RENEWABLE ENERGY SECTOR

Renewable Energy : Indian scenario

Renewable Energy: Tamil Nadu Scenario

Investment Opportunities

Government Support

CONTENTS

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

78.4%

2.6%

19.0%

Fossil Fuels

Nuclear Power

Renewable energy

Global Renewable energy generation by origin

International Energy Outlook 2011 forecasts energy consumption growth by 53% between 2008 and 2035. It is expected to reach 770 quadrillion Btu India ranks #6 in the global RE capacity with an installed capacity of 27GW (without including hydro)

118

93

78

32

31

27

China

US

Germany

Spain

Italy

India

Renewable power capacity (GW)

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

0 50 100 150 200

Countries with Policy targetsFeed-in

RPS / quota policiesTendering Policy

Heat Obligations/mandatesBio-fuel obligations

Number of states/province/country

2013

811

1560

2003 2013G

igaw

att

Global Renewable Power Generation Wind Power

Concentrating SolarThermal Power

Solar PV

Geothermal

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

176.1

4.8

40.8

21.1

3.8

4.0

0.1 2.6

72.5

Installed Capacity Mix in India (GW), 2014

Thermal Nuclear HydroWind Power Small Hydro Power 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

Thermal. 68%

Hydro. 18%

Nuclear. 2% Renewable

. 12%

Fuel wise generation mix, 2013

Thermal. 63%

Hydro. 21%

Nuclear. 3%

Renewable. 13%

Fuel wise generation mix by 2017 projection

Section 2 Indian Scenario

Renewable energy investment stemmed from the landmark Electricity Act 2003 and the subsequent policies & instruments.

Electricity Act 2003

Mandated State Electricity Regulatory Commissions (SERCs) to promote power generation from renewable sources through proper grid connectivity and open access

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

Tariff Policy 2006

Provided for fixation by SERCs of a minimum percentage of Renewable Purchase Obligation (RPO) from RE sources taking into account availability of such resources in the region and its impact on 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 (RECs)

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 among all the Indian States #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

6636 7504

7999 8219

2011 2012 2013 2014

Renewable Energy Capacity (MW)

CAGR 7%

Tamil Nadus Competitive Advantage

Wind power in Tamil Nadu Advantageous geographic position and progressive policy initiatives

Ramnathapuram

Theni

Tirunelveli

Kanyakumari

Thoothukudi

Dindigul

Coimbatore

Wind power passes in Tamil Nadu S. No. Areas 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

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

Progressive policy initiatives

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

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

Geographical Advantage

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

Investment Outlay

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

Solar rooftop programme

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

Tax Concessions

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.

Other features

Key features of solar energy policy 2012

Renewable energy sector Tamil Nadu Global Investors Meet 2015

Biomass in Tamil Nadu USD 200 million opportunity of untapped potential

228

272

500

Installed Capacity Untapped potential Total

Cap

acit

y in

MW

Biomass Capacity/Potential in TN

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.

Features of the Biomass power policy under the TNERC regulations. 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.

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

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

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

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

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

TNERC policies promoting investment 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. 3.76 per kWHr.

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.

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 wind-solar hybrid installations and biomass projects

Offshore wind projects development

Development of solar PV manufacturing capabilities

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

Development of large scale solar and wind parks

Government Support

Tamil Nadu been the most forward looking State in terms of sustainable power development

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)

This has been achieved largely on account of the States focused policy making and drive to capitalize on the opportunity.

The current programmes as part of the policy initiative..

CMs 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

CMs Solar Rooftop Capital Incentive Scheme A capital subsidy of $300 (INR 20, 000) per kW of installation over and above the GoIs 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 States 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: indsec@tn.gov.in, jsindgim@tn.gov.in

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: directorguidance@gmail.com

Visit us at www.tamilnadugim.com