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INDIA’S ENERGY OUTLOOK
Energy usage is only 6% of global energy use. {Although home to around
1/6th of the World’s population, and 3rd largest Economy}.
Around 25% of total energy demand in the next decade is expected from
India {“Make in India” programme, rising incomes, rural-urban migration}.
Implications: Massive capital outlays with simultaneous focus on energy
security and the environment.
As against the above, in terms of country’s INDC (Intended Nationally
Determined Contribution) declared at COP21 Paris, India is under
commitment to reduce emissions intensity of its GDP by 33-35% by the
year 2030, relative to the 2005 level. 2
3
GOI Plans: Power from RE sources to contribute around 40% ( up from
around 13% plus today) by the year 2030. This is key to achievement of
targets under India’s INDC (Intended Nationally Determined Contribution)
committed to COP 21 Paris.
India is also committed to creation of an additional carbon sink of 3 billion
tonnes CO2 equivalent through additional forest and tree cover by 2030.
The available potential, as well as the associated / underlying challenges
would be evident from the following slides.
INDIA’S ENERGY OUTLOOK contd..
Renewable Energy: Globally and India’s position
• Data as of 2015/2016 based on country estimates • Source: IRENA RE status report 2015 and Global Wind Energy Council
Wind
19% Biomass 10%
Mini Hydro (<1 MW)
3%
Small (MW)
Global Installed RE Capacity
Pumped
Hydro 16%
Geothermal 1%
As per E&Y Renewable Energy country attractiveness index 2016, India ranks 3rd after USA and China.
4
120
67.66
25.18 22.98
China USA Germany India Spain
Cumulative installed Wind capacity
Global Wind: India 4th with 25.18 GW
Country wise wind (GW)
40.99
• Data as of 2015/2016 based on country estimates • Source: IRENA RE status report 2015 and Global Wind Energy Council
20
40
80
120
140
5
Cumulative installed solar capacity as on December 31st 2015 (In GW):
6
Wind Solar
*Source: MNRE, GoI ; CEA Statistics
Coal 60.23%
Gas 8.36% 0.36%
Diesel Nuclear 2.07% Hydro
15.04%
Wind 8.98%
SHP 1.48%
Biomass 1.59% Waste to energy
0.05% Solar
1.84%
Installed RE Capacity as on March 2016 (MW)
RE 13.95%
• India’s installed capacity is 302 GW (As on March 2016.).
• India’s RE capacity has exceeded 42.8 GW (as on Mar 2016) which accounts for 14.18% of the installed power capacity
• Current share of renewable energy (in energy produced) is at 7%
• Wind contributes to 62.70% of the installed Renewable Capacity
Overview
26867 6763 4273
4831 115 42849
40000
30000
20000
10000
0
50000
Small Hydro Biomass Waste to Energy Total
Present Power Scenario of India
7
Segment Capacity (MW)
Industrial 248
Commercial & Government
296
Residential 196
Total 740
Total Installed rooftop capacity till 31st March 2016:
0
50
100
150
200
250
300
Capacity (MW)
Capacity (MW)
175 GW RE Target by 2022
Private Sector
Commitment of 268 GW from
414 Companies
PSUs
Commitment of 19 GW
from 48 PSUs
Manufacturing
Commitment of 62 GW from
17 Manufacturing
Companies
Finance
Commitment for financing 78
GW from 39 Banks
Support for RE
Accelerated Depreciation
(AD)
Renewable Purchase
Obligation (RPO)
Exemptions and other incentives
High demand supply
energy gap
State RE Policies
Feed in Tariffs and de-risked
competitive bidding
Support Mechanism for Renewable Power In India
• Key instrument for success of wind
• Also exists for solar, biomass projects
• Excise & Custom duty exemptions for most of the Equipment, Machinery etc.
• 10 year tax holiday
Power shortage prevails and Energy gap is expected to
increase
• RPOs mandated by the Electricity Act 2003 and National Tariff Policy
• Renewable Energy Certificate (REC) mechanism launched to fulfil RPOs
States have formulated RE policies and have
added significant capacities
Introduced by almost all states for RE
technologies
Key incentives
FDI: Foreign Direct Investment
• 100% FDI under the Automatic Route • Does not require approval from the Government
of India • The Indian Company receiving FDI is required to:
• Report to the Reserve Bank of India the receipt of FDI within 30 days
• File form FC-GPR within 30 days of issue of shares
JV: Joint Venture
• Automatic approval for up to 74% foreign equity participation in a JV
• Liberalized foreign investment approval regime • 100% foreign investment as equity is permissible
with the approval of Foreign Investment Promotion Board (FIPB)
• Various chambers of commerce and industry associations offer guidance on partners
Incentive Details Income tax Holiday 100% for 10 consecutive years - MAT @ 20% to apply
Accelerated depreciation Accelerated depreciation @ 80% on solar assets Additional depreciation @ 20% on new plant/machinery in the 1st year
Deemed export benefits Available to specified goods manufactured and not actually exported • Advance authorization from Directorate General of Foreign Trade • Deemed export drawbacks • Exemption/return of Terminal Excise Duty
Service tax exemption Certain services are exempted from service tax
Customs and Excise Laws Various duty concessions and exemptions to RE Sector
Reduced VAT Certain States allow reduced VAT rates (5%) on RE projects
Tax-free Grants Grants received from the holding company engaged in generation, distribution or transmission of power
11
Opportunities in Solar in India • London, UK February 2016
9
Solar Scale-up Plans- 100 GW Vision
Category 1. Rooftop Projects Category 2. Large scale Projects
Inside Solar park
20,000 MW
Outside Solar Park
40,000 MW
40,000 MW
1 5 10 16 23 31 40 6 12
22 32
42
51.5
60
0
40
20
60
80
120
100
2015-
16
2016-
17
2017-
18
2018-
19
2019-
20
2020-
21
2021-
22
Cumulative Solar Targets (GW)
Large scale
Solar Roof-top
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Rooftop: Target to achieve 40 GW grid tied rooftop
Promotional measures:
• 16 States have rooftop provisions in their Solar Policy and 26 States/UTs have notified regulations.
• Rooftop included under Integrated Power Development Scheme and guidelines issued
• Guidelines issued to include rooftop under housing loan and banks have issued instructions.
• Central Electricity Authority (CEA) has notified technical standards for connectivity and metering
• A grant of Rs.5050 crore ($ 769 mn) has been approved to support 5000 MW rooftop projects.
• $ 2 billion line of credit through KFW, WB and ADB for rooftop projects.
Status 740 MW Installed capacity
2050 MW Projects approved (in
Principal -Potential for 124 GW exists
Target 40 GW by 2022 of which 10 GW during
2015- 16 to 2017-18.
Current
support
Subsidy of 30% of capital cost
(except for Private, Industrial, Commercial)
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Opportunities for global players
KFW is providing 1 bn Euro to GOI to finance all solar related investments including rooftop PV and ground mounted PV. In respect to this, during 2015, KFW in collaboration with IREDA has launched rooftop solar program worth 340 mn USD. 14
Opportunity: Manufacturing
2,756
1,386 1,305
297
-
2,000
4,000
Solar Modules Installed Capacity (MW)
Solar Cells Operational Capacity (MW)
Solar Cell and Module manufacturing capacity (MW)
Public Sector companies are allocating a separate capacity for Domestic Content Requirement (DCR)
Companies like Trina Solar, JA Solar, Foxconn, etc. have signed MoUs for setting up manufacturing facilities in India
Modified Special Incentive Package Scheme(M-SIPS)
15
• Subsidy: 20% for investments in SEZs and 25% in
non-SEZs
• Reimbursement of CVD/Excise, central taxes and
duties
• Solar cell/modules
•Machinery and equipment required for
setting up production project
• EVA sheets, solar back sheets, solar
tempered glass, flat copper wire
•Duty free import/domestic procurement of
goods for development, operation and
maintenance of SEZ units
• Sales tax & service tax exemption
• Income tax exemption as follows: 100%
exemption for the first 5 years, 50% for next 5
years etc.
Opportunity: Financing
MNRE discussing innovative financial instruments to
reduce cost of debt
MNRE in touch with various multilateral/bilateral FIs like
JICA, KFW, ADB, World Bank, EIB, AFD, US EXIM, etc. to avail line of credit
Green bonds and infrastructure debt funds
(IDFs) Pension funds, crowd funding, yield companies
Year Planned Solar
Capacity
Solar Plant Capital Cost Total Developer's Investment
Market Size of manufactured components
(in MW) INR
Crores/MW
£ Thousand
/MW
INR Crores
GBP Billion
INR Crores
GBP Billion
2016-17 10,000 5.01 511.22 50,100 5.50 33,567 3.69
2017-18 15,000 4.61 470.33 69,150 7.60 46,322 5.09
2018-19 16,000 4.24 432.70 67,840 7.45 45,458 4.99
2019-20 17,000 4.07 415.39 69,190 7.60 46,367 5.09
2020-21 17,500 3.91 398.78 68,425 7.52 45,821 5.03
2021-22 17,500 3.75 382.83 65,625 7.21 43,989 4.83
Total 93,000 390,330
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Largest Bank in India
59000+ Pan-India ATMs
233 million+ Debit Cards
301.2 million+ Customers
64500+ Customer service points
25.5 million+ e-banking users
103,565 pan-India Village coverage
$481 Billion+ Business size
17
SBI at a glance…..
Commitment to lend USD 11.12 bn for financing RE projects in five years
(2015-19).
A separate incremental exposure limit of USD 741 million for
Renewable Energy Sector has also been set by the Bank.
RE Policies put in place for financing renewal energy projects viz. Ground Solar/ Grid Connected Rooftop Solar Projects, Wind Power, Small Hydro
(up to 25 MW) etc.
Bank loan tenors available upto 20 years (depending on PPA), which
has helped in reducing tariff for RE projects.
Present Exposure in RE is $ 3.05 bn After commitment given to GoI, 74
RE projects have been financed for $ 1.10 bn and created capacity of 2418
MW.
Windmills for captive use.
EE measures in own premises .
Waste water treatment and solid waste management in own premises
INITIATIVES TAKEN BY SBI IN RE SECTOR
19