IBEF RENEWABLE ENERGY: EMERGING TRENDS & POTENTIAL
I B EFI N D I A BR A ND EQ U I TY F OU N DAT I ONwww.ibef.orgRENEWABLE ENERGY: EMERGINGTRENDS & POTENTIAL
.CONTENTS1.RENEWABLE ENERGY: INTRODUCTION . 42.INDIA'S RENEWABLE ENERGY STORY TILL NOW . 43.2.1Wind Sector: Overview . 42.2Solar power sector: Overview . 5POLICY ENVIRONMENT FOR RENEWABLE ENERGY . 63.14.Changing paradigm of renewable energy policies in India . 6NEW INNOVATIONS AND TRENDS IN RENEWABLE ENERGY . 114.1Wind-New Innovations and trends in renewable energy . 114.2Wind-Technological innovations: Higher hub height and rotor sweep areas . 114.3Wind-Emerging trends in Business models: Shift from depreciation benefitmodels to Independent Power Producers . 114.4Wind-New trends in Business models: Changing nature of power sale . 134.5Solar Energy: New Innovations and trends in renewable energy . 134.6Solar-Aggressive bidding in NSM shows market confidence in solar energy in India.134.7Solar-New trends in financing: External debts and External Commercialborrowings (ECBs) . 144.8Solar-New trends in financing: Supplier coupled credit/financing . 144.9Solar -New trends in financing: Solar RECs to provide attractive returns onsolar energy . 154.10Solar-sector attracts attention of global suppliers . 15
.CONTENTS5.FUTURE OUTLOOK FOR RENEWABLE ENERGY SECTOR IN INDIA . 166.WIND: FUTURE OUTLOOK . 177.7.6.1The Wind power potential in India set to multiply . 176.2Wind power to cost lower in future: On path to achieve parity with coal power. 176.3Wind power forecasted to grow to 43GW by 2020 . 18SOLAR: FUTURE OUTLOOK . 187.1Solar energy costs in India to reduce. 187.2Solar RECs to enhance returns on solar energy projects in India. 197.3Solar technology manufacturing takes off in India . 197.3Solar Power to reach 20 GW by 2022 . 19END NOTES. 20
.1.Renewable Energy: IntroductionFrom 430MW in 2002-03 to over 17000 MW in 2010-11, India's renewableenergy sector has grown by 40 times in the last eight years. India's installedrenewable energy capacity as the share of total installed capacity is one of thehighest in the world at 9% and continues to grow. India ranks fifth in the worldin terms of installed wind capacity as per the latest figures. Wind and solarpower sectors are expected to grow significantly in the next decade. The lastyear saw India adding over 2000 MW of wind power alone while the next 10years will see India adding 20000 MW of solar power.Renewable energy sector is a continuously evolving sector. There arecontinuous changes in technology, market conditions and policy environmentwhich have led to the emergence of new trends within the industry. India'srenewable policy initiatives that began in 1982 to support R&D initiatives inrenewable energy have matured over time to set ambitious goals of renewableenergy installation for the country. These goals aim to upscale renewableenergy into a significant component of the country's energy future. India'sNational Action Plan on Climate Change (NAPCC) aims to achieve 15% sharefor renewable power in the total electricity mix by 2020. A number ofprogrammes and government schemes are being introduced to achieve thesegoals. Most important of them being the Jawaharlal Nehru National SolarMission (JNNSM). JNNSM is one of the most ambitious renewable energyprogrammes of its kind in the world. It aims to install 20,000 MW of solarenergy in India by 2022.2.2.1India's renewable energy story till nowWind Sector: OverviewIn 2010, wind power capacity reached at an impressive 13,0651 MW which putsIndia at the fifth position in the world in terms of installed wind power capacity2.The wind energy sector in India has shown a compounded annual growth rateof 50% during the last ten years which makes it the fastest growing energytechnology. Tamil Nadu, Karnataka and Maharashtra are the leading states ininstalled wind capacity.Renewable Energy:Emerging Trends & Potential4
.India has also emerged as one of the major wind energy equipment exportnations. Indian wind energy equipment exports stood at 975 million in2009-103. Majority of these exports were to United States, Australia and Brazil.Suzlon with a global market share of 9.8% is the world's third largest windenergy company4 in the world and symbolic of India's progress in Wind Energy.The wind turbine manufacturing capacities are rapidly rising in the country.The annual wind turbine manufacturing capacity in 2007 was 2000 MW whichrose to 7500 MW in 2010 and is expected to increase to 13000 MW by 20135.Installed Wind Capacity 6.320077.89.72008200913.110.92010Figure 1: Installed Wind Capacity in India:Source: Global Wind Energy Council2.2Solar power sector: OverviewSolar is the most abundant renewable energy. About 5000 trillion KWh isincident upon the land area of India every day. The total potential is virtuallyunlimited. India has taken up the ambitious National Solar Mission which aimsto add 20000 MW of solar power by 2022 and the mission aims to achieve gridparity by 2022 and parity with coal based power by 20306. India currently has1000 MW of solar modules manufacturing capacity & 600 MW of solar cellmanufacturing capacity7. The National Solar Mission aims to increase thismanufacturing capacity to 2000 MW by 20208.Renewable Energy:Emerging Trends & Potential5
.3.Policy Environment for renewable energyRenewable energy sector in India first received policy support with theformalisation of Department of Non-Conventional Energy Sources (DNES) in1980s. Although the focus on renewable energy was for a very long time limitedto research & development phase, the larger vision of scaling up renewableenergy to levels where it would become an important component of electricitygeneration was established much later. Instrumental in doing this was theintroduction of The Electricity Act 2003 and Integrated Energy Policy (IEP). TheElectricity Act 2003 recognised the potential of renewable energy andsuggested promotion of renewable energy and steps to provide grid integrationof renewable energy. IEP took this further by recommending a special focus onrenewable power.Accordingly, the Five Year Plans in India targeted atincreased generation of electricity from renewable energy sources. The 11thFive Year Plan aims at 24 GW of energy generation from renewable sources bythe end of 2012.3.1Changing paradigm of renewable energy policies in IndiaThe policy landscape for renewable energy sector in India has been continouslyevolving and we observe three different phases of renewable energy policy inIndiaDirect subsdies & taxbreaksPerformance linkedincentivesMarket mechanismsIn the earliest days when renewable energy was a nascent sector in India andtechnology was new to developers and investors alike, policies aimed atproviding direct subsidies like capital subsidies or attractive depreciation linkedtax breaks. However these policy supports will be phased out gradually.Thepresent status of capital subsidies and depreciation schemes is discussedbelow.Renewable Energy:Emerging Trends & Potential6
.Direct capital subsidies schemes: Capital subsidies are provided for biomassprojects and to demonstration projects in the wind sector by the Ministry ofNew & Renewable Energy (MNRE). The subsidies are provided according to aconditions set by MNRE.Eligibility criteria for availing capital subsidies are:Biomass Power (combustion)1. Minimum 62 bar steam pressure2. Maximum of upto 15% use of fossil fuel of totalenergy consumption in K. cals or as per DPR,whichever is less.3. For only new boilers and turbines (capacitylimited to in accordance with the estimatedpotential in a state)Co-generation1. Minimum 40 bar steam pressure2. Maximum of upto 15% use of fossil fuel of totalenergy consumption in K. cals. or as per DPR,whichever is less, during crushing season.Wind Energy (only for StateGovernments)1. WEG installed capacity greater than 500 KW2. Not more than 1% of technical potential of thestate or 6MW, whichever is less3. States where commercial activity has not yetbeen initiated. / taken offTable 1: Capital Subsidy Eligibility; Source: MNREThe subsidy for a 1 MW biomass plant is 20-25 MW depending upon the state.Cogeneration plants working at higher pressure can receive subsidies uptoINR 40-60 Lakhs.Tax breaks & Accelerated Depreciation: Accelerated depreciation scheme isone of the most important driving force for development of wind energyprojects. The scheme allows a project developer to claim 80% of thedepreciation in the the first year of installation.Initially, 100% depreciation wasalso allowed which was later scaled down to 80%. Additionally a ten year taxholiday has also been provided to profits and gains of new industrialundertakings set up anywhere in India which generate power throughrenewable technologies.Renewable Energy:Emerging Trends & Potential7
.Performance linked incentives: As the performance metrics of renewableenergy (most notably in wind sector) have become available, performancelinked incentives became easier to administrate. This saw emergence ofperformance linked incentives in the form of attractive preferential tariffs andmore recently the generation based incentives (GBI). Performance linkedincentives have existed along with the earlier direct subsidies and taxationbased schemes. Preferential tariff refers to the special tariff at whichElectricity Boards buy renewable power.Performance linked incentives in the form of generation based incentives (GBI)and subsidised feed in tariffs from State Electricity Boards have also beenprovided to renewable energy projects as financial incentives. Feed in tariffswill be instrumental in first phase of National Solar Mission where specialtariffs in the range of INR 10.9 5 to INR 13 would be provided. Similarly specialfeed in tariffs are provided to renewable power projects across states. The feedin tariff differs from state to state and differs for each technology. It isdetermined by the Electricity Regulatory Commission in each state. Forexample the feed in tariff for biomass power ranges from INR 2.80 per unit inKerala to INR 5.05 per unit in Punjab9.In 2009, MNRE also introduced a generation based incentive for wind projects.Under GBI, electricity producers will be provided with INR 0.50 for each unit ofelectricity fed into grid for a period not less than 4 years and upto 10 years.However, now policies in India are increasingly focusing on market basedmechanisms to promote renewable energy. In recent times marketmechanisms like Renewable Energy Purchase Obligations (RPOs) and PAT(perform Achieve & Trade) have been introduced. These market basedmechanisms will accelerate the growth of renewable energy as projectdevelopers would not have to be dependent upon the government schemes forproject viability.However this transition will occur for different technologies atdifferent times.Renewable Energy:Emerging Trends & Potential8
.Market Based mechanisms: Renewable Purchase Obligations: In 2010,Central Elcetricity Regulatory Commission declared the the Renewable EnergyCertificate (REC) mechanism. The REC mechanism will work in conjunctionwith the Renewable Purchase Obligations(RPOs) mandated for all indian statesunder Electricity Act 2003. This renewable purchase obligation would be in theform of a minimum share of electricity consumed that each state is required tomeet through the use of renewable energy. The obligation would increase eachyear till a target of 15% share of renewable energy in the overall electricity mixis met by 2020. Within the overall RPO, a sub quota - a certain fraction of thetotal RPO- has been set for solar energy. This quota would have to be met onlythrough solar power.For Example, State of Haryana has set a solar obligationof 0.25% within the total RPO of 10%. Therefore 0.25% of the total electricityconsumed in Haryana would necessarily have to come from solar power. Thissolar quota will increase by 0.25% each year to reach 3% by 202010.However the availability of renewable energy resources differ from state tostate. This makes it difficult for states with low renewable energy resources tomeet the RPOs. Therefore to ease the compliance of RPOs a mechanism forRenewable Energy Certifciates (RECs) has been set up. Each renewable energygenerator will be given RECs for each MWH of electricity they produce.RECswill be issued through a central agency. This REC will only represent theenvironmental nature of the renewable energy. The producer is still free to sellhis electricity generated anywhere. However in such a case developer cannotavail of any other incentives schemes for renewable energy.RPOElectricity soldBuyerRECs soldRenewableProject 2State Electricity BoardElectricity soldRECs issuedCentral REC issuingauthorityRenewableProject 1Renewable Energy:Emerging Trends & Potential9
.Those states which are not able to meet their RPOs by purchasing renewableenergy directly can comply by purchasing RECs and submitting the same as aproxy for their RPOs. The RECs would be traded on power exchanges. Floorprice (the minimum price at which an REC can be traded) and forbearanceprice (The maximum price at which an REC can be traded) for RECs havealready been set up by Central Electricity Regulatory Commission (CERC).The first trading session of RECs occurred on 30 March 2011 at the IndinEnergy Exchange and Power Exchange India ltd.11 A total of 424 RECs werereported to have been traded.RECs are expected to emerge as a significantrenewable energy financing platform in future.Market Based mechanisms: Perform, Achieve & Trade (PATs): Perform,Achieve & Trade (PAT) is another energy efficiency market mechanism beingimplemented in India by the Bureau of Energy Efficiency with the core focus ofenergy efficiency. In a manner similar to European Union's carbon cap andtrade mechanism, energy efficiency targets would be given to industries.Industries who perform better will be provided energy efficiency certificates(ecerts) which can be traded in energy markets. Industries can achieve theirtargets by either directly achieving the efficiency targets or buying ecerts fromthe market.Companies can additionally also achieve their targets by procuring renewableenergy. Renewable energy use will not be counted under the targets andtherefore will help companies in compliance. Such market mechanisms canadditionally increase the benefits of using renewable energy.Other Policy Measures: Long term leasing rights with governmentsupport: Concessionary leasing rights for land for renewable energy areavailable from state governments. However it differs from state to state andwithin each state, differs from one renewable technology to other. Forexample, Rajasthan provides land to solar project developers at concessionaryrates i.e. at 10% of the average rates in the district12 or Andhra Pradeshprovides land to developers to harness upto a maximum of 200 MW of windpower13.100% Foreign Direct Investment (FDI) allowed in Renewable energy sector in 2009Renewable Energy:Emerging Trends & Potential10
.4.New Innovations and trends in renewable energy4.1Wind-New Innovations and trends in renewable energyNew technological trends, changing market structure & policy environmentare constantly bringing new trends in the wind sector. Some of the new trendsemerging in the wind sector have been detailed in the following sections.4.2Wind-Technological innovations: Higher hub height and rotor sweepareasIn the overall turbine design there is a shift towards larger and higher ratedwind turbines. Larger wind turbines call for higher heights of the wind turbinetower as well as longer blades resulting in a much larger sweep area. E.g. a1.25 MW rated turbine would work with a 54 m hub height and a swept area of3200 sq. m against which a 2.1 MW rated turbine would require a hub height of79 m and it will sweep an area of 6000 sq. m. This increases the powergeneration capacity of the turbine14.While the trend towards higher generation capacity turbines has been acontinuous process, the recent times have seen an unprecedentedacceleration of the trend in India. Compared to the average rated capacity ofwind turbines in 2000 at 0.3 MW, 0.75 MW in 200815 turbine capacity currentlybeing deployed in India is at 2-2.5 MW range. Commercially available modelswith Indian manufacturers have moved from sub 1 MW wind turbines toturbines in 2-2.5MW capacity now16.4.3Wind-Emerging trends in Business models: Shift from depreciationbenefit models to Independent Power ProducersThere are several factors contributing to a shift towards Independent PowerProducers1 (IPPs) in wind power projects from the earlier model of developingwind farms as a sub asset within other core businesses. The factors that madethis earlier model more attractive were (a) the depreciation benefits being agreater financial incentive than the power sales revenue (b) risk of financing astandalone wind power entity. However -as explained further- most of thesefactors are not likely to be true in future.Independent Power Producers refer to the corporate entities who are pure playpower gene
1. Renewable Energy: Introduction. Renewable Energy:Emerging Trends & Potential 4. From 430MW in 2002-03 to over 17000 MW in 2010-11, India's renewable energy sector has grown by 40 times in the last eight years.
renewable resources (renewable energy) and sets the FiT rate. The DLs will pay for renewable energy supplied to the electricity grid for a specific duration. By guaranteeing access to the grid and setting a favourable price per unit of renewable energy, the FiT mechanism would ensure that renewable energy becomes a viable and sound long-term
4.0 Renewable Energy Market 4.1 Policy Framework for renewable energy 4.1.1 Policies and Strategies for Renewable Energy Promotion 4.1.2 Main actors 4.1.3 Regulatory Framework 4.1.4 Licensing Procedures for Renewable Energy 4.1.5 Feed-in-Tariff 4.2 Business Opportunities and Potentials of Renewable Energy Sources 4.2.1 Bioenergy 4.2.2 Solar energy
The EU's renewable energy policy framework 5 - 9 Renewable energy support schemes 10 - 12 Renewable energy within the EU's rural development policy framework 13 - 17 Audit scope and approach 18 - 22 Observations 23 - 82 The EU's renewable energy policy framework could better exploit the opportunities of renewable energy deployment in .
1. FOUNDATIONS OF RENEWABLE ENERGY TARGETS 14 1.1 Overview of renewable energy targets at the global level 14 1.2. Brief history of renewable energy targets 17 1.3. Key aspects and definition of renewable energy targets 22 1.4. Theoretical foundations of targets 28 2. MAIN FUNCTIONS AND BASIS FOR RENEWABLE ENERGY TARGETS 31 2.1.
renewable energy sources. The Government has set a very ambitious target of adding 175 GW of renewable energy by 20226. While this is a recent policy announcement, it would be pertinent to highlight the progress of renewable energy sources over the last two decades. The following graph depicts the journey of renewable energy
NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC. Renewable Energy Certificate (REC) Tracking Systems: Costs & Verification Issues . Jenny Heeter, Renewable Energy Analyst . National Renewable Energy Laboratory . October 11, 2013
Renewable Energy Group and Phillips 66 have proposed the Green Apple Renewable Fuels, LLC (Green Apple) joint venture to produce renewable fuels near Ferndale, Washington. The projected nameplate capacity for the Green Apple Renewable Fuels facility is 250 MMGY of renewable fuel products. Green Apple is designed to be a multi-feedstock
Abstract . The aim of this paper is to build on the Pragmatic Stochastic Reserving Working Party’s first paper (Carrato, et al., 2016) and present an overview of stochastic reserving used with a one-year view of
