© Confederation of Indian Industry
MAITREE ProgramWebinar
29th November, 2019
Renewable Energy Market & Policy for
NZEBs in India
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India: A Renewable Energy future
❖ India is running one of the largest & most ambitious RE capacity expansion programs in the world.
❖ The Ministry of New & Renewable Energy, GoI has a target of:
➢ 175 GW of installed capacity by 2022
➢ 350 GW by 2030 as per the INDC goals
❖ India has the 3rd largest power generation capacity worldwide with 365 GW installed (as on Oct ‘19).
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RE Targets and Trends
❖RE target by the end of 2022:
❖85 GW set up as on Oct ’19
➢ 49% of target achieved
➢ 23% of India’s installed power capacity
100 GW from solar power 10 GW from biomass power
60 GW from wind power 5 GW from small hydro power
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SectorInstalled Capacity (in MW)
(as on 30.10.2019)
Wind Power 37,090.02
Solar Power – Ground Mounted 29,417.44
Solar Power – Rooftop 2,278.80
Small Hydro Power 4,647.10
Biomass (bagasse) Cogeneration 9,131.50
Biomass (non-bagasse) Cogeneration /
Captive Power674.81
Waste to Power 139.80
Total 83,379.47
Grid-Interactive Power
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SectorInstalled Capacity (MWeq)
(as on 30.10.2019)
Waste to Energy 189.63
Biomass Gasifiers 166.17
Solar PV Systems 936.47
Total 1,292.27
Off-Grid / Captive Power
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MARKET SCENARIO & POLICY
FRAMEWORK
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RE Market Size in India
Ranked 4 as per E&Y RE Country Attractive Index
2018
21% CAGR since 2012, to
continue to 17% till 2027
India has one of the lowest
generating costs / MW for utility-scale solar PV &
wind plants
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RE Opportunities
❖ Total investments of $160 bn needed
❖New investments in 2018 – $11.1 bn ($42 bn since 2014)
❖ FDI inflow in 2018 – $1.45 bn ($3.2 bn since 2015)
Equity – $40 bn Debt – $120 bn
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Policy & Regulatory Framework
❖National Level:
Ministry of New & Renewable Energy
• Nodal Ministry of GoI, for all matters relating to new and renewable energy
• Planning, policy formulation, deployment & implementation of technologies, & roadmap for RE development in India
Central Electricity Regulatory Commission
• National regulator whose regulations, guidelines & rulings apply to all state level bodies (Electricity Act & National Tariff Policy)
• Inter-state transmission, related tariffs, & trading
• RPO mechanism
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Policy & Regulatory Framework
❖State Level:
State Nodal Agencies
• Implementation of policies at the state level (for e.g., GEDA, RREC, TEDA, MEDA, KREDL, NREDCAP, etc.)
• Coordination with MNRE & state electricity departments
State Electricity Regulatory Commissions
• Apply CERC guidelines / policies or develop own policies for the concerned state
• Tariff determination, intra-state transmission & wheeling
• Regulate procurement by DISCOM
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Drivers for RE in India
❖Solar
➢ National Solar Mission
❑ Main driver for solar power, mainly utility-scale solar PV plants through bidding –intense competition & drop in tariffs (~ 75% over last 5 years)
❑ Schemes for off-grid & grid connected rooftop PV systems – industrial, commercial, residential, educational, community-based
❑ Schemes for solar thermal systems (concentrators & collectors)
❑ Other decentralised solar energy systems
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Drivers for RE in India
❖Wind:
➢ Competitive bidding in place of previous feed-in tariff regime
➢ Reduced generation costs
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Drivers for RE in India
❖Policy ecosystem
➢ Concessions in open access charges in high-growth states – wheeling & banking, & cross subsidy surcharge
➢ Capital cost subsidies at central level & state level
➢ Net metering & gross metering policies including preferential tariffs, capital subsidies, etc.
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❖RPO
➢ Solar and non-solar RPOs
➢ CERC policy very strict and binding
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Drivers for RE in India
❖ Improvement in Technology
➢ RE technologies have improved drastically in the last 5 years:
❑ Mature, reliable, competitive
❖Business Climate
➢ Price of conventional energy sources are increasing & those of RE sources (mainly solar PV) is rapidly decreasing
➢ GoI allocated over INR 3,000 crore in 2019-20 budget for solar
➢ RE projects are included in priority sector lending as per RBI norms
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SUMMING UP
Technology is more robust, policy framework is strong, asset viability is strengthened
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3. Finance facilitationChallenges faced by RE Industry
• Rapid technological advances, implementation procedures & competitive prices of RE technologies
• Various business models available for adoption of RE, e.g., BOOT, EPC, etc.
Limited Awareness in Consumers
• Total investment of around USD 160 bn needed
• This entails huge financial commitments by Government, private & public institutions
Financial Challenges
• Many high-skilled jobs will be created as capacity of installed power and manufacturing is increased
• Our workforce needs to be trained efficientlyNeed for Skilling
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SOLAR ENERGY
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Solar PV Potential & Targets
❖Rooftop & Off-grid Applications: Residential, agricultural, commercial & industrial (C&I) entities
➢ National target – 40 GW by 2022
❖ Grid Connected Systems: Ground
mounted & utility-scale plants &
solar parks
➢ National target – 60 GW by 2022
Estimated potential – 748 GWp
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Solar PV Project Development – Rooftop
❖Area needed – 13 m2 or 140 ft2 per kWp
❖Average power generation – 1500 kWh / kWp / year
❖ Typical payback period – 3-4 years for C&I entities
Capacity Benchmark Cost (INR /kWp)
Above 1 kW and up to 10 kW 54,000
Above 10 kW and up to 100 kW 48,000
Above 100 kW and up to 500 kW 45,000
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Solar PV Achievements
32,000 MW 1,000 MW 16.72 lakhs
6.4 lakhs 40 lakhs 1.96 lakh
Grid Interactive Off-Grid Home Lighting
Street Lighting Solar Lantern Solar Pumps
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Initiatives of Central & State Governments
❖Concessions in open access charges in high-growth states –wheeling & banking, & cross subsidy surcharge
❖Capital cost subsidies
➢ Central level & state level
❖ Incentive-based schemes
➢ For Govt. organisations
❖Net metering & gross metering
➢ Preferential tariffs, capital subsidies, etc.
❖Statutory benefits & concessions
➢ Minimal GST rates
➢ Deemed conversion for land
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To conclude…
❖High solar potential: 4-7 kWh/m2
❖Scale & volume of business very high
➢ Rapid growth in installation: CAGR 44%
➢ Solar investment growth: CAGR 13%
❖ Firm political commitment
➢ Most states have released dedicated solar policies
❖Prices are falling
➢ INR 2.44 / kWh is current lowest tariff for grid connected PV
❖Public awareness on solar energy has drastically increased
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BUSINESS MODELS
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CAPEX (EPC) Model
OPERATING MODEL
• Contract: Client enters into an EPC / turnkey contract with the solar contractor to install the plant
• Land: Client utilizes its vacant roof space for installation
• Project financing: 100% funding by client
• Captive consumption: 100% utilization of power from solar plant
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CAPEX (EPC) Model
BENEFITS TO THE COMPANY
• AD benefits: AD up to 90% of the asset value with 40% depreciation
• Reduced risk: O&M shall be the responsibility of the SPD
• Green benefits: Reduces carbon footprint and enables to reduce procurement of power from third party source and thereby reducing RPO
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OPEX (BOOT) Model
OPERATING MODEL
• Model: Solar Project Developer (SPD) finances, builds, owns & operates solar plant for PPA period.
• Land: SPD will utilize the roof space of the consumer on lease basis
• Project financing: 100% funding by the SPD
• Consumption: SPD sells the power on monthly basis for a fixed term.
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OPEX (BOOT) Model
BENEFITS TO THE COMPANY
• Zero capital investment: 100% funding by the SPD
• Reduced risk: O&M shall be the responsibility of the SPD
• Energy cost reduction: Competitive / cheaper compared to grid tariff & DG power. No exposure to power tariff escalations and inflation risks.
• Green benefits: Reduces carbon footprint and enables to reduce procurement of power from third party source and thereby reducing RPO
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Decentralised Solar PV Systems – Advantages
❖Cost savings
➢ Competitive w.r.t. grid power for C&I entities
❖Minimum interference during operation
➢ Routine maintenance for cleaning PV modules
➢ Other RE systems require minimal O&M
❖Commitment to sustainability
➢ Internal goals & mandates towards environmental sustainability & climate change
➢ “Green Makes Business Sense”
❖Carbon footprint reduction
➢ 1 MW solar power plant (1,500 MWh) offsets 1,230 tons of CO2 annually
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NET METERING
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Concept of Net Metering & Gross Metering
❖Net Metering
➢ Electricity generated by the solar rooftop system is first utilized by the consumer to meet the internal/captive requirements.
➢ Excess electricity, if any, is exported to the grid.
➢ Subsequently, when the consumer imports power from the grid, the export is adjusted against the import, lowering the electricity bill.
❖Gross Metering
➢ All the electricity generated by the solar rooftop system is exported to the grid.
➢ All the electricity required for consumption by the consumer is imported from the grid.
➢ Consumers are paid a feed-in tariff (FIT) for the electricity exported to the grid.
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Typical Scenario in States
❖ In accordance with state’s policies & SERC’s regulations
❖Min. 1 kWp & max. 1 MWp capacity of rooftop solar PV
❖Rooftop solar capacity will be a certain % of sanctioned demand of user (generally b/w 80 - 100%)
❖Ownership options – CAPEX & RESCO
❖Billing mechanism – monthly adjustment
❖Benefits – exemption from wheeling, banking & cross subsidy charges if applicable
❖ Leading states:
Karnataka Telangana Gujarat Rajasthan
Madhya Pradesh Delhi Punjab Haryana
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RENEWABLE PURCHASE
OBLIGATION
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Renewable Purchase Obligation (RPO)
❖Obligation imposed by law on certain entities to either buy electricity generated by specified ‘green’ sources, or, in lieu of that, ‘renewable energy certificates (RECs)’ from the market.
❖Mandated by CERC for promotion of RE generation
❖Obligated entities:
➢ DISCOMs
➢ Captive consumers of conventional power
➢ Open access consumers of conventional power
❖RPO targets under two categories – Non-Solar & Solar
❖SERCs to fix RPO targets for individual states
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RPO Compliance
❖Methods to fulfill RPO:
➢ Captive consumption of RE
➢ RE procurement through open access
➢ Purchase of REC
❖1 REC equivalent to 1 MWh of green power
❖REC prices
CategoryFloor Price (INR)
Forbearance Price (INR)
Non-Solar 1,000 2,900
Solar 1,000 2,400
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CASE STUDIES OF NZEBS IN INDIA
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Case – 1 CII-Godrej GBC, Hyderabad
❖Deployment of energy efficiency measures
❖ Installation of bifacial solar PV modules
➢ 138 kWp solar PV system
❖Unique project to demonstrate & showcase the viability of establishing net zero energy buildings
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Unique Features of Bifacial Solar PV Modules
❖ Transparent & frameless
❖Backside has a power rating of at least 90% of front side
❖ Energy yield enhanced with higher reflectivity
➢ PV module with all-round & undisturbed reflection will have higher energy yield
❖ Energy yield enhanced as the elevation of the modules from the roof surface increases
➢ 20-30% with an elevation of 1.5 m
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❖ India’s First Net Zero Energy certified project
❖Annual energy consumption: 1,825 MWh
➢ On-site RE installed: 120 kWp
➢ Off-site RE wheeled: 1.2 MW
❖10% grid energy offset by on-site RE
Case – 2Plant – 13, Godrej & Boyce, Mumbai
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❖ The first warehouse project to achieve Net Zero Platinum
❖100% energy requirements met through rooftop solar PV system (625 kWp)
❖Continuous improvements in green performance
Case – 3Globicon Terminals, Mumbai
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❖Continuous performance improvements to optimise energy use
❖15% grid energy offset by on-site RE system (1,583 MWh/yr)
❖Wheeling of green power: 14,260 MWh/yr to meet net zero performance
❖ Extensive retrofitting of existing cooling system, lighting & auxiliary systems
Case – 4Capgemini EPIP Campus, Bengaluru
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❖Predominantly naturally ventilated training institute
❖Net Zero Energy Platinum (Design)
❖ Energy use is optimised by installing EE measures
❖Annual Energy Consumption: 62,000 kWh
❖35 kWp onsite roof-top Solar PV system
❖Use of Phytoremediation system for water treatment (no energy use)
Case – 5ICICI RSETI, Jodhpur
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Thank You
Dhruva Ballal
Confederation of Indian Industry
CII-Sohrabji Godrej Green Business Centre
T: +91 40 4418 5103 M: +91 91009 57420
E: [email protected] W: www.cii.in | www.greenbusinesscentre.com