Indian Solar Power Development:Opportunities

ByDebashish Majumdar

Chairman & Managing Director

Indian Renewable Energy Development Agency LimitedNew Delhi ( India )

Washington DC Nov 5, 2009

Contents

Overview: Power & RE Sector

IREDA

Preview: Solar Mission

Opportunities

Indian Economy Fastest growing free market democracy 4th largest economy Average GDP growth @ 8% 2nd largest Rail network, 334 airports 12 major ports & 187 minor ports 400 Million telephone connections 5th largest power market Strong IT & Engineering base

Current Power Scenario

• Installed Capacity :150 GW • Power Growth : 6%• Power Trading : 3%• Per capita consumption:700Kwh• Transmission Capacity: 21 GW

Power Mix

Hydro 24%

Nuclear 3%

Renewable10%

Gas11%

Thermal 52%

Thermal81,484 MW

Hydro 36,917 MW

Gas 16,386 MW

Renewable15,141 MW

Nuclear4120 MW

Challenges

Huge Unmet Demand Peak Deficit – 12% Half of population lacks power

Energy Security Dependence upon Imports

Low-carbon/ Sustainable Growth 4th Largest Carbon Emitter

RE Imperative Enormous potential Equitable distribution Promotes Energy Security Bridges demand-supply gap Low carbon growth trajectory Provides lifeline energy in rural areas DSM measure in Urban areas Contains urban migration

RE Potential & Achievements

SectorPotential( In MW)

CapacityAs on 30 Sept 2009

Wind 45195 10464

Small Hydro 15000 2461

Cogeneration 5000 1155

Biomass 16881 773

WTE 2700 59

Total: 84,776 14,912

Solar PV 4^

(^) Excluding decentralized systems

Policies for Renewable Power

• The Electricity Act 2003, mandates to:• Create competition, protect consumers’ interest & power for all.• Facilitate private sector investments• Permit stand-alone systems – rural areas• Provide open access• Determination of preferential tariff• Specify minimum percentages for purchase of renewable power.

17 States have announced RE Policy

Future Policy Direction Introduction of Generation Based Incentives. Introduction of Penal provisions for not meeting RPOs. Introduction of Tradable Renewable Energy Certificates.

Indian Renewable Energy Development Agency Limited

At a Glance

Evolution of IREDA

INCEPTION Incorporated under the Companies Act on 11th March,

1987 to promote, develop and extend financial assistance for Renewable Energy and Energy Efficiency/ Conservation Projects.

OBJECTIVE Extend financial support to Renewable Energy, Energy

Efficiency & Conservation projects

MOTTO Energy For Ever

Be a pioneering, participant friendly and competitive institution for financing and promoting self-sustaining investment in energy generation from renewable sources, energy efficiency and environment technologies for sustainable development.

Mission

Areas of OperationSectors being financed: Wind Small & Medium Hydro Biomass Power &

Cogeneration Solar Waste to Energy Energy Efficiency &

Conservation Bio Fuels/ Alternate Fuels

Project Financing Schemes Equipment Financing Schemes Financing Through Intermediaries

Highlights

Dedicated FI for RE Financing – Unique in the World

Specialized knowledge of RE / EE sector Recognized internationally – High Brand Equity Multilaterals/ Bilaterals prefer working with

IREDA Perceived as a leader in the sector Profit earning & dividend paying Rated Excellent for FY 2007-08

Expected Rating Excellent for FY 2008-09 NBFC as per RBI Classification ISO 9001:2000 Certified Company

Successes

Developed RE through innovative financing.

Encouraged entry of private sector in RE.

Catalyzed market development leading to commercialization of RE

Helped in creating capabilities in : manufacturing design & engineering O&M

Assisted in framing of conducive RE policies

Highest share in RE Financing.

Cumulative Performance

No. of Projects Sanctioned : 1892 Projects Total Loan Sanctions : 2290 Million US$ Loan Disbursements : 1270 Million US$ Sanctioned Power Capacity : 3616 MW Conventional Fuel Replacement :1.3 mln MTCR/Yr

As on 31/03/2009

Resource Base

Authorized Share Capital : 221 Million US$

Paid-up Capital : 115 Million US$ Net-worth : 193 Million US$ Domestic Borrowings : 172 Million

US$ International Borrowings : 205

Million US$

International Partners Govt of Netherlands, 1991 : 18 Million

Dutch Guilders World Bank (1st LoC), 1993 :$ 145 Million DANIDA, 1993 :$ 15 Million Asian Development Bank, 1997 :$ 100 Million KfW, Germany (1st LoC), 1999 :€ 61.35 Million World Bank (2nd LoC), 2001 :$ 110 Million KfW, Germany(2nd LoC), 2008 :€ 50 Million NORDIC Investment Bank : $ 50 Million EXIM Bank, USA : $ 50 Million

Lines of Credit in Pipeline KfW, Germany(3rd LoC) :€ 19.9 Million AFD (France) :€ 100 Million JICA (Japan) :$ 100 Million ADB :$ 200 Million

National Solar Mission

(A quick preview)

Aims & Objectives

Aim: Setting up an enabling environment for solar technology penetration in the country both at centralized and decentralized levels

Objective: Establish India as a global leader in solar energy, by creating policy conditions for its diffusion across the country as quickly as possible

Expectation

20,000 MW Solar Power

by

2020

Expected Policy Enablers (I) Utility scale power generation

(including Roof Top)

-Solar specific RPO (3% by 2022) -Generation Based Incentives (GBI) to

reduce impact on tariff Off-Grid power generation

-Capital subsidy for new applications -Soft re-finance facility via IREDA

Low-cost quality Manufacturing-Capital Subsidy for solar thermal (already

exists for Solar PV)

-Soft loans from IREDA

Expected Policy Enablers (II)

Promoting Solar Collectors (Water Heaters)

-Provisions under building bylaws-Certification/ rating

Solar Thermal Demonstration Projects-Storage & Hybrid Mode

R&D Funding under PPP mode for:

-Efficiency improvements-Cost reduction-Energy Storage

Expected Policy Enablers (III)

Fiscal:

- Customs and Excise Duty exemptions on specified materials, equipment and systems

Opportunities

Opportunity: Solar Manufacturing Low base – 700 MW Duty exemptions 100% FDI permitted Cheap skilled workforce 20 GW market by 2022 (NSM) Single window clearance SIPS scheme for Fab units Dedicated export zones (SEZ)

Opportunity: Solar Generation

Mission mode approach Attractive tariff (GBI) Tax breaks Low-cost finance Long term PPA Revenue – CDM & REC 100% FDI permitted Best Practices from Wind

Investment Opportunity

Sector Capacity Addition* TotalCost/MW Investment

s

Unit MW MW MW US $Mn US $Bn

Wind 10,000 20,000 30,000 1.00 20.00

Solar PV  -- 15,000 15,000 3.50 52.50

Solar Th  -- 5,000 5,000 2.50 12.50

SHP 2,000 8,000 10,000 1.00 8.00

Biomass 2,000 7,000 9,000 1.00 7.00

TOTAL 70 GW 100.00

US$100 Bn Opportunity

(*) Estimated Figures

India: Investment Opportunities

Strong and clear policy framework providing enabling environment.

Structures in place to facilitate power trading, open access etc.

Power sector growth (5%) yet to catch up with GDP growth rate (8%) – creating market demand.

Large supply-demand gap in power sector.

Very large potential of RE yet to be tapped.

Mature financial markets

Advantage IREDA

IREDA has emerged as a dominant player and continues to maintain its position in serving RE & EE sectors.

Self-sustaining institution, earning profits since inception.

Has earned the trust and confidence of prestigious institutions like World Bank, GEF, ADB, KfW etc.

Ability to finance wide range of projects in RE & EE sectors.

IREDA welcomes you to join hands to create a better tomorrow.

Thank you !

Indian Renewable Energy Development Agency Limited 3rd Floor, August Kranti Bhawan, Bhikaiji cama Place, New Delhi – 110 066, India

Email : cmd@ireda.inwww.ireda.in

National Solar Mission (NSM)

Applications Units 2013 2017 2022

Grid MW 1000 4000 20000

Off-Grid MW 200 1000 2000

Thermal Mn m2 7 15 20

Manufacturing MW/yr 1500 5000 10000

RE Investments

Parameters 2007 2008 Growth

Total Investments USD 3.3 Bn USD 3.7 Bn 12%

VC & PE USD 133 Mn USD 493 Mn 280%

Foreign Exchanges USD 756 Mn -- --

Domestic Bourses USD 646 Mn USD 74 Mn (85%)

Merger &Acquisitions

USD 585 Mn USD 585 Mn --

Wind USD 2.2 Bn USD 2.6 Bn 17%

Solar USD 18 Mn USD 347 Mn 1800%

SHP USD 135 Mn USD 543 Mn 300%

Bio-Fuel USD 251 Mn USD 49 Mn (80%)

Asset Finance USD 2.5 Bn USD 3.2 Bn 25%

Solar Providence

Sun: Worshipped since Ages

Solar Advantage for India

300 sunny days in a year 5-7 kWh/m2

Large scale Solar Thermal Plants SPV providing lifeline energy SPV for Railways, Telecom towers DSM in urban areas

SPV Roof-tops/ Battery charging Solar Heating & Cooling systems

Source: IBM-PLI – Global Investment Locations Database, GILD

India: Ideal Investment Destination

BusinessIndiaUSAUK

China

FinancialUSA

ChinaUK

India

MotorChinaUSA

IndiaPoland

ICTIndiaUSA

ChinaUK

ElectronicsChinaIndiaUSAUK

PharmaUSA

ChinaIndia

UK

FDI of US$ 35Bn

2008-09