RE in India – Market

Scenario & Policy

Framework

BIPV / NZEB in India

Chennai
© Confederation of Indian Industry
13th February, 2020
 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 363 GW installed (as on Sept ‘19).

© Confederation of Indian Industry

 RE Targets and Trends
❖ RE target by the end of 2022:

100 GW from solar power 10 GW from biomass power

60 GW from wind power 5 GW from small hydro power

❖ 87 GW set up as on Dec ’19

➢ 49.7% of target achieved

➢ 23% of India’s installed power capacity

© Confederation of Indian Industry

 Grid-Interactive Power
Installed Capacity (in MW)
Sector
(as on 31.12.2019)
Wind Power 37505.18

Solar Power – Ground Mounted 31397.30

Solar Power – Rooftop 2333.23

Small Hydro Power 4671.55

Biomass (bagasse) Cogeneration 9186.50

Biomass (non-bagasse) Cogeneration /
674.81
Captive Power
Waste to Power 139.80

Total 85908.37

© Confederation of Indian Industry

 Off-Grid / Captive Power

Installed Capacity (MWeq)

Sector
(as on 31.12.2019)

Waste to Energy
191.13
SPV Systems 945.22

Total 1136.35

© Confederation of Indian Industry

 RE Market Size & Opportunities
❖ CAGR of 21% since 2012; to continue at 17% till 2027
➢ Around 91 GW yet to be installed by 2022

➢ Primarily by solar (68 GW) & wind (23 GW)

❖ Total investments of $160 bn needed

Equity – $40 bn Debt – $120 bn

❖ New investments in 2018 – $11.1 bn ($42 bn since 2014)

❖ FDI inflow in 2018 – $1.45 bn ($3.2 bn since 2015)

© Confederation of Indian Industry

 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
© Confederation of Indian Industry
 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

© Confederation of Indian Industry

 Policy Overview Tamil Nadu
❖ Tamil Nadu’s Solar Energy Policy 2019 targets 9 GW of
installed solar photovoltaic (PV) capacity in Tamil Nadu by
2023.

❖ 3788.36 MW of Solar and 9285.27 MW of Wind has been

installed

❖ Key Highlights
➢ 40 percent of the targeted capacity will come from consumer
category solar

➢ Utility-scale solar energy gross feed-in will be allowed at all voltage

levels

➢ Solar energy net feed-in will be made available to all prosumers

even at low tension voltage level

➢ Consumer category solar will have electricity tax exemption of two

years from the issue of this order
© Confederation of Indian Industry
 Policy 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:
➢ Earlier regime of feed-in tariff now replaced by competitive bidding

➢ Drastic fall in tariffs amid intense competition (reduced generation

costs)

© Confederation of Indian Industry

 Policy Drivers for RE in India
❖ GoI allocated over 3000 crores in 2019-20 budget for solar
❖ RE Projects are included in priority sector lending
❖ Policies have been formulated for all sub sectors under
renewable energy by multiple states
➢ 19 Indian states have notified solar policies with comprehensive
framework to promote solar adoption
❖ RPO regulations have been implemented across all states and
are being enforced more rigorously
❖ In December 2018, a draft amendment was proposed to
electricity act with below features
➢ Penalty on non compliance for RPOs
➢ Direct Benefit Transfer of Subsidy
➢ Separation of content & carriage
➢ Penalization of PPA violations

© Confederation of Indian Industry

 Other Drivers for RE in India
❖ Falling Tariffs of Solar & Wind
➢ Both solar and wind have seen intense competition & drop in tariffs
(~ 75% over last 5 years) which makes them commercially viable

❖ Technology Advancements
➢ The Technology of Renewables improved drastically in the last few
years with efficiency of over 20% being commercially viable for
solar PV Panels, wind turbines with generation capacity of upto 8
MW & improved manufacturing processes for solar and wind

© Confederation of Indian Industry

 3. for
Barriers Finance facilitation
Adoption of Renewables

• While excellent policies for solar net metering, open access etc exist in many
states, implementation has been a major challenge
Policy • Some states are trying to renegotiate signed PPAs with RE developers setting a
Barriers negative precedent and harming project viability
• Huge payment delay by DISCOMs & their fear of losing high paying consumers
• RPO compliance has been uneven across different states

• Total investment of around USD 160 bn needed

Financial • This entails huge financial commitments by Government, private & public
institutions
Challenges • The recent non-banking financial companies (NBFC) crisis has negatively
impacted access to funding for many renewable energy projects

Awareness • Rapid technological advances, implementation procedures & competitive prices

regarding RE of RE technologies
Technologies • Various business models available for adoption of RE, e.g., BOOT, EPC, etc.

© Confederation of Indian Industry

SOLAR ENERGY

© Confederation of Indian Industry

FINPRO
 Solar PV Potential & Trends
❖ India has high solar potential: 4-7 kWh/m2

❖ As of June 2019 installed solar power

capacity in the country was 29.55 GW

❖ Prices are falling rapidly

➢ INR 2.44 / kWh is current lowest tariff for grid
connected PV

❖ Public awareness on solar energy has

drastically increased

❖ Solar sector in India received investments Estimated Potential – 748 GWp

of US 9.8 billion in 2018

❖ Off Grid solar power is growing fast & India

is one of the largest markets in the world
for off grid solar products, with 2.48 million
units sold in 2018
© Confederation of Indian Industry
 Solar PV Potential & Targets
❖ Rooftop & Off-grid Applications:
Residential, agricultural,
commercial & industrial
establishments
➢ National target – 40 GW by 2022

❖ Grid Connected Systems: Ground

mounted & utility-scale plants &
Estimated Potential – 748 GWp
solar parks
➢ National target – 60 GW by 2022
© Confederation of Indian Industry
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

© Confederation of Indian Industry

 Solar PV Project Development – Rooftop
Capacity Benchmark Cost (INR /kWp)

Above 1 kW and up to 10 kW 54,000

Above 10 kW and up to 100 kW 48,000

Above 100 kW and up to 500 kW 45,000

© Confederation of Indian Industry

 Solar Rooftop Sector in India
❖ 10 Sq meter area or 100 Square Feet is typically required for 1
Kw capacity solar system

❖ Rooftop solar PV plants are typically 15-25 Kgs/m2, they can

be installed on concrete roofs and also some metal

❖ For commercial and Industrial players, payback is

approximately 3-4 years

❖ The state rooftop solar attractiveness index by the MNRE

Ranks Karnataka, Telangana, Gujarat and Andhra Pradesh as
best states for solar

© Confederation of Indian Industry

 Solar PV Achievements

Grid Interactive Off-Grid Home Lighting

30,000 MW 1,000 MW 16.72 lakhs

Street Lighting Solar Lantern Solar Pumps

6.4 lakhs 40 lakhs 1.96 lakh

© Confederation of Indian Industry

BUSINESS MODELS

© Confederation of Indian Industry

FINPRO
 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

BENEFITS TO THE COMPANY

• AD benefits: AD up to 90% of the asset value with 40% depreciation

• 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

© Confederation of Indian Industry

 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.

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

© Confederation of Indian Industry

 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.

© Confederation of Indian Industry

FINPRO
 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

© Confederation of Indian Industry

 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

© Confederation of Indian Industry

 Thank You
Apoorva Santhosh
Confederation of Indian Industry
CII-Sohrabji Godrej Green Business Centre
T: +91 40 4418 5118 M: +91 9515403824
E: apoorva.santhosh@cii.in© W: www.cii.in|www.greenbusinesscentre.com
Confederation of Indian Industry