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Published on March 13, 2014

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Ernst & Young Renewable energy India outlook 2013
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Mapping India’s Renewable Energy growth potential: Status and outlook 2013

Content Power scenario in India ...........................................................................2 Renewable energy scenario in India .........................................................3 Key drivers of renewable energy in India ..................................................5 Key government initiatives......................................................................6 Wind ....................................................................................................11 Solar....................................................................................................15 Biomass...............................................................................................21 Small hydro..........................................................................................24 ..................................................................................27 Sources................................................................................................29

2 | Mapping India’s Renewable Energy growth potential: Status and outlook 2013 Power scenario in India Overview the country. shortage. Break-up of installed power generation capacity Source: CEA, Ernst & Young analysis; as on 31 March 2013 Note: Hydro power is also a form of renewable energy, but it is accounted for renewable energy. Coal, 58.3% Total: 223 GW Nuclear, 2.1% Oil, 0.5% Gas, 9.0% Hydro, 17.7% Renewable, 12.3% 86.0 131.6 72.3 34.6 39.0 10.97.8 24.5 29.8 3.9 4.8 5.3 End of X plan 2006-07 End of XI plan 2011-12 Planned XII plan additions 2012-17 India installed generation capacity (GW) Thermal Hydro Renewable Nuclear Source: CEA Target Investments

3Mapping India’s Renewable Energy growth potential: Status and outlook 2013 | Renewable energy scenario in India Overview Power generation from renewable sources is on the rise in Growth of installed capacity of renewable energy in India (GW) Source: MNRE Note: includes wind, solar, biomass (incl. bagasse) and small hydro. Excludes large hydro. 10.2 12.3 14.4 16.8 20.0 24.5 28.1 FY07 FY08 FY09 FY10 FY11 FY12 FY13 CAGR 18.4% Installed capacity of renewable energy in India Source: MNRE; as on 31 March 2013 Note: biomass includes bagasse cogeneration; ‘others’ includes waste-to-power Small hydro, 12.9% Biomass, 12.8% Wind, 67.9% Solar, 6.0% Others, 0.3%Total: 28.1 GW Investments Targets

4 | Mapping India’s Renewable Energy growth potential: Status and outlook 2013 Renewable Technology 2010-11 2011-12 2012-13 2013-14 Target (MW) Actual (MW) Target (MW) Actual (MW) Target (MW) Actual (MW) Target (MW) Actual (MW) (as on 30.6.13) Wind Power 512 300 307 350 353 350 237 300 54 Bio Power 472 474 475 475 472 425 Solar Power 200 27 200 905 754 75 Total 2,972 3,157 3,425 4,943 4,125 3,162 4,325 640 Renewable energy actual installations and target Ernst & Young LLP’s Renewable Energy Country Attractiveness Index (RECAI) Rank Country All renewables Wind index Solar index 1 US 75.4 2 China 71.9 76.7 79.6 2 69.6 59.6 4 UK 62.1 5 43.7 6 61.3 46.2 57.2 7 Canada 59.3 52.5 46.1 56.9 47.3 9 India 56.2 50.5 60.6 10 Italy 54.4 37.3 50.3 11 Belgium 53.0 42.5 35.7 12 South Korea 52.2 39.9 41.7 13 51.7 36.0 45.5 14 51.3 46.0 24.9 15 Brazil 50.9 47.4 46.9

5Mapping India’s Renewable Energy growth potential: Status and outlook 2013 | Key drivers of renewable energy in India Energy security concerns Government support of renewable energy sources. Climate change: India is among the most vulnerable countries Increasing cost competitiveness of renewable energy technology: Renewable energy is becoming increasingly Distributed electricity demand: Renewable energy is a infrastructure. Favorable foreign investment policy has created a liberal environment for foreign investment in Vast untapped potential receives one of the highest levels of solar irradiation in the forestry residues. Resource Estimated potential (GW) Installed capacity (GW) Wind 19.1 Small hydro 19.7 3.6 22.5 3.6 6 1.7

6 | Mapping India’s Renewable Energy growth potential: Status and outlook 2013 Key government initiatives The framework Promotion of electricity from renewables SERCs to set differential tariff for renewables Key policy initiatives energy energy announced by several Establishment of Central Constitution of offshore Wind Energy Steering 2008 2008-09 2009-11 2011-13

7Mapping India’s Renewable Energy growth potential: Status and outlook 2013 | RPO regulations sources. Year RPO Target National targets under NAPCC STATE RE Technology 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 Solar Solar Solar Bihar Solar Chhattisgarh Solar Solar Solar Solar Solar Solar Jammu and Kashmir Solar Solar

| Mapping India’s Renewable Energy growth potential: Status and outlook 2013 STATE RE Technology 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 Solar Kerala Solar Solar Solar Solar Solar Solar Solar Solar Solar Solar Solar Solar Solar Uttar Pradesh Solar West Bengal Solar

9Mapping India’s Renewable Energy growth potential: Status and outlook 2013 | the country. REC mechanism certain environmental attributes of electricity generated from Renewable energy sources or Electricity Sold at preferential tariff Sold at non-preferential tariff RECs Trade/transact Type of REC Floor price (INR/ MWh) Forbearance price (INR/MWh) Solar Source: REC Registry of India Non-solar RECs issued and redeemed, and average clearing price (INR/MWh)* 1,500 0 100000 200000 300000 400000 500000 600000 700000 REC issued Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 REC redeemed Average price * Average clearing price for non-solar RECs Source: REC registry of India, IEX, Ernst & Young analysis

10 | Mapping India’s Renewable Energy growth potential: Status and outlook 2013 Solar-RECs buy and sell bids and average clearing price (INR/REC) Buy bids Sell bids Cleared priced Source: ??? 12,500 12,680 12,720 12,620 12,500 12,500 13,400 12,206 11,490 9,300 9,300 0 8,000 16,000 24,000 32,000 40,000 48,000 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13

11Mapping India’s Renewable Energy growth potential: Status and outlook 2013 | Wind Sector overview Global installed capacity of wind energy (%) Source: GWEC Annual market update 2012; as on December 2012 US, 21.2% China, 26.6% Germany, 11.1% Total: 282.6 GW Spain, 8.1% India, 6.5% France, 2.7% Rest of World, 15.7% Canada, 2.2% UK, 3.0% Italy, 2.9% State-wise wind potential and installed capacity (MW) and potential in India State Estimated Potential * (MW) Installed capacity (MW) Kerala 35 4 measurements. Re-introduction of GBI to aid growth; restored, will be another key driver registered under the scheme. can be drawn between 4 and 10 years. last year’s generation.

12 | Mapping India’s Renewable Energy growth potential: Status and outlook 2013 Growth of installed capacity of wind energy in India (GW) Source: MNRE CAGR 17.9% 7.1 8.8 10.2 11.8 14.2 17.4 19.1 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Role of GBIs and RECs locations. will need to factor in these considerations into their business analysis to arrive at a suitable model. Offshore wind policy released Encourage investment in energy infrastructure renewable energy resources in the EEZ of the country Reduce carbon emissions Encourage indigenization of the offshore wind energy technology industry clearances. Permission would be granted on a case basis to interested throughout the value chain.

13Mapping India’s Renewable Energy growth potential: Status and outlook 2013 | Growing investor interest almost half of the total investment in clean energy in India in by states regulators conventional energy India for various renewable energy technologies under State Tariff (INR/kWh) Order Remarks 3.51 4.15 July 2013 Zone 2: 5.05 Zone 3: 4.31 3.07 July 2013 5.92 4.70 25 years Source: Relevant SERC orders and announcements

14 | Mapping India’s Renewable Energy growth potential: Status and outlook 2013 Key takeaways integration of renewable energy into the grid. Key challenges

15Mapping India’s Renewable Energy growth potential: Status and outlook 2013 | Solar Sector overview the country has 300 sunny days a year and receives an annual solar radiation across the country. State-wise split of solar power projects (MW) Source: MNRE, as of 31 March 2013 Gujarat, 858 Rajasthan, 553 Maharashtra, 100 Andhra Pradesh, 23 Madhya Pradesh, 37 Others, 115 JNNSM: catalyst for solar sector growth 2022. JNNSM capacity addition target Phase I Phase II Phase III 200 7 15 20 JNNSM — an update

16 | Mapping India’s Renewable Energy growth potential: Status and outlook 2013 Phase I — JNNSM allocations and commissioned capacity Solar PV projects under batch II, phase I (as of 31 July 2013) Capacity allocated as per PPA (MW) Capacity actually commissioned (MW) 140.00 130.00 340.00 310.00 54.00 30.00 2.50 Total 662.05 579.3 Name of projects State Capacity allocated as per PPA (MW) Capacity commissioned (MW) Date of commissioning 15 15 22.01.2013 15 15 31.01.2013 20 20 19.02.2013 20 20 20.02.2013 10 10 20.02.2013 20 20 20.02.2013 15 15 12.02.2013 20 20 13.02.2013 15 15 21.01.2013 5 5 23.12.2012 20 20 30.01.2013 5 5 24.12.2012 5 5 5 5 22.02.2013 20 20 11.02.2013 5 5 24.02.2013 10 10 26.02.2013 10 10 25.02.2013

17Mapping India’s Renewable Energy growth potential: Status and outlook 2013 | Phase II — proposed schedule for allocations under Batch 1 Name of projects State Capacity allocated as per PPA (MW) Capacity commissioned (MW) Date of commissioning 10 10 26.03.2013 5 5 26.03.2013 10 10 27.04.2013 10 10 01.05.2013 10 10 26.04.2013 10 10 26.04.2013 20 20 26.04.2013 20 10 Phase II — progress update Event Date Zero date Zero date + 15 days Zero date + 45 days evaluation of bids. Zero date + 90 days signing Zero date + 120 days 13 months from the date of Incentives offered under JNNSM by states obligation for states conventional energy India for various renewable energy technologies under

| Mapping India’s Renewable Energy growth potential: Status and outlook 2013 Policy roadmap Source: MNRE, IREDA Guidelines issued for the following: Off-grid PV and decentralized solar applications Rooftop & Small Solar Power Generation Programme (RPSSGP) Jun 2008 Nov 2009 Jun 2010 Jul 2010 Aug 2010 Feb 2010 Oct 2010 Nov 2010 Dec 2010 Sept 2010 Jul 2011 Nov 2011 Dec 2011 May 2012 Apr 2013 Aug 2013 Launch of National Action Plan on Climate Change (NAPCC) suggesting setting up of JNNSM. 35 projects with aggregate capacity of 610 MW achieve JNNSM Phase-I. Allocation of 350 MW of solar PV projects under Batch-II of the JNNSM Phase-I 29 projects (~20 MW) sanctioned under the off-grid PV scheme 96 projects shortlisted to set up solar PV projects for RPSSGP- 80 projects (98 MW) sanctioned Government approved JNNSM - aims to promote the development and use of solar energy for power generation Guidelines for migration of projects under development to JNNSM Guidelines for new grid connected solar power projects and notice for RFS 418 applications received Submission of bids Solar project allocations (620 MW) LoI issued In-principle approval and sanction of INR172.3 million awarded to 37 ‘solar cities’. Solar Energy Industry Advisory Council (SEIAC) constituted by the MNRE to help attract investments, encourage R&D, reduce costs and make the Indian solar industry competitive. First solar REC traded. Guidelines for 750 MW under VGF (JNNSM Phase 2, Batch 1) Allocation of roof top PV projects in selected cities/states (Phase-II) IREDA scheme for Solar Off-Grid 16 projects (84 MW) migrated to NSM The opportunity landscape Off grid Diesel offset Manufacture of solar equipment Grid power Solar PV appears to the immediate opportunity to achieve critical size DDG issues include ‘size’ and revenue collection DLS/SWH/Torches have critical dependence on a distribution channel Need to develop customized solutions as per end use Higher gestation to achieve ‘size and scale’ Spread market /smaller project size Evolving technology Propriety technology like solar thermal Economies of scale to compete with establishes western/Chinese/south-east asian companies Immediate opportunity to achieve size and scale Shorter gestation ~2 yrs for SPV Solar thermal has limited operating history / equipment issues

19Mapping India’s Renewable Energy growth potential: Status and outlook 2013 | State policies complement JNNSM State Measures/initiatives Kerala Uttar Pradesh New state policies expected to increase demand determined by the Central Electricity Regulatory Commission Regulatory uncertainty, however,

20 | Mapping India’s Renewable Energy growth potential: Status and outlook 2013 manufacturing is still awaited. Manufacturers, developers differ on anti-dumping duties that goods from these countries are being sold below cost. Falling rupee adds to industry woes Key takeaways industry. Key challenges

21Mapping India’s Renewable Energy growth potential: Status and outlook 2013 | Biomass Sector overview Biomass availability in India is estimated at about 500 million State-wise grid-interactive biomass power installed capacity and potential in India State Estimated Potential (MW) Installed capacity (MW) Uttar Pradesh 776.50 756.90 236 249.90 124.50 91.30 45.30 Bihar 919 43.30 30.50 West Bengal 396 26.00 246 20.00 16.00 24 10.00 Growth of biomass-based power generation installed capacity in India (MW) Source: MNRE 1,112 1,324 1,751 2,199 2,665 3,135 3,601 FY07 FY08 FY09 FY10 FY11 FY12 FY13 CAGR 21.6%

22 | Mapping India’s Renewable Energy growth potential: Status and outlook 2013 Policy focus and impetus for biofuels and biomass-based power Fiscal incentives for biomass power projects Capital subsidies for biomass/bagasse cogeneration projects Capital subsidies for bagasse cogeneration projects by cooperative/public sector sugar mills Area/program systems for 10 years duties Project type Special category states (North eastern region, Sikkim, Jammu & Kashmir, Himachal Pradesh and Uttarakhand) Other states 0.646 0.646 Bagasse cogeneration by 0.646 0.646 above. Project capacity Subsidy (per MW*) 40 bar and above 60 bar and above Next-generation biofuels to address energy security and environmental concerns for addressing energy security and environmental concerns. are being announced to induce villagers to rehabilitate waste

23Mapping India’s Renewable Energy growth potential: Status and outlook 2013 | Recent development heat agricultural waste left after harvests in controlled conditions. Key takeaways Key challenges Inconsistent availability of biomass with a concern.

24 | Mapping India’s Renewable Energy growth potential: Status and outlook 2013 Small hydro Sector overview of an electrical transmission grid system is uneconomical. SHP installed capacity and potential in India State Estimated Potential (MW) Installed capacity (MW) 964 794 300 219 175 Kerala 704 441 155 131 943 Growth of biomass-based power generation installed capacity in India (MW) Source: MNRE CAGR 11.35% 1,905 2,045 2,429 2,735 3,043 3252 3,632 FY07 FY08 FY09 FY10 FY11 FY12 FY13 remote areas deforestation and resettlement associated with large hydel very low load densities. Government incentives utilization.

25Mapping India’s Renewable Energy growth potential: Status and outlook 2013 | of new designs of water mills for mechanical and electricity Category Above 100 KW and up to 1000 KW Above 1 MW- 15 MW Category Up to 1000 KW Above 1 MW-25 MW Support to new SHP projects in the state sector Support to new SHP project in private/ cooperative/ joint sector Tariff norms for FY13–14 Area/program Preferential tariffs by many SERCs to state governments and the Customs duty concessions Low private investment in the sector Execution and evacuation challenges allotment and getting a number of statutory clearances is State Capacity Generic Levelized tariff (INR/KWh)* 3.34 3.27 3.17 5.91 5.41 4.91 4.20 Kerala 2.94 for 25 years Source: SERC

26 | Mapping India’s Renewable Energy growth potential: Status and outlook 2013 Key takeaways Key challenges

27Mapping India’s Renewable Energy growth potential: Status and outlook 2013 | Key initiatives under the NMEEE Perform Achieve and Trade (PAT) scheme Market Transformation for Energy NMEEE platform The PAT scheme country. focuses on creating savings. Recent developments of the scheme. Policy Database (IREEED Smart grids increase in the generation of intermittent renewable sources such as solar and wind.

| Mapping India’s Renewable Energy growth potential: Status and outlook 2013 the mandatory installment of metering systems in Indian as of June 2013. would be given as grant. smart grid technologies in India. Micro grids removed to ensure the success of micro grids in India. Energy storage the integration of a large amount of intermittent renewable energy smoothly with the grid and also in grid stabilization. Energy storage technology Estimated potential in India Rural micro grid Solar integration Rural grid connected Wind integration SEZ Market potential for ESS in India through 2020 (MW) systems in India.

29Mapping India’s Renewable Energy growth potential: Status and outlook 2013 | Sources

30 | Mapping India’s Renewable Energy growth potential: Status and outlook 2013 2013

31Mapping India’s Renewable Energy growth potential: Status and outlook 2013 |

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33Mapping India’s Renewable Energy growth potential: Status and outlook 2013 | Ahmedabad 2nd Bengaluru 12th th th th Chandigarh 1st Chennai th th Hyderabad Kochi 9th Kolkata 22 Camac Street 3rd Mumbai 14th 5th NCR Sector 42 6th 4th th Pune th

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