For Independent Power Producers Title · 2011-07-19 · •High growth potential o Economic growth & power demand o 80% untapped potential in wind energy •Matured market o 3rd largest
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Wind Power Investment Opportunities:
For Independent Power Producers
Suzlon Energy Limited
• Role of wind turbine manufacturers in India
• Opportunity for IPPs: The Indian Contexto Winds of Change in India
o Wind Energy: Answer to Power Sector Challenges
o Investment Imperatives for IPPs
o Overview of Market Framework
• Regulatory and Policy Environment in Indiao Regulatory Support: State – Wise Tariff Structure (Existing)
o SUO MOTO CERC Tariff Order: For Wind Zone 1
o SUO MOTO CERC Tariff Order: For Wind Zone 2
o SUO MOTO CERC Tariff Order: For Wind Zone 3
o SUO MOTO CERC Tariff Order: For Wind Zone 4
o Conducive Policy Environment
Structure of the Presentation
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Suzlon: Global Scenario
Resources & Capabilities Bandwidth
Integrated Supply Chaincapacities for timely
deliveries and long term operations & maintenance
support
Secured Land Resourcesfor better planning,
flexibility & development of large scale wind park
projects
Power Evacuation capacity blocking & ability to develop
grid infrastructure like sub-stations and
transmission lines
Project & Financial Planning assistance
from experienced domain experts in wind energy and banking & finance sectors
Wind Resource Assessmentwith state-of-the-art
technology and expertise for more accurate & scientific
estimation
Value Added Services to assist on financial closure,
regulatory approvals, PPAs, CDM registration and CSR
Life Cycle Asset Management
with a truly comprehensive O&M
contract and a dedicated CRM team
End to End Solution with single source coordination & accountability over the entire
project life cycle for hassle-free experience
Wind TurbineManufacturers
In India
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Opportunity for IPPs:
The Indian Context
Winds of Change in India• Wind energy market - a significant opportunity
for IPPs
• Key drivers of paradigm shift:
o Investment Conducive Regulatory Environment ~ CERC Tariff Regimes
o New policy Initiatives ~(GBI, RPS/RPO, RECs)
o Rising power demand
o Mounting pressure for action on climate change
o Inherent growth potential of wind energy sector
Source: Suzlon Internal
Wind Energy: Answer to Power Sector Challenges
Source: WISE & GWEC Report and CII Report on Power Sector & * Wikipedia 2006 Statistics on GHG emissions
Thermal 63.2%
Large Hydro 25%
Nuclear2.8%
Renewable9%
Wind 71%
10.2GW
Other RE29%
Capacity Augmentation
•Current capacity:
146 GW
•Peak Shortage: 13.8%
•Addition Req. by 2020:
150 GW
Sustaining Fuel Mix
Current Fuel Mix for
Power Generation:
Coal :52%, Hydro:25%,
Gas & Oil:11%, RE:9%,
Nuclear:3%
Climate Change
India is the 4th
largest emitter of
GHG gases globally
(total emission of
1293 MT CO2e* pa)
Solution : Wind Power
•Proven ability & readiness to
quickly augment capacities
•Lowers burden on fossil fuel need
•Mitigation of climate change by
substantial CO2 displacement
• High growth potentialo Economic growth & power demand
o 80% untapped potential in wind energy
• Matured marketo 3rd largest in the world (10.2GW+)
o Access to proven technology & skill-set
• Progressive Policy Supporto Attractive feed in tariff & long term PPAs
o Fiscal incentives (GBI), RPO & RECs
• Investment Economicso 20 yrs predictable cash flows &
multiple revenue streams
o Impressive Returns : 14-16% IRR
o Flexibility to build ‘green power’ portfolio
o Easy ‘End to End’ solution – no hassles of managing market, material or manpower
Investment Imperatives for IPPs
Source: Suzlon Internal
Overview of Market framework
IPP Investor
Financier
End to End Solution ProviderEquipment Supply, EPC, VAS
Life Cycle Asset Management
Local Power Utility
ERC, Nodal
Agency, IREDA
Key Stakeholders
Power Trading Options
Procurement by Local Utilities
RPO set by Regulatory Commission, mandates local distribution utilities to procure power from renewable at a binding feed-in tariff under a long term PPA
Captive Usage
After adjusting the losses / charges towards wheeling & transmission, a proportionate set-off is given in the monthly electricity bills
OA / Merchant Generation
Investor can sell power to any open access consumer (with more than 1 MVA load) after paying OA charges
Source: Suzlon Internal
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Regulatory & Policy Environment in India
Regulatory Support: State- Wise Tariff Structure (Existing)
StatesFeed –In–Tariff Rates
(Rs/kWh)
Tenure
( Number of Years)
Other Conditions RPO (%)
Maharashtra Rs 3.50 13 Escalation of 15 Paisa per
year6%
Rajasthan Rs 4.28/ Rs 4.50 20 NA 7.5%
Madhya Pradesh Rs 4.03 20
Depreciation of 17 paise for 3 years, 16 paise in the 4th year. Constant rate of Rs 3.36/Unit thereafter
10%
GujaratRs 3.37
(Proposed: Rs 3.55/ Unit)20 No Escalation
2% (10% Proposed)
Karnataka Rs 3.70 10 No Escalation Min 7.5%
Andhra Pradesh Rs 3.50 10 No Escalation 5%
Tamil Nadu Rs 3.39 20 No Escalation 12-13%
Kerala Rs 3.14 10 No Escalation 2%
Source: Suzlon Internal, SERC Orders
SUO MOTU CERC Tariff Order: For Wind Zone 1
Assumption Head Unit Particulars
Wind Power Density Watts/ m2 200 - 250
Power Generation Capacity MW 1
Capacity Utilization Factor % 20
Project Cost Rs Lacs/ MW 515
Tariff Period Years 13
Debt – Equity Ratio % 70 – 30
Repayment of Debt Years 10
Return on Equity for 1st 10 years % 19
Return on Equity 11th year onwards
% 24
Source: CERC Petition Number: 284/2009 SUO MOTU
Levelised Tariff : Rs 5. 63 per kWhDepreciation Benefit : Rs 0. 37 per kWhGBI , as a pass through : Rs 0. 50 per kWh
Most Sites, now fall under this category
Currently applicable to Central Generating Stations. Different SERCs may chose to adhere to these guidelines, at a future date
SUO MOTU CERC Tariff Order: For Wind Zone 2
Assumption Head Unit Particulars
Wind Power Density Watts/ m2 250 - 300
Power Generation Capacity MW 1
Capacity Utilization Factor % 23
Project Cost Rs Lacs/ MW 515
Tariff Period Years 13
Debt – Equity Ratio % 70 – 30
Repayment of Debt Years 10
Return on Equity for 1st 10 years % 19
Return on Equity 11th year onwards
% 24
Levelised Tariff : Rs 4. 90 per kWhDepreciation Benefit : Rs 0. 32 per kWhGBI , as a pass through : Rs 0. 50 per kWh
Some places in MH, KAR, AP and TN
Source: CERC Petition Number: 284/2009 SUO MOTU
Currently applicable to Central Generating Stations. Different SERCs may chose to adhere to these guidelines, at a future date
SUO MOTU CERC Tariff Order: For Wind Zone 3
Assumption Head Unit Particulars
Wind Power Density Watts/ m2 300 - 350
Power Generation Capacity MW 1
Capacity Utilization Factor % 27
Project Cost Rs Lacs/ MW 515
Tariff Period Years 13
Debt – Equity Ratio % 70 – 30
Repayment of Debt Years 10
Return on Equity for 1st 10 years % 19
Return on Equity 11th year onwards
% 24
Levelised Tariff : Rs 4. 17 per kWhDepreciation Benefit : Rs 0. 28 per kWhGBI , as a pass through : Rs 0. 50 per kWh
Some places in KAR, AP and TN
(Although very few)
Source: CERC Petition Number: 284/2009 SUO MOTU
Currently applicable to Central Generating Stations. Different SERCs may chose to adhere to these guidelines, at a future date
SUO MOTU CERC Tariff Order: For Wind Zone 4
Assumption Head Unit Particulars
Wind Power Density Watts/ m2 350 - 400
Power Generation Capacity MW 1
Capacity Utilization Factor % 30
Project Cost Rs Lacs/ MW 515
Tariff Period Years 13
Debt – Equity Ratio % 70 – 30
Repayment of Debt Years 10
Return on Equity for 1st 10 years % 19
Return on Equity 11th year onwards
% 24
Levelised Tariff : Rs 3. 75 per kWhDepreciation Benefit : Rs 0. 25 per kWhGBI , as a pass through : Rs 0. 50 per kWh
Sites with above mentioned WPD are
nearly exhausted
Source: CERC Petition Number: 284/2009 SUO MOTU
Currently applicable to Central Generating Stations. Different SERCs may chose to adhere to these guidelines, at a future date
Conducive Policy Environment
• Prime Minister’s National Action Plan on Climate Change (NAPCC)
o To attain 5% National RPO by 2010
o To increase by 1% every year for 10 years, reach 20% National RPO by 2020
o Special focus on Solar: Announcement of Solar Mission, to attain 1000 MW by 2013 (Phase I)
• Provision of Tax Incentives, via the 80% Accelerated Depreciation route
o Makes Wind Power Investment attractive for investors with high tax appetite
• Introduction of Generation Based Incentives (GBI)
o GBI of 50 paise/kWh
o Applicable Cap of 62 lacs per MW
o Co-existent with Accelerated Depreciation till 2012, or till implementation of DTC
• Proposal for framework for Introducing RECs in Indian Markets rolled out
o RECs envisaged to aid fulfillment of RPS in non windy states
o Trading of RECs to take place, via power exchanges
Source: Suzlon Internal
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Thank You
Chintan ShahHead – Strategic Business Development
Suzlon Energy LimitedEmail: cns@Suzlon.com
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