1. Potential and Investment Challenges in Wind Energy in India NarasimhanSanthanam EAI – www.eai.in

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

4. Investment Trends in Wind Energy in India

5. Costs

6. Tariffs and RoI

7. Key Challenges

8. Looking Ahead

10. National Wind Power Programme The Wind Power Programme in India was initiated towards the end of the Sixth Plan, in 1983 – 84 . The programme aims at survey and assessment of wind resources, setting up demonstration projects, and provision of incentives to make wind electricity competitive. As a result, wind electricity has emerged as an option for grid-quality power generation. The costs in respect of wind monitoring stations are shared between the Ministry of Non-Conventional Energy Sources (MNES) and the state nodal agencies in the ratio of 80:20 (90:10 for north-eastern states). With 2980 MW of installed wind power capacity, India now ranks fifth in the world after Germany, USA, Spain, and Denmark. Most of the capacity addition has been achieved through commercial projects by private investors.

12. 2007 - $2.2 billion

13. 2008 - $2.7 billion (6 3 % of total RE investments)

14. 2009 – Over $ 3 billion (EAI estimate)

20. Equity IRR: 25%

21. Payback period: 6 years Above data calculated for the case where accelerated depreciation benefits are CDM benefits are factored in.

22. Potential vs. Actual Total wind energy potential (best case) = 90 GW Installed capacity = 11 GW Installed capacity to total = 12.2% Installed capacity - % to total electricity capacity – 6% Electricity generation - % to total – 1.5%

24. Transmission Challenges

25. Regulatory Challenges

26. Structural Challenges

30. Payment for transmission augmentation upstream of an interconnection point is a contentious issue.

32. There is a lack of grid codes that incorporate the behavior of renewable generation., not just for wind alone.

34. What - what is the role of State Transmission Utility (STU) in developing transmission infrastructure for renewable energy projects?

36. Costs for wheeling electricity are higher than those assumed by MNRE. Lowering and standardisation required.

38. Wind energy does not enjoy infrastructure sector status such as roads, power or ports projects do. Therefore, banks have been reluctant to go in for non-recourse funding for wind power projects.

42. More proactive cooperation between STUs, Developers and Regulators, and more flexible distribution rules

43. Shift incentive focus to encourage long term investments (from AD to GBI)

44. Short term forecasting for the day ahead and hour ahead power system operation and dispatch is critical for any market for reliable power supply and to minimise the cost of power supply.

46. A number of incentives have been provided, and more in pipeline; recent budget has been generous

47. Technology improvements and innovations could further increase efficiency and profitability

48. Key challenges present in dependence on incentives, transmission, regulatory, structural, and efficiency.