RENEWABLE ENERGY SECTOR

CONTENTS Renewable Energy : Indian scenario Renewable Energy: Tamil Nadu Scenario Investment Opportunities Government Support

Renewable Energy – Global Scenario Renewable energy contributes 1/5th of the global power production. It has the potential to satisfy 100% of the growing global energy demands Renewable energy share (including-hydro) of global electricity production is 19%

Renewable energy has had a healthy growth owing to increasing focus through policy shifts

Global Renewable energy generation by origin

Number of states/province/country

19.0% Fossil Fuels Nuclear Power

2.6% 78.4%

Renewable energy

Bio-fuel obligations Heat Obligations/mandates Tendering Policy RPS / quota policies Feed-in Countries with Policy targets

2013

0

India ranks #6 in the global RE capacity with an installed capacity of 27GW (without including hydro)

Renewable power capacity (GW)

India Italy Spain Germany US China

27 31 32 78 93 118

100

150

200

Global Renewable Power Generation 1560 Gigawatt

International Energy Outlook 2011 forecasts energy consumption growth by 53% between 2008 and 2035. It is expected to reach 770 quadrillion Btu

50

Wind Power

Concentrating Solar Thermal Power Solar PV

811

Geothermal 2003

2013

Bio Mass

Renewable Energy - Indian Scenario Renewable energy sources currently contribute 30% of the installed capacity and is expected to increase to 34% by 2017 Fuel wise generation mix, 2013 Nuclear. 2%

Installed Capacity Mix in India (GW), 2014 4.8

Hydro. 18% 21.1

Renewable . 12% Thermal. 68%

72.5 176.1

3.8

40.8

4.0 0.1

Thermal Wind Power

Nuclear Small Hydro Power

2.6

Hydro Biomass Power

• For the period 2012-17, the target capacity addition for power sector is 118 GW out of which the target addition for renewable energy is 30,000 MW. This implies that 25% of the planned capacity addition is in the renewable segment

Fuel wise generation mix by 2017 – projection Renewable . 13%

Nuclear. 3% Hydro. 21%

Thermal. 63%

Section 2 – Indian Scenario

Renewable energy investment stemmed from the landmark Electricity Act 2003 and the subsequent policies & instruments. •Mandated State Electricity Regulatory Commissions (SERCs) to Electricity promote power generation from renewable sources through proper grid connectivity and open access Act 2003 •Fix certain minimum percentages for purchase of renewable power

National Electricity Policy 2005

•Further provided for progressive increase in generation of electricity from renewable sources and supported purchases by distribution companies through competitive bidding process

•Provided for fixation by SERCs of a minimum percentage of Renewable Purchase Obligation (RPO) from RE sources taking into Tariff account availability of such resources in the region and its impact on Policy 2006 retail tariffs and procurement by distribution companies at preferential tariffs determined by the SERCs

National Action Plan on Climate Change 2008

•Outlined existing and future policies and programs addressing climate mitigation and adaptation •NAPCC has advised that starting 2009-10, RPOs be set at 5% of total grids purchase, and be increased by 1% each year for 10 years.

Policy Instrument

Positives for Private sector investment

Feed in Tariffs/ Preferential Tariffs

Financial as well as economic costs and benefits of RE are not yet factored in FIT.

Accelerated Depreciation

Result of which, there is commercial viability in this business

Generation Based Incentives

Avenues for additional guaranteed revenues for project developers

Renewable Purchase Obligation

Readymade market for renewable power sources

Renewable Energy Certificates (REC’s)

Helps renewable power developers to trade REC's and realise the value of power

Carbon Trading

Additional revenue stream for developers to increase their financial returns

Tax Incentives

Improved Return on Equity for developer

Renewable Energy - Tamil Nadu Tamil Nadu is a pioneer in harnessing its renewable energy potential in India as compared to its peers. #1 State in renewable energy capacity

Renewable Energy Capacity (MW)

among all the Indian States

CAGR – 7%

6636

7504

7999

8219

#10 global installed capacity of wind power generation units and also #1 in India. #2 installed capacity of cogeneration power plants in the country 39.6% of the total power capacity from renewable energy sources

2011

2012

2013

2014

Tamil Nadu’s Competitive Advantage Wind power in Tamil Nadu – Advantageous geographic position and progressive policy initiatives Wind power passes in Tamil Nadu

S. No.

Coimbatore

Annual Average Wind Speeds

1

Palghat Pass, Coimbatore, Erode

18-22

2

Shencottah Pass, Tirunelveli, Tuticorin

18-22

3

Aralvoimozhi Pass, Kanyakumari

19-25

4

Kambam Pass , Theni District

19-25

5

Palghat Pass, Coimbatore, Erode

18-22

Progressive policy initiatives

Dindigul Theni

•

The regulations allow for sale to third parties through open access.

•

Wheeling charges for transmission of power using the network is at 40% of the conventional power.

•

The State has allocated USD 377 Million and USD 198 Million in two phases for provision of transmission capacity for wind and solar sources

Ramnathapuram Tirunelveli Thoothukudi Kanyakumari

Areas

Solar Power in Tamil Nadu – Geographic advantage of tropical region and initiatives to become national leader in solar power by achieving 3000MW Geographical Advantage •

•

India has solar incidence in the range of 4 – 7 kWH/sq.m./day, while Tamil Nadu enjoys solar incidence of 5.5 - 6 kWh/sq.m/day. This sector which has hitherto been untapped with a cumulative capacity of only 119.06 MW.

•

Tamil Nadu is pioneer in announcing net metering policy

•

Hence, Tamil Nadu is a potential destination for solar investment

Renewable energy sector • Tamil Nadu Global Investors Meet 2015

Key features of solar energy policy 2012 Investment Outlay •The State has an outlay of INR 55,000 crore (USD 9.16 Billion) for solar energy sector alone. This is more than 10% of the total allocation for Power sector

Solar rooftop programme •Solar rooftop has been made mandatory for all new State Government buildings. PV system will also be installed in old buildings in phased manner

Tax Concessions •Refund of 50% of the VAT component on capital goods (if these are manufactures in Tamil Nadu) exclusively for captive power generation •Electricity tax exemption for sale to utility & captive sales for 5 years

Other features •Domestic roof top installations with support from the State Government • Net metering policy to encourage more number of installations •Compulsory roof tops in all government buildings •Solar water heating systems in public building and industrial buildings •A total capacity of 1500 MW to promote development of solar capacity (of varied capacities ranging from 1MW to over 10 M.

Biomass in Tamil Nadu – USD 200 million opportunity of untapped potential

Capacity in MW

Biomass Capacity/Potential in TN Features of the Biomass power policy under the TNERC regulations.

272 500 228 Installed Capacity

Untapped potential

•

Any company/corporate body/association/body of individuals can set up a biomass power generation unit



The applicable tariff for the current year is under revision. However, the tariff for the last year is Rs 4.85 per MW.

Total

•

Available potential is 272MW.

•

As per TANGEDCO, the approximate cost of setting up a biomass • facility is INR 4.45 crore per MW (USD 0.74 Million). Therefore an investment potential of USD 200 Million.

•

The scheme allows for 3rd party sale and open access. Wheeling charges at 50% of conventional power

Cogen in Tamil Nadu – Raw material availability and investment policies Raw material availability

TNERC policies promoting investment

•

The raw material for power generation using cogeneration plants is bagasse which is generated form sugar factories.

•

Any company/corporate body/association/body of individuals can set up a biomass power generation unit

•

Tamil Nadu is the third largest sugar producer in India with 43 factories and it accounts for about 10% of the total production.

•

The applicable tariff for the current year is under revision. However, the tariff for the last year is Rs. 3.76 per kWHr.

•

There are 29 plants in the State that together account for the capacity of 659 MW of cogen power capacity.

•

The scheme allows for 3rd party sale and open access.

•

Wheeling charges at 7.5% of energy wheeled for Low tension services and 5% for others.

•

This capacity is spread across the State in the delta region, Districts of Erode, Coimbatore, Tirunelveli etc.

Opportunities for Investment in Renewable Energy in Tamil Nadu Tamil Nadu is conducive for investment across the spectrum in the renewable energy sector

Development of windsolar hybrid installations and biomass projects

Offshore wind projects development

Development of solar PV manufacturing capabilities

Development of large scale solar and wind parks

Tidel projects first at pilot scale, and then at commercial scale

Government Support Tamil Nadu been the most forward looking State in terms of sustainable power development This has been achieved largely on account of the State’s focused policy making and drive to capitalize on the opportunity.

Energy Department Tamil Nadu Electricity Board (TNEB) Limited

Tamil Nadu Generation and distribution Corporation Limited (TANGEDCO)

Tamil Nadu Transmission Corporation Limited (TANTRANSCO)

Tamil Nadu Energy Development Agency (TEDA) - Set up in 1984 to migrate the State from fossil to renewable energy

Tamil Nadu Power Finance and Infrastructure Development Corporation Limited (TNPFIDC) Chief Electrical Inspector to Government (CEIG)

The current programmes as part of the policy initiative.. CM’s Solar Powered Green House Scheme 0.3 Million houses will be constructed with solar powered lighting systems from 2011-12 to 2015-16 in rural areas

CM’s Solar Rooftop Capital Incentive Scheme A capital subsidy of $300 (INR 20, 000) per kW of installation over and above the GoI’s 30% subsidy under the MNRE scheme

Bio Energy Bio energy program's objective is to optimally utilize the vast biomass resource for power and cogeneration through biomass gasifier & biomass plants

Solar Energy The State’s ambitious solar energy policy 2012 is aiming to add 3000MW of solar in Tamil Nadu by 2015 which is ~16% of the total installed capacity in Tamil Nadu

Wind Energy Wind is a success story of Tamil Nadu. The State has identified Kambam pass in Theni District for wind energy development. Currently 3 passes are in operation.

Wind Solar Hybrid System A wind solar hybrid is a way to offset the seasonality of these power sources. Also the cost of the hybrid is 40-50% cheaper than pure play solar systems.

Additional Chief Secretary - Government of Tamil Nadu Industries Department Phone: 91-44-25671383 Fax: 91-44-25670822 Email: [email protected], [email protected] Nodal agency Tamil Nadu Industrial Guidance and Export Promotion Bureau 19-A, Rukmini Lakshmipathy Road, Egmore, Chennai-600 008 Phone: 91-44-2855 3118 Email: [email protected]

Visit us at www.tamilnadugim.com