1. Elephants CanDanceRenewable Energy in India – Implications for Investment Narasimhan Santhanam Renewable Energy Finance, Singapore Apr 13, 2010

2. About EAI Leading Indian renewable energy business intelligence, market strategy consulting firm Work on all primary renewable energy sectors – solar, wind, biofuels/biomass, waste-to-energy and small hydro Work on market research, entry and diversification strategy, economic and financial modelling and pre-feasibility analysis Team comprises professionals from IITs and IIMs, with renewable energy, industry research and economics backgrounds Based out of Chennai More from www.eai.in www.eai.in ElephantsCanDance

4. India Energy – Strategy for the Future

5. Electricity Grid Improvements

6. Focus on Renewables

7. Investments in Renewable Energywww.eai.in ElephantsCanDance

8. India Energy - Current Status The Elephant Has Just Begun to Roar www.eai.in ElephantsCanDance

9. GDP Growth www.eai.in ElephantsCanDance

10. Electricity Demand Growth www.eai.in ElephantsCanDance

11. Energy SourcesBut…the Elephant Has a Problem www.eai.in ElephantsCanDance

13. 17% peak deficit in 2009 (shortfall of 23 GW), to

14. 25% peak deficit by 2015 (shortfall of over 60 GW)

15. Electricity generation capacity, most of it coal fired, will more than treble from 2005 to 2030.www.eai.in ElephantsCanDance

17. Ministry of Power has accelerated the Rural Electrification Program with a target of providing Power to All by 2012www.eai.in ElephantsCanDance

19. Produce 1 million barrels per day

20. Import about 700 million barrers per year

21. At $75 per barrel, that’s about $50 billion outflow

22. Easily wipes out all the gains we make from FDI (about $30 billion per year).www.eai.in ElephantsCanDance

23. CO2 Emissions Increase www.eai.in ElephantsCanDance

25. Primary energy will be more than double this by 2030.

26. For its electricity, transport and other industrial and domestic needs, India needs energy. Current sources of primary energy are:Coal, Natural Gas, Oil Renewables – Hydro, biomass Nuclear www.eai.in ElephantsCanDance

28. Production - from 0.7 million barrels per day in 1990 to about 1 million barrels per day in 2009.

29. Recent findings of oil in Rajasthan by Cairn Energy. Cairn estimates that it will be able to achieve peak production of about 0.24 million barrels per day in 2011

30. India currently imports about 70% of its oilwww.eai.in ElephantsCanDance

32. Current demand of 166 mmscmd (million cu meter per day) made up of 132 mmscmd from domestic and rest from imported LNG

33. Hydrocarbon Vision 2025 – increasing proportion of natural gas in total energy consumption from 8% now to 20% by 2025. Will require investments of $40 - $50 billion across value chain.

34. Country currently imports 20% of its requirementswww.eai.in ElephantsCanDance

36. Coal imports will increase almost seven-fold, accounting for 28% of India's total coal needs in 2030 from 12% in 2005

37. In 2009-10, imported about 60 million T (10%); expected to hit 100 million T within the next three years. This for a country which has the fourth largest coal reserves in the world – about 100 billion T of proven reserves www.eai.in ElephantsCanDance

39. Coal - imports a little over 10% of its requirements, likely to increase steeply over the next five years

40. Oil - pleasantly surprised by the recent oil finds in Rajasthan, but over 60% reliance on outside countries for oil for the foreseeable future.www.eai.in ElephantsCanDance

42. Makes a big hole in our $ reserves

43. Causes harm to the environmentwww.eai.in ElephantsCanDance

44. India’s Energy Strategy The Elephant Starts Thinking www.eai.in ElephantsCanDance

50. Overhauling the Electricity Grid The Elephant Begins to Act www.eai.in ElephantsCanDance

51. Electricity Grid - Overview Generation capacity of about 150 GW; 663 billion units produced; CAGR of 5% over the last 5 years The fifth largest electricity generation capacity in the world Transmission & Distribution network of 6.6 million circuit km - the third largest in the world www.eai.in ElephantsCanDance

53. Private sector participation is increasing

54. Distribution licences for several cities are already with the private sector

55. Three large ultra-mega power projects of 4000MW each have been recently awarded to private sectorwww.eai.in ElephantsCanDance

57. Overloading of system components

58. Low metering efficiency and bill collection

59. Power theft

60. Low operational efficiency of the public sector utilitieswww.eai.in ElephantsCanDance

62. Unbundling State Electricity Board’s assets into separate entities for generation, transmission, and distribution - intention of eventual privatization

63. Improving metering efficiency

64. Auditing to create transparency and accountability at the state level

65. Improved billing and collection

66. Mandating minimum amounts of electricity from renewables; requiring preferential tariff rates for renewableswww.eai.in ElephantsCanDance

68. 100% FDI permitted in Generation, Transmission & Distribution

69. Incentives: Income tax holiday for a block of 10 years in the first 15 years of operation; waiver of capital goods' import duties on mega power projects

70. Independent regulators: Central Electricity Regulatory Commission for central PSUs and inter-state issues. Each state has its own Electricity Regulatory Commission www.eai.in ElephantsCanDance

72. Unbundling of vertically integrated SEBs

73. “Open Access” to Transmission and Distribution networks

74. Select distribution circles to be franchised/privatized

75. Tariff reforms by regulatory authorities www.eai.in ElephantsCanDance

77. Joint Venture (JV) Route, wherein the CTU/STU shall own at least 26% equity and the balance shall be contributed by the Joint Venture Partner (JVP);

78. Independent Private Transmission Company (IPTC) Route, wherein 100 percent equity shall be owned by the private entity.www.eai.in ElephantsCanDance

80. Demand-side management to selectively curtail electricity use for delinquent customers or neighbourhoods, while improving power quality for better customers.

81. Another driver behind the need for a smarter grid in India is its need for energy efficiency and increased use of renewables.www.eai.in ElephantsCanDance

83. Private sector participation possible through JV and 100% equity mode

84. Total investment opportunity of about US$ 150 billion over a 5 year horizon (2007-2012)www.eai.in ElephantsCanDance

85. Focus on Renewables A New Elephant www.eai.in ElephantsCanDance

86. Renewables Contribution to Electricity www.eai.in ElephantsCanDance

88. Total production of ethanol and biodiesel combined were less than 0.25 million T (2009)www.eai.in ElephantsCanDance

90. Solar PV

91. Solar CSP

92. Wind

93. Biofuels

94. Biodiesel

95. Ethanol

96. Second Generation Biofuels

97. Hydro

98. Small Hydro

99. Large Hydro

100. Biomass-based electricity

101. Waste to Energywww.eai.in ElephantsCanDance

103. Targets under the National Solar Mission : 20,000 MW by 2022 (for PV + CSP)

104. 2000 MW BY 2013

105. 10000 MW by 2017

106. Attractive Feed-in-tariffs and other incentiveswww.eai.in ElephantsCanDance

108. Installed capacity – Approx 12,000 MW, expected to reach 17,000 MW by 2012

109. Investments in wind energy

110. 2007 - $2.2 billion

111. 2008 - $2.7 billion (63% of total RE investments)

112. 2009 – Over $3 billion (EAI estimate)

113. Accelerated depreciation benefits, or GBIwww.eai.in ElephantsCanDance

115. Currently, biofuels contribute less than 0.5% of total transport fuel

116. Feedstock availability, prices major concerns

117. Mandatory blending of 5% in petrol and diesel

118. Future depends on both government incentives and feedstock availabilitywww.eai.in ElephantsCanDance

120. Current installed capacity – about 2500 MW

121. Small hydro investment in India grew by 300% 2007-08

122. $543 million in 2008 (15% of total RE investments)

123. $140 million in 2007

124. Concerns

125. Delays & long timelines

126. Poor transmission and distribution

127. Geological and social uncertainties

128. Regulatory challengeswww.eai.in ElephantsCanDance

130. Installed capacity – 36,000 MW

131. Most investments are government dominated, but private investments beginning to happen

132. Total investments of 28,000 crores planned in the 11th five year plan (2007-12)

133. Concerns

134. High capex

135. Large gestation periods

136. Geological surprises

137. Societal and environmental impacts

138. Uneven distribution of hydro resources and possible demand-supply mismatchwww.eai.in ElephantsCanDance

140. Exploited potential – 795 MW

141. Expected installed capacity by 2012 – 1000 MW

142. Dominated by small MW plants (1-5 MW)

143. Feedstocks used - waste biomass such as rice husk, cotton seed husk, crop waste

144. Gasification/pyrolysis is the process used for power production

145. Incentives from government - duty exemption on components, exemption in sales tax, depreciation benefits

146. Concerns - feedstock availability and price stabilitywww.eai.in ElephantsCanDance

148. MSW – biodegradable household waste and sewage

149. Industrial waste – non-hazardous biodegradable waste

150. Potential - over 20,000 MW of power generation

151. Typical process used is anaerobic digestion. Gasification being explored

152. Concerns

153. Collection and segregation of waste

154. Cost and efficiency of technologywww.eai.in ElephantsCanDance

156. Wind

157. Small Hydro

158. Biomass-based Powerwww.eai.in ElephantsCanDance

159. Investments in Indian Cleantech($ billion) Over 80% of the investment through project finance, rest through VC and PE investments www.eai.in ElephantsCanDance

161. Centrotherm PV – Polysilicon processing

162. Signet Solar – thin film module manufacturing

163. Vestas – wind turbine manufacturing

164. Gamesa – wind turbine manufacturing

165. eSolar – solar CSP power plants

166. Siemens – wind turbine manufacturing

167. Refex Energy – Solar PV

168. BP – Biodiesel

169. GE – wind turbine manufacturing

170. Biogas Nord – biogas plantswww.eai.in ElephantsCanDance

172. About 300 MW of electricity installed capacity, with a more efficient grid network

173. Most of its villages electrified

174. Much larger participation from private sector in energy

175. Hopefully much less reliance on foreign sources of energywww.eai.in ElephantsCanDance

176. Who Says Elephants Can’t Dance? All you need to do is to look at India to see an elephant dancing, and DANCING PRETTY WELL. Thank you! NarasimhanSanthanam narsi@clixoo.com Mob: +91-98413-48117 www.eai.in ElephantsCanDance