Welcoming you to the world of indian renewable energy for european companies

Opportunities for EU in Indian Renewable Energy

Narasimhan SanthanamEnergy Alternatives India – EAI

www.eai.in

Presentation @ EBTC Seminar, Bangalore, Nov 15, 2011

About EAI

• Dedicated focus on renewable energy and cleantech for India

• Diversification, feasibility studies, market entry strategy, business intelligence

• Work with corporates on making their factories use more renewables

• Founded by professionals from IITs and IIMs• Based out of Chennai• More from www.eai.in – see also our club, forum,

mailing list…

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Contents

WHAT…

– is the status of and opportunities in Indian renewable energy?

– are the trends, policies and success factors?

Potential and Opportunities

– Needs and Drivers

– Status and Potential of Renewable Energy in India

– Attractive Opportunities for EU Companies

Needs and Drivers

• Increasing electricity needs– Over 60,000 villages without electricity - Dire need for

distributed energy generation– Peak deficit over 10%– Significant industrial productivity loss due to power cuts –

7% decrease in turnovers of Indian companies, acc to Goldman Sachs

– Significant reliance on diesel as a standby source, increasing the import bill, and resulting in higher pollution

• Increasing needs of transport and liquid fuels

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Renewable Energy Potential

• Solar• Wind• Biomass• Biofuels• Small Hydro• Waste to Energy

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Growth Potential for Renewable Energy Sources in IndiaShort term = less than 3 years; medium term = 3-8 years

RE Power Source Short Term Growth Potential

Medium Term Growth Potential

Solar PV High High

Solar CSP Medium High

Wind High High

Biomass Power High High

Small Hydro High High

Large Hydro Medium Medium

Waste to energy Medium High

Biofuels Low High

Geothermal Low Low

Wave Low Low

Tidal Low Low

Overall Market Potential in India

• National Solar Mission– 20 GW by 2022; state targets in addition– KPMG estimates put total installed capacity 68 GW by 2022;

EAI estimates put it at 75 GW (solar PV+CSP+offgrid).– Focus on both PV and CSP, and thermal– Midway through the first phase (total 1000 MW)

• 200 MW of PV and 500 MW of CSP awarded

– State-specific Solar Missions – Rajasthan, Gujarat, Karnataka– PV expected to have race ahead in the near term, CSP

higher prospects post 2015 and long term– Emphasis on developing the entire ecosystem

Solar Focus - Overall

• National Solar Mission– 10 GW by 2022; state targets in addition– 1 GW by end of 2013; 5 GW by end of 2017; 10 GW by 2022– Midway through the first phase

• 200 MW of PV allocated (5 MW each); 300 MW to be allocated soon

– Feed in tariffs in the range – 25-36 cents/kWh– PV expected to have race ahead in the near term, CSP higher prospects

post 2015 and long term– Local content requirements– Emphasis on developing the entire ecosystem

– Opportunities for foreign companies: EPCs, developers, component or equipment manufacturing, solar farm analytics, niche segments in rooftop solar, training and support

Solar Focus - PV

• National Solar Mission– 10 GW by 2022; state targets in addition– Midway through the first phase

• 500 MW of CSP awarded

– Minimum capacity – 50 MW• Feed-in-tariffs range – 18-30 cents /kWh• PV expected to have race ahead in the near term, CSP higher

prospects post 2015 and long term• BHEL – Abengoa JV for CSP in India

• Opportunities for foreign companies: EPCs, developers, technology transfer, R&D collaboration

Solar Focus - CSP

• Total installed capacity – 14500 MW• Fifth largest installed capacity in the world • Estimates – 50,000 MW by 2020• Current annual additions of about 2500 MW, expected to increase to 4000

MW• Feed-in-tariffs in range – 8-12 cents/kWh• Main companies – Suzlon, Vestas, Gamesa, GE, Siemens, Enercon, WinWind• Demand supply gap in turbines widening• Chennai Major hub for turbine manufacturing – Chennai hosts mfg for

Vestas, Gamesa, WinWind, Pioneer Wincon…

• Opportunities for foreign companies: Developers, turbine component manufacturing, wind energy analytics

Wind Focus

• India has more agricultural land than China (160 mill ha vs 137 mill ha)• Total biomass availability in India – about 400 million T per year; agro waste

availability – about 200 million T per year, which translates to about 30 GW of power capacity

• Total installed capacity (including cogeneration): about 2.2 GW (1.1 GW cogen, 0.9 GW combustion, 0.1 GW gasification)

• Biomass power divided into– Combustion – 5 MW and above; low efficiency; 800 MW installed capacity– Gasification – 10 kW to 2 MW; medium efficiency; 120 MW installed capacity

• Feed-in-tariffs in range – 8-12 cents/kWh• Emerging – Pyrolysis and AD• Drivers – rural power needs, small scale power needs• Bottlenecks – biomass supply chain, price of biomass

• Opportunities for foreign companies – Technology transfer (esp for small scale biomass), research collaboration in energy crops, developer

Biomass Focus

• National Biofuels Mission– Blending targets for both biodiesel and ethanol

• Biodiesel– India is a diesel country – (65 million T diesel vs 17 million T gasoline)– Total installed capacity – 1.2 million T– Production – Less than 100,000 T– Biodiesel facing serious pressure on both supply side and demand side (price)

• Ethanol– India second largest sugar producer in the world (350 million T per annum of sugarcane; Brazil –

645 million T)– 95 million gallons (0.32 million T) of fuel ethanol production – 2010– 5% blending will require about 150 million gallons (0.5 million T)– Tussle between use of ethanol for fuel vs. spirits vs. industrial use

• Opportunities for foreign companies: Research in oilseeds and cellulosic ethanol, research in increasing seed yield for crops such as Jatropha

Biofuels Focus

• Potential – 15000 MW• Status – 2950 MW (20% of total)• Grew at about 10% CAGR between 2005-2010; expected to grow at about 13% between

2010-2015• Drivers

– Power requirements in remote locations– Availability of small hydro resources in these locations– Requirements of baseload power

• Bottlenecks– Long approval times (over 3 years)– Very geography dependent

• Run of river and hydrokinetic in its nascent stages• Large companies more interested in large hydro• Number of companies in small hydro keen on selling their licences

• Opportunities for foreign companies – equipment and component supply, especially more efficient turbines and accessories

Small Hydro Focus

• Potential – 148700 MW• Status – 37400 MW installed capacity• Drivers

– Need for large-scale baseload power– Need for large-scale low cost power

• Bottlenecks– Large ecological imprint– Long time for starting off– Large capital requirements– Geological surprises

• Companies in large hydro – (Govt) SJVN, NHPC, Damodar Valley Corp., (Private) Tata Power, Reliance Power, Jaiprakash Power

• Opportunities for foreign companies – equipment and component supply, ability to bring in large-scale financing

Large Hydro Focus

• 42 million T of municipal solid waste (MSW)• 200 million T of agricultural waste• Indian cities alone generate 32 billion liters of sewage a day.• A wide variety of industrial waste, including animal waste from poultry and cattle farms• Potential – 17 MW for MSW and 29 MW for industrial waste• Drivers

– Need to dispose of waste in an environment friendly manner– Need to incentivise such waste disposal

• Bottlenecks– Complex logistics– Technology still evolving– Need to deal with government in many cases, slowing down processes

• Opportunities for foreign companies – technology transfer (esp gasification related domains), innovative tech to deal with distributed energy production using waste, tech for treatment for hazardous waste

Waste to Energy

RE Power Source Opportunities

Solar PV EPC, component/equipment mfg, analytics, rooftop , custom solutions for specific industries

Solar CSP EPC, tech transfer in storage

Wind Component mfg, forecasting and analytics, power conditioners

Biomass Small scale biomass power systems, energy crops research, waste heat usage

Biofuels R&D in oilseeds including Jatropha/pongamia, cellulosic ethanol, biomass to liquids (BTL)

Small Hydro Equipment and component supply (low head turbines…), hydrokinetics

Large Hydro Equipment and component supply, financing

Waste to energy Proven MSW to energy solutions, solutions for distributed waste to energy

Opportunity Matrix for EU Cos.

Highlights of Opportunities for EU

• Opportunities across the value chain but more on upstreamR&D/tech transfer ->Component manufacturing->Equipment supplies->Power plant development->Financing->Training and support

• Tech transfer opportunity significant across all sectors

• Specific opportunities for companies in OEM and component manufacturing sectors – positive Indian government policies for component manufacturing and local content

• Engineering/design expertise required for Solar PV and CSP

• 2nd gen tech for biodiesel and cellulosic ethanol, including thermo-chemical solutions

• Waste to energy is an important pain point where technology partnerships are being sought – esp. for MSW

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Opportunity Dimensions

• Industry specific opportunities – SPV for telecom industry (mobile towers) , cogen at sugar industries, waste tyre to energy for transport…

• Diesel replacement – D2R Blueprint from EAI (25-30 GW of power from diesel)

• State and central - Opportunities in solar at central and state policies; states could play a bigger role in future (esp for solar)

• RPO market – could give rise to a strong private third party consumer market for renewable power

• Distributed power - Niche opportunities in small-scale, distributed power – waste to energy, fuel cells, biomass gasification, biogas…

• Innovative business models – that could lower the risk of new technology adoption (a la Sun Edison?)

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Policies and Success Factors

Foreign Direct Investment in Renewable Energy

2006-07 2007-08 2008-09 2009-10 2.11

43.1585.27

497.91

All investments in $million

CAGR - 300%

Indian Govt. Policies and Regulations Relevant to Foreign Investors

• National Solar Mission

• Foreign Direct Investment

• Electricity Act 2003 and Open Power Access

• Renewable Purchase Obligations (RPO) and Renewable Energy Certificates (REC)

• Local content requirements

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RECs and RPOs

RPO/REC (all renewables)

• Long term, sustainable, market driven

• REC trading started

• Voluntary purchase as part of corporate social responsibility (CSR) also reported

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Success Factors

• Get a feel for the market before you get in big time – short trips to meet stakeholders, a detailed market scan…

• Customise your technology and business model to India

• Have local partners who can navigate the business and regulatory ecosystem

• Many large Indian companies keen on technical joint ventures (especially solar PV), so get in early and forge those partnerships

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All the best!

Narasimhan SanthanamEnergy Alternatives India – EAI

Mob: [email protected], www.eai.in

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