28jul_astonfield_power plants in india

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July 2010

Astonfield Renewable Resources LtdSolar power plants in India : achieving 1 GW +opportunities and challenges


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Indias Power Sector : Points to Ponder

Current power mix is fossil fuel dependent and hasfollowing negatives

Price volatility/ subsidy dependent

Energy security Impact on environment

Long gestation period

Utility scale carbon-less SOLAR POWER, with NILenvironment impact is need of the day to support

Sustainable rural development (electricity inrural areas)

Use existing T&D network

Decentralized power generation at remotelocations across the country

Replacement for existing DG sets being usedfor irrigation where subsidised cost is Rs 15/kwh

Utility scale solar power addresses Indias growing energy needs

Indias Installed Generating CapacityTotal = 152,000 MW


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India Faces Significant Energy Challenges in

Achieving Its Development Goals Over the Next 20 Years

StrengtheningEnergy Security

Traditional thermalplants supply over 60%of the nations currentpower

India imports over 65%of its current petroleumand coal requirements,expected to grow asdomestic coal reservesdiminish

25GW of captive dieselgeneration has sprung up

to support industrialgrowth 90+% of fuelimported

StrengtheningEnergy Security

Traditional thermalplants supply over 60%of the nations currentpower

India imports over 65%of its current petroleumand coal requirements,expected to grow asdomestic coal reservesdiminish

25GW of captive dieselgeneration has sprung up

to support industrialgrowth 90+% of fuelimported

Electrifyingthe Masses

42% of the populationhas no access toelectricity (90 millionhouseholds)

Most traditional thermaland hydro plants locatedfar from distributedpopulations, contributingto high transmissionand distribution lossesof over 27%

Electrifyingthe Masses

42% of the populationhas no access toelectricity (90 millionhouseholds)

Most traditional thermaland hydro plants locatedfar from distributedpopulations, contributingto high transmissionand distribution lossesof over 27%

Meeting RisingPower Demand

Historically there hasbeen a 10GW powershortage per annum,with a 10.5% peak timeelectricity shortage

Over the next 5 years,per capita consumptionis expected to jumpfrom 580kWh to1000kWh, driving totalshortage above 25GW

Meeting RisingPower Demand

Historically there hasbeen a 10GW powershortage per annum,with a 10.5% peak timeelectricity shortage

Over the next 5 years,per capita consumptionis expected to jumpfrom 580kWh to1000kWh, driving totalshortage above 25GW

Source: Ministry of Power, President of India Energy Review

Clean, locally-sourced renewable energy will be essential if India is toachieve targeted long-term GDP growth of 9-10% p.a

Clean, locally-sourced renewable energy will be essential if India is toachieve targeted long-term GDP growth of 9-10% p.a


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President of India Energy Review:Demand Increase Will Drive GreaterEmphasis on Renewable Energy

President of India Energy Review:Demand Increase Will Drive GreaterEmphasis on Renewable Energy

The Government of India Has Recognized That Renewable

Energy Must Play a Critical Role in Addressing the Energy Gap

Source: Ministry of Power, President of India Energy Review

147,716MW

400,000MW

Thermal

Diesel 1%Gas 10%Coal 52%

Nuclear 3%

Hydro 25%

Renewables 9%

Solar


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Solar power will be a significant source of global energy mix in

future , with critical mass building after reaching grid parity

Oil

Coal

Gas

Nuclear Power

Hydroelectricity

Biomass(traditional)

Biomass(advanced)

Wind

Solar power(photovoltaics andsolar thermalgeneration)

Solar thermal

(heat only)

Other renewables

Geothermal

200

400

600

800

1,000

1,200

1,400

1,600

0

2000 2010 2020 2030 2040 2050 2100

PrimaryEnergyUse(EJ/a)

Source: Climate Change

Solar subsidies

required

Solar hits

grid parity

Solar cheaper than

conventional energy


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With government support starting in 2009, solar can

achieve Peak Grid Parity as early as 2014-15

Source: Stephen ORourke/Deutsche Bank / Astonfield Analysis

7%

6%

PHASE I(Govt Policy

very important)

PHASE II(Post- Govt Policy)

5%

4%

India Estimated priceof peak electricity today:Rs. 6.50/KWh

Convergence /Peak Grid Parity

Post 2014, India can substitute expensive sources such as diesel with solar to meet growing peak power demand

Astonfield estimates that base load grid parity can be achieved by 2020-23 - beyond that point, abundantlyavailable domestic solar power will be cheaper than imported coal, positioning India to be energy independent

*

* Assumes that conventional power tariff escalates at roughly 5-7% per annum


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Regulatory and Policy Developments in Recent Years Have

Increasingly Supported the Growth of a Solar Sector in India

Ministry of New andRenewable Energies (MNRE)

announces 50MW programwith tariff of Rs.15/kWh

Leading states announceindependent whollystate-sponsoredprograms:

Gujarat 500MW

Rajasthan 50MW

Tariffs declared by stateshover around the Rs.15/kWh range

Prime Minister announcesJawaharlal Nehru NationalSolar Mission targeting20,000MW by 2022, with

Phase 1 of 1,000MW by 2013backed by Central budget

Mission is treated as a corecomponent of Indias NationalAction Plan on ClimateChange and as a criticalenabler of sustainable growth

Tariff increases fromRs.15/kWh to Rs.17.91/kWh

India has seen a movement from dispersed,small-scale programs to a cohesive, large-scale national platform

India has seen a movement from dispersed,small-scale programs to a cohesive, large-scale national platform


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Jawaharlal Nehru National Solar Mission

Government of India announced Jawaharlal Nehru National Solar Mission in November2009 to promote solar power in the Country

Capacity addition in JNNSM envisaged in 3 phases

Phase 1 : 2009 -13 : 1100 MW

Phase 2 : 2013 17 : 3000 MW

Phase 3 : 2017-22 : cumulative capacity addition of 20000 MW by 2022

Under phase 1 , program designed as under :

Equal split of 50: 50 between solar PV and solar thermal

Existing projects under development meeting specified criteria eligible for migrationunder JNNSM , balance capacity to be allocated on Expression of Interest basis

Draft EOI guidelines limit capacity allocation to 5 MW per developer for PV : benefits ofeconomies of scale might be hampered


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Jawaharlal Nehru National Solar Mission : Challenges for

Developer

Achieving Financial Closure :

Bankability of the Power Purchase Agreement : Deemed Generation, PaymentSecurity Mechanism

Economies of scale

Sourcing restrictions under EOI

Tariff for solar PV plants in various states

JNNSM M.P. Rajasthan Gujarat Karnataka

Tariff (Rs /kwh)

Rs 17.91 Rs 15.35 Rs 15.32 Rs 15(year 1-12)

Rs 5 (year13-25)

Rs 14.50

Duration 25 years 25 years 25 years 25 years 25 years


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JNNSM : structured to promote project viability and rapidexecution

Solar IndependentPower Producer (IPP)

States to initiate solarprojects on allocation basis

Final approval to be givenby Central stakeholders tothose developers withstrong technical andfinancial tie-ups

IPP signs standard country-wide PPA with NTPCNVVNL (not 28 versionsacross States) at Rs17.91*/kWh as per CERCguidelines

NTPC PowerTrading Company

NTPC NVVNL is the soleofftaker of grid-connectedsolar power: AAA ratedcredit

NTPC NVVNL pays IPP atRs 17.91/kWh tariffsubsidized by $950 milliondedicated Central budget

NTPC NVVNL blends solarofftake with conventionalenergy to achieve bundledrate of Rs ~5.5/kWh forresale to States

StateUtilities

State utilities purchasepower from NTPC NVVNLat Rs ~5.5/kWh, the lowerpricing end of power tradingmarket rate in India

Purchase allows states tomeet solar power purchaseobligations (currently statedat 0.25%), with minimalimpact on state levelizedtariff

RECs allow states withoutstrong solar resource to

meet solar power purchaseobligation

Rs 17.91per kWh

SolarFeed inTariff

Rs ~5.5per kWh

BlendedPowerTrading

Rate

* CERC solar PV feed-in-tariff guideline for FY2010-12


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Each State ERC can ensure strong foundations for solar sector

rollout even as JNNSM is being rolled out

Initiate study to confirm CERC solar tariff guidelines (with adoption ofspecific CUF assumption for each state)

Declare a tariff for Solar power

Pursue allocation approach rather than competitive bidding in early years ofthe program (incubation is still required)

Declare an RPPO with solar-specific carve out

Work with Discoms to standardize bankable PPAs for solar projects


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Key issues impeding the growth of solar program

Affordability of

power (Outlook ongrid parity)

Industry players

(across the valuechain)

Government Policy

environment(subsidy)

RegulatoryFramework (RPPO,

tariff orders)

Ground level issues(land, permitting)

Open access toconsumers

Central / State government need to support the solar program by way offeed in tariff subsidy and regulatory framework till grid parity is achieved


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To realize potential of solar power, India should have

capabilities across PV Value chain

Crystalline Value Chain

7% 7% 8% 13% 30%

(%) = relative weight of cost structure

35%

Polysilicon Ingot Wafer Cell Module Balance of System

PV Raw Materials PV Deposition & Module Integration Module Encapsulation

Schematic diagram of a CdTe moduleThin-Film manufacturing line where depositionand integration take place

Glass that is used as substrate

Thin film Value Chain

India can be a global solar PV manufacturer , though presence across the valuechain is imperative


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Robust solar policy and right regulatory framework required to

stimulate demand for solar power generation

1. Stimulating generation creates domesticdemand for solar manufacturing and fulfillsnations electricity needs

15-20 GW of demand stimulation toattract large scale cost efficient

manufacturing

2. As demand is created, a vibrant manufacturingbase opens up, creating domestic jobs andfueling overseas exports

Drive manufacturing of all solar technologies

and create export base market

3. With an established downstream demand, investment inR&D and talent flow into the sector, helping India

become a global solar technology hubGrowth ofthe valuechain beginsdownstream

Stimulating generation lays the foundation for long-term viability of the sector


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Enabling regulatory framework is a must at state level based on

CERC notified normsSolar ProgramDevelopment Required: Why this is necessary:

In the absence of an RPPO mandate for PV solar ,states will steer towards cheaper renewable energy

sources and subsidies will be compromised

Gives developers and manufacturers line of sight tostandardized project return expectations acrossStates and facilitates early installations

Accelerate Adoption of CERCGuidelines at State Level

Renewable Power PurchaseObligations

Development delays are costly barriers fordevelopers - land assistance, permits should begranted through a single window clearance

Ensure Administratively SimpleProcesses

Given fast implementation cycle for solar, seriousdevelopers can accelerate new capacity addition ifsubsidy process is streamlined

Streamline Central SubsidyApplication and Payment Process


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Concessions in hand in 7states and active businessdevelopment across 13

states

20MW of solar and 10MW ofbiomass in execution in 2010

Total of 803MW of solar and

110MW of biomass currentlyin the MOU/Allocation stage

Close to 2,000MW of pre-MOUopportunities currently in thepublic sector pipeline

Three offices across India andglobal HQ in New York City

West Bengal

2x 5MW Solar10MWBiomass

Rajasthan30MW Solar

Gujarat200MW Solar

Haryana3MWSolar

Karnataka

10MW Solar

Andhra Pradesh

250MW Solar

Bihar300MW Solar100MW Biomass

Astonfield Office

With Government Concessions Across the Country, Astonfieldis the Largest Diversified Renewable Energy Company in India


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THANK YOU

28jul_astonfield_power plants in india

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