space so far? What have been the key achievements in the past one year?

Arvind Kumar Secretary, Energy, Government of Telangana

Telangana has created an attractive and stable policy environment for harnessing solar energy in the state. It came out with its solar policy in June 2015, which offers some of the most attractive incentives in this space and provides a transparent way of setting up power projects. The discoms in Telangana have played a proactive role in promoting solar power through competitive bidding. Letters of intent (LoIs) have been issued for setting up 515 MW of solar power capacity. Another 2,000 MW of solar power is planned to be procured through competitive bidding, which is under way. The solar capacity expected by next fiscal would be as below: z Existing/Under construction: 1,341 MW z Under the finalisation process: 2,049 MW z Under proposal (NTPC bundling scheme): 400 MW of power.

“Due to accelerated solar capacity addition, the state will be in a position to meet the RPO target much earlier than envisaged under the RPO policy.”

The Government of Telangana has also sanctioned the setting up of 361 MW of wind power projects in the state. What steps have been taken by the state government in the past one year to facilitate private sector investments in renewable energy? The state government has notified the Telangana Solar Power Policy, 2015, which is effective from June 2015. This policy has ease of doing business provisions such as the deemed conversion of land and automatic exemption from the Land Ceiling Act, and has also mandated the constitution of a single-window clearance

74 ● Renewable Watch ● November 2015

mechanism for clearing solar power projects in the state of Telangana. In addition to the above, the policy offers attractive fiscal benefits such as VAT and stamp duty exemption as well as other operational incentives such as exemption from cross-subsidy surcharge and energy banking facilities. The state has decided to encourage private sector participation in solar projects. It has deliberately decided to go for private sector participation on a reverse bidding model. Under a unique model, the project locations are worked out based on the evacuation capacity available at the substation level and solar generation thus is based on a distributed generation model. This ensures that solar power generation is spread uniformly throughout the state and brings down transmission costs and distribution losses. What are the key issues and challenges faced by solar project developers and what measures are being taken to resolve the same? Some of the key concerns that solar developers had highlighted were the delays and challenges in getting non-agricultural land status and panchayat approvals. Overall, the time and efforts needed for commissioning projects consumed a lot of effort and time. The above concerns were resolved through the notification of the Telangana Solar Power Policy, which has clearly defined timelines for getting approvals as well as ease of doing business provisions. Most solar power developers have expressed huge satisfaction, as most of these implementation-level difficulty issues have been taken care of.

PERSPECTIVE

ANNIVERSARY ISSUE What are your plans for promoting solar power development further (including offgrid, rooftop, etc.)? The state solar policy recognises the potential of adding solar-based capacities through the solar rooftop and off-grid modes. The policy also has specific provisions for the promotion of grid-connected solar rooftop projects. Recognising that consumers need to be given a choice to decide on the mode of sale of power from solar rooftops based on their commercial and technical standing, the Telangana Solar Power Policy, 2015 provides flexibility to them to choose between gross and net metering. Further, the benefits stated in the policy have been extended for a 25-year period for solar rooftop projects. The discoms in Telangana are also working out the modalities for floating a competitive tender for setting up solar rooftop capacities, which would offer higher scale, lower implementation times and competitive tariffs. In Phase I, it has been decided to set up solar rooftops on all government buildings in Hyderabad. A detailed survey has been done and a total of 5 million square feet has been identified under this category. This will be put up for single competitive bidding under a reverse auction model. Rental will be paid for rooftop usage and a part of the energy generated will be shared with such government offices. In Phase II, private buildings will be taken up and power will be shared on a net metering basis. What is the current status of other renewable energy segments such as wind and bioenergy in the state? The state government has already sanctioned the setting up of 361 MW of wind projects in the state. The state has finalised a draft wind policy and it is likely to be put in place in the near future. The Telangana State Road Transport

“The discoms in Telangana are working out the modalities for floating a competitive tender for setting up solar rooftop capacities, which would offer higher scale, lower implementation times and competitive tariffs.” Corporation (TSRTC) is already using fuel blended with biodiesel to the extent of 10 per cent in its buses. The biodiesel production capacity in the state is currently around 30 tonnes per day. There is one municipal solid waste (MSW) project with a capacity of 12 MW. Projects with a capacity of 33.6 MW are at advanced stages of construction. What is the status of renewable purchase obligation (RPO) compliance in the state? For 2014-15, the percentage of energy from non-conventional energy sources was 1.11 per cent. Due to bifurcation, Telangana has lost around 600 MW of wind capacity, as renewable sources were allocated on a location basis. However, going forward, due to accelerated solar power capacity addition, the state will be in a position to meet the RPO target much earlier than envisaged under the RPO policy. The RPO needs to be increased in a graded manner and Telangana will be in a position to meet the new targets easily by 2017-18. What kind of changes can be expected in the state’s renewable energy policy and regulatory framework in the coming years? The Telangana Solar Power Policy has been well received by investors and the recent participation of private developers in the solar competitive bidding is an indicator of that. Going forward, the Telangana government will be notifying the wind power policy. On the regulatory front, tariff orders are expected from the Telangana State Electricity Regulatory Commission for wind energy and MSW power projects in the state.

How well is the state placed in terms of the availability of transmission and evacuation infrastructure for renewable energy projects? The state has plans to harness solar energy and other renewable energy projects in the most optimal manner. Solar energy would be used for providing nine hours of power supply to agricultural consumers during the daytime. Transmission and distribution adequacy studies have been done and network strengthening is being carried out at the identified locations. The Ministry of New and Renewable Energy has agreed to provide for 1,000 MW of intra-state transmission capacity under the Green Energy Corridors project. What role do you foresee for renewable energy in terms of meeting the state’s overall demand for power as well as promoting access to rural energy? The concept of using solar and other renewable energy sources under the state’s distributed generation model is a promising one and it provides energy access in remote/rural areas in a costeffective manner. Recognising the importance and benefits that distributed generation can bring in, the discoms are planning to procure power from 5,000 MW of capacity by 2018, of which 3,790 MW is in the process of being finalised. In addition, the state recognises and has plans in place to use rooftops for setting up solar rooftop panels. LED street lights are also being finalised for 12 municipalities in the state and LED bulbs are shortly going to be in use in Hyderabad. This is expected to result in the avoidance of transmission losses as well as upstream transmission investments, as a sizeable quantum of solar capacity is expected to be connected at various distribution voltage levels. ■ November 2015 ● Renewable Watch ● 75

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ANNIVERSARY ISSUE

Growing Optimism Developers expect further improvements in the investment scenario In the past year, there have been several significant developments in the renewable energy sector. Its targets have been scaled up significantly, the National Offshore Wind Policy has been released, and multiple GW of solar capacity has been allocated. The pace of small-hydropower (SHP) and biomass-based project development has, however, been sluggish due to lower tariffs for both segments and to fuel supply linkage issues in biomass. Leading industry players and analysts share their views on the sector’s current scenario, key trends, challenges and future growth drivers… What have been the noteworthy developments in the renewable energy sector over the past year? How is it expected to benefit from them?

Sunil Jain A key development has been the scaling up of the renewable energy target to five times more than what was envisaged two years ago. This will directly or indirectly result in reduced costs, increased capital efficiency and project efficiency, or get translated into lower tariffs. This will open up a new market because the reluctance of discoms to buy higher-tariff power is likely to be neutralised to some extent by lower tariffs. Another noteworthy development has been the introduction of renewable generation obligations. With this, there will be a lot of pressure on coal generators to set up projects that will also expand the market. While the government increased the targets, they also marketed them very well.

The first Renewable Energy Global Investors Meet & Expo was a great marketing event that showed positive results. If the states follow what the centre is trying to do, the target could be achieved at least by 2025, which is commendable. Overall, the sector will benefit from these developments. Manufacturing activity will increase because of growing demand and the reliance on imported equipment will decline, which will help the Make in India initiative.

Anil Sardana In the past year, significant developments have taken place. From a meagre 23.7 MW in February 2013, the installed capacity increased to 36.4 GW as of October 31, 2015. This can be largely attributable to the steady addition of wind power capacity and the tremendous government impetus received by solar. Programmes like the Jawaharlal Nehru National Solar Mission (JNNSM) have also given a boost to solar capacity. However, other new

technologies like offshore wind and geothermal are yet to gain importance.

Manoj Kumar Upadhyay This year has been very exciting for the renewable energy sector as various developments have taken place, particularly in solar. The government’s efforts for bringing down solar tariffs have paid results. There have also been several sectoral developments. At the central government level, these included: z A proposal for a Renewable Energy Act. z A proposal for amendments in the Electricity Act, 2003 regarding RPOs and the distribution business. z Allowing renewable energy companies to issue infrastructure bonds. z Renewable energy investment commitments by various countries. z The revision of targets. z The proposal for green corridors. z A first-of-its-kind annual conference to announce commitments: RE-INVEST.

Sunil Jain

Anil Sardana

Chief Executive

Managing Director

Manoj Kumar Upadhyay

Officer and

and Chief

Founder

Executive Director,

Executive Officer,

Chairman,

Hero Future Energies

Tata Power

ACME Group

“The majority of policies that the government is coming out with are skewed towards international investors and very little is being done to encourage domestic investors.”

76 ● Renewable Watch ● November 2015

“In order to ensure the viability of projects when solar feed-iin tariffs have reached grid parity, it is important to lower the capex even further.”

“The good thing about the sector is that stakeholders are much more aware about its working and prospects, and initial apprehensions have largely settled down.”

PERSPECTIVE

ANNIVERSARY ISSUE z z

Revised targets announced in the 201516 budget. Choosing NTPC as nodal agency and developing solar parks under JNNSM.

These modifications and proposed amendments have helped the sector by bringing in credibility and ease-of-business to a great extent, cutting down the financial risk component in buyers’ debt portfolios. The encouraging economic scenario is evident from the interest elicited by international renewable energy firms as well as various companies in the country’s renewable energy sector, thus building scale and bringing down costs for a better offtake. Apart from the action taken by the central government, state governments like Telangana and Andhra Pradesh have helped the sector through utility-scale tenders that awarded bids without any viability gap funding (VGF), thus leading to muchdesired economic viability in the sector. Are you satisfied with the strategies adopted by the government for promoting the sector or do you think things could have been done in a better manner? What are the key challenges that remain unaddressed?

Sunil Jain One thing that has obviously been a cause of concern is the government’s announcing of tenders before they have been fully prepared. This results in their repeated postponement, which is not the right signal to send. Tenders should be floated only when they are fully prepared. The government is trying to address two main areas of concern: the health of discoms and transmission and evacuation infrastructure. However, both of them will take a long time to be remedied. Another aspect is the proposal for changes to the Electricity Act, 2003, which are yet to be approved by Parliament. Till they are approved, states are unlikely to come on board. While the centre’s policy is good, it is important for states to cooperate since power is a concurrent subject and the centre can only do so much by itself. States must make the necessary

amendments to their policies, but many have not done so.

Anil Sardana The solar segment has mostly been policydriven, gaining impetus from national and state missions. We need to wait and watch for any other mission announcements by the government. Compared to other sources of power, the cost of installation per MW of solar is still high. In order to ensure the viability of projects when solar feed-in tariffs have reached grid parity, it is important to lower the capex even further. Moreover, the infrastructure needs to be able to handle the integration of such large amounts of renewable energy. The setting up of large solar projects like the 1,000 MW ones in Rajasthan, Madhya Pradesh, Gujarat and Andhra Pradesh is fraught with evacuation challenges. Grid management also becomes a problem as wind and solar generation rise and fall due to seasonal variations. In such situations, apart from announcing new policies, it is imperative to make infrastructural enhancements. It is also important to ensure that fiscal incentives are not changed periodically. In the past few years, various incentives have been introduced and then annulled. For example, generation-based incentives were announced in 2011, discontinued in 2012 and reintroduced in 2013. Similarly, accelerated depreciation was introduced in 2002, discontinued in 2012 and reintroduced in 2014. These changes affect the investment confidence of developers.

Manoj Kumar Upadhyay The government’s initiatives and strategies have definitely paid off as the sector was helped by warding off anti-dumping duty and other initiatives, which helped the sector breach Rs 6 as the weighted average. However, the other requirements needed for addressing challenges are: z Increased support in terms of investments and rupee-denominated financial instruments. z Faster deployment of Green Corridors. z Last mile connectivity, as well as

z z

strengthening of state grids. Restricting the maximum capacity allowed by any bidder to accommodate at least two to three players for mitigating the risk of depending entirely on one. Ensuring plant quality while keeping aggressive bids in mind. Not depending solely on lowest tariffs as they do not bring the desired outcome. Tariffs should be based on the business case.

What is the short- and medium-term outlook for the sector in terms of tariffs, policy framework, investments, financing, challenges, etc?

Sunil Jain The outlook for the sector is very positive and I believe it is poised to grow rapidly. We are likely to add a quantum that has not been added in solar even in four to five years. However, it is imperative for policy frameworks to consider a longer horizon. We cannot live with a one-year policy horizon or one-year tariff framework, which is currently the case. There are a lot of flipflops happening in the states, even in bidding. They do not follow bidding guidelines, which sends the wrong message. These challenges have to be addressed by the central and state governments. Once bidding has been conducted, it should be honoured. All states need to announce policies that are look ahead, at least towards the next three to four years. We have seen bidding taking place at Rs 4.63 per unit. From the government’s perspective, this is very positive. However, I hope we are not going the ultra mega power project way in solar. We are likely to peak too fast, and this could put the sector in trouble.

Anil Sardana The power sector is facing several challenges. For a nation with a population of 1.24 billion, the demand for power supply is expected to surge to 335 GW by 2017. However, this appears nowhere close to being met due to the demand-supply gap in terms of fuel sources and power generation. As of February 2014, India was dealNovember 2015 ● Renewable Watch ● 77

PERSPECTIVE ing with a peak power shortage of 5,378 MW. Eyeing a target power supply of 335 GW, a generation capacity of approximately 440 GW will be required. This implies that we need to have an annual addition of 2040 GW, which will be difficult to sustain. Despite significant coal reserves, India’s domestic power sector is facing coal shortages and it has resorted to imports for meeting its requirements. In addition, policy changes in Indonesia and Australia have significantly escalated imported coal prices, making generation unviable for imported coal-based power projects. The slow pace of distribution reforms is another major concern. Power distribution remains a segment that needs immediate policy reforms and a combination of tariff increases to reflect the increasing cost of fuels, the depreciating rupee, competition and open access, and the enforcement of the “obligation to service”. The high financial losses incurred by discoms are not only hampering electricity distribution, but also jeopardising capacity addition. The JNNSM has ushered in a new era for India’s solar industry. With an installed capacity of more than 23 GW, wind power is already a mature technology. The government is promoting wind projects through private sector investments by providing fiscal and promotional incentives. However, the installation of other sources like biomass and SHP has not been as popular as solar and wind, mostly because of them lacking good policies. The renewable energy sector is developing and still needs government support in order to grow.

Manoj Kumar Upadhyay With the revised solar target of 100 GW by 2022, new milestones and benchmarks are set to be established in the coming years. Tariffs have been going downwards and will soon reach grid parity and economic viability, though the gradient of the fall will not be as steep as in the past three years. We also see consolidation in the segment sooner rather than later and we need to prepare for that. Therefore, some 78 ● Renewable Watch ● November 2015

ANNIVERSARY ISSUE organisations could choose an inorganic way of growth. Having said so, the future of solar is really bright. Much greater maturity in terms of better business cases will prevail in the long term and eventually only these will be sustained in the future. One needs to understand that merely creating assets will not help; they also need to run for their projected life. Timely payments will be an issue in the short term and we are sure that concerned policymakers are aware of this and have already started working on it. We also need to manage the risks of intermittent generation, in which we see batteries playing a very crucial role. The integration of batteries along with solar PV plants on the load side has already started showing promise and is already placed very reasonably in terms of tariffs. If adequate impetus is given to battery-backed systems as was the case in solar PV systems, their tariffs could also achieve reasonable parity. Electricity produced from solar is the cleanest form of energy and India is very wellplaced to make the maximum use of this because of its geography. It is the duty of all stakeholders to come together and make it a huge success. From a developer’s point of view, what kind of investment environment is expected to prevail in the near future? Which renewable energy segments will receive a greater impetus?

Sunil Jain The order, I feel, will change from wind, solar, hydro, biomass to solar, wind, hydro, biomass. It is likely that solar will add 10,000-15,000 MW of capacity per annum. Having said that, Indian investors are probably at a disadvantage when it comes to solar because of the associated capital costs and the government’s lack of action in this context. I have to compete with international players whose cost of capital is 34 per cent, whereas mine is 12 per cent, which is a very unfair disadvantage. In this competitive market, there is no way we can bridge this gap. Moreover, the majority of policies that the government is coming out with are skewed towards international

investors, with very little being done to encourage domestic investors.

Anil Sardana The power sector is currently undergoing a lot of reforms. We are happy that the government has realised the importance of the sector and is restructuring the areas that need attention. Investor sentiment has improved because of enabling policies. After a long period, domestic coal production is higher by a good 7 per cent and generation capacity addition has registered the best growth. Renewables will continue to be in focus and receive government impetus. With a target of 100 GW, solar will continue to drive renewable energy installations. Wind power, with an installed capacity of more than 24,000 MW, is already a mature technology in India. However, the high wind zones are nearly exhausted and new installations have to be set up on low and medium-wind sites that provide low generation. SHP and biomass projects, as well as new technologies like offshore wind, will also gain importance. Renewable energy is expected to play a major role as an off-grid solution and will help India achieve its vision of Power for All. Renewable energy will be used for peak load shaving, thereby bringing efficiency into the system.

Manoj Kumar Upadhyay As the country’s leading solar developer, we expect the investment climate to get better with time. There is immense growth potential as we look forward to investing $100 billion in the sector, which is still trying to find its equilibrium. Market dynamics will play a larger role in the time to come. We think the incentives will be weaned off with time and the sector will have to stand on its own. We will see lots of maturity and innovation in terms of financing projects. The good thing about the sector is that stakeholders are much more aware about its working and prospects, and initial apprehensions have largely settled down. Therefore, there has been a lot of international funding, which will continue to increase. ■

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PERSPECTIVE

ANNIVERSARY ISSUE

In Growth Mode Manufacturers ride on the Make in India initiative While the country has made considerable progress in ramping up its renewable energy generation capacity, this growth has not trickled down to the manufacturing space. Although the government’s Make in India initiative offers a ray of hope to the industry, it may take some time for its effects to be reflected in the market. The industry highlights the noteworthy developments during the past year and comments on their implications for the renewable energy manufacturing industry, the response to the Make in India initiative, the challenges that remain unaddressed and the road ahead… What have been the noteworthy developments in the renewable energy sector over the past one year? How is the manufacturing segment expected to benefit from these?

Hitesh Doshi There was a common perception that due to the inherent limitations of solar energy in terms of continual supply and transmission it is less competitive as compared to coal in India. However, that opinion has been changing in the past few years with a lot of emphasis being laid on the renewable energy sector by the government. The solar energy segment has witnessed some crucial policy reforms in the past one year and the declining rates have garnered more government support for solar as well as wind energy. Investors like Japan’s Softbank and iPhone-maker Foxconn have already pledged to invest around $20 billion in solar projects in India. With big players making such huge investments, it is evident that the manufacturing segment has benefited significantly.

Hemal Ghelani The government has demonstrated a strong vision and commitment towards renewable energy by expanding the vision and business opportunities for both solar and wind energy, which is commendable. This has certainly helped increase the interest of global investors to participate in the Indian renewable energy sector. We expect investor interest to remain high for manufacturing across the photovoltaic (PV) production value chain and are cautiously optimistic about the potential scalability of PV manufacturing in India on a globally competitive scale.

Sujoy Ghosh There have been several policy initiatives at the central government level to increase the demand for renewable energy on a sustained basis. These include the renewable purchase obligation (RPO) mechanism, introducing the renewable generation obligation, implementing solar parks to

bring in scale by introducing NTPC as a key offtaker for mitigating payment risks, and providing an impetus to revive the financial health of state discoms through debt restructuring. The solar industry has reciprocated by demonstrating a continuous reduction in the cost of energy in successive tariff auctions through 2015, thereby increasing the momentum of solar energy deployment in the country. An increase in demand would indicate growth (or at least higher capacity utilisation) in the manufacturing sector for solar equipment.

Dr B.C. Jain While not much has happened in the biomass gasification space, the notification of tariff guidelines by the Central Electricity Regulatory Commission is a major development. However, it is to be seen how this is implemented by the states. The Ministry of New and Renewable Energy has taken on the National Biomass Mission; however, this has not crystallised yet.

Hitesh Doshi

Hemal Ghelani

Sujoy Ghosh

Chairman and

Vice-President and

Country Head,

Managing Director,

General Manager,

First Solar, India

Waaree Energies

Meyer Burger India

Limited

Private Limited

“India urgently needs to implement innovative policies and financing mechanisms to promote the use of solar energy.”

80 ● Renewable Watch ● November 2015

“A key challenge that still remains from a manufacturing standpoint is related to the financing of projects.”

“The government’s policy measures to promote renewable energy are intended to make a permanent impact on the energy footprint.”

PERSPECTIVE

ANNIVERSARY ISSUE

Ramesh Kymal One of the foremost developments in the industry is the increased government support to the renewable energy sector. The setting of a huge renewable energy target of 175 GW in the next seven years has been the first big move towards clean energy this year. Innovation is key in any industry and the renewable energy sector is no different. So, when it comes to the wind segment, turbine designs are getting more robust. The new generation turbines are getting smarter and more efficient, with a focus on catering to low-wind markets that remain untapped. Solar too has caught the attention of all industry players and Gamesa’s foray into this segment is also only a natural progression. All these developments will have a positive impact on the manufacturing scenario in the country as increased customisation will lead to innovation and ancillary units are set to benefit from this, reducing India’s dependence on imports. Are you satisfied with the initiatives taken by the government for promoting the sector over the past year? What are the key issues that remain unaddressed?

Hitesh Doshi The government has set an ambitious target of 100 GW of solar power capacity by 2022. This is almost 30 times the existing solar set-up in the country. Of the total target, 40 GW is expected to come from rooftop installations. In our opinion, India has abundant free solar energy. It has

around 300 sunny days a year. Going by this advantage, 5,000 trillion kWh of solar energy can be easily generated during the year. However, there is a need to secure the country’s energy future by adopting solar and other renewable energy resources. India urgently needs to implement innovative policies and financing mechanisms (such as capital and interest subsidies as well as concessional funding) to promote the use of abundant and sustainable solar energy. In the past few months, at the state government level, particularly in Tamil Nadu, Maharashtra, Karnataka and Telangana, we have witnessed an uptrend in terms of policy revision and implementation for rooftop solar systems. However, local manufacturers continue to face challenges due to lack of government incentivisation, which is required to scale up their projects. As a result, Indian solar cells are less efficient and costlier than imported ones. The financial health of the offtakers is also extremely important for winning investor confidence. Besides, a key challenge is the bankability of projects. The biggest challenge in reaching the target will be the resistance or inability of cash-strapped discoms to buy expensive solar power.

Hemal Ghelani The government has taken some positive steps to promote the renewable energy sector. However, on the downstream power projects, it needs to strike a balance

Dr B.C. Jain

Ramesh Kymal

Chairman,

Chairman and

Ankur Scientific

Managing Director,

Energy Technologies

Gamesa Renewable

Private Limited

“The focus on the solar and wind segments has been good. However, not much is happening in the biomass space.”

The Make in India thrust will provide a more conducive ecosystem for indigenous manufacturing of components for the entire industry.

between the cost of power and the technologies coming in with imports. Is India going to focus only on $c per Wp, or is increased efficiency (kWh) and achieving a levellised cost of energy (LCOE) equally important? Why is it that high efficiency module manufacturers like Sunpower and Panasonic, for instance, do not consider India a viable market in spite of the government’s 100 GW solar vision? A key challenge that still remains from a manufacturing standpoint is project financing. Unless financing is considered an enabler to create local production of scale, India risks underachieving its manufacturing potential. Is the government ready to have over $40 billion in foreign exchange outflows to import modules or does it prefer to spend that money on helping Indian manufacturing compete on a globally competitive scale?

Sujoy Ghosh The policy measures adopted by the government to promote renewable energy are definitely intended to make a long-term, permanent impact on the energy footprint of India. We should view this as a process of change that will keep calibrating itself as the programme builds out; while traditional constraints will be overcome, new ones could emerge. The good part about the renewable programme in India is its transparency and the fact that consumer interest is paramount. This has resulted in a sharp decline in the subsidy support required, clearly indicating that the programme will be sustainable in the long run as it is driven by market economics. The initial focus has been on large grid-connected solar projects to bring in scale and build capabilities. However, equal focus needs to be put on distributed generation as solar is a compelling and economically viable energy alternative for the 300 million people who live without any access to energy. Creating a regulatory and policy framework to encourage large-scale participation by the private sector in energy access projects would be important. Also, integrating the renewable generation plans into the transmission capacity planNovember 2015 ● Renewable Watch ● 81

PERSPECTIVE ning process will be vital for the infrastructure build-out required to support largescale solar and wind projects.

Dr B.C. Jain Overall, the focus on the solar and wind segments has been good with all aspects including policy and finance being tied up. However, not much is happening in the biomass space. For instance, there were discussions on the large-scale use of biomass gasifier systems in mobile/ telecom towers, MWe-level decentralised and distributed generation, etc.; but so far, there has not been any progress in this regard. The renewable energy targets seem to be met largely by solar. There is no focus on biomass.

Ramesh Kymal The government’s resolve to increase India’s renewable energy capacity is seen as a welcome move by the industry. The government has also offered various fiscal and monetary incentives to renewable energy developers to promote investment in the sector. Hundred per cent foreign direct investment (FDI) through the automatic route is one of the positive moves available to investors in renewable energy. This apart, the government’s thought-out policies have brought down solar tariffs, which is a positive development. However, the industry needs to collectively focus on delivering on its commitments. Despite the growing momentum of activity in the wind space, there are certain issues that highlight the gaps in the segment. These include the lack of adequate grid infrastructure, the non-availability of long-term affordable finance and strict RPO compliance. It should also be taken into the consideration that every renewable energy source has its own opportunities and challenges and the government should devise policies accordingly to promote all forms of renewable energy sources so that the growth of the sector is inclusive. How has the industry’s response been to the Make in India initiative? Is it expected to 82 ● Renewable Watch ● November 2015

ANNIVERSARY ISSUE achieve the objective with regard to the renewable energy sector?

Hitesh Doshi The solar industry has benefited from the Make in India initiative as the government has projected the sector to be a $100 billion investment magnet over the next seven years. The initiative has been really effective, particularly in the wind segment, but a lot remains to be done to encourage localisation in the solar segment.

Hemal Ghelani So far, the PV industry’s response has been mixed. Companies investing capital in manufacturing need to ensure size, scale and speed because these criteria affect the ability to be globally competitive and profitable with a business model that should include both upstream and downstream plans. Given the investments involved and the challenges that remain in financing manufacturing projects, Make in India will take time to realise.

Sujoy Ghosh It is too early to reach a conclusion on the response to the Make in India initiative with respect to solar equipment. The initial response is encouraging if we look at the announcements that have been made in the public domain, but actual investments and tangible activities on the ground have been insignificant. We will have to wait for another couple of years to see if these announcements translate into incremental manufacturing capacity creation in the country.

Dr B.C. Jain Companies like ours are surviving largely on exports as not much is happening in India. Of the various technologies for biomass utilisation, gasification has long been seen as a technology with tremendous potential and promise, particularly for small and medium-scale power generation. Of course, the technology is equally suitable for a wide range of thermal applications. While considerable technology development efforts have been made world-over during the past three decades (with extensive international and multilat-

eral funding), substantial progress has been made only in a few countries, with India unquestionably being the leader in the field. A lot of focus is now being laid on country-to-country agreements and biomass gasification should be included in these to give a boost to the sector.

Ramesh Kymal The wind industry is a huge supporter of the Make in India initiative and has been better established in terms of investments from private players with a capacity of over 10 GW. In the last decade, several policies have helped India become a key exporter of wind turbines, with a mature manufacturing base that has grown in parallel with the deployment of wind projects. Therefore, the wind sector currently has a diverse market of manufacturers who are very cost competitive due to lower production costs. The Make in India thrust will provide a more conducive ecosystem for indigenous manufacturing of components for the entire renewable energy industry. It will empower ancillary manufacturers, thus reducing our dependence on imports and will help manufacturers to further reduce the cost of manufacturing. Secondly, facilitating national and state-level low-cost funds to support infrastructure and strengthen the supply chain will immensely help indigenous manufacturing. On the other hand, lower entry tax/barriers and incentives for new renewable energy investors and linking the National Wind Mission with the manufacturing policy will help manufacturers boost their business. Lastly, as envisaged in the draft Renewable Energy Act, a dedicated renewable energy manufacturing zone will prove immensely fruitful in shaping the renewable energy landscape in India. In addition to the above, considering the expected growth in renewable energy in India, it is imperative to nurture the renewable energy talent pool through various educational reforms. This will ensure the development of indigenous skills, which

4\I~S

Energy

ENERGIZING INDIA THROUGH BREAKTHROUGH TECHNOLOGY INFRASTRUCTURE LEASING & FINANCIAL SERVICES ( IL&FS) WAS INCORPORATED MORE THAN TWO DECADES BACK WITH THE OBJECTIVE OF FACILITATING INFRASTRUCTURE PROJECTS ON COMMERCIAL FORMAT & FOR SETTING UP VALUE ADDED FINANCIAL SERVICES

•!• IL&FS STARTED ITS ENERGY BUSINESS IN 2008 THROUGH ITS SUBSIDIARY IL&FS ENERGY DEVELOPMENT LIMITED (IEDCL)

•!• IEDCL IS A ONE STOP ENTITY OFFERING POWER SOLUTIONS FROM CONCEPT TO COMMISSIONING •!• IEDCL INVESTS AND OWNS GENERATION ASSETS IN ALL FORMS OF FUEL SOURCES •!• CORPORATE PHILOSOPHY OF IEDCL IS TO PROMOTE RENEWABLE ENERGY IN A LARGE WAY

SOME OF OUR SPECIFIC MILESTONES INCLUDE: •!• MORE THAN 700 MW OF WIND POWER GENERATING ASSETS IN OPERATION •!• MORE THAN 100 MW OF BIO POWER GENERATING ASSETS IN OPERATION •!• DEVELOPING 5000 MW OF SOLAR PARK WITH THE GOVERNMENT OF RAJASTHAN •!• MORE THAN 700 MW OPERATING CLEAN GAS BASED POWER PROJECT WITH ONGC IN TRIPURA •!• MORE THAN 800KMS OF TRANSMISSION LINES IN INDIA AND CROSS~BORDER IN NEPAL •!• ADVISORS TO VARIOUS STATE GOVERNMENTS •!• IMPLEMENTING ENERGY EFFICIENCY PROJECTS ON LED STREETLIGHTS WITH EESL IN MULTIPLE STATES IEDCL ALSO HAS COAL BASED POWER GENERATING PLANTS

OUR VISION:

TO CATALYZE RELIABLE & ENVIRONEMENTAL FRIENDLY POWER AT AN AFFORDABLE COST

OUR MISSION:

GENERATION CAPACITY 20000 MW BY 2020

PERSPECTIVE will further initiate indigenous research and development (R&D), thus reducing our dependence on foreign technology. What course is the sector set to take over the next five to seven years? From a manufacturer’s point of view, what kind of an investment environment is expected to prevail over the medium to long term?

Hitesh Doshi The solar power segment in India is poised for huge growth over the next five to seven years. India is one of the top three countries to have expanded its footprint considerably in the solar power market. The country has a high population density and solar insolation. These are the perfect conditions for the exponential growth of solar power as a future energy source. With GDP growing at about 8 per cent in India, solar PV is the only renewable energy resource that can help bridge the gap between energy supply and demand. It will not only help in cutting down commercial and transmission costs but will also assure equitable distribution of energy. We are geared up to meet and exceed the expectations of our stakeholders in terms of supply capability and execution excellence. In addition, we expect a lot of monetary investments in the sector over the medium to long term.

Hemal Ghelani It is difficult to predict how the sector will shape up over the next five to seven years given the dynamic nature and volatility of the industry. However, coming out of a major downturn, lessons have been learned and both PV technologies and business models have evolved. Companies expecting to be globally recognised as Tier I suppliers need to ensure a minimum size and scale of 1 GW+, with control of manufacturing across the PV value chain. Many global Tier I companies have been adopting a downstream independent power producer approach to complete their business models, which, in turn, is driving cell technology upgrades. Focus on energy generation versus installed capaci84 ● Renewable Watch ● November 2015

ANNIVERSARY ISSUE ty will increasingly drive technology adoption and play a major role in driving the discussion from $c per Wp to LCOE. High efficiency cell technologies like Hetero junction technology with a start cell efficiency of 22 per cent will play a key role in driving the industry towards a high efficiency regime.

z z z

tion-based inventives and tax benefits. Faster and single-window clearances. Strict adherence to RPOs by industries and states. Completely eliminating fossil fuel support and discouraging the use of fossil fuel-based energy generation in industries, etc. Enchancing affordability through longterm, low-interest rates on loans, given that renewable energy projects need large-scale funding and financial institutions/banks are overly cautious about funding decentralised projects. A specific policy for biomass-based power generation (of less than 2 MWe size) for sustainable economic development and environment protection.

PV manufacturers need to be aggressive with their scale-up plans and timelines in order to achieve technology differentiation. The investment environment in the sector will continue to be challenging if investors do not see a credible business plan in terms of size, scale and speed to achieve profitability. However, companies serious about manufacturing and with a proven track record and willing to put in enough equity, will see support from investors.

Sujoy Ghosh

The Indian renewable energy industry is poised to grow substantially in the coming years. The industry has to focus on the fact that the government’s aggressive target of 175 GW, fuelled further by the Intended Nationally Determined Contribution commitments, will promote aggressive growth in the sector. Additionally, certainty and long-term policy visibility are some of the key prerogatives that the government should have in mind for the development of the renewable energy sector. Another aspect that is crucial for the development of the sector is strict RPO compliance across all states. Proper grid infrastructure should also be in place, which will help in the effective utilisation of renewable energy sources. All these factors play a huge role in attracting investments. This apart, the recent approval of the National Offshore Wind Policy by the government will open up new opportunities in the wind space.

The Indian solar market is one of the highgrowth markets globally. However, over the next few years, some of the traditional growth markets in the world may contract due to the reduction in feed-in tariffs or other subsidies that had been the fundamental demand drivers in those markets. How that will impact incremental capacity creation in India remains to be seen. From an equipment manufacturer’s perspective, there will be a continuous effort to lower costs by increasing scale, integrating processes and intervening with R&D improvements. The focus will be on countries that provide manufacturers with the environment, framework, access to capital and talent to achieve the lowest cost of production.

Dr B.C. Jain In order to achieve sector goals and objectives, we need a clear roadmap and a significant increase in the installation of renewable energy projects on a year-onyear basis. Also, to provide an impetus to the renewable energy sector, the following initiatives need to be taken: z Setting up of a centre-state coordination committee that can enable expeditious approvals. z Favourable policies such as subsidies, higher tariffs for power sales, genera-

Ramesh Kymal

Attracting investments to the renewable energy sector does not just rest on the above. Improving and incentivising local R&D and engineering, building capability in the downstream supply chain in line with Make in India, and strategically developing skilled human capital to build and maintain these huge national assets also play a significant role. ■

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PERSPECTIVE

ANNIVERSARY ISSUE

Funding Renewables Taking steps to enhance financing in the segment To achieve its renewable energy capacity target of 175 GW by 2022, India needs to find a way to meet the significant capital requirement of $200 billion. While investor sentiment in the sector has improved over the past one year, risks pertaining to irregular policy updates and poor discom health have been restricting investments. Leading financiers share their views on their experience in the renewable energy sector, the key risks and concerns, as well as the expected financing requirement in the coming years… What has been financiers’ experience in the renewable energy space over the past year?

Sanjay Bansal Over the past year, the key trends in renewable financing include renewed private equity (PE) interest in larger diversified players and aggressive financing commitments by banks and financial institutions ($57 million for 70 GW). Meanwhile, potential PE interest in other players is yet to bear fruit. The rapidly changing market and aggressive bidding could lead to lower returns and potential failures, and the industry needs to tread carefully.

Ashok Haldia In the past year, investments in the renewable energy space have gained momentum. Large global utilities have been showing interest in solar energy, which augurs well for the segment and the industry at large. As a result, more and more states are taking renewable energy initiatives. Globally, renewable energy is growing at a

compound annual growth rate of about 50 per cent. As far as senior debt financing goes, no major delinquencies have been observed. Further, interest rates and risk spreads of renewable energy projects have witnessed a declining trend. Banks have become more comfortable in lending to the sector, leading to increased competition among financiers, which is a healthy trend. However, I still feel that the risks in financing projects have not been priced properly by banks and financial institutions.

G. Krishnamurthy Power sector exposure constitutes about 50 per cent of L&T Infra’s portfolio and is core to our business. L&T Infrastructure Finance has been among the first movers in the renewable financing market to indulge in pure-play project finance without recourse to the promoter’s balance sheet. We took a conscious call during the past two to three years to stay away from coal thermal projects given their heavily regulated status.

Our experience in the renewable sector has been exceptionally good. Even after having supported close to 3,000 MW of projects so far, the company does not have a single instance of stressed assets in this segment. We have around 30 per cent market share in Jawaharlal Nehru National Solar Mission Phase II Batch I (750 MW), implemented over the past one year with all our projects achieving commercial operations within their scheduled timelines. In the past year, we chose to selectively fund wind projects in Maharashtra and Rajasthan as these states were close to meeting their renewable purchase obligations. In many instances, lenders are stuck with projects that are either being curtailed or stranded due to the lack of power purchase agreements (PPAs). Our disciplined and analytical approach to the sector has helped us avoid this issue and all our projects are fully operational with consistent revenue streams. The company currently has the fastest turnaround in the industry for renewable financing proposals.

Sanjay Bansal

Ashok Haldia

G. Krishnamurthy

Founder and

Managing Director

Chief Executive,

Managing Partner,

and Chief Executive

L&T Infrastructure

Aurum Equity

Officer, PTC India

Finance Limited

Partners

Financial Services

“The ultimate challenge and goal for the renewable industry should be to become feasible even without subsidies.”

86 ● Renewable Watch ● November 2015

“Healthy competitive pressure and the ability of bidders to perceive and approach the associated risks differently are driving down tariffs.”

“Long-tterm stability of policy regimes can go a long way in adding to lenders’ appetite for funding renewable projects.”

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ANNIVERSARY ISSUE

Pankaj Sindwani A new set of lenders has opened up to the possibility of building large renewable energy portfolios. This has meant increased competition leading to hefty rate cuts and relatively relaxed terms by lenders. Slowly but surely, the secondary debt markets are also picking up. Once they attain maturity, mainstream financiers may need to redefine their roles in the entire project finance value chain.

one of the leading renewable energy companies in India; and Sembcorp Industries, a leading energy company operating in five continents, which acquired a major stake in Green Infra, a company with both solar and wind portfolios in India. What are the key risks and concerns in the Indian renewable energy sector? What are the emerging financial instruments that can be used to alleviate the same?

Gaetan Tiberghien

Sanjay Bansal

The International Finance Corporation’s (IFC) experience in the Indian renewable energy sector has been good so far in terms of solar and wind. Globally, it transformed its power portfolio in 2008-09, so that more than half of it constitutes renewable energy. IFC’s portfolio comprises over 3 GW of different forms of renewable projects in India. The recent reforms in India including ease of regulations along with initiatives such as Make in India will help revive the investment climate and reduce external vulnerabilities in the country.

The key risks and concerns for renewable energy financing include: z Mismatch in returns and exit expectation for PE funds and developers. z Off-take risks due to poor enforceability of renewable purchase obligations (RPOs), ailing discoms and inadequate transmission and distribution (T&D) facilities make investments in projects risky. This leads to higher interest cost expectations by banks and FIs. z Aggressive bidding leading to potentially unviable projects. z Risks due to the quality of equipment being installed, especially in solar plants, may leave banks with poor-performing assets.

Thanks to these reforms and ambitious targets, the renewable energy sector has witnessed increased interest from equity players as well as financial institutions in the past two years. The refinancing of stalled projects has also picked up, signalling that lenders are bullish on financing. Some of the recent examples of new entrants in the sector are ENEL Green Power, which is currently based in 17 countries and acquired a stake in BLP Energy,

The availability of long-term “patient” debt finance has been an issue for a long time. A few banks and FIs have now started to provide finance with tenors of 15 to 18 years; however, the cost of debt still remains a concern. The high interest rates and difficult terms of debt increase the cost

Pankaj Sindwani

Gaetan Tiberghien

Business Head

Principal Investment Officer, Infrastructure and Natural Resources, Power Sector Lead, South Asia, IFC

Tata Cleantech Capital Limited

“There is a potential of $15 billion$18 billion being disbursed in debt over the next two or three years for meeting the ambitious targets.”

“The focus should be on strengthening grid transmission capacity, and ensuring grid stability and adequate evacuation capacity.”

of renewable energy by 25-30 per cent in India as compared to that in the US and Europe. The following are the key emerging financial instruments that can help overcome the issues faced in the industry: z Infrastructure and green bonds could be vital in bridging the funding gap. Green bond issues stood at $35 billion globally in 2014, while the market is almost non-existent in India. z Masala bonds (rupee-denominated borrowings by Indian entities in overseas markets) could prove to be an important instrument to attract overseas investment for renewable projects. z Term loans should be structured keeping in mind the risk profile of the project. At the development stage, a project may warrant higher interest rates, but an operational project becomes derisked and at that stage, developers should negotiate lower interest rates. z Asset performance-based structured equity investments by PE funds. z Yeildco-like structures can tap into patient long-term equity investors (like pension funds), which are looking for infrastructure/utility-type returns.

Ashok Haldia The renewable energy space primarily involves implementation and counterparty risks. Implementation risk has a manifold impact. For instance, delays in implementation not only increase project costs and postpone cash flow realisation, but can have a bearing on the tariff realisation per unit. Preferential tariffs have temporal validity and even the slightest slippage could lead to a material impact on realisations. Delays usually occur on account of land acquisition issues, pertaining to unclear or disputed title, right of way and implementation of works, which are in the scope of government agencies. Further, counterparty risks of Indian PPAs are significant and it is important to resolve the financial woes of the discoms. The Ujwal Discom Assurance Yojana (UDAY) is expected to resolve the current mess in the financial position of the discoms as well as help in their sustainable performance improvement over a period of time. November 2015 ● Renewable Watch ● 87

PERSPECTIVE The structure of financing should, however, be geared to cushion the project from the impact of such risks. For instance, during implementation, the financial risks of delays should be hedged through engineering, procurement and construction (EPC) contracts and lenders need to ensure that EPC contracts are robust and tailored to cover these risks. Repayments should mirror the cash flows and a reserve should be created or funded for debt servicing in the initial three to six months post the commercial operation date. In addition, there are some risks that are likely to increase in the coming years. As we scale up investments in the solar/ renewable energy space, problems related to evacuation and curtailments from discoms are bound to occur. Further, aggressive bidding, which we are witnessing these days, involves a lot of financial engineering specific to the bidder. A lot of assumptions like securitisation and forward pricing of solar equipment should be subjected to reality tests during due diligence. According to me, healthy competitive pressure and the ability of bidders to perceive and approach the associated risks differently are driving down the tariff rates.

G. Krishnamurthy The shift towards renewable energy is crucial for meeting the country’s energy needs in a sustainable manner. The biggest risk that we foresee in the sector is the “euphoria” surrounding it. The experience with the road and thermal power sectors shows that the euphoria may lead to irrational behaviour, which can create systemic stress in the entire value chain. Therefore, it is imperative to caution the industry against irrational bidding. Prudent bidding, which is in line with the current capital cost and ensures a reasonable internal rate of return, is a prerequisite for all stakeholders. Aggressive bidding may lead to developers abandoning projects altogether. Developers may also try to cut corners just to complete a project and meet the committed tariffs, thereby hampering the technical viability and long-term sustainability of the project. 88 ● Renewable Watch ● November 2015

ANNIVERSARY ISSUE The other risk that we foresee is the integration of large-scale renewable energy with the transmission grid network. The scale-up of transmission networks in synchronisation with the scale-up of renewable generation capacities is crucial for seamless evacuation. Cluster development of large-scale generation projects without proper transmission planning may lead to a number of stranded projects in the future. The Ministry of Power’s initiative, UDAY, is a long-fix solution to wipe out discom losses by 2019. Its implementation by states will address the demand-side issues in the power sector. This will allow a significant risk rerating of the sector by the investment community. However, counterparty risks continue to exist, which is one of the biggest overhangs in the sector. The government has attempted to mitigate the counterparty risk through intermediaries like the Solar Energy Corporation of India (SECI) and NVVN. However, these entities are less vulnerable to counterparty risks and are completely exposed to the payment pattern of the discoms. Creation of a contingency fund by the central government covering payment obligations of the intermediaries for six to nine months could be a comfort factor for lenders. Wind resource estimation in India lacks sophistication despite there being 25 GW of installed wind capacity in the country. Being 15-20 per cent off the mark in energy yield estimation is not uncommon. Meanwhile, the lack of standardisation of material used for solar modules is an area of concern. One module manufacturer sells multiple qualities of modules with the same technical configuration at different price points, making it impossible for lenders to gauge the quality of modules. Thus, the lending community must push towards standardisation of modules in the industry. Financial engineering alone cannot change the fundamentals of the sector. A

vibrant bond market with long tenors and fixed rates will enhance the financing option for developers. Long-term stability of policy regimes can go a long way in adding to the lenders’ appetite for funding renewable projects.

Pankaj Sindwani The key risks are the financial health of discoms, delays in infrastructure approvals in certain cases, and the lack of long-term data on solar panel performance in India. The recently launched Ujwal Discom Assurance Yojana is a welcome step for alleviating issues related to financial discom health. Many states are now streamlining infrastructure approval processes and this, again, will help bring up capacity at a faster pace.

Gaetan Tiberghien The renewable energy sector has witnessed impressive cost reductions, particularly in solar. This was seen in the recent round of bidding in Andhra Pradesh, with the lowest bid at Rs 4.63 per kWh. However, renewable energy is still not competitive with conventional power in most cases. In order to achieve the ambitious targets set by the government, a supportive framework is required with adequate fiscal and/or regulatory incentives to push the renewable market towards a mature self-replicating phase. The focus should be on strengthening the grid transmission capacity, and ensuring grid stability and adequate evacuation capacity. China and the state of Tamil Nadu in India are two live examples demonstrating that rapid renewable capacity addition can lead to a high level of curtailment risk. Besides, the financial health of distribution companies needs to be urgently addressed. There have been some improvements following the announcement of the financial restructuring package for discoms in 2012, but many of the discoms are still unsustainable without significant reforms. We hope that the recently announced UDAY, a new, more comprehensive restructuring plan, will help achieve the expected turnaround.

PERSPECTIVE

ANNIVERSARY ISSUE Finally, the sector would benefit from stronger PPAs with enhanced payment guarantees and protection from the curtailment risk. Such reforms will further open the sector to new and additional funding sources that need to be mobilised to fuel growth and reduce the cost of capital. These new sources include institutional and global pension and sovereign wealth funds. Also, corporate bond markets and innovative structures such as securitisation should be leveraged. What will be the financing requirements over the next two to three years? What initiatives can be taken by the industry and the government to facilitate financing for the segment?

Sanjay Bansal Over the next two years, we expect up to 10 GW of solar and 8 GW of wind assets to be installed. With an average capital outlay of $1 million per MW for solar and Rs 1.1 million per MW for wind, a total investment of Rs 19 billion will be required. The industry needs to do a lot in terms of providing scalable business models for investors with long-term cash flow visibility. A larger portfolio of assets is more amenable to private equity investment as it has multiple streams of revenue. Investment in research and development by companies across the value chain will help them skip a few stages of evolution and become more cost competitive. This will help enhance the bankability of projects. The ultimate challenge and goal for the renewable industry should be to become feasible even without subsidies.

Ashok Haldia India has set a target of 175 GW of renewable energy capacity by 2022. As against the commissioned capacity of around 40,000 MW as of September 2015, it is an ambitious but achievable target. At a cost of Rs 70 million per MW, the total investment required for meeting this target will be Rs 9,450 billion, 70 per cent of which may have to be met by senior debt. This means that there would be a requirement of Rs 6,600 billion in the next six years, that is, Rs 1,000 billion annually. The industry

needs to be realistic when it comes to bidding in auctions and should correctly price the risks, which are currently being undermined. I think, with time, the necessary calibration would come and myths around solar energy would be dispelled, making the steep decline in tariff rates acceptable. The government needs to encourage financial institutions to raise resources for funding renewable energy projects. For instance, it can allow IFC to raise funds through long-term tax-free bonds, reduce risk burden of assets in the renewable energy space, and undertake measures to mitigate risks in financing and promoting consumption of renewable energy. Rooftop solar, decentralised generation and solar irrigation pumps could provide great investment opportunities in the near future.

G. Krishnamurthy We expect solar capacity addition to surpass wind capacity addition for the first time during 2016-17. While greenfield wind projects would remain a 3-4 GW per annum market in the next two to three years, greenfield solar would mature and become a 10-12 GW market as per government plans. A large funding of $10 billion-$12 billion of debt per annum will be required for the projects to see the light of day. The renewable (wind and solar) PPAs under state policies need to be standardised. Moreover, greater rights should be accorded to lenders under the PPAs for the upfront assignment of project assets and the right for substitution in the event of default. The conversion of land to nonagriculture status has a huge nuisance value in many states. It can take as long as 18-24 months for a change in status. The industry is in fast-track mode and regulatory approvals need to keep pace for the industry to achieve the intended growth proportions. The National Clean Energy Fund’s grant to SECI providing a three-month cushion on payment obligations should be made functional without any further delay. Further, the financial cushion available for the intermediaries (SECI and NVVL) to meet their

obligations needs to be augmented through central government support. PPAs for wind power projects should be upfront like those for solar projects to mitigate the revenue uncertainty in the sector for both investors and lenders. A financial intermediary for mitigating discom risks for wind projects, like those for solar projects, would be useful. Moreover, we will urge developers to desist from being taken in by the market euphoria and bid responsibly for projects. The idea should be to run the project sustainably for 25 years, adding value to the entire ecosystem.

Pankaj Sindwani Given the ambitious plans and significant uptake of projects being announced on the ground, there is a potential of $15 billion-$18 billion being disbursed in debt over the next two or three years. This will, however, depend on the alacrity with which approvals are secured, PPAs are signed and supply chain augmented. For this to continue, the policy momentum needs to sustain. The debt markets need to expand further and mature, and the evacuation infrastructure must keep pace.

Gaetan Tiberghien According to the Ministry of Power, Coal and New and Renewable Energy, meeting the Indian government’s renewable energy targets would entail an investment of $120 billion by 2022, excluding the $130 billion required for conventional generation, transmission, distribution and energy efficiency. The financing requirement for the next two to three years will be very large. The good news is that many new players, both domestic and international, are entering this space with the willingness to make large investments. However, more effort is required. For example, a standardised PPA model that can be used by all states and central agencies, with fair risk allocation, a good payment security mechanism and other best practice standards, would go a long way in further boosting the sector’s attractiveness and bring in more investors. ■ November 2015 ● Renewable Watch ● 89

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ANNIVERSARY ISSUE

Poised for Growth Consultants upbeat about the sector’s future outlook The renewable energy sector in the country generated significant enthusiasm during the past year. With favourable government policies, resulting in increased attention from domestic as well as foreign players, and rising awareness about the role that renewables can play in addressing climate change concerns, the sector is poised for substantial growth in the long term. Leading consultants share their views on the sector’s performance and the future outlook… How has the renewable energy sector performed over the past year? What were some of the positives and negatives?

Amit Kumar In the past year, the government has taken significant steps to encourage the renewable energy sector. It is diversifying the fuel mix by increasing its focus on renewable resources in order to reduce the country’s reliance on conventional fuels, especially coal. At the moment, there are huge investment opportunities in India’s renewable energy sector. In addition, the government has made infrastructure growth a national priority. Along with manufacturing, renewable energy is expected to drive India’s growth over the next five years. In line with this vision, the Ministry of New and Renewable Energy (MNRE) has scaled up the renewable energy target to 175 GW by 2022. The positive developments in India’s renewable energy sector include the launch of national-level reforms like the off-

shore wind policy and the Draft National Renewable Energy Act, the creation of the viability gap funding and renewable purchase obligation (RPO) mechanisms, and permitting 100 per cent foreign direct investment in the sector. The sharp decline in solar costs, from about Rs 7 per unit in 2014 to below Rs 5 now, is also making solar an attractive business opportunity. International cooperation in renewable energy development is increasing as well, and low-interest investments from multilateral agencies are also flowing in. On the flip side, the sector is suffering due to the poor financial health of discoms. The states where discoms are faring poorly are Tamil Nadu, Rajasthan, Andhra Pradesh, Uttar Pradesh, Haryana, Jharkhand, Bihar and Telangana. Incidentally, these are also the states that have the maximum renewable energy potential. Another concern is that India has realised only 42 GW of its estimated 160 GW hydropower potential till date. The govern-

ment needs to put in place hydropower purchase obligations, much like RPOs, to encourage the segment. In addition, the fall in crude oil and coal prices has resulted in the slow development of renewable energy in the past year. Meanwhile, the waiver of interstate transmission charges is expected to boost the solar segment in the short term, but its medium- to longterm effects are unknown.

Arvind Mahajan There has been accelerated capacity addition in renewable energy over the past year. Solar power has reached a tipping point and is poised for a rapid scale-up. Many states are deploying renewables for meeting their growing electricity requirements and for energy security considerations. On the positive side, the support extended to renewable energy by the central government and various states has helped create an initial ecosystem as they are aligned and working together. The solar park initia-

Amit Kumar

Arvind Mahajan

Ajit Pandit

Partner,

Head of Energy,

Director,

Energy and Utilities,

Infrastructure,

Idam Infrastructure

Pricewaterhouse-

Healthcare and

Advisory

Coopers

Government Practice, KPMG

“There are huge investment opportunities in renewables. Along with manufacturing, renewable energy is expected to drive India’s growth.”

90 ● Renewable Watch ● November 2015

“The right business models and consumer financing solutions can expand market reach and promote distributed generation.”

“While the government has taken a number of steps to promote the sector, the emphasis now has to be on project development.”

PERSPECTIVE

ANNIVERSARY ISSUE tive is an example of the close cooperation between the central and state governments in support of renewable energy. The competition in the solar segment has intensified, with new low tariffs being discovered for each round of bidding. Globally, energy storage is finally getting some much-needed attention and battery costs have been declining. Combined with cost-effective storage, solar can be a game changer. However, renewable energy is still not part of the government’s integrated planning paradigm. Moreover, the country’s dependence on imports for installing renewable energy projects remains high and the domestic solar equipment manufacturing base is uncompetitive.

Ajit Pandit The country’s renewable energy sector generated significant enthusiasm during the past year, mostly due to policy support from the government. However, while there is a lot of positive sentiment about renewable energy development, projects on the ground are not being developed at the desired pace. The MNRE has envisaged about 4.4 GW of capacity addition in the sector this fiscal, but only 1.6 GW had been added till September 2015, less than 40 per cent of the target. Of late, the focus has been more on solar. Other segments like wind, biomass and small hydro have not received adequate attention. What should be the government’s key focus areas for promoting large-scale development of renewable energy?

Amit Kumar India’s present power generating capacity is about 270 GW, most of which is powered using fossil fuels. The peak demand for electricity is expected to increase at a compound annual growth rate of 7 per cent over the Twelfth and Thirteenth Plan periods. The business-as-usual scenario, that is, fossil fuel dependence, has limitations. Therefore, the government is increasing its focus on renewable energy. There is now a need for a robust and integrated policy regime that attracts inves-

tors and covers aspects like a stable and long-term policy framework, the roles of the central and state governments, and grid management protocol. Stricter implementation of RPOs is essential as well. Another requirement is the identification and development of renewable electricity investment zones. This can be done under the National Renewable Energy Development Plan, which the government is planning to come out with soon. In addition, the financial health of discoms needs to be revived. There should also be a focus on the creation of smart grids and the development of green energy corridors for the evacuation of renewable energy. Issues related to graded tariffs to achieve grid parity and ensure investors a fair return on their investment over the life cycle of a project should also be looked into.

Arvind Mahajan The government should work towards strengthening the transmission network for enabling higher penetration of renewable energy sources. Conventional energy generators should bring in generation flexibility to accommodate the variability in renewable energy. The government should focus on developing smart grids to enable distributed generation (such as solar rooftops) and also put in place a mechanism for demand-side response. Promoting research and development (R&D) in storage solutions can accelerate renewable energy deployment. Money can be set aside from the National Clean Energy Fund to finance promising technologies in this area. The government should create a wind energy atlas with high resolution data to cover India’s offshore wind potential. This will be a new frontier for India and large-scale projects can help make it more competitive with onshore wind.

Ajit Pandit While the government has taken a number of steps to promote the sector, the emphasis now has to be on project development on the ground. There has been a lot of government focus on supply-side

intervention. The industry, too, has committed its resources towards enhancing the supply side. However, the sector’s growth cannot just be supply push; there has to be enough of a demand pull for the market to succeed. The discoms, power offtakers and consumers will have to be encouraged to purchase power generated from renewable sources. The government has put in place the RPO mechanism that stipulates targets for renewable energy purchase, but these are not being strictly enforced. In addition, the grid integration of renewable energy generators should be undertaken on a priority basis if the 175 GW target has to be achieved. There are three dimensions to grid integration: planning, construction and development, and operation. Each aspect has its own sets of challenges, and hence careful strategies have to be developed to tackle the issues. Thus, strengthening RPO compliance and ensuring effective grid integration should be the government’s twin focus areas. What steps does the industry need to take to reach the 175 GW target?

Amit Kumar The industry needs to explore innovative business models and not be too dependent on domestic debt as it is much costlier. Developers need to have access to easy finance in order to compete with international players. An issue that could arise in another two years is the availability of skilled manpower, given the kind of capacity that is expected to come up. The government needs to work with the industry to counter this. In addition, the development of domestic renewable energy manufacturing capacity is a must as dependence on imported equipment will only lead to foreign exchange outgo. The private sector must develop a substantial manufacturing capacity of at least 5-10 GW across India in order to be competitive in the international market.

Arvind Mahajan Renewable energy presents a large November 2015 ● Renewable Watch ● 91

PERSPECTIVE

opportunity for investors. The right business models and consumer financing solutions can expand market reach and promote distributed generation. The industry should invest in finding solutions for integrating renewable energy additions. This can help India achieve its targets in a sustainable manner. A lot of opportunities for innovation also exist in the solar offgrid market.

Ajit Pandit The industry obviously has a very important role to play in terms of bringing down the cost of renewable power. For instance, solar prices have come down from Rs 11Rs 12 per kWh to below Rs 6 in the past three to four years. This has been made possible as a result of the financial engineering undertaken by the industry. There is now a need to develop indigenous manufacturing in the sector to remain competitive in the global market. With 18 to 19 players, the Indian wind industry has become quite competitive. In fact, we export technology to other countries. Similarly, in biomass, small hydro and cogeneration, we have a good manufacturing base. However, in solar and wasteto-energy, we are still partially dependent on imported technology. Addressing supply chain issues can help unlock greater potential in the sector. 92 ● Renewable Watch ● November 2015

ANNIVERSARY ISSUE

What are the key constraints facing the country’s renewable energy sector? How do you see it evolving in the coming years?

Amit Kumar The key constraints facing the sector relate to the poor financial health of discoms, land availability, renewable energy forecasting, the failure of the RPO mechanism, and the non-availability of green energy corridors for transmitting renewable energy. While the government is taking steps to resolve some of these, more effort needs to be put in. If we can overcome the above constraints, the country will be able to achieve the ambitious target set by the government. Policymakers, project developers and financial institutions need to come together to set up year-wise targets and remove bottlenecks.

Arvind Mahajan The renewable energy sector is poised for accelerated growth. In solar, disruption is on the horizon. Distributed solar with storage can be a game changer that has the potential to disrupt the traditional utility business model. The main constraints are to do with grid integration challenges to accommodate

the rising renewable energy penetration; the financial stress of discoms, which can push back the support extended to renewable energy; and the availability of land with adequate transmission evacuation facilities. In addition, domestic R&D capabilities for developing localised solutions in the Indian context (agricultural pump sets, storage solutions and grid integration) are still inadequate. The lack of skilled manpower in fulfilling opportunities in the clean energy space is also one of the key challenges currently facing the industry.

Ajit Pandit A key constraint is the lack of adequate transmission and evacuation facilities for renewable energy projects. If the pace of project development is not matched with the establishment of evacuation facilities, it can pose a serious hindrance. The government has planned green energy corridors to address this issue. It is now imperative that these plans are put into action and on-ground developments reflect the enthusiasm in the sector. Despite these challenges, the outlook for the sector is very positive. Concerns regarding energy security and climate change, along with the falling prices of renewable energy, indicate significant growth prospects in the market. ■

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ANNIVERSARY ISSUE

A Challenge and an Opportunity Off-grid segment makes progress, but problems remain While the role of energy in driving economic growth is acknowledged, the fact is that millions of households in the country still lack access to reliable power. Many private companies have stepped in to fill this gap and have been increasing their reach to large off-grid sections of the population over the past few years. Key off-grid players discuss recent trends in the segment, the challenges faced by entrepreneurs operating in the off-grid space and their plans for tapping the potential of this market… What is the potential of the renewable energy-based off-grid power market in India? What have been the key trends witnessed in this segment over the past one year?

for us to look at the needs of a particular segment of population and the geography of the region it lies in, and then devise a solution that is best suited to the segment.

Harish Hande

Nikhil Jaisinghani

While the term off-grid is often used in the context of households that lack access to electricity, such a definition is narrow. For instance, last month, 60-70 per cent of our business came from installing microgrid systems for households that already have electricity but are frustrated with its unreliability. Thus, the off-grid market is large and segmented. As an entrepreneur, one has to look at the market as consisting of clients whose value needs to be respected. The off-grid market in India has been witnessing an increased uptake of microgrid solutions. However, there is an urgent need to realise that providing technological solutions alone will not solve the offgrid challenge. The social dynamics, together with financial modelling of a solution, will make it successful. It is essential

The off-grid market in India is very large, comprising 300-400 million people, which translates into 45-50 million households that do not have access to electricity and depend on kerosene for lighting. While the market is very large, it is also very diverse. A number of companies are operating in this space with varied offerings such as solar home lighting systems, solar lanterns and microgrids. While solar lantern companies are currently doing very well, their business model may not necessarily be sustainable. On the other hand, microgrid companies, which charge people on a monthly or weekly basis, have a more sustainable long-term model. These companies are experimenting with various models to work out the best way to tap the market potential.

Anish Thakkar There are about 80 million households in the country, primarily rural, which still do not have access to reliable power. This is our target market. The most significant trend that we have witnessed in the segment we operate in is that households are able to afford higher power rated products. Further, we have seen that once a household starts using a solar lamp, it moves away from using a kerosene lamp. With solar power, their homes are safer and their health is better protected.

Kartik Wahi There are multiple applications within the solar off-grid vertical and our company focuses on the solar pumping solutions segment. While home rooftop systems have been around for the past four to five years, solar pumping has emerged as a fairly significant category only in the past two years. This is primarily because the government has taken a firm stand on supporting the industry by aiming to support

Harish Hande

Nikhil Jaisinghani

Anish Thakkar

Managing Director,

Co-Founder,

CEO,

Selco India

Mera Gao Power

Greenlight Planet

“We should look at poor off-g grid households as partners and design appropriate solutions that address their needs.”

94 ● Renewable Watch ● November 2015

“The government’s subsidy programmes have been largely ineffective as the required funds have not flowed into the segment.”

“The government has done a good job by making the renewable energy sector a key policy focus area.”

PERSPECTIVE

ANNIVERSARY ISSUE the installation of 200,000 solar pumping systems over the next two to three years through a variety of programmes. This translates into a business opportunity of Rs 90 billion-Rs 100 billion (at Rs 500,000 per solar pump, assuming the average size of the solar pump to be 5 HP). As an industry, we are beginning to see a critical mass of installations on the ground which makes a product or a technology mainstream. This has resulted in better awareness among different stakeholders, whether it is the beneficiaries, the funding agencies or the government. In addition, a lot of effort is being made to innovate and develop new business models to take the benefit of solar irrigation to a broader audience. What are the key challenges faced by entrepreneurs in this segment?

Harish Hande Many of the challenges that entrepreneurs in the segment face are similar to those that enterprises in other domains face. These challenges pertain to securing funds from local banks for operational needs, developing an appropriate product that would provide value to the end-user, and having adequately qualified and experienced people on board. A part of the problem is also that today entrepreneurs look at the poor as a market and not as a partner or a client. It is essential that we start looking at poor off-grid households as partners and design appropriate solutions that address their needs instead of forcing a technological or financial product on them. Kartik Wahi Co-Founder, Claro Energy

Nikhil Jaisinghani The microgrid segment is commercially viable only at a certain scale. In north India, while there are plenty of off-grid hamlets, the population of each hamlet is quite small. Also, their ability to pay for power is low. Energy-as-a-service companies must either be willing to accept low customer acquisition rates for more expensive offerings or find a way to drive down the cost of service delivery. Pricing a product at more than what the customer can afford to pay will lead to a reduction in demand; at the same time, developing low-cost, efficient operations can be complicated. Access to financing is another key challenge faced by first-time entrepreneurs trying to navigate the off-grid space. The other big challenge relates to transportation. Interstate transport, particularly in states like Uttar Pradesh and Maharashtra, is subject to bureaucratic regulations, which can be very challenging to deal with. Apart from these, government regulations make it challenging to operate in the off-grid segment. There have been times when some local government bodies and politicians have stepped in and stopped us from working.

Anish Thakkar The biggest challenge for us is distribution. Reaching off-grid families, many of whom live in rural and hard-to-reach areas, is a mammoth task. Another challenge is developing trust among consumers. While our products are able to pay for themselves in six to nine months, for off-grid families it is a radically new idea as it represents an upfront investment which people may not be willing to make. Therefore, we focus on generating awareness among consumers through door-to-door interactions and explain the virtues of the product and solar power in general.

Kartik Wahi “Since many companies operating in the off-g grid space are relatively young, getting access to working capital has been quite challenging.”

The first major challenge relates to the product or the service itself. When we started out, the technology for solar pumping was limited to a few suppliers. As the market size increased, a number of manufacturers realised that this is an attractive opportunity. Now there is a thriving market

ecosystem for all the technology components that go into a solar pump. With so much innovation and commoditisation of technology happening, the cost is coming down across the board. Thus, the factor that was a big challenge earlier is now beginning to get sorted out. The other big challenge that remains from the industry’s perspective is end-user financing. The government, through the National Bank for Agriculture and Rural Development, came up with a consumer finance scheme whereby a consumer willing to buy a new solar pump could get a loan from a bank against the solar pump. However, things have been slightly sluggish on this front, with banks still struggling to understand this asset class. The third issue is the lack of enterprise-level financing. Since many companies operating in the off-grid space are relatively young, getting access to working capital has been quite challenging. Most investors (debt and equity) are ready to finance megawatt-scale projects; however, applications like solar pumping get neglected. This leaves companies like ours that are investing in last mile infrastructure with little room to operate. Do you think the government policies are supportive enough? What can the government do on the policy and regulatory fronts to provide a further impetus to the segment?

Harish Hande The government should subsidise the entire ecosystem rather than just the capital. For instance, the government could mandate that 5 per cent of all banks’ portfolios should consist of renewable energy financing. Banks can then reduce the interest rates on loans for renewable energy products rather than providing capital subsidy. Further, there is a need to provide high-risk funds for entrepreneurs to invest in the innovation of technology and financial products.

Nikhil Jaisinghani I don’t think the government is doing much. The best thing that the government did, probably inadvertently, was allowing companies to service power consumers November 2015 ● Renewable Watch ● 95

PERSPECTIVE in rural areas without a licence. However, the kerosene subsidy provided by the government has had an adverse impact on us because it limits the amount of money we can charge customers. Further, the government’s subsidy programmes have been largely ineffective as the necessary funds have not flowed into the segment. In my opinion, rather than providing subsidies, the government should encourage commercial models, which would help bring electricity to off-grid households. The best measure that the government can take is to provide high-risk debt because most companies are finding it difficult to raise commercial debt as domestic banks are still reluctant to lend to off-grid enterprises. Also, diverting the kerosene subsidy in favour of cash transfers would be a phenomenal move.

Anish Thakkar In my opinion, the government has done a good job by making renewable energy a key policy focus area. There is increased awareness within the government of the benefits of promoting renewable energy use and driving the country towards energy self-sufficiency. However, there are several challenges involved in providing affordable, high quality and low-cost offgrid power. It is, therefore, essential that the government takes adequate steps to ensure that affordable and good quality products enter the market. Further, it can help keep the prices of these products low by imposing a lower sales tax.

Kartik Wahi The government is doing its bit in terms of giving initial support to the industry by launching a number of programmes. Implementation at the state level, however, remains a challenge. At the policy level, the Ministry of New and Renewable Energy is fairly serious about solar pumps and has issued guidelines for state agencies. While there are some states that are very proactive, some falter when it comes to implementation. The government should now work towards creative restructuring of the subsidy programme. For example, currently the government gives a direct 96 ● Renewable Watch ● November 2015

ANNIVERSARY ISSUE capital subsidy for solar pumps. In addition to that, it could also look at parking some money in a fund to facilitate a loan guarantee scheme for banks. This move will give banks the comfort that should a loan to a farmer for a solar pump go bad, they will still be able to recover the money. What has been the impact of the projects undertaken by your company? What are your immediate plans and targets?

Harish Hande The impact of our projects cannot be seen in isolation. While energy access is critical, it is just a part of the development equation. For holistic development, an entire ecosystem should be provided. Selco’s aim is to address the energy needs of 200,000 households over the next five years, including aspects of education, livelihoods, health, etc., to bring about a lasting impact on people’s lives.

Nikhil Jaisinghani We operate in off-grid areas where half the households earn just Rs 3,000-Rs 5,000 per month. As per the surveys conducted by our company, children study 50 per cent more in the households that we serve because they have access to electricity, which allows them to study at night as well. In addition, we have seen that microentrepreneurs with businesses that depend on electricity are able to produce more owing to reduced incidents of outages. This improves the overall income of the household. In fact, many people have told us that their homes are much safer now and instances of thefts have reduced, thus improving the overall quality of life. Currently, we are operating in about 1,450 villages, serving 21,000 households and 120,000 people. Our goal is to double the number of households we serve by 2016-17. We are in the process of raising our next round of financing to help us achieve this target. We are looking at new ways of providing more than just lighting and phone charging facilities. We also plan to explore new districts in eastern and western Uttar Pradesh and some other states next year.

Anish Thakkar Our customers have witnessed considerable savings owing to reduced kerosene consumption. Also, our products lead to 25 per cent increase in the household income as people are able to work even after sunset. In addition, our research has recorded a 75 per cent increase in the number of study hours for schoolgoing children in households using our products. Our products also help reduce the dependence on kerosene, thereby increasing safety at home, improving health and reducing carbon emissions. We started our commercial operations in June 2009. It took us one year to reach 1 million households and in September 2015, we crossed the 4 million mark in terms of the total number of devices sold. Today, we cater to around 4,000 new off-grid households every day. Our cumulative sales have not only helped offset 610,000 tonnes of carbon dioxide emissions but have also helped families save billions of rupees in kerosene fuel expense. Our goal now is to reach 20 million off-grid households by 2020.

Kartik Wahi We have seen that in the first six to eight months after a farmer installs a solar pump, his cropping pattern remains the same. Post that, in most areas, farmers move from growing two to three crops a year, which adds to their income. Moreover, when farmers rely on diesel for pumping, they fail to irrigate the farms sufficiently. However, with affordable irrigation offered by solar pumps, they are able to undertake effective irrigation. After almost 12 months of using the solar pump, farmers begin to move towards cash crops that are more sensitive to water needs. Studies are going on to quantify these benefits in rupee terms. With the additional income, farmers are able to better afford other services like health care and education. Our current installed base is over 2,000 pumps and another 2,000 solar pumps are under execution in 15 states. In the next financial year, we are looking to deploy 10,000 additional solar pumps. The industry is on an exponential growth curve and we would like to tap the emerging opportunities. ■

9th Annual Conference on

S LAR P WER

Sponsorship opportunities are open for 2016

In India

June 2016, New Delhi

Speakers 2015 included: Mr Piyush Goyal Hon'ble Minister of State (Independent Charge), Ministry of Power, Coal & Renewable Energy Dr Amarpal Singh, Chief Executive Officer,

Vineet Mittal, Co-Founder and Managing Director, Welspun Energy

Punjab Energy Development Agency

Shivanand Nimbargi, Managing Director & Chief Executive Officer, Sembcorp Green Infra

S.K. Shukla, Chief Executive Officer, Chattisgarh Renewable Energy Development Agency

Sunil Jain, Chief Executive Officer, Hero Future Energies

Shiva Rajaraman, Chief Executive, L&T Infra Debt Fund

Keshav Prasad, Chief Operating Officer, Solar, IL&FS Energy Development Company

Gagan Pal, Vice-President, Tata Power Solar System India

Previous Sponsors

For more information Contact: Kanan Kumar - Conference Cell India Infrastructure Publishing Pvt. Ltd., B-17, Qutab Institutional Area, New Delhi 110016 Tel: 011-41034615, 9891210461, Email: kanan.kumar@indiainfrastructure.com

OPINION

ANNIVERSARY ISSUE

Vineet Mittal Vice Chairman, Welspun Renewables

Finding Favour Tapping the rooftop solar potential

ndiaâ&#x20AC;&#x2122;s immense potential to generate power from solar panels mounted on rooftops has, unfortunately, remained highly underrated. Considering that India has over 300 sunny days in a year and an abundance of rooftop space, especially in rural areas, much of its potential is still unexplored. Of the ambitious 100 GW solar power target set by the Jawaharlal Nehru National Solar Mission, the country aims to achieve 40 GW through rooftop solar installations by 2022. India currently has less than 300 MW of installed rooftop capacity. It is, however, adding rooftop capacity rapidly, because of the declining cost of technologies and batteries, as well as the encouragement received from the government and the private sector, and the favourable policy measures. Rural India is largely dependent on grid connectivity for access to electricity. Regardless of grid connectivity, a significant number of rural Indians continue to rely on diesel for energy. This is neither economically nor ecologically sustainable.

Benefits of rooftop solar Rooftop solar is a reliable and long-term source of power. Unlike grid-level solar projects, rooftop solar is useful throughout the day as well as the night, since household batteries can store electricity, which can be utilised during night time. This also eliminates the enormous transmission, theft and distribution losses faced by the conventional grid system. Moreover, rooftop solar is

98 â&#x2014;? Renewable Watch â&#x2014;? November 2015

very useful for both household and industrial consumption. Large-scale industries are realising the growing importance of rooftop solar, since their peak hour consumption coincides with the highest intensity generation period of rooftop solar systems. Fundamentally, rooftop solar does not require megawatt-scale grid connectivity, since it is a microgrid system connected directly to smaller units like households, hamlets or villages. It also eliminates challenges and delays related to land acquisition, and acquiring environmental and other clearances, which makes it an easily executable option. The microgrid system involves almost no recurring cost after installation. The maintenance costs of rooftop solar are almost negligible when compared to conventional sources of energy. Above all, rooftop solar empowers communities and individuals in a significant way by helping households become energy efficient, as well as capable of trading electricity with the state electricity boards (SEBs). It has the potential of becoming an all-encompassing livelihood model for the underprivileged in the long run. Germany has set a viable model of rooftop solar, which has made the nation power surplus and also created livelihood opportunities for millions.

Mitigating emissions through rooftop solar Rural India consumes over 2 billion litres of diesel every year. Diesel fuel in India is subsidised by over Rs 10 per litre. According to a World Bank report, if the cost of subsidy is taken into account, diesel would be the most expensive source of energy in the coun-

OPINION

ANNIVERSARY ISSUE try (at over Rs 15 per unit). According to a report by consulting firm AT Kearney, India spends around Rs 85 billion on diesel each year to keep its telecom towers running. Despite such a high degree of fossil fuel consumption, India has one of the lowest per capita emissions among the developing economies. This can be brought down further through rooftop solar installations, which will provide cheap electricity as well as a source of income and clean energy. A large number of small-scale industries, educational institutes and hospitals continue to depend on fossil fuels for energy, which can easily be replaced with more profitable rooftop solar options with a small capital investment. The central government has initiated a reward system to support states with high afforestation targets. This programme can gain significant momentum by accelerating rooftop solar and, in turn, involve communities in massive tree-planting drives.

Clearing the stumbling blocks In the next five years, I anticipate that a significant portion of the 40 GW of rooftop solar capacity under the National Solar Mission will see the light of day. However, this will not come without its share of challenges. Many rooftops in the country are either occupied by air conditioners or are expensive. Insufficient storage technology is another major roadblock. Low-cost batteries with high capacities and efficient solar modules can hasten the development of the rooftop solar sector in a significant way. While major state governments have offered subsidies on the procurement of solar technologies and low-cost finance, many state governments and municipal corporations are yet to take initiatives in this direction. The development of cheap storage technologies will become a game changer in the sector, since it is an important component of the solar microgrid. Another important lesson India can learn from its foreign counterparts is the formulation of a net metering policy. India is equipped to provide both self-owned and third-partyowned net metering systems. Third-party-owned rooftop systems can become a commercially viable option for the owner of the rooftop as well as the developer. The possibility of power utilities buying surplus electricity from households (which is a common practice in many countries) has not even been made a part of the public discourse yet. It is crucial for the states and the centre to work together to clear these roadblocks.

State of the states Most states have opened up phenomenally to the idea of rooftop solar in the past two years. Almost every major state (which has reasonable solar irradiation) has a comprehensive stand-alone policy to encourage the installation of rooftop solar. States like Haryana have moved swiftly to execute their rooftop policy. The Haryana government has made it mandatory for any building with a plot size of 500 square yards or more to install such systems. The chief minister of Tamil Nadu recently made a similar policy announcement, making rooftop solar systems mandatory for all new buildings. Gujarat is creating large solar cities which have rooftop solar as the focal point. States like Madhya

Pradesh, Rajasthan and Karnataka, which have high solar radiation, are also moving rapidly in this direction. In Delhi, which is the world’s most polluted city, the government is drafting a comprehensive strategy to increase rooftop solar installations. In urban India, shopping malls, hospitals and educational institutes are bullish about the rooftop opportunity.

The way forward In the past few years, the much-needed clarity on rooftop solar has been provided by the central and state governments. Although the cost of technologies has reduced dramatically in the past five years, many Indian households are reluctant to undertake the high initial costs. The government’s role will be crucial in providing subsidies and low-cost microfinance to people to boost rooftop solar uptake. High labour and land costs are also dampeners for the segment. This could be checked through active government intervention. A large number of Indian households, especially in rural areas, use diesel generators and wood as their primary source of energy; rooftop solar promises to significantly lower the usage of fossil fuels and decrease emissions and environmental degradation. This will also ease the burden on SEBs during peak hours.

Changing the rooftop discourse The mindset of people and developers must change for rooftop solar to attain the set capacity target. Unless we see energy as a pressing socio-economic need for the 300 million Indians who still do not have access to uninterrupted electricity, rooftop will have to fight its way to its goal. There is an urgent need for spreading awareness among people regarding the growing danger of climate change. Indian cities, in particular, are highly vulnerable to increasing emissions. According to a recent report by the World Health Organization, 13 of the 20 most polluted cities in the world are in India. This is a major threat to the health of children in Asia’s third largest economy. A boost to the rooftop solar segment can help neutralise this threat, which is endangering the health and environment of the nation. Our company has taken several initiatives to increase the awareness about rooftop solar plants among institutions, governments and citizens. We have a large, dedicated rooftop solar team, which is exploring commercial opportunities across the country. So far, we have undertaken and successfully executed three rooftop solar plants at high irradiation sites in the country. We are constantly engaged in dialogue with state governments, local self-governments and citizens to make them aware about the importance of rooftop solar. We are educating them about the entire model, whereby citizens can sell the excess electricity to the SEBs and earn a reasonable sum of money each month. Conversely, this would provide the state with cheap and clean electricity, which will help address the challenge of energy efficiency. Rooftop solar, therefore, presents a win-win situation for all stakeholders. ■ November 2015 ● Renewable Watch ● 99

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Company Highlights Key developments in the past 12 months

he Indian renewable energy sector has been attracting interest from small and large companies from India and across the globe. The past year, in particular, has witnessed some major global players entering the Indian renewable energy space and the existing ones ramping up their presence. Besides, some large industrial groups and players have diversified into the sector. Clearly, renewable energy is emerging as a viable business opportunity in India. This not only holds true for power generation and services, but also for manufacturing in light of the Make in India initiative. Investor interest was evident at the first Renewable Energy Global Investors Meet & Expo (RE-INVEST 2015), which concluded with 266 GW of green energy commitments from domestic and global private companies as well as public limited ones across the project development, manufacturing and power generation segments.

Aditya Birla

100 ● Renewable Watch ● November 2015

ACME Cleantech Solutions

Renewable Watch takes a look at the significant developments related to key manufacturers, developers, and engineering, procurement and construction (EPC) companies operating across the solar, wind, small-hydro and biomass segments in India during the past year...

z The Aditya Birla Group is a $41 billion multinational conglomerate. In October 2015, it announced a partnership for building a large-scale renewable energy platform focused on developing utility-scale solar power plants in India with the Abraaj Group, an investor operating in global growth markets. The Aditya Birla Group will invest in the plat-

form through Aditya Birla Nuvo Limited (ABNL), while Abraaj will do so through one of its affiliates. ABNL has entered into a definitive share subscription and shareholder agreement with Abraaj’s affiliate. In accordance with the agreement, subject to customary closing conditions and requisite approvals, ABNL and the Abraaj affiliate will respectively hold 51 per cent and 49 per cent of the paid-up share capital in Aditya Birla Renewables Limited currently a wholly owned subsidiary of ABNL. Aditya Birla Renewables Limited, the solar power platform, will bid for projects tendered at national and state auctions with the intent of developing and operating utility-scale solar plants. Earlier during 2015, ABNL had participated in Telangana’s tender for the allocation of 2 GW of solar photovoltaic (PV) projects.

z ACME Cleantech Solutions, formerly known as ACME Tele Power Limited, is the ACME Group’s flagship company. ACME Cleantech Solutions has partnered with EDF Energies Nouvelles and EREN to form a three-way joint venture (JV), ACME Solar, with the latter two holding a cumulative equity stake of 50 per cent in it. As of August 2015, ACME Solar’s installed operational capacity was 197.5 MWp, and it had about 1,300 MWp of capacity in the pipeline (to be commissioned by end-March 2016). During the year, ACME Solar commissioned five solar projects with a cumulative capacity of 100 MW in Jodhpur, Rajasthan. The projects, which were awarded to the company under the Jawaharlal Nehru National Solar Mission (JNNSM) Phase II Batch I, entailed an in-

vestment of Rs 8 billion. Financing for them was secured from the Asian Development Bank (ADB), International Finance Corporation (IFC) and YES Bank. ACME Solar also commissioned a 25 MW project comprising 117,000 PV panels in Sikuan, Odisha, under the state’s solar policy. During the past year, ACME Cleantech Solutions signed agreements with Trina Solar Limited for supplying and installing 48 MW of solar modules at two of the latter’s upcoming solar projects. It also awarded a contract to China-based Zhongli Talesun for supplying and installing 222 MW of solar modules, the delivery of which is slated to be completed by February 2016. ACME Solar was recently reported to have won a 50 MW solar PV project in Uttarakhand. In August 2015, the company announced that it had secured 446 MW under Telangana’s 2,000 MW tender. During the past year, the company also secured two projects of 24 MW and 50 MW under Punjab’s 250 MW solar tender. In addition, ACME Solar is implementing a 30 MW rooftop solar project in Punjab. In another development, the ACME Group signed a power purchase agreement (PPA) for a 30 MW solar power plant it is developing in Mahoba, Uttar Pradesh. The project is being developed with an estimated investment of Rs 2.25 billion and is expected to be commissioned by August 2016. Overall, ACME is aiming to install 7,500 MW of solar power by 2019.

Azure Power Founded in 2007, Azure Power is an Indian solar power developer with several proz

COMPANIES

ANNIVERSARY ISSUE

jects operating under various policies for grid-connected projects, rooftops and off-grid systems. It was among the first private companies in India to commission a MW-scale, grid-connected solar PV project: a 2 MW plant in Amritsar in December 2009. In November 2014, the company commissioned a 34 MW solar project at Lamb in Punjab. Spread across 170 acres, the plant entailed an investment of Rs 3.5 billion. During the year, it also secured two projects, one of 24 MW and the other of 4 MW, under Punjab’s 250 MW solar tender (Phase II). In December 2014, Azure Power signed an MoU with the Rajasthan government for developing a 1,000 MW solar project in the state. In May 2015, it announced the commissioning of a 100 MW solar plant in Jodhpur. The 725 acres project was won under JNNSM Phase II Batch I. Azure Power will supply electricity generated by the plant to the Solar Energy Corporation of India at Rs 5.45 per unit under a 25-year PPA. Azure Power has also commissioned 30 MW of solar capacity in Durg, Chhattisgarh. It had won the project under the Chhattisgarh Solar Policy, 2012-2017 for supplying power to Chhattisgarh State Power Distribution Company Limited for 25 years. Covering 150 acres of land, its installation was completed in three phases of 10 MW each. The first phase was completed in June 2015 while the remaining 20 MW was commissioned in the consecutive months. In addition, during the year, Azure Power’s subsidiary, Azure Sunlight, raised $20 million in a loan facility from the Overseas Private Investment Corporation. The loan, facilitated by SAM Consultant, will be used for the development, financing, construction and operations and maintenance (O&M) of 19 MW of rooftop solar power systems across India.

Bharat Light and Power z Bharat Light and Power (BLP) is a renewable energy generation and

technology company in India. As of September 24, 2015, the company owned operating wind plants cumulating 172 MW in Gujarat and Maharashtra. It also held a wind project portfolio of about 600 MW of capacity at different stages of development. BLP has three verticals. BLP Energy, a JV with Italybased Enel Green Power (EGP), builds, owns and operates utility-scale renewable energy power plants to generate clean energy through wind and solar technologies. Statkraft BLP Solar Solutions Private Limited (SBSS), a JV with Europe-based renewable energy producer Statkraft, provides distributed solar solutions to large corporates, industries and institutions in India. Meanwhile, via its Orion platform, BLP provides monitoring, reporting and predictive intelligence solutions to global utilities through a control centre in Bengaluru by leveraging big data, the cloud, mobility and advanced analytics. In September 2015, EGP announced its entry into India’s renewable energy sector with the acquisition of a majority stake in BLP Energy (BLP’s utility-scale wind and solar subsidiary) for a total consideration of approximately Euro 30 million. BLP and Statkraft announced the formation of SBSS, a 50-50 JV to provide distributed solar energy solutions in India, in November 2015. This will provide industrial and commercial consumers with rooftop and groundmounted solutions with world-class technology and execution. In addition, SBSS will provide a variety of financing structures whereby consumers can convert their solar capex into an attractive per unit cost of solar energy.

Bharat Heavy Electricals Limited Established in 1964, Bharat Heavy Electricals Limited (BHEL) is an integrated power plant equipment manufacturer and engineering and manufacturing company engaged in the design, engineering, manufacture, construction, testing, commissioning and servicing of a wide range of products

and services for sectors like power, transmission, industry, transportation (railways), renewable energy, oil and gas, and defence. In the renewable energy sector, the PSU offers EPC solutions for solar PV plants and has the capability of manufacturing space-grade solar panels and space-grade batteries. Its main product offerings are solar cells and modules and a 500 kVA power control unit for solar PV plants. In July 2015, BHEL commissioned a 10 MW grid-connected solar project for Karnataka Power Corporation Limited near Shivanasamudram in Karnataka. Its scope of work included the design, manufacture, supply, testing, installation and commissioning of the plant. BHEL will also undertake its O&M for three years. During the year, BHEL also executed a 10 MW solar plant in Neyveli, Tamil Nadu, for the Neyveli Lignite Corporation. The project entailed an investment of Rs 746 million. The solar plant is spread across 54 acres of land and comprises 48,000 units of solar PV modules, each with a capacity of 240 W. In May 2015, BHEL was reportedly awarded EPC works for 50 MW of solar capacity out of a total of 250 MW in Anantapur, Andhra Pradesh by NTPC Limited. This capacity is part of a 1,000 MW ultra mega solar power project that is being taken up by NTPC near Kadiri in Anantapur district. As per the company’s investor presentation for June 2015, its future strategies for the solar segment include enhancing its EPC capabilities progressively up to 600 MW, setting up an integrated manufacturing facility for 480 MW of solar PV systems, and commercialising its indigenously developed 500 kW power conditioning unit.

CLP India CLP India is a wholly owned subsidiary of CLP Holdings Limited, which is listed on the Hong Kong Stock Exchange. Its investments spread across a diversified portfolio that covers renewable energy and supercritical coalz

November 2015 ● Renewable Watch ● 101

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and gas-fired generation. In line with the CLP Group’s commitment to lower its carbon emission intensity, CLP India has been expanding its wind investments. As of mid-September 2015, the company had more than 1,000 MW of committed wind projects spread across six states. In February 2015, CLP India and Gamesa announced the signing of an agreement for the construction of a 100 MW wind farm in Chandgarh, Madhya Pradesh, on a turnkey basis. As per the agreement, Gamesa will handle the entire infrastructure required for setting it up and operating it, including the installation of 50 new G97 2.0 MW turbines with an extended hub height of 104 metres. In September 2015, CLP Holdings announced the issuance of its first green bonds through its wholly owned subsidiary CLP Wind Farms (India) (CLP India’s wind portfolio unit) to fund the development of wind projects in the country. CLP Wind Farms (India) raised Rs 6 billion through the offering, the proceeds of which will be used to fund renewable energy projects in India. The secured, unlisted and redeemable non-convertible bonds, which have a coupon rate of 9.15 per cent per annum, will be issued in three series of equal amounts and mature in April of 2018, 2019 and 2020. Standard Chartered Bank, IDFC Limited and the Hong Kong and Shanghai Banking Corporation were the lead arrangers for the bond issuance. At the end of September 2015, Suzlon commissioned a 100.8 MW wind power project for CLP India in Jaisalmer, Rajasthan. The project, part of the 1,300 MW Tejavu wind farm, comprises 48 units of Suzlon’s S97-2.1 wind turbine generator (WTG) with a hub height of 90 metres.

Essel Infraprojects z The

Essel Group is a conglomerate involved in the media, technology, entertainment, packaging, infrastructure, education, wellness, financial services and precious metals businesses. It ventured into the infrastructure sector in 2007 and 102 ● Renewable Watch ● November 2015

ANNIVERSARY ISSUE

formed Essel Infraprojects Limited, the group’s flagship company. This company has operations in transportation (roads), power transmission and distribution, urban infrastructure, environment (municipal solid waste) and renewable energy (solar and hydro). In June 2015, the Essel Group entered into a JV with the Rajasthan government for setting up solar parks in the state. It signed an MoU in this regard in February 2015. The project will facilitate an investment of Rs 40 billion in Bikaner and Jaisalmer. The Essel Group and the state government will hold a 50:50 stake in the JV company, Essel Saurya Urja Company of Rajasthan Limited, which will develop solar parks that will produce 5,000 MW of clean energy. The land for solar park development will be provided by the Rajasthan government, while the Essel Group will implement the entire project, including its financing, technical support and O&M. Prior to this, the Essel Group had signed an MoU with Chinese firm JA Solar for setting up a solar cell and module manufacturing company in India. The 500 MW manufacturing facility is expected to entail an investment of $150 million, of which $30 million-$45 million will be obtained from equity funding. In April 2015, the Essel Group also signed an MoU with Germany-based FeCon for the transfer of critical solar and wind technology. As per this agreement, FeCon will assist Essel in developing and manufacturing wind turbines in India, along with power station and grid equipment for solar and wind energy to suit Indian conditions. In December 2014, the Essel Group reportedly awarded a Rs 7 billion contract to Rays Power Infra for setting up 86.5 MW of solar plants. The EPC company was to set up 31.5 MW and 55 MW of solar plants in the states of Punjab and Uttar Pradesh respectively on a turnkey basis.

GWPL z Mumbai-based wind turbine man-

ufacturer Global Wind Power Limited (GWPL) is a joint venture between the Reliance Anil Dhirubhai Ambani Group and the China Ming Yang Wind Power Group. The latter invested in GWPL in 2012 to become a stakeholder. Prior to this collaboration, GWPL had signed technology transfer agreements with three European companies. In August 2015, GWPL signed an agreement with Australia-based Heliostat to jointly develop utility-scale power projects in India. While the company will initially develop 50 MW and 100 MW projects, it aims to develop 1 GW of solar power projects over the next four years with an estimated investment of $1.85 billion.

Gamesa Wind Turbines Private Limited Gamesa Wind Turbines Private Limited (GWTPL), the Indian arm of Spanish wind turbine manufacturer Gamesa Corporation, started its operations in the country in 2009. During 2014-15, GWTPL registered the highest growth in terms of total wind power capacity addition, increasing from 397.95 MW in 2013-14 to 657.45 MW in 2014-15. This represented a 28 per cent growth (the highest among original equipment manufacturers [OEMs]) in the total capacity addition in the country during the year. As of November 2015, the company had installed around 2.1 GW of wind capacity apart from managing more than 1,700 MW under O&M agreements. In addition, as a wind farm developer, it had set up over 1,300 MW of capacity. During the past year, the company received various orders including 260 MW of contracts from Greenko and CLP for its G97-2.0 MW turbines; two orders from Orange Renewable Power for the supply and installation of 50 MW of G97-2.0 Class S wind turbines and 250 MW of G97-2.0MW-T104 wind turbines; a 40 MW contract from ReNew Power Ventures for its G97-2.0 MW Class S wind turbines; and a 200 MW contract from Ostro Energy for its G97-2.0 MW Class S turbines. z

20 years of trust and leadership •

Global installations of over 14,500MW

•

International presence across 19 countries

•

R&D facilities in Germany, Denmark, India and The Netherlands

COMPANIES z

In December 2014, as part of the agreements signed during the official visit of Russian President Vladimir Putin to India, GWTPL signed an MoU with Russia-based manufacturer Rotek. The agreement between the two companies will facilitate mutual cooperation in the wind power equipment space. In May 2015, the company commissioned 54 MW of wind power projects in Gujarat and Madhya Pradesh for Oil India Limited. While the 16 MW Gujarat unit in Patan entailed an investment of Rs 1,265 million, the 38 MW unit in Chandgarh, Madhya Pradesh was set up at a cost of Rs 3,124.5 million. In July 2015, it secured orders to develop a 10 MW solar power farm for three textile manufacturers in Tamil Nadu on an EPC basis. This development marks the re-entry of the company into the solar energy business after its exit in 2004. GWTPL plans to invest Rs 8 billion to develop grid-connected utility-scale and rooftop solar power projects in the county. In October 2015, Gamesa along with Suzlon, ReGen Powertech and ReNew Power Ventures had committed to the Andhra Pradesh government to invest around Rs 19 billion for setting up wind farms and turbine manufacturing units in the state over the next five years. This was to support the state’s plan to develop 4.8 GW of wind power capacity over the next five years with an estimated investment of Rs 300 billion.

ANNIVERSARY ISSUE z

The Greenko Group is an Indian developer, owner and operator of clean energy projects with a portfolio spread across wind, run-of-the-river hydropower, natural gas and biomass assets. As of end-June 2015, its operational capacity stood at 838 MW. In 2015, during the six-month period ended June 30, 2015, the company added 123 MW. During this period, two new wind projects cumulating 100 MW were commissioned, taking Greenko’s operating wind portfolio to 502 MW. Meanwhile, its hydro portfolio increased to 258 MW with the acquisition of the 22.5 MW Swasti hydro project. The Greenko Group is reportedly planning to enter the solar energy segment by developing 500 MW of solar projects by end-2016 and is actively looking for a global partner for this purpose. It is planning to co-locate solar energy projects with existing wind farms. In February 2015, Greenko placed an order with Gamesa for the supply, installation and commissioning of 80 of the latter’s G97-2.0 MW turbines (160 MW). More specifically, Gamesa was to install 30 turbines at Jaisalmer in Rajasthan, and another 50 at Basavanabagewadi in Karnataka. These wind farms were to be commissioned by z

104 ● Renewable Watch ● November 2015

Greenko Group

GE India z General Electric (GE), which has had an Indian presence since 1902, is involved in providing technology solutions in energy, health care, infrastructure, aviation and financial services. In the Indian wind power segment, the company’s offerings include wind turbines, O&M services, project-related services, research and manufacturing. Its energy financing unit, GE Energy Financial Services, provides developers with financing options to expand infrastructure and capacity.

In October 2015, GE extended its partnership with Welspun Renewable Energy Limited with a second round of funding. Prior to this, in April 2014, GE Energy Financial Services had announced $24 million funding for Welspun Renewable’s 151 MW (DC) solar PV project, which had been operationalised in August 2013. In February 2015, the company inaugurated its Brilliant Factory at Chakan II in Pune, Maharashtra. This has been built on the concept of flexibility, allowing for the manufacturing of a diverse set of products. In the first phase of operations, it will focus on products and solutions for power generation, oil and gas, and transportation industries.

June 2015. The contract was included in a new framework agreement to commission 300 MW of wind power projects in India and was signed by Gamesa and Greenko. In August 2015, the Greenko Group signed a non-binding agreement with the Singapore government’s investment arm, GIC, for selling its entire stake in Greenko Mauritius for a gross cash consideration of about £162.8 million. Consequently, in October 2015, the company announced that it had entered into a sale and purchase agreement with Greenko Energy Holdings, a newly formed subsidiary of Cambourne (a GIC affiliate), for the disposal of all the company’s shares in Greenko Mauritius, and other assets held by the company at completion. As per Greenko Group’s half-year report for 2015, the construction of 300 MW of wind farms spread over three locations is well under way. The 60 MW Tanot Phase II and 100 MW Vyshali projects are expected to be operational by December 2015. The company also had 178 MW of hydro assets under construction. Overall, Greenko intends to reach 1,000 MW of operational capacity by end-2015.

Hero Future Energies

z In September 2013, the Hero Group entered the renewable energy sector with the launch of a new business unit, Hero Future Energies. As of November 2015, the company had 220 MW of installed wind capacity and 40 MW of installed solar capacity. A total 150 MW of wind projects and 90 MW of solar projects were under construction in Madhya Pradesh and Telangana. During RE-Invest, the company committed to developing 5 GW of renewable energy projects by 2022. The company is reportedly planning to raise nearly $100 million to expand its renewable energy portfolio. Further, the company is looking to divest a minor stake and attract strategic or private equity investors to raise funds. Current-

COMPANIES

ANNIVERSARY ISSUE

ly, the entire equity in the company is funded by the promoter. In June 2015, Clean Solar Power (Dhar) Private Limited, a special purpose vehicle (SPV) floated by Hero Future Energies, completed a 32 MW solar power plant in Goyalkhedi and Kamlakhedi in Ratlam district of Madhya Pradesh. The project was awarded to the SPV under the JNNSM Phase II Batch I, with 10 MW under the domestic content requirement (DCR) category and the remaining under the open category. The project was executed by Sterling and Wilson. In September 2015, Hero Future Energies commissioned a 10 MW solar power plant in Chitradurga, Karnataka. Spread across 50 acres of land, the project was executed by Clean Solar Power and is estimated to generate around 17 MUs of electricity annually.

IL&FS Energy Development Company Limited

Hindustan Cleanenergy

ment till 2018 with Korea’s Osung LST Company. The agreement covers a significant portion of Indosolar’s solar PV cell demand for 2015-16. During the year, the company will require a total of 48 million wafers worth Rs 2.6 billion.

Inox Wind Limited

z Established

z IL&FS

started its energy business in 2008 through its subsidiary, IL&FS Energy Development Company Limited (IEDCL), of developing, owning and operating power generation and transmission assets in India and abroad. The company currently has operational assets across the coal, gas, renewable energy and power transmission segments. IL&FS is planning to expand its generation capacity from 1,500 MW to 5,000 MW over the next five years, half of which will come from renewable energy sources. As of April 2015, the company’s renewable energy capacity stood at around 900 MW, and it plans to add 1,000 MW of solar and around 800 MW of wind power capacity. IL&FS plans to invest about Rs 40 billion in its energy businesses during the next three years and is actively looking for funding options. It is open to listing its energy assets in Singapore, as well as floating an initial public offering (IPO) in India. In May 2015, Vikram Solar commissioned a 40 MW grid-connected solar power project owned by IEDCL. The

project, won by IEDCL under JNNSM Phase II Batch I, is located in Madhya Pradesh and was installed in two phases of 20 MW each. The plant uses Vikram Solar’s high efficiency Eldora 250 polycrystalline PV modules and is spread across 260 acres of land.

in 2008, Hindustan Cleanenergy (erstwhile Moser Baer Clean Energy) is a wholly owned subsidiary of Hindustan Power Projects, which is backed by US-based private investment firm Blackstone. The company is planning to invest Rs 120 billion in setting up 2 GW of solar generation capacity over the next two years. Currently, there is around 500 MW of solar capacity in the company’s portfolio, which has been built with an investment of Rs 65 billion-Rs 70 billion. In September 2015, Hindustan Cleanenergy issued secured, rated, listed and partially guaranteed debentures worth Rs 3.7 billion on a private placement basis to YES Bank. The bonds carry a coupon rate of 10.05 per cent and have a tenor of 10 years, and will be listed on the wholesale debt market segment of the National Stock Exchange. The company will use the funds raised to refinance three solar power projects located in Porbandar, Gujarat. With the successful issue of the bonds, Hindustan Cleanenergy will become the first solar power firm to enter the creditenhanced bond market.

Indosolar

zI n d o s o l a r Limited is a solar PV cell manufacturer with a current production capacity of 450 MWp and an average efficiency rating of 17.4 per cent. The company’s facility is located in Greater Noida, Uttar Pradesh. Here, the machinery and technology has been supplied by SCHMID GmbH, Germany, on a turnkey basis. In January 2015, Indosolar entered into a Rs 12.5 billion wafer purchase agree-

z Incorporated in 2009, Inox Wind Limited (IWL) is part of the Inox Group and an integrated player in the wind segment. During 2014-15, it added 272 MW; about 12 per cent of the total wind capacity added by different OEMs in India during the year. IWL is reportedly planning to launch an IPO valued at around Rs 10 billion. This will consist of nearly Rs 7 billion by way of a fresh issue of equity shares, along with the sale of Rs 3 billion of shares by promoter Gujarat Fluorochemicals. Axis Capital, DSP Merrill Lynch, Edelweiss and YES Bank are reportedly serving as merchant bankers for the IPO. During the past year, the company has received a number of orders, including a 166 MW turnkey contract from Green Infra, 222 MW of EPC contracts from Tata Power for three wind projects, a 50 MW EPC contract from NHPC Limited, a 100 MW EPC contract from Ostro Energy, and a turnkey contract from Gujarat Mineral Development Corporation for supplying and installing 50 MW of wind turbines. In March 2015, the company signed an MoU with the Gujarat government for setting up 700 MW of wind power. As part of the agreement, IWL will invest Rs 45 billion in setting up wind projects in Rajkot, Amreli and Kutch.

Juwi India Renewable Energies Private Limited Juwi India Renewable Energies Private Limited is a wholly owned Indian subsidiary of Germany’s Juwi Group, which was founded in 1996. It currently operates in 16 countries. The Indian subsidiary offers EPC services for solar projects and has exez

November 2015 ● Renewable Watch ● 105

COMPANIES

cuted 155 MWp (both ground mounted and rooftop). In December 2014, Juwi India commissioned a 10 MW solar project for Fortum India Private Limited. This was the first project to be commissioned under the viability gap funding mechanism of JNNSM Phase II Batch I. In June 2015, the company initiated construction work for a ground-mounted utility-scale 39 MW solar PV plant in Tamil Nadu. The project will cover around 250,000 square metres in the vicinity of Samudram village and is expected to produce 64 million kWh annually.

ANNIVERSARY ISSUE

Kenersys India Private Limited

z The company was originally established in 2003 as a design and consulting company for wind turbines and component manufacturers. It became part of the Kalyani Group in 2007 and has since been operating as a full-scale turbine manufacturer. In 2008, US-based private equity firm First Reserve Corporation also invested in Kenersys India. During 2014-15, the company installed 38.8 MW of wind capacity in the country. In January 2015, Tata Power Renewable Energy Limited (TPREL) commissioned the final 8 MW of its 32 MW wind farm at Girijashankarwadi in Maharashtra. The wind farm has been developed using Kenersys India’s 2 MW wind turbines. It is expected to generate approximately 62 MUs of electricity per year, which will be procured by Tata Power Delhi Distribution Limited (TPDDL). The discom will use the power acquired from the wind farm to fulfil its RPOs. With the commissioning of this project, the company’s total wind generation capacity has reached 470.6 MW.

Larsen & Toubro

106 ● Renewable Watch ● November 2015

Larsen & Toubro (L&T) is a business conglomerate with interests in technology, engineering, construction, manufacturing and financial services. In the solar space, the company operates through its construction arm, L&T ECC. The subsidiary provides EPC services for PV as well as concentrating solar thermal technology-based projects. In October 2015, the company received EPC contracts for developing 115 MW of solar power projects. Following the commissioning of these plants, the company’s total installed solar capacity will reach 643 MW. z

Lanco Solar Energy Private Limited Lanco Solar Energy Private Limited is a 100 per cent subsidiary of Lanco Infratech Limited, which has a presence across the entire solar value chain. The company is involved in manufacturing solar products and sys-

tems and PV modules, as well as in project development and EPC for solar plants (both PV and thermal). The company has commissioned 41 MW of solar projects in Gujarat and Rajasthan, and is developing another 100 MW in Rajasthan. In February 2015, Lanco Solar Energy won the Indian Electronics and Semiconductor Association’s (IESA) Most Innovative Product Award in 2012 for its plug-and-play off-grid solar PV product. It was presented with the award at the IESA Vision Summit in Bengaluru. In May 2015, NTPC Limited awarded the contract for a 50 MW solar PV project to Lanco Solar Energy as part of its plan to set up 250 MW of solar in Anantapur, Andhra Pradesh. In August 2015, Lanco Group subsidiary Omega Solar Projects Private Limited commissioned a 10.5 MW solar project in Sangrur district, Punjab. The project, which entailed an investment of Rs 840 million, is spread over an area of 45 acres. The company had secured the capacity under the Punjab government’s 300 MW solar tender floated in 2013. In October 2015, Lanco Infratech preclosed a Rs 2.1 billion term loan with YES Bank. The company had taken these loans for a couple of its solar projects, which are now operating efficiently.

Mahindra Susten

z Mahindra Susten (previously known as Mahindra EPC) is a subsidiary of business conglomerate Mahindra & Mahindra. The company provides EPC services for solar power projects. After executing its first solar project of 5 MW in 2011, the company has provided EPC services for about 90 MW of capacity. It has about 250 MW of solar capacity under implementation at present. Over the next three years, Mahindra Susten is aiming to achieve a $1 billion annual turnover. In addition, Mahindra Partners, of which Mahindra Susten is a part, will invest $225 million in building 1 GW of solar assets over the next two to three years.

Malpani Group The Malpani Group is a welldiversified business conglomerate with interests in renewable energy, FMCG products, real estate, hotels, etc. The group has 320.65 MW of installed wind power capacity in its portfolio. In addition, it has 109.65 MW of solar power projects in Rajasthan, Maharashtra, Telangana and Tamil Nadu. In September 2015, the Malpani Group’s subsidiary, Giriraj Enterprises, commissioned a 40 MW solar power project in Sengottai, Tamil Nadu. The plant, which entailed an investment of about Rs 2.5 billion, was executed by Sterling and Wilson and is spread across 250 acres of land. The power generated from the plant will be supplied to the state discom under a 25year PPA at Rs 6.28 per kWh. z

Mytrah Energy z Mytrah Energy, which operates in India as Mytrah Energy (India) Limited, has an installed capacity of 560 MW across six states, and a project pipeline of 3,500 MW. It plans to add 200 MW of wind power capacity before the 2016 wind season.

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COMPANIES z

In February 2015, Mytrah Energy signed a long-term loan agreement with a leading Indian financial institution for Rs 8.52 billion. The funds will be utilised as long-term project finance debt for a 150 MW wind power project, which is expected to be commissioned by February 2016. In the same month, the company signed an MoU with the Andhra Pradesh government for setting up a 220 MW wind power project in Kurnool district, which is expected to be commissioned by June 2016. In April 2015, the company raised $60 million of capital from Merrill Lynch International and Aion Direct Singapore Private Limited. This follows investors exercising a greenshoe option worth $28 million and additional warrants worth $32 million, which they acquired in addition to the non-convertible debenture issued by Mytrah Energy in November 2014. As per the terms of the warrants, the investors purchased a total of 2.83 million shares of Mytrah Energy at a strike price of $1.2 per share. The company will use the fresh capital to refinance a part of its existing Rs 1,100 million mezzanine facility, and the remaining for the development of new wind power projects. In August 2015, Mytrah Energy secured a loan facility of $95 million to fund its upcoming 100 MW wind power project in Telangana. Although the loan amount was sanctioned in July, the company has not started withdrawing the funds. In September 2015, Mytrah commissioned a 16.8 MW wind power project in Bhesada, Rajasthan. The project is a part of the company’s 50 MW wind farm being developed at the location. The overall project comprises 24 units of 2.1 MW WTGs.

ANNIVERSARY ISSUE

z NTPC

108 ● Renewable Watch ● November 2015

z Orient Green Power Limited (OGPL), a subsidiary of the Chennai-based Shriram Group, is an independent power producer (IPP) in the wind- and biomassbased power segments. At present, the company has an installed wind power capacity of 435 MW and a biomass capacity of 106 MW. In February 2015, it sold its entire stake in its non-operative subsidiary, Theta

Wind Energy Private Limited, to Andhra Pradesh-based Axis Energy. Theta Wind Energy has a licence for setting up a 200-300 MW wind power project in Andhra Pradesh. In September, OGPL raised Rs 2,500 million through a preferential allotment of shares. While existing promoter SVL Limited and its subsidiaries subscribed to shares worth Rs 1,500 million, EW Special Opportunities Fund II Private Limited, Ecap Securities Limited and Forefront Capital Management Private Limited subscribed to the remaining Rs 1,000 million worth of shares. The company will use these funds to retire its debt and expand its project portfolio.

Rays Power Experts Founded in 2010, Rays Power Experts was initially focused on providing consultancy services for solar plant development. Thereafter, it gradually entered solar park development and became a turnkey power developer. It has already commissioned 100 MW across its solar park facilities and is aiming to set up a 150 MW utility for turnkey projects and 20 MW of rooftop projects in 2015-16. In January 2015, Rays Power Experts commissioned a 5 MW turnkey solar power project in Khera, Haryana. The work involved in this regard was its complete design, technical and engineering groundwork, installation and commissioning. In another development, the company signed an agreement with the New Delhi Municipal Corporation (NDMC) for developing 4 MW of solar rooftop power projects in the New Delhi municipality area. Rays Power Experts will be responsible for financing, design, installing and commissioning the projects. The electricity produced by them will be procured by NDMC under a 25year PPA signed by the two parties. In April 2015, Rays Power Experts won an EPC contract for developing a 7 MW rooftop solar PV power plant at select z

OGPL

NTPC Limited Limited, India’s largest state-owned power producer, has 110 MW of installed solar power capacity. In January 2015, the company commenced operation of its 15 MW solar power plant at Singrauli, Madhya Pradesh. In February 2015, the central govern-

ment approved the setting up of 15,000 MW of grid-connected solar PV power projects in three tranches under the JNNSM through NTPC/NTPC Vidyut Vyapar Nigam Limited (NVVNL). The first tranche of 3,000 MW will be set up under a bundling mechanism, wherein solar power will be bundled with unallocated coal-based thermal power at fixed levellised tariffs. The second tranche of 5,000 MW will be developed with government support. The remaining 7,000 MW under Tranche III will be set up without any financial support from the government. In April 2015, Andhra Pradesh’s discoms signed PPAs with NTPC Limited for procuring power from a 250 MW solar project being developed by it in the state. Under the 25-year PPA, power from the plant will be sold to the discoms at Rs 6.14 per kWh. The project is part of NTPC’s 1,000 MW solar power park in Anantapur district. In May 2015, NTPC announced its plans to raise $1 billion through the sale of its first global rupee bonds and green energy bonds. The bond sale has been approved by the company’s board but not yet executed. Meanwhile, NTPC is exploring the possibility of setting up a 1,000 MW solar equipment manufacturing facility in an effort to expand its presence across the solar power value chain. The facility is expected to entail an investment of Rs 50 billion. Moreover, the company has announced plans to set up 10,000 MW of solar power generation capacity over the next few years.

COMPANIES

ANNIVERSARY ISSUE

stations and sites for the Delhi Metro Rail Corporation (DMRC). The scope of work involves the execution of the entire design, engineering, civil works and installation process, as well as testing and commissioning. The company will sign a 25-year PPA with DMRC at a tariff of Rs 6.24 per kWh. In July 2015, Rays Power Experts won contracts for developing 12 MW of solar power projects at Rs 5.45 per kWh under a 300 MW solar tender floated by the Madhya Pradesh Power Management Company.

Refex Energy Chennai-based Refex Energy has commissioned two solar power projects with a capacity of 11.5 MW each in Uttar Pradesh. So far, the company has commissioned 115 MW of solar capacity in the country. It plans to add 100 MW during 2015. z

ReNew Power Ventures

ReNew Power has awarded several contracts in the past one year to expand its project portfolio, both solar and wind. In May 2015, the company awarded a contract to the Suzlon Group to supply and install 90 MW of wind turbines at its upcoming wind farm in Ratlam, Madhya Pradesh. The project is scheduled for commissioning by March 2016. This was followed by an agreement with China-based solar panel manufacturer Hareon Solar Technology in July 2015 to develop a 72 MW solar power plant in Andhra Pradesh. The plant, located in Kurnool district, will be developed with a joint investment from the two partners. While the delivery of the modules is scheduled for completion by December 2015, the plant is expected to be commissioned by March 2016. In the same month, the company also won a project under Telangana’s state solar tender. Further, ReNew Power Ventures signed an agreement with South Korea-based Hanwha Q Cells to jointly develop two solar power projects with a cumulative capacity of 148.8 MW in the state. The delivery of modules is scheduled for completion in 2016 and the project is expected to be completed by June 2016. The company also won 51 MW of projects under Madhya Pradesh’s 300 MW tender. It had bid Rs 5.63 per kWh for the projects. During the past year, the company signed MoUs with various state governments to develop renewable energy capacity. One of these was with the Andhra Pradesh government wherein ReNew Power is one of a group of companies which have committed to invest z

Rays Power Infra Incorporated in 2010, Rays Power Infra is an EPC company promoted by Ketan Mehta and his family. It offers turnkey EPC services for grid-connected and off-grid solar projects. In December 2014, Rays Power Infra received a Rs 7 billion contract from the Essel Group for setting up 86.5 MW of solar power plants. Under this, the company will set up 31.5 MW and 55 MW of solar plants in Punjab and Uttar Pradesh, respectively, on a turnkey basis. In February 2015, it received Rs 2.4 billion worth of EPC orders for developing a cumulative solar power capacity of 37 MW in Telangana and Karnataka. While 5 MW will be developed in Karnataka for a Gujarat-based company, the remaining 32 MW will come up in Telangana. In May 2015, Rays Power Infra commissioned a 31.5 MW utility-scale PV project in Punjab for Mumbai-based Pan India Infra Projects Private Limited. It was developed in two phases, with 21 MW at Lakhmirwala and 10.5 MW at Barre in the state’s Mansa district. In July 2015, the company entered the wind power segment by commissioning a 160 MW wind farm in Jaisalmer, Rajasthan. It has also constructed a 220 kV substation and transmission line for power evacuation. By 2016, Rays Power Infra intends to develop wind power projects in Karnataka, Andhra Pradesh and Telangana with an investment of Rs 2 billion.

about Rs 19 billion for setting up wind farms and turbine manufacturing units in the state over the next five years. In September 2015, ReNew Power commissioned a 12.6 MW wind power project in Rajasthan. The project is a part of the 100.8 MW wind farm that the company is developing in the state. The project comprises six units of Suzlon’s S97-2.1 MW wind turbine generator, which stands on a unique combination of a lattice and tubular tower with a hub height of 120 metres. In October 2015, Gamesa received a contract from ReNew Power Ventures to build a 40 MW wind farm in India on a turnkey basis. The project is expected to be commissioned by March 2016. In the same month, ReNew Wind Energy (Jath) Limited, a subsidiary of ReNew Power Ventures, issued bonds worth Rs 4,510 million under IIFCL’s credit enhancement scheme. The funds raised will be used by ReNew Power to refinance its existing debt.

ReGen Powertech In May 2015, Punebased SKF India Limited signed a strategic agreement with ReGen Powertech for supplying pitch and yaw bearing sets, and mainshaft bearings for the latter’s 1.5 MW wind turbines. Since its inception, ReGen Powertech has been buying shaft bearings from SKF. During the year, the company increased its focus on promoting wind-solar hybrid projects. To this end, it is in talks with the state and the central government to come out with a policy framework and tariffs for hybrid power models. In October 2015, ReGen won wind power projects worth Rs 16 billion from Hero Future Energies and Sembcorp Green Infra. The company signed a contract with Hero Future Energies for a 150 MW project in Andhra Pradesh and with Sembcorp Green Infra for a 60 MW project in Madhya Pradesh. Both of these are repeat orders from companies concerned. With projects under execution in various z

November 2015 ● Renewable Watch ● 109

COMPANIES states, ReGen is set to commission 400 MW wind power projects in the current financial year.

ANNIVERSARY ISSUE Solairedirect In February 2015, Solairedirect won two projects of 30 MW and 24 MW capacity at Rs 6.88 per kWh under Punjab’s 250 MW solar tender. z

RPower

z In February 2015, Reliance Power (RPower) signed an MoU with the Rajasthan government for developing 6,000 MW of solar parks in the state by 2025. Under the agreement, the company will invest Rs 500 billion for the project besides developing a power transmission network and creating basic infrastructure in these solar energy parks. In August 2015, Reliance CleanGen Limited, a wholly owned subsidiary of RPower, won significant capacity under Telangana’s 2 GW solar tender.

Sterling and Wilson

Sembcorp Green Infra In February 2015, Singapore-based Sembcorp Industries Limited, through its subsidiary Sembcorp Renewables, acquired a 60 per cent stake in Green Infra Limited (GIL) for $227 million. The former acquired the shares from private equity (PE) firms IDFC PE Fund II and IDFC PE Fund III, which were the majority shareholders in GIL. While IDFC PE Fund II will completely exit the company, IDFC PE Fund III will continue to hold a 40 per cent share in GIL with a secured option to exit in the future. The acquisition marks the entry of Sembcorp into the Indian renewable energy sector. Singapore-based Sembcorp Utilities subscribed to the entire pro-rata rights issue, valued at Rs 2 billion, by its subsidiary Sembcorp Green Infra. However, the other stakeholder – IDFC Private Equity Fund III – did not subscribe to its share of the rights issue. The funds raised will be used for financing the company’s growth in the renewable energy sector in India. As a result of Sembcorp Utilities subscribing to the entire issue, its stake in Sembcorp Green Infra increased from 60 per cent to 64.06 per cent. z

110 ● Renewable Watch ● November 2015

z In May 2015, Sterling and Wilson, the EPC arm of the Shapoorji Pallonji Group, received a contract from NTPC for setting up a 50 MW solar power plant at Kadiri in Anantapur district, Andhra Pradesh. The company will also be responsible for the O&M of the plant for a period of five years. In June, it commissioned SunEdison’s 50 MW solar power project at Dammakhedi in Madhya Pradesh. Sterling and Wilson was one of the two EPC contractors of the project, which was won by SunEdison under the JNNSM Phase II, Batch I. While 30 MW of the project was undertaken by Sterling and Wilson, the remaining was executed by Larsen & Toubro. In the same month, Sterling and Wilson also commissioned a 32 MW solar power plant for Clean Solar Power (Dhar) Private Limited, an SPV floated by Hero Future Energies. The plant is located at Goyalkhedi in Ratlam district of Madhya Pradesh and is spread across 171.6 acres of land. The project was awarded to the SPV under JNNSM Phase II Batch I, with 10 MW under the DCR category and the remaining 22 MW under the open category.

SunEdison Energy India Private Limited SunEdison Energy India Private Limited, the company through which US-based SunEdison operates in India, has emerged as a key solar power developer in the country. In January 2015, it partnered with Gurgaon-based Omnigrid Micropower Company for setting up 5,000 solar power projects with a cumulative capacity of 250 MW in rural areas. These projects are to be developed over the z

next three to five years with an estimated investment of Rs 50 billion. In February 2015, SunEdison commissioned a 7.72 MW solar PV plant for Brakes India Limited at Munanjipatti in Tirunelveli, Tamil Nadu. It was set up with an investment of Rs 660 million. The power generated from the project will be used for the company’s captive consumption. During the year, SunEdison entered the wind power space with plans of developing 3,000 MW in the segment in India over the next few years. It intends to add the targeted capacity through acquisitions and greenfield projects. To this end, SunEdison signed an agreement to acquire Singapore-based Continuum Wind Energy, along with its Indian assets, for an undisclosed amount. This deal is yet to be concluded. Continuum Wind Energy owns and operates 242 MW of wind power plants in Maharashtra and Gujarat, and has 170 MW of wind power projects under construction in Madhya Pradesh. It also has more than 1,000 MW of wind power plants at various stages of development across six states. In a related development, SunEdison signed an agreement with Spain-based Fersa Energias Renovables for acquiring 102 MW of the latter’s operating wind power plants in India. As per the agreement, it will acquire the Hanumanhatti, Gadag and Bhakrani wind farms in Karnataka and Rajasthan; projects which already have long-term PPAs in place. The company is also planning to buy a 51 per cent equity stake in a 23.1 MW operating solar project in Rajasthan from its partner Chint Solar Company Limited. SunEdison has also signed an MoU with the Tamil Nadu government for developing 2 GW of solar and wind power in the state over the next five years. In June 2015, SunEdison commissioned a 1 MW canal-top solar power project in Karnataka, built on the banks of the Krishna river. The project was executed for Krishna Bhagya Jala Nigam Limited. SunEdison had implemented a similar

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COMPANIES

project on the Narmada dam in Gujarat in 2012. In June 2015, it also commissioned a 50 MW solar power project at Dammakhedi in Madhya Pradesh, which it had won under Phase II Batch I of JNNSM. In a significant development, SunEdison commissioned eight solar rooftop plants with a cumulative capacity of 1.9 MW on the Delhi Metro Rail Corporation’s (DMRC) Badarpur-Faridabad line. It is also developing 1.7 MW of solar power plants at DMRC’s Yamuna Bank station and Yamuna Bank yard. During the past year, the company secured a significant amount of solar capacity, with its key projects being won under Telangana’s 2 GW tender. It also signed a 20-year agreement with TPDDL for supplying solar power to the discom through the open access route. For this purpose, SunEdison will develop a 180 MW solar project in Madhya Pradesh, where 90 MW will be delivered at Rs 6.49 per kWh and the remaining 90 MW at Rs 6.52 per kWh.

ANNIVERSARY ISSUE z

Suzlon Energy Limited The past year has been a significant one for Suzlon Energy Limited. In January 2015, Suzlon signed an agreement with US-based private equity fund Centerbridge Partners to sell German subsidiary Senvion. The all-cash deal, valued at Euro 1 billion, was completed by April 2015. The sale enabled Suzlon to raise approximately Rs 70 billion in cash; a substantial portion of which was utilised for debt reduction and volume growth. The year also marked Suzlon’s entry in the solar power space as it won 210 MW under Telangana’s 2 GW solar tender. The company has been receiving a significant number of wind orders. In May 2015, the Suzlon Group won two orders from ReNew Power for supplying and installing 90 MW of wind turbines at the latter’s upcoming wind farm in Ratlam, Madhya Pradesh, and 90.3 MW of wind turbines at a wind farm in Anantapur, Andhra Pradesh. z

112 ● Renewable Watch ● November 2015

During the same month, Suzlon won a contract from Mytrah Energy to supply and install 98 MW of wind turbines at the latter’s wind farm in Telangana. According to the agreement, it has to supply 47 units of its S97 120 metre hybrid tower wind turbine, each of which have a rated capacity of 2.1 MW. This project is scheduled to be completed in 2016. In October 2015, Suzlon won orders from Orange Renewables to supply and install 100.8 MW of WTGs. As per the contract, it will install 48 units of its S111 2.1 MW WTG at a hub height of 90 metres at Beluguppa, Andhra Pradesh. This project is expected to be commissioned in 2016-17. This was followed by orders for supplying and installing 105 MW of wind turbines from various small and medium enterprises and PSUs. As per the orders, Suzlon will install 50 units of its multi-MW S95-90m, S9790m and S97-120m WTGs across Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh and Tamil Nadu. Technology major Siemens Limited has won an order worth Rs 790 million from Suzlon. As per the contract, Siemens will supply 2.1 MW Winergy gearboxes for the latter’s wind turbines. Over the past year, Suzlon has commissioned a number of projects for IPPs and captive players. In August 2015, it commissioned a 6.25 MW wind power project for the National Stock Exchange, making it the first stock exchange in India to harness wind energy for captive consumption. The project, located in Satara, Maharashtra, comprises five units of Suzlon’s 1.25 MW S66 turbines. It also commissioned a 12.6 MW wind power project in Rajasthan for ReNew Power Ventures Limited. This is part of a 100.8 MW wind farm that is being developed by the company in the state. Suzlon also commissioned a 100.8 MW wind power project for CLP India in Jaisalmer, Rajasthan. The project, which is part of the 1,300 MW Tejavu wind farm, comprises 48 units of Suzlon’s S97-2.1 WTG with a hub height of 90 metres. The company is planning to raise up to

Rs 50 billion through the issue of securities; a move for which it has sought shareholder approval. It intends to issue these securities in the domestic and international markets through instruments like equity shares, American depository receipts, global depository receipts, foreign currency convertible bonds and non-convertible debentures.

SWELECT Energy Systems Limited

z SWELECT Energy Systems Limited, formerly known as NUMERIC Power Systems Limited is a public company listed on the Bombay Stock Exchange and the National Stock Exchange. The company has a facility near Salem that manufactures solar power converters, array junction boxes and solar module mounting structures. The company’s wholly owned subsidiary, HHV Solar Technologies Limited, which is engaged in solar module manufacturing, recently achieved the full commissioning of its 100 MW crystalline solar PV manufacturing line with advanced process automation and German machinery. The production facility is spread across 40,000 square feet and has been equipped with maximum automation and in-line quality control processes using multi-stage compliance measures. During the year, SWELECT Energy Systems also commissioned its 10 MW solar PV farm near Musiri in Trichy district of Tamil Nadu under the JNNSM Phase II Batch I.

Tata Power Renewable Energy Company Limited TPREL has been looking to increase its wind and solar power generation capacity during 2015-16. For this purpose, it has been considering setting up its own assets and acquiring existing plants. In February 2015, TPREL acquired 40 MW of operating wind power assets from AES Saurashtra Windfarms in Gujarat. TPREL has a total wind generation z

COMPANIES

ANNIVERSARY ISSUE

capacity of over 500 MW and a total renewable energy capacity of around 1,400 MW. In December 2014, it commissioned the final 8 MW of a 32 MW wind farm it is developing at Girijashankarwadi in Maharashtra. This wind farm was developed with Kenersys India’s 2 MW wind turbines. Following this, the company commissioned a 24 MW wind power plant in Rojmal, Gujarat, as part of a 54 MW wind farm. The project comprises 12 units of 2 MW wind turbines supplied by IWL, and is expected to generate about 52 MUs of electricity every year. The power produced at the farm will be sold to Gujarat Urja Vikas Nigam Limited under the Gujarat Wind Power Policy, 2013. IWL received a contract from TPREL for supplying and installing WTGs at a 118 MW wind farm in Jaisalmer, Rajasthan. The project will be executed in two stages and is expected to be completed by March 2016. IWL also received orders from TPREL to provide turnkey services like development, construction and commissioning for a 50 MW wind project. As per this, IWL will supply and install 25 units of its DFIG 100 rotor diameter 2 MW WTG at Lahori, Madhya Pradesh.

which is its core competency.

Trina Solar

Ujaas Energy Limited

z z

Vikram Solar

Vikram Solar has emerged as one of the key solar PV manufacturers in the country over the past one year. In May 2015, the company commissioned a 40 MW grid-connected solar power project owned by IEDCL. The project was won by IEDCL under JNNSM Phase II Batch I. It is located in Madhya Pradesh and was installed in two phases of 20 MW each. The plant uses Vikram Solar’s high efficiency Eldora 250 polycrystalline PV modules and is spread over 260 acres of land. It is expected to generate 79.2 million kWh of electricity on an average in its first year of operation. Vikram Solar was responsible for its design, supply, EPC, installation and commissioning, and will also provide O&M services for 10 years. In the same month, Vikram Solar partnered with three international research institutes and technology companies – Fraunhofer ISE, Meyer Burger and Centrotherm Photovoltaics. The partnerships are aimed at further optimising the module production technology and making preparations for cell production at the company’s manufacturing facility, z

Ujaas Energy, known for its large portfolio of renewable energy certificate (REC)-based projects, has diversified into various non-REC solar projects over the past one year. In September 2015, Oil India Limited awarded an EPC contract valued at Rs 880 million to Ujaas Energy for developing solar power projects. As per the agreement, the latter will set up a 9 MW grid-connected solar PV plant at Ramgarh in Jaisalmer, Rajasthan. Ujaas will also undertake comprehensive O&M services of the project for 25 years. In July 2015, the company announced its plans to set up about 119 MW of solar parks in Madhya Pradesh as well as 2.5 MW of rooftop projects. In addition, it is developing a 50 MW project with NHPC. It also has commitments to set up 30 MW of solar plants and PPAs with Madhya Pradesh discoms. z

TEECL In May 2015, Techno Electric and Engineering Company Limited’s (TEECL) subsidiary, Simran Wind Project Limited, sold 44.45 MW of its wind power assets located in Tamil Nadu. The transactions are valued at Rs 2,150 million. TEECL is one of the first few companies to receive an order worth Rs 3.7 billion for a substation package at Chittorgarh, Tuticorin and Ajmer under Part A of the Green Energy Corridors: Inter-State Transmission Scheme. Going forward, the company intends to divest the balance portfolio of 162.9 MW of wind assets to improve its strength for bidding for more publicprivate partnership projects in the transmission sector, improve return on capital employed and focus on EPC,

z China-based Trina Solar Limited, a leading player in the Chinese solar power market, is a relatively new entrant in India. In March 2015, the company signed an agreement with ACME Cleantech Solutions Limited to supply and install 48 MW of solar modules at two of the latter’s solar power projects. As per the agreement, Trina Solar had to supply around 188,000 units of its TSM-PC05A honey modules to ACME. The installations are expected to provide an annual output of 81.6 GWh. In June 2015, the company signed a framework agreement with a partner in India to develop a 2 GW solar cell and module manufacturing facility in the country in various phases. However, this is only a draft plan.

in India in 2014, Denmark-based wind turbine manufacturer Vestas increased its focus on the Indian market in 2015, winning two key orders recently. In July 2015, it received orders to supply and install 46 MW of wind turbines for a project in India. As per the order, Vestas will supply 23 units of its V1102.0MW turbine for a wind farm in Karnataka. The contract includes the delivery, installation and commissioning of the wind turbines, as well as a 15year service agreement. In August 2015, Vestas Wind Systems received orders to supply and install 40 MW of wind turbines in India. Under the contract, Vestas will supply 20 units of its V110-2.0 MW turbines for the Khambaliya wind farm project. The contract also involves a five-year service agreement. The delivery is slated to be completed by June 2016.

Vestas Wind Technology India Private Limited After a sluggish performance

November 2015 ● Renewable Watch ● 113

COMPANIES

ANNIVERSARY ISSUE

in addition to establishing a solar academy in India. In July 2015, Vikram Solar signed a master distribution agreement with USbased solar wholesaler Clean Energy Distribution to supply 20 MW of solar modules. The delivery is slated to be completed by December 2016, with 8 MW of modules mandated to be delivered during 2015. The agreement envisages a dynamic collaboration between the two companies for jointly developing the residential and commercial solar market in the US.

Waaree Energies Limited In June 2015, Waaree Energies commissioned a 10 MW solar power project for Sharda Construction and Corporation Private Limited (SCCPL) at Latur, Maharashtra. The project was allotted to SCCPL under the DCR category of JNNSM Phase II Batch I. Waaree was responsible for the design and execution of the project, which was completed in less than 90 days. This was followed by the company commissioning its first plug-and-play solar PV power park in the country. The solar z

114 ● Renewable Watch ● November 2015

park, located in Akola, Maharashtra, is spread over 150 acres and has a capacity of 30 MW. Apart from providing land to set up the project, the solar park provides facilities like evacuation to the nearest 132/33 kV substation via a double-circuit transmission line, approach roads, fencing, water supply and other common infrastructure support. Recently, in October 2015, Waaree Energies commissioned a 27.5 MW direct current solar power plant for Roha Dyechem Private Limited at the Bhadla solar park in Rajasthan. The project was allocated to Roha Dyechem under the Rajasthan Solar Policy, 2011 (Phase I) with a 25-year PPA with Rajasthan Renewable Energy Corporation Limited. This is the second largest project commissioned by Waaree Energies after its 50 MW project for Waaneep Solar during 2015.

Welspun Energy Limited z In December 2014, Welspun Renewables Energy Private Limited, widely known for its focus on utility-scale solar development, ven-

tured into the solar rooftop segment by setting up three such plants totalling over 790 kW in Haryana and Uttar Pradesh. These projects were set up to meet the captive power needs of IIT Kanpur (192 kWp), Ansal University (100 kWp) and Medanta Medicity Hospital (500 kWp). In January 2015, Welspun Renewables Energy Private Limited signed an MoU with the Andhra Pradesh government for developing a 100 MW solar PV power project in the state. In this regard, it announced that it would be investing Rs 7 billion. This was followed by Welspun Solar Punjab Private Limited winning a 4 MW project under a 250 MW solar tender floated by Punjab at Rs 7.71 per kWh in February 2015. In March 2015, Welspun Renewables Energy Private Limited signed an agreement with Japanese firm Solar Frontier for the supply and installation of 100 MW of solar modules for the former’s upcoming solar projects. According to the agreement, Solar Frontier will supply Welspun with its proprietary copper indium selenide thin-film solar modules. This agreement follows Welspun’s recent signing of PPAs with multiple states. Welspun also signed an MoU with Germany-based iPLON for the supply, installation and commissioning of solar PV power plant automation systems for 550 MW of upcoming projects in India. iPLON will offer Welspun the necessary power plant automation systems, plant analysis tools, telemetry systems and central monitoring systems for managing its large portfolio of projects. In October 2015, Welspun Renewables Energy Private Limited commissioned a 32 MW solar power project in Bathin-da, Punjab. Spread over 140 acres, the project is expected to generate 48 MUs of electricity annually and reduce approximately 1.3 million tonnes of carbon dioxide emissions during its life. Welspun had signed an MoU with the Punjab government in January 2014 for developing 151 MW of solar projects in the state. ■

Conference on

Workshop on

Bond Financing for Infrastructure

Strategic Debt Restructuring

December 9, 2015, Grand Hyatt, Mumbai

December 10, 2015, Grand Hyatt, Mumbai Agenda/Structure

Agenda/Structure

Trends and Outlook Regulations, Terms and Structures Private Sector Experience PSU Experience Infrastructure Bonds: Bankers' Perspective Infrastructure Bonds: NBFC Perspective Investor Perspective Focus on IDFs Green Bonds Bond Ratings

Trends in Stressed Assets and CDR Experience

Introduction to SDRs

Lenders' Perspective

Borrowers'/Developers' Perspective

Legal Challenges

Asset Valuation

The conferences have received an excellent response with more than 80 senior officials already confirmed from a diverse group of organisations which include: Avalokiteshwar Valinv (Renaissance Group), Axis Bank, BMR Advisors, Brescon Corporate Advisors, CRISIL, Cyril Amarchand Magaldas, DBS Bank, Dhir & Dhir Associates, Ernst & Young, EXIM Bank, Gamesa Renewable, HDFC Bank, ICRA, IDFC Alternatives, IDFC Infrastructure Debt Fund, IIFCL, IL&FS Maritime Infrastructure, IL&FS Urban Infrastructure Managers, International Asset Reconstruction Company, ITNL, J Sagar & Associates, KFW, Khaitan Sud & Partners, Kotak Mahindra Bank, L&T Infra Debt Fund, L&T Infra Finance, Luthra & Luthra, Power Finance Corporation, PricewaterhouseCoopers, RITES, Safire Capital Advisors, SBI Capital Markets, SKS Ispat & Power, Tata Realty & Infrastructure, UPEIDA, Vedanta Resources, Wadia Ghandy & Co., etc. For more information, contact: Nishpreet Bhasin

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WORLD VIEW

ANNIVERSARY ISSUE

Global Trends Wind leads renewable capacity addition while solar comes a close second

here is a rising global awareness that promoting renewable energy and energy efficiency is critical not just for addressing climate change, but also for creating new economic opportunities and providing energy access to the billions of people still living without modern energy services. In recent years, the renewable energy sector has benefited from policy support, technology advances and rapid cost reductions, leading to large-scale capacity addition. During 2014, the sector’s performance was particularly noteworthy as growth came about despite dramatic reductions in oil prices. As of end2014, the total installed renewable energy capacity had reached 657 GW, up from 560 GW at the end of 2013. Almost half this capacity is made of wind power, but solar photovoltaic (PV) is swiftly catching up.

In geographic terms, while Europe remained an important market and innovation centre, project development activities continued to shift towards other regions. China led the world in new renewable power installations in 2014, and Brazil, India and South Africa accounted for a large share of the capacity added in their respective regions. An increasing number of developing countries across Asia, Africa and Latin America emerged as important destinations for manufacturing renewable energy technologies. A look at the key global trends in the renewable energy sector during 2014…

Wind During 2014, the global wind segment recorded the maximum capacity addition

among all renewable energy technologies, with about 51 GW of new capacity taking its total installations to 370 GW. Asia remained the largest market for the seventh consecutive year, accounting for half the added capacity, with China alone adding 23.2 GW during the year. This was partly due to the anticipation of a reduced feed-in tariff for onshore wind power in the country. Europe accounted for 23 per cent of capacity addition during the year, with Germany adding 5.3 GW. The US added 4.9 GW of wind capacity to take North America’s share in the overall addition to 13 per cent. In the offshore segment, an estimated 1.7 GW of grid-connected capacity was added in 2014, taking the total to more than 8.5 GW. Europe accounted for 88 per cent, with the UK leading the way (813 MW), followed by Germany (529 MW) and Belgium (141 MW). However, many UK projects were cancelled. Apart from Europe, the only significant market is China, which added about 200 MW to its grids. As of early 2015, about 6 GW was under construction in seven countries (in Asia and Europe), and construction of the first US offshore project had started in July 2015. Wind turbine manufacturers across the world have been incurring losses owing to economic recession and policy uncertainty. However, in 2014, most manufacturers turned around their performance on the back of strong order books. Denmarkbased Vestas retained its top spot with a market share of 11.6 per cent, followed by Germany’s Siemens (9.5 per cent) and China’s Goldwind (9 per cent). On the technology front, turbine designs continued to evolve, with trends towards larger machines (longer blades, higher hub

116 ● Renewable Watch ● November 2015

WORLD VIEW

ANNIVERSARY ISSUE heights to reach stronger winds, greater nameplate capacities) and average turbine sizes increasing from 1.9 MW in 2013 to 2 MW in 2014. Efforts are also on to reduce operations and maintenance costs, and introduce technologies and strategies to improve the segment’s economics in a wider range of wind regimes and operating conditions.

Cumulative installed renewable energy capacity (excluding hydropower) Source

As of end-2013 (MW)

Solar PV

As of end-2014 (MW)

% increase

138.0

177.0

3.4

4.4

29.41

319.0

370.0

15.99

Biopower

88.0

93.0

5.68

Geothermal

12.1

12.8

5.79

560.5

657.2

17.25

Concentrating solar thermal Wind

Total

28.26

Source: REN 21

Solar Solar PV is starting to become cost-competitive with fossil fuels in an increasing number of locations around the world. In 2014, 40 GW of solar PV capacity was added globally, taking the total installed capacity to 177 GW. China added the maximum capacity at 10.6 GW, followed by Japan (9.7 GW) and the US (6.2 GW). These countries accounted for the vast majority of new capacity. However, the distribution of new installations continued to broaden, with rapid growth in Latin America, significant capacity addition in several African countries, and new markets picking up in the Middle East.

facturer SnapNrack. Similarly, Chinabased building materials and glass company CNBM acquired German CIGS (copper, indium, gallium, selenide) manufacturer Avancis; and China-based Canadian Solar purchased US firm Recurrent Energy in early 2015. In addition, many companies entered into strategic partnerships to advance technologies and expand their reach. For instance, US-based SunEdison announced a joint venture agreement with China’s JIC Capital to facilitate financing for developing, constructing and owning up to 1 GW of projects in China; South Korea’s LG Electronics teamed up with US-based Borrego Solar to supply modules to the US commercial market; and Trina, Yingli and Canadian Solar announced initiatives to partner with financial backers for developing new large-scale plants.

During 2014, consolidation among developers and manufacturers in the solar PV market continued. US solar developer SolarCity purchased module manufacturer Silevo and began moving into energy efficiency and storage, while developer and financier Sunrun made several acquisitions, including a takeover of distributor AEE Solar and racking hardware manu-

153

The concentrating solar power (CSP) market is not as established as the PV market,

Top seven countries in terms of installed renewable power capacity (excluding hydropower, as of end-2014) 105 86

China Source: REN 21

USA

Germany

Italy

Spain

Japan

India

with only 0.9 GW being added during 2014 to take the total to 4.4 GW. Only the US and India added CSP facilities to their grids in 2014. While Spain remained the global leader in terms of existing capacity, South Africa and Morocco were the most active in planning capacity addition. In technological advancements, parabolic troughs continued to represent the bulk of existing capacity. However, 2014 was notable for the diversification of technologies in operations, with the world’s largest linear Fresnel and tower plants coming online and an increasing focus on thermal energy storage technology.

Bioenergy The use of biomass for producing energy is multifaceted, with the associated applications ranging from residential to industrial, and decentralised to grid connected. Solid biomass represents the largest share of biomass for heat and electricity generation, whereas liquid biofuel is used in the transport sector. The bioheat production market remained stable in 2014, increasing 1 per cent since 2013, while global biopower production increased by approximately 9 per cent, with China, Brazil and Japan leading in capacity addition. Liquid biofuel production, meanwhile, increased by 9 per cent in 2014. Although the US and Brazil dominated the overall volume, Asia experienced particularly high production growth rates. While policy had a positive influence on biofuel markets with blending mandates, policy uncertainty had negative effects in Europe, the US and Australia. Low oil prices in the second half of the year had November 2015 ● Renewable Watch ● 117

WORLD VIEW some positive effects, particularly in feedstock production, but reduced the turnover of some bioenergy businesses.

Hydro An estimated 37 GW of new hydropower capacity was commissioned in 2014, bringing the total global capacity to approximately 1,055 GW. China installed the maximum hydro capacity at 22 GW, followed by Brazil (3.3 GW), Canada (1.7 GW), Turkey (1.4 GW), India (1.2 GW) and Russia (1.1 GW). While the industry continued innovating towards more flexible, efficient and reliable facilities, a number of projects were delayed across the world due to concerns about their social and environmental impact.

Other segments Geothermal: About 640 MW of new geothermal power generating capacity came online during the year, taking the global total to 12.8 GW. The largest share of new capacity was in Kenya, underscoring the growing emphasis on geothermal energy in East Africa. The geothermal industry continues to face significant project development risks, and various efforts are under way to ameliorate these in developed and developing countries. Ocean energy: This kind of capacity, mostly tidal power generation, remained at about 530 MW in 2014, with virtually all new installations being in the form of pilot or demonstration projects.

Investment scenario Globally, new investments in renewable power and fuels (not including more than 50 MW of hydropower projects) increased by 17 per cent over 2013 to $270.2 billion. With the inclusion of unreported investments in hydropower projects larger than 50 MW, the total new investments in renewable power and fuels were $301 billion. This increase was partly due to a boom in solar installations in China and Japan, as well as investments in offshore wind projects in Europe. Investments in developing countries increased to $131.3 billion, 118 â&#x2014;? Renewable Watch â&#x2014;? November 2015

ANNIVERSARY ISSUE going up by 36 per cent in comparison to 2013. China accounted for almost twothirds of this. During the same period, investments in developed economies reached $138.9 billion in 2014, an increase of 3 per cent over 2013. Among developed countries, the US, the UK, Japan and Germany invested the maximum in their renewable energy sectors. Investments also continued to spread to new markets throughout 2014, with Chile, Indonesia, Kenya, Mexico, South Africa and Turkey each putting in more than $1 billion in renewable energy. Solar and wind were the leading technologies in terms of committed investments, with solar (mostly PV) accounting for more than 55 per cent of new investments in renewable power and fuels (not including hydro capacity greater than 50 MW), and wind power taking 36.8 per cent. Investments in the solar segment increased to $149.5 billion in 2014, an increase of 25 per cent over 2013, while wind energy investments rose by 11 per cent to reach $99.5 billion by the end of 2014. Overall, more than a quarter of new renewable energy investments in 2014 were in smallscale projects, particularly solar PV. Geothermal investments grew by 23 per cent, while investments in ocean energy nearly doubled. Other renewables did not fare as well, with biofuel investments declining by 8 per cent, biomass and waste-to-energy by 10 per cent each, and small-scale hydropower by 17 per cent. During 2014, the value of assets managed by clean energy funds decreased by 13.5 per cent as compared to 2013. However, newer types of innovative yieldoriented financing vehicles emerged, with three US yieldcos floated in 2014 raising a combined $1.6 billion. An important trend was the emergence of green bonds, with $39 billion worth of them being raised globally during the year. Institutional investors, including pension funds, insurance companies and wealth managers, played an increasing role in financing the sector, especially through green bonds and yieldcos.

Future outlook While there has been considerable growth in the sector, most of this was due to government policies. By early 2015, 164 countries had defined their renewable energy targets, while about 145 had policy frameworks in place. It is imperative that future policies respond to emerging opportunities and challenges by addressing new developments, including the spread of renewable energy deployment to new countries, particularly in the developing world; the need to improve existing energy infrastructure and markets for integrating high shares of renewable power; and the increasing electrification of non-power sectors (i.e., heating, cooling and transport). Policy frameworks need to be stable and predictable for the sustained deployment of renewable energy. The industry needs predictability to attract investments, build up production capacity, develop new technologies, and expand the number of sustainable jobs. However, policies also need to be flexible so that they can accommodate upcoming market developments and avoid unnecessary public spending. It is essential to avoid abrupt changes like a sudden reversal of feed-in policies as this can have a major negative impact. Therefore, transition to new policy systems requires a complete knowledge of changes and sufficient time for the industry to adapt its business models. Discussions about the specific role of renewables in achieving long-term energy sustainability need to be more broad based. As of now, most literature focuses on power infrastructure and primarily looks at how renewable energy can contribute to disaster recovery, apart from talking about the backup functions that renewables can provide in case of higher demand or grid failure. Considering the expanding effects of extreme weather, more attention needs to be paid to the role renewable energy can play in addressing the issue of climate change and ensuring energy security. â&#x2013; Based on the Global Status Report 2015 by REN21

India Infrastructure Research

Solar Power in India 2015 Report India Infrastructure Research (a sister division of Power Line and Renewable Watch magazines) has released the sixth edition of “Solar Power in India” report, the most comprehensive and up-to-date study of the solar power sector in India. The report has 3 distinct sections: Section A: Overall Sector Scenario z

Executive Summary

State Solar Policies and Programmes

Key Trends

Financing

Recent Developments

Economics of Solar Power

New Government Policy and its Impact

Domestic Manufacturing

JNNSM Update

Future Outlook and Projections

labl

avai

Section B: Segment Analysis z

Solar Parks and UMSPPs

Captive Solar Segment

Utility-Scale Projects

Focus on Off-grid

Solar Rooftop Projects

Section C: Player Profiles z

Leading Developer Profiles: This section covers current portfolio, operational performance, financials, project pipeline, future plans, etc. of the major developers in the country.

The report is available along with a presentation in PDF format. The report is priced at Rs 50,000 (plus 14.5 per cent service tax) for a Site Licence and Rs 75,000 (plus 14.5 per cent service tax) for an Enterprise Licence.

To order a copy, please send a cheque or draft payable to “India Infrastructure Publishing Pvt. Ltd.” and mail to: Aayushi Lahoti Information Products Tel: +91-11-46038153(D), +91-11-41034600/01(B), Fax: +91-11-26531196 Mobile: +91-7838751085 Email: aayushi.lahoti@indiainfrastructure.com

PEOPLE

ANNIVERSARY ISSUE

Changes at the Top T

he Indian renewable energy sector is set to witness major expansion in the coming years, driven by active efforts from the government and industry interest. In the current scenario, the sector is catching the eye not only of private companies but also several public companies, which are diversifying into the wind and solar power segments. Meanwhile, in the wake of the Make in India initiative, the dynamics of the solar manufacturing industry are also changing. During the past year, there were many changes in the management of various renewable energy-related government entities, and public and private companies operating in the areas of power generation, project development, manufacturing, financing, etc. Renewable Watch takes a look at some of the key movements in the sector...

Major Singh, Chairperson, CEA Major Singh was appointed chairperson of the Central Electricity Authority (CEA) in January 2015. In addition, he continues to hold the positions of member, planning, and member, grid operations and development, CEA. Singh has diverse experience of over 34 years in the sector, in areas such as project planning and formulation, performance monitoring, grid management, demand forecasting, and crisis and disaster management. Some of the key assignments that he is currently spearheading are the preparation of the National Electricity Plan for 2017-22, the drafting of the proposal for the replacement of old and inefficient thermal power plants with supercritical units, and the preparation of the Nineteenth Electric Power Survey for forecasting demand for the next plan period and beyond. During 2003-08, Singh held the position of member, power, Narmada Control Authority, where he was in charge of the operationalisation of modalities for controlling and operating the Sardar Sarovar Power Complex. He also served as member secretary of the Eighteenth Electric Power Survey Committee as well as chief vigilance officer, CEA.

I.S. Jha, CMD, Powergrid I.S. Jha was recently appointed the chairman and managing director (CMD) of Power Grid Corporation of India Limited (Powergrid). An experienced electrical power system professional, Jha is an electrical engineer from NIT, Jamshedpur. He has previously served as director,

120 ● Renewable Watch ● November 2015

projects, and executive director, engineering, with the company. He has also worked as executive director, corporate monitoring group, and as executive director, north-eastern region, for the company. Apart from these functions, he has been a lead member in the planning, engineering and execution of the APDRP and the Rajiv Gandhi Grameen Vidyutikaran Yojana in Powergrid. Jha has presented a number of articles and technical papers on power systems in various international and national conferences/symposia. He was appointed director on Powergrid’s board in September 2009.

Dr Ashvini Kumar, MD, SECI Dr Ashvini Kumar was appointed managing director (MD) of the Solar Energy Corporation of India (SECI) in end-September 2015. He has professional experience of over 30 years and is an expert in the field of solar energy. He has been associated with the Ministry of New and Renewable Energy (MNRE) in different capacities since 1986. As a director at MNRE, he served as the divisional head for solar grid power and research and development (R&D) coordination. Kumar obtained a Ph.D. in solar energy from IIT Delhi and has been a major contributor to the promotion and development of solar thermal technology in the country. He has also worked at the Solar Energy Centre, a technical institution set up by the MNRE, where he was instrumental in establishing solar thermal testing facilities. Kumar has co-authored three books, and written several review articles and over 50 research papers on this technology. He is currently editing the technical journal brought out by the Solar Energy Society of India.

M.K. Goel, CMD, Power Finance Corporation M.K. Goel was appointed CMD of the Power Finance Corporation (PFC) in January 2015. He had held additional charge as CMD since September 23, 2013, along with being director, commercial, at PFC. He is currently also chairman of PFC Green Energy Limited, a wholly owned subsidiary of PFC. Goel has 36 years of experience in various central power PSUs, including NHPC. In his current roles, he provides strategic direction and guidance for all the activities of the company. He also plays a critical role in the implementation of

ANNIVERSARY ISSUE

power sector reform schemes, including the 24x7 Power for All scheme, the annual rating exercise of discoms, the Restructured Accelerated Power Development and Reforms Programme, and the recently launched Integrated Power Development Scheme. Goel holds a bachelor’s degree in technology with a specialisation in electrical engineering from Kanpur University.

A.K. Jha, CMD, NTPC Limited A.K. Jha assumed additional charge as CMD at NTPC Limited in September 2015. An NTPC veteran, Jha has worked with the company for about 38 years. He started his career with the company in 1977 as an executive trainee and was associated with NTPC’s flagship 1,000 MW Singrauli project. He was appointed to the NTPC board as director, technical, in July 2012. He is currently responsible for concept-to-investment approval of projects, complete engineering during the development, operations and maintenance (O&M) of new plants, and repair and maintenance of ageing projects. He also oversees various aspects of the renewable energy sector, including policy advocacy, business development, project contracting, engineering and commissioning. In addition, he spearheads NTPC’s R&D initiatives through the NTPC Energy Technology and Research Alliance, as well as technology initiatives such as the induction of environment-friendly technologies like ultrasupercritical and advanced ultra-supercritical. Jha is a mechanical engineer from BIT Sindri, Ranchi University. He also holds a bachelor’s degree in law from Delhi University.

R.N. Misra, CMD, SJVN Limited R.N. Misra was appointed CMD, SJVN Limited in January 2015. He has over 35 years of experience in the power sector, with expertise in the areas of project planning and appraisal, environmental issues, project management and monitoring, contract management, and execution of large hydropower projects, including the commercial and policy aspects. He has earlier served as executive director at NHPC. He joined SJVN Limited in 2010 as director, civil, and led the successful commissioning of the company’s 412 MW Rampur hydroelectric project. He also actively contributed to the company’s diversification into the thermal, wind and solar energy spaces as well as its cross-border foray into Bhutan and Nepal. Misra holds dual bachelor’s degrees in civil engineering and science as well as a master’s in water resources engineering from IIT Delhi. He has an MBA from the Indira Gandhi National Open University.

PEOPLE

Dr Ashok Haldia, MD and CEO, PTC India Financial Services Dr Ashok Haldia was appointed MD and chief executive officer (CEO), PTC India Financial Services (PFS) in July 2015. He has over 35 years of experience in the power and finance sectors. During his seven-year-long association with the company as whole-time director, he has been instrumental in the development of PFS as an all-inclusive financial institution. He is credited with PFS’s foray into renewable project financing as well as for successfully leading the company’s initial public offering in 2011. His areas of expertise are reforms and restructuring, policy, project financing, public sector management and reforms, participative banking, corporate law and governance, and formulation of accounting and auditing standards. Haldia is a member of the Institute of Chartered Accountants of India (ICAI), the Institute of Company Secretaries of India, and the Institute of Cost and Works Accountants of India. Prior to joining the board of PFS, he was secretary, ICAI, Delhi, as well as a member of several government committees and national and international bodies.

Ashish Khanna, Executive Director and CEO, Tata Power Solar Ashish Khanna joined the Tata Group in 2007, holding a series of leadership positions in Tata Power, most recently as chief, corporate contract organisation. He has been on the executive board of Tata Power Solar since 2013. He is also on the board of Tata Power group companies outside India (in the Netherlands and Indonesia) and a few subsidiaries in India. Khanna has over 27 years of experience and worked with multinational companies like Engineers India Limited and Bechtel in leading functions before joining Tata Power. His accomplishments include leading one of the world’s biggest process gas-fired power plants in the Netherlands for Chorus Steel, and heading contracts and procurement for Tata Power’s 4,000 MW Mundra ultra mega power project. A mechanical engineer from the Delhi College of Engineering, Khanna also has a master’s in management and systems from IIT Delhi.

Ajay Goel, President, Solar, and Chief, New Businesses, ReNew Power Ajay Goel joined ReNew Power in May 2015 and is responsible for leading the development of new businesses on the distributed side of the solar sector, focusing on the commercial, industrial and residential segments. This entails

November 2015 ● Renewable Watch ● 121

PEOPLE

creating end-to-end innovative solutions around multiple products, technologies and business models such as rooftop solar, energy efficiency and energy storage. Prior to joining ReNew Power, Goel was CEO at Tata Power Solar. Earlier, he spent 20 years in the US, gaining in-depth experience at leading high-tech and clean-tech companies such as SunEdison and Brightsource Energy, and consultancy firm McKinsey & Company. Goel has an MBA from the Booth School of Business, University of Chicago, and a B.Tech. in electrical engineering from IIT Delhi.

Vipul Tuli, CEO and Country Head, Sembcorp India Sembcorp Industries has recently appointed Vipul Tuli as CEO and country head for India, and as global head of group strategy, Sembcorp. As India head, he will focus on driving growth for the company as well as managing its investments, governance and key stakeholder relationships. Prior to joining Sembcorp, Tuli worked with McKinsey & Company for about 23 years.

Dr Govind Bhagwatikar, Business Head, Renewable Energy Business, Sany India Chinese construction equipment manufacturer the Sany Group has appointed Dr Govind Bhagwatikar as business head of its renewable energy business unit in India in November 2015. Bhagwatikar has over 20 years of experience in the power and grid-connected wind and solar energy sectors. Prior to joining Sany, he was associated with companies like Vestas, BP, Siemens and Welspun Renewables, where he played a key role in their growth through turnkey projects, greenfield development, repowering, bidding and technology acquisition in the wind and solar energy segments.

Devinder Kumar, CEO, Solar Projects, SuKam Power Systems Limited Devinder Kumar has been appointed CEO, solar projects, Su-Kam Power Systems Limited. He is responsible for driving the company’s solar business as well as providing strategic support, business leads and tie-ups with PSUs and corporates, and guiding the business development team in the formation of various customer-centric products. Prior to joining Su-Kam, Kumar worked with the State Bank of India (SBI) for nearly 33 years, his last position being deputy general manager, overseeing the agriculture business vertical of banks. During his tenure with SBI, he gathered

122 ● Renewable Watch ● November 2015

ANNIVERSARY ISSUE

experience in diverse business segments including retail, small and medium enterprises, and mid-corporates. He was also deputed to SBI Funds Management as vice-president (SBG-Marketing) for four years. A post-graduate in public administration, Kumar is also a certified associate of the Indian Institute of Bankers and a certified financial planner.

Diane Farrell, Director, Azure Power Diane Farrell was appointed a board director at Azure Power in early 2015. Since July 2011, she has served as executive vicepresident, US-India Business Council. Prior to this, she served on the board of directors of the Export Import Bank of the United States. As a presidential appointee confirmed by the US Senate, she was responsible for voting on transactions of over $10 million as well as on significant policy matters. In addition, she was named a member of the White House Business Council. Farrell received her bachelor’s degree in American government from Wheaton College in 1977.

Robert Kelly, Director, Azure Power Robert Kelly was appointed a board director at Azure Power in end-2014. Prior to that, from October 2011 to August 2014, he served as chief financial officer (CFO) of SolarCity Corporation in San Mateo, California, and before that as CFO, Calera Corporation, a clean-tech company. Earlier, he worked as an independent consultant providing financial advice to retail energy providers and power developers and also was in various senior leadership roles at Westinghouse Credit Corporation, Lloyds Bank and the Bank of Nova Scotia. Kelly is also a member of the board of directors of Solar Mosaic, Inc., a US-based residential solar lending platform, and Solix Biosystems, Inc., a specialty algae products company. Kelly is a commerce graduate from the Memorial University of Newfoundland and has an MBA from Dalhousie University, Canada.

Vivek Chaturvedi, Country Manager, India, Solar, Royal DSM Vivek Chaturvedi has been appointed country manager for Royal DSM’s solar business in India. He joined DSM in early 2015, bringing with him over 20 years of experience in different industries and companies. Chaturvedi has also served as co-chairman of the FICCI Solar Energy Task Force for nearly five years, since its inception in 2010. ■

Solar Plant Performance in India 2015 India Infrastructure Research (publisher of PowerLine and Renewable Watch magazines) is currently developing and will soon release the “Solar Plant Performance in India 2015” report. The solar power sector in India is on a high growth trajectory. The performance of solar plants set up so far can provide useful insights to all key stakeholders including developers, EPC contractors, equipments providers, financiers, etc. The report on Solar Plant Performance in India will provide a detailed analysis of the generation performance of solar plants in India. It will examine the variations in solar plant performance based on various parameters such as size, location, technology, etc. The report will have twelve chapters:

ep wr

Solar Power Overview

Plant Performance by Developers

Review of Solar Plant Performance

Plant Performance by Module Manufacturers

Plant Performance by State/Location

Plant Performance by EPC Contractors

Plant Performance by Size

Plant Performance by Year of Commissioning

Plant Performance by Technology

Case Studies*

Plant Performance by Developer Type

Database of Plants Tracked

*The case studies will include information on size, location, technology, vendors, cost, performance and implementation. The Quarterly Updates (February 2016 and May 2016) will include: Performance updates of plants already covered in the base report and also those not covered in the base report. The report is priced at Rs. 50,000 (plus 14.5 per cent service tax). The report will be available in PDF format along with a data-set and will be released in December 2015.

To order a copy, please send a cheque or draft payable to “India Infrastructure Publishing Pvt. Ltd.” and mail to: Aayushi Lahoti Information Products B-17, Qutab Institutional Area, New Delhi-110016, India Tel: +91-11-46038153, 41034600, 41034601; Fax: +91-11-26531196 Mobile: +91-7838751085 Email: aayushi.lahoti@indiainfrastructure.com Website: www.indiainfrastructure.com

PHOTOGALLERY

ANNIVERSARY ISSUE

Sector Snapshots

s at the s an addres odi deliver M a t for the dr an en pl ister Nar solar power p to of Prime Min ro Raghubar kW presence of n of a 180 and, in the inauguratio kh ar Jh in ict Court arkhand Minister, Jh Khunti Distr Das, Chief

Piyush Goy al, Minister of State (Ind and New an ependent Ch d Renewab arge) for Po le Energy de Renewable wer, Coal livers the ke Watch’s “S ynote addr olar Power ess at in India” co nference in New Delhi

Upendra Tripathy, Secretary, Ministry of New and Renewable Energy, delivers the keynote address at the “Solar Park Development in India” conference

(From left) Alok Brara, CEO, India Manu R. Pu Infrastructu ri, Principa re Publishi l, Energy an Ravi Seth, ng; d Utilities, CFO, ReNew Accenture Power; Sin Welspun R India; do or enewables; Mittal, Exec G. Krishnam utive Direc Finance; Pa tor, urthy, CEO, rtha Dey, Pr L&T Infras esident an Venture; M tructure d C oHead, Infras ilind Joshi, tructure, IC Partner, ID Tiberghien FC Alternat ICI , Principal ives; and G Investment Natural Res aetan O ff icer, Infras ources, Sou tructure an th Asia, IFC d , at an even Renewable t on Financ Energy in M ing umbai

ing e, after land pulse 2 Plan ad Im ab ar ed ol S hm e A t of th l Airport in ccard, Pilo Internationa l te Bertrand Pi Pa ai r Vallabhbh at the Sarda

124 ● Renewable Watch ● November 2015

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PHOTOGALLERY

.S. than, and H ter of Rajas is in ng M yi ef la hi eRaje, C dation ston Vasundhara ate , at the foun (From left) ant in the st zure Power pl A , er w an m po ir r la ha C so a, W M hw 0 ad W pany’s 10 for the com ceremony

Varsha Josh i, Joint Sec retary, Min Energy, de istry of New livers the ke and Renew ynote addr conference able ess at the “Wind Pow organised by Renewab er in India” le Watch in New Delhi

(From left) Pradeep Kumar Sinha, Cabinet Secretary; Piyush Goyal; Upendra Tripathy; and Anil Swarup, Secretary, Ministry of Coal; at the Workshop on Rooftop Solar Projects in New Delhi

Senior officials from NTPC Limited, APEPDCL and APSPDCL at the signing of a PPA for power procurement from the 250 MW first phase solar power plant of the 1,000 MW ultra solar power project being set up by NTPC in Anantapur district, Andhra Pradesh

(From left) Sumant Sin ha, Founde Madhusuda r and CEO, n Khemka, ReNew Pow Managing Piyush Goy er; Director, R al at the la egen Power unch of the tech; and Indian Win d Energy A lliance

ss Solar Busine -President, ce Vi ’s e iv ny ut pa jay, Exec the com dia’s K.V. Sa D, announce Gamesa In h Kymal, CM es am ss R d ne si an e solar bu Unit (left), entry into th

November 2015 ● Renewable Watch ● 125

DATA AND STATISTIC S

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REC Trading on IEX and PXIL Growth between October 2014 and October 2015 Trading summary Particulars

IEX

PXIL

October 2014 Solar

October 2015

Non-solar

Solar

October 2014

Non-solar

Solar

October 2015

Non-solar

Solar

Non-solar

Buy bids (no.)

232

36,411

11,945

68,663

147

37,591

1,906

142,779

Sell bids (no.)

187,483

4,766,941

2,221,069

7,325,684

262,879

5,380,305

577,054

6,363,552

232

36,411

11,945

68,663

147

37,591

1,906

142,779

9,300

1,500

3,500

1,500

9,300

1,500

3,500

1,500

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

Category-wise participation (no.) Participant category

IEX

PXIL

October 2014

October 2015

Participants

Cleared volume

Participants

Cleared volume

Participants

Cleared volume

Participants

Cleared volume

20,000

4,142

25,000

116,833

Discoms

101

6,420

196

46,550

2,486

12,822

Captive consumers

10,223

29,916

10,252

15,030

Voluntary buyers

50,000 2,000 40,000 1,500 30,000 1,000

20,000

500

10,000 0

0 June 2015

July 2015

August 2015

September 2015

1,500

200,000 1,200 1,000

150,000

800 100,000

600 400

50,000 200 0

0 May 2015

June 2015

July 2015

August 2015

September 2015

October 2015

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

126 â&#x2014;? Renewable Watch â&#x2014;? November 2015

250,000

Cleared volume (no.)

60,000 2,500

1,500

70,000

1,400

1,500

80,000

1,600

1,500

3,500

3,000

May 2015

Price and volume trends (non-solar)

90,000

Cleared volume (no.)

Market clearing price (Rs per REC)

3,500

Price and volume trends (solar)

4,000

Market clearing price (Rs per REC)

Open access

October 2015

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