Uptake of Renewables in Indian Market

Sandip Das,

Head of Renewables, PXIL, India

Power Exchange India Limited

5th November 2012

Renewable Energy in India - Development

� The role of New and Renewable Energy has assumed significance in recent

times with the growing concern for India’s Energy security

� Development of focused approach:

― Commission for Additional Sources of Energy (CASE) in 1981

― Department of Non-Conventional Energy Sources (DNES) under Ministry of

Energy in 1982

― Ministry of Non-Conventional Energy Sources (MNES) in 1992

― MNES renamed as Ministry of New and Renewable Energy (MNRE) in 2006

Commission for

Additional

Sources of

Energy (CASE)

1981

Department of

Non-conventional

Energy Sources

(DNES)

1982

Ministry of Non-

Conventional Energy

sources (MNES)

1992

Ministry of New

and Renewable

Energy (MNRE)

2006

Development of focused approach

NAPCC and National Tariff Policy

NAPCC

� National Action Plan on Climate Change (NAPCC) released by Prime Minister of India

on June 2008 with an aim to continue India on a high growth path along with taking

responsibility on climate change

� Aims to achieve target through 8 missions

� National Solar Mission

� National Mission for Enhanced Energy Efficiency

� Six National Missions on Water, Sustainable Habitats, the Himalayan

Ecosystem, Sustainable Agriculture, Green India and Strategic Knowledge on Climate

Change

� National Bio-Energy Mission to be added in 12th 5-year plan (FY 12-13 to 16-17)

� Recommended increasing the share of Renewable energy to 10% by 2015 and 15% by

2020

National Tariff Policy

� The Amendment to National Tariff Policy-2006 issued in Jan-2011 has specified

Purchase from Solar energy at 0.25% by FY 2012-13 and to reach 3% by FY 2021-22

Renewable Energy in India – Promotion of Investments

� Renewable Energy sector (mainly Wind) took off in mid 90’s after

Government of India(GoI) started the Accelerated Depreciation Scheme as

a Tax incentive

� Preferential Tariff determined by State Electricity Regulatory Commission

(SERCs) was the only way to sell Electricity

� With focus on capacity addition rather than generation, Renewable energy

generation below International standards

� In December 2009, Ministry of New and Renewable Energy(MNRE) initiated

Generation Based Incentive(GBI) scheme

― Indian Renewable Development Agency (IREDA),the Financial Institution for

Renewable projects also is the central agency for implementing the GBI

scheme

� Migrating towards a Renewable Purchase Obligation (RPO) regime where

Obligated entities will meet their targets through REC market and

Preferential Tariff

RE Technology12th Plan(2012-17) capacity

addition targets (MW)

Wind Power 19255

Solar Power 9410

Small Hydro Power 2799

Biomass Power 4250

Total 35714

Nuclear , 5

GW, 2%Hydro , 39

GW, 19%

Renewable

Energy , 25

GW, 12%

Coal , 118

GW, 57%

Gas , 19

GW, 9%

Diesel , 1

GW, 1%

Total Installed Capacity as on Sep 2012

Wind , 17967

MW,

69.5%

Small Hydro,

3434 MW,

13.3%

Biomass,

1210 MW,

4.7%

Bagase , 2110

MW,

8.2%

Solar,

1044 MW,

4.0%

Municipal

Waste, 94

MW,

0.4%

Renewable Installed Capacity as on Sep 2012

Power Sector Capacity Distribution in India

Renewable Energy Potential (GW)

Source: Central Electricity Authority (CEA) website

Jawaharlal Nehru National Solar Mission(JNNSM)

� National level bidding to set up Solar Power plants at a single location to achieve economies of scale

� JNNSM Phase-I target of 1000 MW grid connected Solar Power plants to be completed by 2013

� 131 projects of 802 MW in Batch-I and 28 projects of 350 MW in Batch-II

� Financial closure achieved by 35 projects of 610 MW in Phase -I Batch-I

� Grid Connected Solar capacity increased from 10 MW in FY 09-10 to 1044 MW in FY 11-12

� Record low tariffs of 15 cents/unit in JNNSM Phase-I Batch -II

– Grid Parity likely to be achieved much before FY 16-17

� Charanka Solar Park in Gujarat- Largest Solar Park in Asia with current capacity of 214 MW with total

planned capacity of 500 MW

Particular Phase I (2010 - 13) Phase II (2013 - 17) Phase III (2017 - 22)

Utility Grid power, including Roof

top1100 MW 4000 - 10000 MW 20000 MW

Off Grid Solar Applications 200 MW 1000 MW 2000 MW

Aggregation of Demand to provide economies of scale

Renewable Energy Certificates (REC) - Introduction

� REC - A Market based instrument

– Distribution of RE resources not uniform

across the country

– In past, Feed in Tariffs (FiTs) set by various

SERCs was the only option

– Renewable rich states reached their

saturation level and had no obligation to

purchase costly Renewable energy

beyond their Renewable Purchase

Obligation (RPO) target

– Problem overcome by creating a National

REC Market where each state has to

meet its RPO either through FiTs route or

the REC route

� A vibrant and liquid National Market

for participants to carry out RE

transactions

RPO Target of various States for

2012

REC Mechanism – Conceptual Framework

RE Generation

Sale at Preferential Tariff

Distribution licensees

Sale under REC Framework

Electricity Component

Distribution licensee at a Price

not more than Average Power Purchase Cost

Third Party sale at mutually agreed

Price

Sale through Power Exchange

Renewable Component

Obligated Entities (Sale through

Power Exchange)

REC Market

� 1 REC = 1 MWh

� Floor & Forbearance Price declared till FY 16-17

� Rapid Growth in RECs issued from avg. of 87000 in

FY 12 to avg. of 0.34 Million in H-1 of FY 2012-13

� Market envisages to trade 0.5 Million REC / Month

by end of FY 2012-13

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0

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0.5Monthly REC Issued (in millions)

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0

0.05

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g-1

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Se

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Monthly RECs traded (in millions)

ParticularFloor Price

(in INR/REC)

Forbearance

Price

(in INR/REC)

Non-Solar 1500 3300

Solar 9300 13400

Issues

� Need for single window clearances to fast track commissioning

of RE based Power projects

� Setting up of evacuation facilities for full utilization of RE Power

� Strengthening of enforcement and monitoring mechanism for

meeting of RPO obligations of various states

� Emerging demand from generators to extend the tenure of REC

scheme to be co terminous with loan tenures

� Better forecasting technologies for RE power - Will help in

scheduling of RE power

Path Ahead

� Wind largest contributor (70%) to RE

portfolio of India

� Estimated Potential of 100 GW in wind at

80m Hub Height

� Focus on utilisation of Capacity by improving

PLF of Wind

� Biomass contributes around 5 % of total RE

portfolio of India - Strategic importance in

Urban areas for managing Municipal Waste

� Focus on building of ‘Green Energy

Corridors’ with a cost of $8 Billion to

evacuate Renewable energy from states of

Tamil Nadu, Karnataka, Andhra

Pradesh, Gujarat, Maharashtra, Rajasthan

and Himachal Pradesh

� Establishment of Renewable Energy

Management Centers(REMC) to co-ordinate

with the System Operators

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