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TRANSCRIPT
Current status, Outlook and Investment opportunities
in RE sector in India
A Presentation by:
K S PopliChairman & Managing Director
Indian Renewable Energy Development Agency LimitedNew Delhi (India)
Renewable Energy: Globally and India’s position
Wind39%
Solar PV19%Biomass
10%
Mini Hydro (<1 MW)
3%
Small Hydro (1-10
MW)12%
Pumped Hydro16%
Geothermal1%
Global Installed RE Capacity
43 39,733,3
21,11 18,65
5,13
0
20
40
60
China Germany Japan USA Italy India
Country wise Solar (GW)
120
67,66
40,99
25.18 22,98
0
20
40
60
80
100
120
140
China USA Germany India Spain
Country wise wind (GW)
• Data as of 2015/2016 based on country estimates• Source: IRENA RE status report 2015 and Global Wind Energy Council
• Global Wind: India 4th
with 23.44 GW
• Global Solar: India 10th
with 5.1 GW
Present Power Scenario of India
*Source: MNRE, GoI ; CEA Statistics
Coal61,11%
Gas8,09%
Diesel0,33%
Nuclear1,91% Hydro
14,12%
Wind8,83%
SHP1,41%
Biomass1,59% Waste to energy
0.05%Solar2,23%
RE14,45%
• India’s installed capacity is more than 300 GW (As on 31st March 2016).
• India’s RE capacity has exceeded 42GW (as on Mar 2016) which accounts for about 14% of the installed power capacity
• Current share of renewable energy (in energy produced) is ~7%
• Wind contributes to 64.5% of theinstalled Renewable Capacity
Overview
267446763
42744831
11542727
0
10000
20000
30000
40000
50000
Wind Solar Small Hydro Biomass Waste to Energy Total
Installed RE Capacity as on Mar 2016 (MW)
RE in India: Status and Revised targets
Current status, Outlook and opportunities • MNRE
4
164.1
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
MW
Source wise renewable capacity ( FY 07-16)
WtE
Solar Power
Biomass power
Co Gen bagasse
Small Hydro
Wind Power
42727 MW
9389MW
Capacities in MW
Source Installed capacity by
end of 11th Plan
(March 2012)
Current installed
Capacity
(March 2016)
Target as per 12th
Plan
(March 2017)
Revised Targets
till 2022
Solar Power 941 6763 10,941 1,00,000
Wind power 17,352 26744 32,352 60,000
Bio Power 3,225 4946 6,125 10,000
Small Hydro 3,395 4274 5,495 5,000
TOTAL 24,914 42727 54,914 1,75,000
Solar Energy capacity addition in India
164.1
0
1000
2000
3000
4000
5000
6000
7000
8000
2010 2011 2012 2013 2014 2015 2016 (Till31/03/2016)
MW
Source wise renewable capacity ( FY 10-16)
36 MW
1.03 GW1.68 GW
2.63 GW
3.74 GW
6.75 GW
11 MW
Capacities in MW
Source Installed capacity at
beginning of JNNSM
2009-2010
Current installed
Capacity
(31st March 2016)
JNNSM Target
(2022)
Revised Target
(2022)
Solar 11 6753.38 20,000 1,00,000
Support Mechanism for Renewable Power In India
Support for
RE
Exemptions
and other
incentives
Introduced by almost all states for
RE technologies
State RE
Policies
High demand
supply energy
gap
Accelerated
Depreciation
(AD)
Renewable
Purchase
Obligation
(RPO)
Key instrument for
success of wind
Also exists for of solar,
biomass projects
Excise & Custom duty exemptions for
most of the Equipment, Machinery etc.
10 year tax holiday
Power shortage
prevails and Energy
gap is expected to
increase
Feed in
Tariffs and
de-risked
competitive
bidding
RPOs mandated by the
Electricity Act 2003 and
National Tariff Policy
Renewable Energy
Certificate (REC)
mechanism launched to
fulfil RPOs
States have formulated
RE policies and have
added significant
capacities
Key incentives
Current status, Outlook and opportunities • MNRE
6
Incentive Details
Income tax Holiday 100% for 10 consecutive years - MAT @ 20% to apply
Accelerated depreciation Accelerated depreciation @ 40% on solar assets
Deemed export benefits
Available to specified goods manufactured and not actually exported • Advance authorization from Directorate General of Foreign Trade• Deemed export drawbacks • Exemption/return of Terminal Excise Duty
Service tax exemption Certain services are exempted from service tax
Customs and Excise Laws Various duty concessions and exemptions to RE Sector
Reduced VAT Certain States allow reduced VAT rates (5%) on RE projects
Tax-free GrantsGrants received from the holding company engaged in generation, distribution or transmission of power
FDI: Foreign Direct Investment
• 100% FDI under the Automatic Route• Does not require approval from the Government of
India• The Indian Company receiving FDI is required to:
• Report to the Reserve Bank of India the receipt of FDI within 30 days
• File form FC-GPR within 30 days of issue of shares
JV: Joint Venture
• Automatic approval for up to 74% foreign equity participation in a JV
• Liberalized foreign investment approval regime• 100% foreign investment as equity is permissible
with the approval of Foreign Investment Promotion Board (FIPB)
• Various chambers of commerce and industry associations offer guidance on partners
Solar Scale-up Plans- 100 GW Vision
11
Current status, Outlook and opportunities • MNRE
Category 1. Rooftop ProjectsCategory 2. Large scale Projects
Inside Solar park Outside Solar Park
20,000 MW 40,000 MW
40,000 MW
1 5 10 16 23 31 406 12
2232
42
51,5
60
0
20
40
60
80
100
120
2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Cumulative Solar Targets (GW)
Large scale solar
Roof-top
Plummeting cost of power from solar
Current status, Outlook and opportunities • MNRE
12
Bidding tariffs for solar projects have been declining due to drop in capital costs and competitive bidding
• Lowest tariff quoted in Rajasthan: Rs. 4.34/KWh ($ cent 6.45) for 70 MW from Fortum
• Lowest tariff quoted in Andhra Pradesh: Rs. 4.63/KWh ($ cent 7.02) for 500 MW from SunEdison
Rs. 4.63/KWh ($ cent 7.02) for 350 MW from SoftBank
• Lowest tariff quoted in Haryana: Rs. 5/KWh ($ cent 7.4) for 140 MW from Acme
• Lowest tariff quoted in Madhya Pradesh: Rs. 5.05/KWh ($ cent 7.65) for 50 MW from Sky Power
12,16
8,79 8,36 8,738,34
8,05
6,45 6,87 6,866,75
6,94 6,72 7,16
5,36 5,73 5,62 5,654,63 5,08
5,754,63
5,125
4.34
0
2
4
6
8
10
12
14 Tariffs evolved in FIT - Competitive bid process (INR/kWh)
Highest Bid (Rs./KWh) Lowest (Rs./KWh) Weighted Avg. Price (Rs./KWh)
6.9
7.67.4
$ Cent/KWh
6.4
Reduced technology costs
Strong competition with lower margins for EPC’s
Larger pool of investors
Concessional financing
- Payment security with NTPC and SECI as the power off-takers in most bids
- Three month payment guarantee in case of delays from the distribution company
Guarantee by Off-takers
- Enables developers to lower their bids in real time
- Promotes competition with transparent lower tariffs
Online reverse bidding
- Large scale projects being bid result in economies of scale
- Faster and easier implementation of projects
- Common pool of resources and better network utilisation
Scale of projects and Solar Parks
Factors leading to reduction in solar tariffs
Reduction in EPC costs Entry of major foreign players
De-risked Bidding
Rooftop: Target to achieve 40 GW grid tied rooftop
Status 152.73 MW Installed capacity
2050 MW Projects approved (in Principal
[Potential for 124 GW exists]
Target 40 GW by 2022 of which 10 GW during 2015-
16 to 2017-18.
Current
support
Subsidy of 30% of capital cost
(except for Private, Industrial, Commercial)
• 16 States have rooftop provisions in their Solar Policy and 26 States/UTs have notified regulations
• Rooftop included under Integrated Power Development Scheme and guidelines issued
• Guidelines issued to include rooftop under housing loan and banks have issued instructions
• Central Electricity Authority (CEA) has notified technical standards for connectivity and metering
• A grant of INR 50 Billion ($ 757 Million) has been approved to support 4200 MW rooftop projects
• $ 2 billion line of credit through KFW, WB and ADB for rooftop projects
Promotional measures:
20 GW Solar parks
Current status, Outlook and opportunities • MNRE
15
34 Parks (22 states) with capacity 20,000 MW approved
700 MW
Gujarat
750 MW+ 1000 MW +500 MW +500 MW
MP
500 MW
Chattisgarh
500 MW
Tamil Nadu200 MWKerala
1500 MW + 1000MW + 1000 MW + 500 MW
AP: Anantapur, Kurnool, Kudappa
2000 MW
Karnataka
600 MW
UP
20 MW
Meghalaya
50 MW
Uttarakhand
680 + 1000 + 500 + 750 + 321 MW
Rajasthan
100 MW
Arunachal
60 MW
Nagaland
100 MW
A&N Islands
69 MW
Assam
1000 MWHimachal Pradesh
500 MW
Telangana
500 MW
Haryana
100 MW
J&K
500 MW+500 MW +500 MW
Maharashtra
1000 MW
Orissa
500 MW
WB
Opportunity 1: Project development (Tenders in FY16)
Uttar Pradesh
Concluded 215
In-Process 540
Andhra Pradesh
Concluded 1250
In-Process 2260
Telangana
Concluded 2000
Upcoming 900
Tamil Nadu
Concluded 1215
Kerala
In-Process 100
Karnataka
Concluded 300
In-Process 2550
Maharashtra
Concluded 500
Gujarat
In-Process 250
Rajasthan
Concluded 680
Upcoming 730
Punjab
Concluded 500
In-Process 500
Capacity Tendered for ground mounted Solar Projects in 2015-16 for commissioning in 2016-17 & 2017-18
20,904 MW
Madhya Pradesh
Concluded 300
In-Process 950
Haryana
Concluded 500
Jammu and Kashmir
Upcoming 100
Jharkhand
In-Process 1200
Uttarakhand
Concluded 170
Opportunity 3: Financing
Current status, Outlook and opportunities • MNRE
22
175 GW RE plan entails investment of Approx. $ 140 billion (Rs. 8,50,000 Crore)
Debt (70%)
$ 98 Billion (Rs. 6,00,000 Crore)
Equity (30%)
$ 42 Billion (Rs. 2,50,000 Crore)
• Multilateral and Bilateral
• NBFCs• Commercial banks
18000
58000
102000
120000128000
136000143000 149000
0
20000
40000
60000
80000
100000
120000
140000
160000
2014-15 2015-16(p)
2016-17(p)
2017-18(p)
2018-19(p)
2019-20(p)
2020-21(p)
2021-22(p)
Rs
. C
rore
Annual investment in RE (Rs. Crore)
SHP and BiomassInvestment (Rs.Crore)
Wind Investment(Rs. Crore)
Solar Investment(Rs. Crore)
MNRE discussing innovative financial instruments to reduce cost of debt
Green bonds and infrastructure debt funds (IDFs)Dollar denominated tariffsPension funds, crowd funding, yield companiesHedging risk fund to allow cheaper financing
MNRE in touch with various multilateral/bilateral FIs like JICA, KFW, ADB, World Bank, EIB, AFD, US EXIM, etc. to avail line of credit
Renewables accorded Priority Sector lending status: Loans up to ₹ 15 crore for renewable power projects included. Banks mandated to disburse 40% of adjusted net bank credit to priority segments.
Rooftop Solar through Home Loans: DFS has issued guidelines and circulars issued by various banks to include rooftop under housing loan
Tax-Free Bonds: Government approves INR 50 billion tax-free bonds to enable low interest rate funding for RE
Green Bonds: Enabling low cost funding for clean energy , REC, PFC, IREDA, IDBI and private sector like ICICI, Yes Bank asked to issue green bonds to raise funding for RE projects
Facilitating financing 2015
Innovative Financing
Mechanisms
Faster REdeploymentIncreased
availability of finance
Lower rates of interest
Renewable Investment globally vis-à-vis India
Current status, Outlook and opportunities • MNRE
2,7 3,14,9
6,3 5,64,3
9
13
8,2 7,18,9
10,9
02468
101214
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Renewable Energy Investment in India ($ Billion)
Investment in Europe decline and stay constant in US, Asia & South America witness highest growth
• Investment in India’s renewable industry increased more than 22% in 2015 to reach $10.9bn
• Rise largely attributed to solar, where investment reached $5.6bn, up 80% from $3.1bn last year
110,5
5643,6
23,410,9 10,6 7,5 4,5
0
20
40
60
80
100
120
India 5th largest by RE investment in 2015 ($ Billion)
India as an Investment destination
MNRE Target
Commitment made during RE-Invest
175 GW 287 GW
$140 Billion $ 57 billion to support approx. 78 GW
• 462 investors submitted “Green Energy Commitment” to develop 287 GW • 39 Banks and Financial Institutions have given commitments to finance projects aggregating to 78 GW
Global
• In second quarter of 2015, Global investment in clean energy was $73.5bn , down0.2% on Q2 2014.
• For the first half of 2015, Global investment in clean energy was $127.9bn, down 3% on H1 2014. India
• India invested $2.2bn, up 75% on the same quarter last year.
• India remains on track to cross $12.5 billion in 2016
• Interest in India from domestic and foreign investors has grown in the last One year
• India intends to reduce the emissions intensity of its GDP by 33 - 35% by 2030 below its 2005 level
• In the January-June period, India has surpassed US and China as the biggest FDI destination in the world , garnering $31 billion.
International Solar Alliance (ISA)
India and France launched an International Solar Alliance at COP21 to boost solartechnologies and investment in solar sector. (Headquartered in India)
The ISA comprises 121 countries that lie partially or fully between the Tropics of Cancerand Capricorn, endowed with excellent solar insolation, but the potential remain largelyuntapped.
Focuses on Building a common Knowledge e-Portal, Capacity building , developinginnovative financing mechanisms
French Development Agency to allocate €300 million to develop solar energy over thenext 5 years
IREDA contribution of US $ 1 million to the ISA corpus fund
Alternate Investment Fund
A dedicated renewable energy fund of USD 1 to 1.5 bn fund is proposed to be setup
IREDA will invest USD 15 million into the fund as Anchor Investors
Fund will be managed by a reputed international fund manager whose selection is being undertaken through an ICB process
Received prima facie interest from various large fund managers to act as Investment Managers for proposed fund.
Ujwal DISCOM Assurance Yojana (UDAY Scheme)
GOI Launched UDAY for operational and financial turnaround of Stateowned Power Distribution Companies (DISCOMs)
States shall take over 75% of DISCOM debt as on 30 September 2015
States will issue non-SLR bonds with maturity period of 10-15 years with amoratorium on principal up to 5 years
18 States and 1 UT gave their ‘in-principle’ approval to join the scheme
So far, 10 States signed MoUs with MoP under UDAY
UDAY Bonds worth Rs. 1 lakh crore issued in 2015-16
Financing Renewable Energy projects since last 28 years.
Financed more than 2200 RE projects.
Supported green capacity addition of more than 6000 MW
Loan Sanctioned to the tune of more than ₹ 38,600 crore (€ 5.08Bn) & disbursed ₹ 21,200 crore (€ 2.80 Bn) as on March’16.
Largest share in RE Project Financing in India
Catalyzed Market Development
Profit earning & dividend paying since inception.
About IREDADedicated FI for Renewable Financing
Operational Areas
Sectors being financed :
Wind Energy
Hydro Power
Solar Energy
Biomass including Bagasse & Industrial Cogeneration
Biomass Power Generation
Waste to Energy
Energy Efficiency & Energy Conservation
Bio-fuel / Alternate Fuel
Hybrid Projects with RE Technologies
New & Emerging Renewable Energy Technologies
IREDA Financing Products / Schemes
Direct Lending Other Services Lending through and with
Financial Intermediaries
Project & Equipment
Financing
Loans for Manufacturing
Take Over Loans from
other Banks / FIs
Short Term Loan
AssistanceBridge Loans against
Capital Subsidies / VGF /
GBI / SDF
Underwriting of Debt / Loan
Syndication
Line of Credit to NBFCs for
on-lending to RE / EEC
Projects
Partial Credit Guarantees
Loan against Securitization
Responsible for
Disbursement of GBI by
MNRE
• IREDA has a long standing relationship with KFW Development Bank of
Germany.
• Relation started in the year 1999 with the first line of credit of € 61.36
Million to finance the renewable energy sector in India.
• Since 1999 IREDA has received and utilized four lines of credit with
government of India guarantee amounting to a total of € 331.33 Million.
• IREDA signed 5th line of credit with KfW of € 100 Million on 5th October
2015 without sovereign guarantee. The line of credit is for a tenure of 12 years.
• The technologies financed under various lines of credit include: Solar PV,
Wind, Cogeneration, Biomass Power, Small Hydro, etc
• Total capacity of 1135 MW have been sanctioned under (LoC -1,2,3,4)
Indo-German Cooperation ( IREDA & KfW Cooperation for Renewable Energy)
• KfW financing enables IREDA to avail long term, low cost funds which is the
requirement of the renewable energy sector in India.
• All these lines of credit have immensely helped IREDA in promoting and
developing renewable energy in the country.
Indo-German Cooperation ( IREDA & KfW Cooperation for Renewable Energy)
LoC -1 : 1999
€ 61.36 Million
144.53 MW
SPV (5), Cogen(3) & Wind
(26)
LoC -3 : 2009
€ 19.97 Million
41.625 MW
WTE (3), Biomass(1) &
Cogen (1)
LoC -2 : 2008
€ 50 Million
76 MW
Hydro (2), Cogen(2)
LoC -4 : 2011
€ 200 Million
872.80 MW
Hydro (3), Cogen (2), Solar
(17), Wind (8)
LoC – 5 : 2016
€ 100 Million
(No projects financed yet)
IREDA is in discussion with KfW for a sixth line of credit for implementation of
‘Access to Energy’ programme which aims at meeting the financing
requirement of off grid sector.
• Proposal is for a line of credit of € 20 Million
• TAP fund of € 1 Million and
• Grant of € 4 Million
• Status - Proposal for said line of credit has been recommended by MNRE and
sent to DEA.
Indo-German Cooperation ( IREDA & KfW Cooperation for Renewable Energy)
KfW has also provided TAP funds under KFW II & IV line of credit of
total € 1.5 Million, which is being utilized for following purpose:
Indo-German Cooperation ( IREDA & KfW Cooperation for Renewable Energy)
S. No. Subject Activities
1 Capacity Building 1. Development and Implementation of New CRRS for IREDA
2. International financial reporting standards
3. Development of New Business Models
2 Training 1. Solar and Wind Resource Assessment Training
2. Development of Marketing Strategy for IREDA
3 Environmental &
Social Appraisal
1. Gap analysis for the selected states.
Technical Assistance for strengthening Environmental & Social Safeguards of
IREDA funded projects:
• Development of Environmental & Social Management System (ESMS) to
meet the requirements of all international lines of credit
• Improvisation of existing E&S screening checklists for different sectors used
by IREDA
• Training of IREDA technical staff to complete E&S screening checklists
• Live project assessment from each sector
Indo-German Cooperation ( IREDA & KfW Cooperation for E&S Safeguards)
