renewable energy market & policy for nzebs in india...india: a renewable energy future india is...

© Confederation of Indian Industry

MAITREE ProgramWebinar

29th November, 2019

Renewable Energy Market & Policy for

NZEBs in India


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).


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


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


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

© Confederation of Indian IndustryFINPRO

MARKET SCENARIO & POLICY

FRAMEWORK


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


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


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


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


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



❖Wind:

➢ Competitive bidding in place of previous feed-in tariff regime

➢ Reduced generation costs



❖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.


❖RPO

➢ Solar and non-solar RPOs

➢ CERC policy very strict and binding



❖ 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


SUMMING UP

Technology is more robust, policy framework is strong, asset viability is strengthened


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


SOLAR ENERGY


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


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




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


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


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


BUSINESS MODELS


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


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


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.


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


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


NET METERING


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.


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


RENEWABLE PURCHASE

OBLIGATION


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


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


CASE STUDIES OF NZEBS IN INDIA


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


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


❖ 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


❖ 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


❖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


❖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


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

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