Cover Story

Cover Story

89,000MW potential power generation from renewable energy SourCeS

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Renewed focus on energy

With the government focussing heavily on renewable energy generation, wind and solar power are quickly becoming preferred natural resources By Syed Ameen Kader

enewable energy has become vital for developing countries looking at sustainable economic development. And with India leading the pack, the existing mismatch between demand and supply, coupled with rising costs of fossil fuels and environmental concerns, has made renewable energy a necessary option. In the last decade renewable energy has become an attractive and growing market driven by the climate change agenda and increased energy demand under increasingly scarce resources. Ambitious governmental CO2 reduction targets and associated government support programs are a key drivers of the increasing renewable energy market, says Hari Kiran Chereddi, managing director, Sujana Energy, which specialises in medium temperature solar parabolic troughs. Realising the importance of renewable energy, India is quickly turning to wind and solar power to fuel its growth. Indias policy framework in wind energy generation has been quite investor friendly so far. Its attractive tariff and regulatory regime provides a strong foundation for the growth of the sector. Recently, the government announced a generation based incentive (GBI) under which additional US Cent 1.25 per kWh generated from wind power projects is to be provided to the projects that do not avail of the accelerated depreciation benefit. This will create a level playing field between foreign and domestic investors.

Policy makers are providing incentives and encouraging platforms for R&D, technology transfer, manufacturing, financing projects and developing solar missions to ramp up the commercial adoption of solar power, says Chereddi. Today India is among the top five countries of the world in terms of renewable energy capacity, with an installed base of over 19,000MW of grid interactive renewable power, which is around 11% of its total installed capacity. In addition, it adds about 2500MW of renewable power annually. Its renewable energy programme is one of the largest and most ambitious in the world. Among the various forms of renewable energy, wind energy attracted most of the investors due to its inherent advantage of ease of installation, and comparatively low cost of energy. Also, since the obligation of state government for purchase of various forms of renewable energy is highest for wind, the contribution of wind energy is expected to

In Numbers

Cost of Indias largest EPC solar based project with 850 solar-powered water purification plants
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Policy makers are providing incentives and encouraging platforms for R&D, technology transfer, manufacturing, financing projects and developing solar missions to ramp up commercial adoption of solar power

India aims to facilitate the generation of 1000 MW of grid connected electricity by 2013. (Pic courtesy: Sujana Energy)

company is entering into renewable energy with an estimated investment of Rs 12,000 crore. The MoU was signed at the Vibrant Gujarat Summit.

Solar

Hari Kiran Chereddi,

managing director, Sujana energy be maximum in renewable energy capacity addition in the near future, says Tapan Pal, sr. vice president, business head Power Sector, HCC Infrastructure. Earlier this year, HCC signed an MoU with the government of Gujarat for setting up a renewable energy park at its proposed waterfront city at Dholera Special Investment Region, Ahmedabad, which is a development similar to Lavasa. This is the first time the

On the solar front, in 2009 India launched the ambitious Jawaharlal Nehru National solar Mission (JNNSM) with a target capacity of 20GW by 2022. It aims to facilitate the generation of 1000MW of grid connected electricity by 2013. This is the largest and most ambitious programme of its kind anywhere in the world. With over 400 million citizens who lack access to modern forms of energy, it also has one of the largest decentralised off-grid renewable energy programmes. Solar Energy, though an emerging sector in India, has got tremendous potential. One round of capacity allocation under JNNSM has already been completed and has received unprecedented responses from various national and international companies. A similar response was received by the Gujarat government for their solar power plans. It speaks volumes about the magnitude of the opportunity and investors confidence in the country, Pal says. Though HCCs primary focus is on the development of thermal and hydro power projects,

the company has made a modest plan to develop several solar power projects, with Solar Photovoltaic (SPV) technology. At present we are considering the opportunities to develop Solar Photovoltaic projects in the state of Rajasthan, Madhya Pradesh, Karnataka and Andhra Pradesh. Though we are quite ambitious on developing projects in the said states, the capacity allocation happens through a competitive bidding process. Also, the maximum capacity of SPV projects has been capped at 5MW, leaving limited scope for large capacity addition. So as of now we are targeting a capacity of 30MW to 40MW in next 2-5 years, Pal adds. Sujana Energy, which sees a huge growth potential in the solar energy market intends to be a key player of this revolution. It plans to set up over 400 MW of solar thermal and solar PV power plants by 2013. We develop and provide technology for government and private companies alike. For the government, we offer a unique solution in decentralised distributed power generation schemes with our solar thermal and hybrid technologies. Whereas, in case of private companies, we not only provide technology, but also offer EPC solutions for their solar projects, he adds. Like HCC there are other private players

20gWJawaharlal nehru national Solar MiSSion target For 2022

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including Lanco and Punj Lloyd. And many other companies have begun strengthening their presence in the renewable energy sector to keep up. Punj Lloyd recently signed a 25-year power purchase agreement with NTPC Vidyut Vyapar Nigam Ltd (NVVN) for sale of power from a 5MW PV based solar power plant. The company is building the plant at Phalodi area of Jodhpur district in Rajasthan. This project is being set up as part of JNNSM, a program under the aegis of Ministry of New & Renewable Energy and Ministry of Power. We were one of the 30 developers to have secured a power purchase agreement in the first phase of the JNNSM. Punj Lloyd will operate and maintain the project for 25 years. The plant is to be commissioned by December 2011. The electricity produced by the plant will benefit the people of Jodhpur. What made us unique was that, we were the only pure play EPC company with a track record in executing projects ourselves in the power sector out of the 30 bidders, says Tariq Alam, CEO, Punj Lloyd Delta Renewables. He says that solar has tremendous growth potential both in utility grid tied systems as well as in decentralised distributed systems. The Indian government has launched the JNNSM, which is a historic development that will put solar power in the mainstream of Indias quest for energy security, thereby combating global warming and climate change. It is a path-breaking initiative, which has set out an ambitious target of generating 20,000 MW of solar power by 2022, Alam adds.

Financing
renewable energy Projects
Indian Renewable Energy Development Agency (IREDA), a public limited govt company, provides financial support to specific projects and schemes for generating electricity and/or energy through new and renewable sources. IRDEA offers term loans to renewable energy projects at rates slightly more favourable than general commercial lending rates. As of March 31, 2010, IREDA financed 1,921 projects with a loan commitment amounts totalling over Rs121.8 billion. Power Finance Cooperation (PFC), the Rural Electrification Corporation (REC), and National Bank for Agricultural and Rural Development (NABARD) actively fund renewable energy projects. Corporate financiers of renewable energy projects in India are primarily concentrated on the large wind and hydropower projects. The growing awareness and favourable govt policies & regulatory mechanisms (both at Central & State level) have led to gradual increase in confidence of domestic commercial banks providing loans to renewable energy projects.

We think there is a massive opportunity in the solar space globally, for both project developers and EPc players. Our strategy is to undertake the entire project development gamut. globally, there are very few EPc companies; most of them are regional. We see an immense V Saibaba, potential there
Ceo, Lanco Solar

Fully commissioned 5MW Lanco solar power plant in Gujarat

inDiA AMonG TOP 5 CountrieS in terMS of renewAbLe enerGy CAPACity

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Punj Lloyd is involved in acting as a developer or as an EPC company in both utility-sale grid-tied systems as well as rooftop systems. We are involved in five EPC solar power contracts, which we had won from Punjab Energy Development Agency. We are also executing Indias largest ever (Rs232 crore) EPC solar based project to construct 850 solarpowered water purification plants. The project, awarded on a turnkey basis by the Public Health Engineering Department of the Bihar Government, will have a capacity of supplying 6.224 million litres of drinking water per day to the fluoride affected village of Khaira and its adjoining areas, Alam added. Punj Lloyd looks to execute over 200 MW projects over the next three years. Another player, Lanco Solar Holdings Singapore, a subsidiary of Lanco Infratech, has already signed power purchase agreements to the extent of 140 MW and aims to develop 200-300 MW of solar power over the next two years. The company also offers turnkey engineering, procurement and construction (EPC) services to other solar power developers and are looking to build 300-500 MW of solar thermal and solar PV plants over the next couple of years. As part of its integrated business strategy, Lanco is setting up Indias first integrated solar PV manufacturing Special Economic Zone (SEZ) project in Rajnandgaon district of Chhatisgarh. The SEZ project will be developed in phases and will have integrated facilities for the manufacture of Polysilicon, Ingots, wafers, PV Cells and PV modules with capacities of 250 MW/year or equivalent. First phase of the project with an investment of Rs1370 crore, consisting of Polysilicon, Ingots & Wafers, will be fully operational by year 2012. Lanco Solar has built and commissioned a 5MW Solar power plant for its parent company i.e. Lanco Infratech in district Patan, Gujarat under the Gujarat Solar Policy 2009. The second 5MW is currently under advanced stages of construction in district Patan, Gujarat. By December 2011, Lanco Solar plans to commission the entire allotment of 35MW of Solar PV in Gujarat under the State Policy. We also plan to start construction of 100MW Solar Thermal plant in Rajasthan allotted to it under JNNSM over the coming months. On top of this, Lanco Solar has also signed certain turnkey EPC contracts for other developers, which would be coming up in Rajasthan & Gujarat, says V Saibaba, CEO, Lanco Solar. Lanco Solar has also established a global presence across the United Kingdom, Germany, France, Italy, Spain, USA & Canada. It is developing Solar Power Plants and providing turnkey EPC services in these countries. We think there is a massive opportunity in the solar

govt initiatives
Industry friendly policies, offering 10 years tax holiday on income, concessional customs and excise duties A new fiscal incentive by way of accelerated depreciation and resultant tax benefit was introduced Federal electricity regulator announced normative guidelines for provincial regulators to fix tariffs for renewable energy Govt facilitating easy financing through its financing arm, Indian Renewable Energy Development Agency (IREDA) The latest proposal to include wind and solar power in the Indian Electricity Grid Code (IEGC) Jawaharlal Nehru National Solar Mission program aims to achieve deployment of 20 GW of Solar Energy by 2022 A number of States including Gujarat, Rajasthan and Tamil Nadu coming up with their solar policy National Tariff Policy mandating state regulators to fix solar power purchase obligation for Discoms to promote growth for solar sector

Ground breaking ceremony of integrated Solar PV manufacturing SEZ project in Rajnandgaon district of Chhatisgarh

indiaS Solar power reCeption iS about 5000 trillion kwh/year

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Challenges
High initial investment Reduce the cost of electricity to achieve grid parity Delay in project execution Lack of innovation as new technology not engineered or developed in India Foreign technologies not feasible for the Indian climate or geography Infrastructure constraint and poor financial condition of SEBs Lack of adequate domestic manufacturing facility Cost structure for manufacturing not globally competitive Inter-state levies very high in India for manufacturing No export subsidies

With the intent to become an established player in Indias wind and solar power market, we started operations in the country in 2010 by establishing an office in the Indian wind industry epicenter, Chennai. It has been a long road for a newcomer like us to enter the Indian market with latest technology products Jukka-Pekka makinen,

Shortage of quality manpower

Permanent magnet generator from The Switch

President and Ceo, the Switch

space globally, for both project developers and EPC players. Our strategy is to undertake the entire project development gamut. Globally, there are very few EPC companies; most of them are regional. We see an immense potential there, says Saibaba. He says the cost of developing solar projects has come down considerably over the recent years. Moreover, global trends indicate that solar tariffs are also coming on par with grid power tariffs. So, it will not be very long before solar power is at parity with the grid, he adds. Another player, Moser Baer Clean Energy (MBCEL), has commissioned Indias first Thin Film based 5 MWp solar farm in Tamil Nadu in December 2010. The company has been allocated 3 more projects, 15 MWp each, by the Gujarat government. We see a tremendous opportunity for solar farms business in Indian market and are focussed towards creating a large pipeline of projects. In 2-5 years, our strategy would be to pick right opportunities in both government and private segments and build around 1 GW portfolio of solar projects across the country, said Rajya Ghei, country head, MBCEL. Seeing the huge growth potential that the renewable energy sector offers, global equipment manufacturers are entering the Indian

market, whereas the existing ones are looking at expanding their production capacity. Finland-based The Switch, a new energy technology company, has recently announced the expansion of its international presence by establishing a wholly-owned India office in Chennai. It has been a long road for a newcomer like us to enter the Indian market with latest technology products. We are also targeting the country through our existing turbine customers such as Chinese Dong Fang that has received orders from India for 166 turbines, which are based on our permanent magnet technology and full-power converters, says Jukka-Pekka Makinen, president and CEO, The Switch. Its targeted customers in India are wind turbine manufacturers and solar power system integrators. The Switch is one of the leading manufacturers of permanent magnet generators and full-power converters with power capacity ranging from 700 KW to 6 MW. The Indian renewable market exhibits great growth potential with a government that actively supports sustainable energy solutions. Wind and solar power play a key role in the countrys efforts to increase the share of renewables in the overall energy mix. Currently, the governments wind power program

2500mW renewable Power inDia aDDS annually

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Tata BP solar modules installed in one its projects

India is blessed to be situated between 84 N to 376N in the northern hemisphere of the earth. most parts of the country receive sunlight almost throughout the year. With about 300 clear sunny days in a year, Indias solar power reception is about 5000 trillion kWh/year

K Subramanya,
Ceo, tata BP Solar

is the fastest growing sector of the overall renewable energy program and it contributes almost 75% of the grid connected renewable energy, says Makinen. In addition to the governments incentives, he says, private investors have also shown strong interest and support for the renewable sectors potential and development. The key driver behind the wind power sector development has been the financial accounting provision of accelerated depreciation of 80% which has enabled large profit making companies, small investors and captive users to tap the market. The government has recently set up a generation based incentive of 50 paisa per unit, which is a particularly welcome incentive for independent power producers and foreign direct investors, Makinen adds. Another leading player in India, Tata BP Solar (TBPS), a joint venture between Tata Power Company and BP Solar, offers innovative solar solutions that cater to the needs of individual customers, large institutions as well as communities. The company also manufactures and distributes solar water heaters for the residential and institutional customers.

While we continue to service our core customers in the rural areas and industrial segments, we have expanded our capabilities to address the newly emerging market of large commercial plants of megawatt scale connected to the grid. We have already secured a large number of mw-scale projects of 1-2 MW and 5 MW and more and we have a robust pipeline for the next few years, says K Subramanya, CEO, Tata BP Solar. He says that the renewable energy has a huge potential which needs to be tapped vigorously so that India can address the twin challenges of meeting its energy security needs and addressing the increasingly urgent question of global warming and climate change. As for solar, the potential is so large that it is difficult to compute. India is blessed to be situated between 84 N to 376N in the northern hemisphere of the earth. Most parts of the country receive sunlight almost throughout the year. With about 300 clear sunny days in a year, Indias solar power reception is about 5000 trillion kWh/year which is about 7000 times more than the total electricity consumption of India, he adds.

india inCluded in TOP 10 Clean energy inveStment liSt

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