India is a 12.

8GW solar opportunity until 2016 New market new chances

11th October 2012

Dr. Tobias Engelmeier tobias.engelmeier@bridgetoindia.com

Copyright 2012 by BRIDGE TO INDIA Pvt Ltd. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means electronic, mechanical, photocopying, recording, or otherwise without the permission of BRIDGE TO INDIA Pvt Ltd. This document provides an outline of a presentation and is incomplete without the accompanying oral commentary and discussion. CONFIDENTIAL

Our business

BRIDGE TO INDIA specializes in supporting international solar companies and investors in India
BRIDGE TO INDIAs key fields of expertise are:

About us
Founded in 2008 Based in New Delhi, Hamburg and Munich German competency and local expertise Entrepreneurial approach Solar PV as a core knowledge area Three mutually supportive business segments

Policy Projects Financing Industry

Market Entry Market Potential Competitor Landscape Market Strategy

Capital Investments Remittance PD Due Diligence

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Installed PV capacity

India has more than 1GW of installed capacity already.

Solar installed capacity in India

Key Facts

Currently market growth centres on grid-connected plants (FiT) This trend is expected to continue over the next three years Around 70% of installations are in the Indian state of Gujarat, another 20% in Rajasthan both in the West

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PV market projection

We expect India to be a 12.8 GW market until 2016

MW 4500 4000 3500 3000 2500 2000 1500 1000 500 0

Expected installed capacity additions 2012-2016 (year on year)

Segments are driven by different factors FiT segement: NSM will likely be discontinued after 2017 RPO / REC segment may provide good opportunities, but regulatory questions remain Non-subsidized segments will grow: solar replacing diesel as well as grid power

Total: 12.8 GW
>1GW already achieved 1.7 GW 1.2 GW

4.0 GW 3.4 GW
Power sold directly to end consumer

2.5 GW

Power sold (mostly) to the grid

2012
Telecom Towers

2013

2014

2015
RPO-Driven

2016

FIT Driven Policy Based Grid Parity Commercial

Diesel Parity (commerical+backup)

Source: BTI market analysis, based on data from MNRE, CERC, CEA BRIDGE TO INDIA, 2012 4

Global PV markets

India is one of the most attractive solar markets globally

Global GW markets

Annual growth (2011-16) +143%

Key drivers
Ranked 2nd in the Ernst & Young country attractiveness index Market segments reach grid parity and are viable without FiT No political incentives needed for future projects Sets RPO/ REC targets to further boost the market

0.15

12.8

India

+16%
24.7 52.7

Germany

Ranked 4th in the Ernst & Young country attractiveness index Political frontrunner in the past Insecurity about future of the EEG Ranked 1st in the Ernst & Young country attractiveness index Insecurity about future supply of Chinese modules, which may result in higher prices and a lack of available technology Sophisticated financing ecosystem Ranked 3rd in the Ernst & Young country attractiveness index Insecurity about political development towards foreign investments and exchange rate fluctuations Ranked 6th in the Ernst & Young country attractiveness index Cut back of FiT in 2011 Insecurity about future development of the market
Source: BTI market research, based on data from BTI market model, Reuters, E&Y , various

4.2

+49%

30

USA

3.1

+48%

23

China

12.5

+13%

23

Italy

Installed capacity, GW 2011

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Installed capacity, GW 2016 (e)

Market drivers

Solar power makes fundamental sense in India

Structural power deficit
gap: 13%

1500

Price of commercial electricity (INR/kWh)

12 10 8 6 4 2
plus 6 % pa

Rising power costs

Driven by rising global energy costs and Indian politics Trend expected to accelerate

1000

500

High and rising power deficit By 2050: lack of 600 GW capacity

BU

Demand

Supply
Source: CEA Source: State tariff orders

3.5 3 USD/ Wp 2.5 2 1.5 1

minus 47% pa

Falling solar costs

Driven by sharp price decline of PV modules in last months Trend expected to slow

India

Germany

High irradiation
Very high irradiation levels across the country Around twice as high as Germany

Source: BRRIDGE TO INDIA research

Source: SolarGis

Solar power is already commercially viable in India without subsidies This trend will accelerate, creating a vast market in India
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Underlying market logic for our idea

The worlds largest power failure in India drives new business models (600m without power in July 2012)
Power security is a key concern to Indias businesses The grid is the main weakness in India Development of local, semiinterconnected meso-grids We will see a new breed of local utilities/IPPs The key strategic asset in the future is the access to customers/power consumers

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Indian tariff structure Average tariff (in EUR cents/kWh)

Solar is already competitive with grid power in some regions of India

16 14 12 10 8 6 4
2
Commercial Industrial Domestic

Our model works today Today, solar reduces the cost of power wherever the customer pays more than EUR 0.11/kWh (dependent on local irradiation levels) Wherever supply security is low and diesel power (currently 60 GW back-up systems) is used, the case for solar becomes stronger

Indian States Market trend 1 Falling cost of solar power will allow us to offer lower tariffs 2 Rising power tariffs will make solar a more attractive alternative

Source: CERC, SERC tariff orders

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Near term opportunities

In 2013, opportunities will come primarily from NSM Phase II

New opportunities (2013-14)
India sales opportunity: 2.3GW in the next year
00

Existing opportunities (2012-13)

India sales opportunity: 710MW this year

Installed capacity

FIT Driven Policy Based

475MW

485MW 225MW 180MW 677MW 1,047MW

Projects under execution Projects likely to be cancelled Opportunity (with DCR) Opportunity (without DCR)
Source: BRIDGE TO INDIA project database

FIT Driven Non-Policy Based REC based projects

1,150MW

392MW

RPO based projects Grid Parity Commercial and industrial Telecom Towers

185MW 71MW 50MW

Source: BRIDGE TO INDIA market model

Opportunity (with DCR) Madhya Pradesh allocations ( 225MW) Opportunity (without DCR) Karnataka (60MW) Odisha (25MW) Direct allocations (400MW in Andhra Pradesh, Jharkhand, Bihar and Uttar Pradesh - only six developers involved key client approach)
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NSM phase two 1GW allocations in 1st quarter of 2013 (with DCR) Uttar Pradesh policy 150MW in 2nd quarter of 2013 (without DCR) Projects outside policy Projects outside policy based allocations. These will include projects based on new business models around REC mechanism, RPO based projects, commercial and industrial parity projects and telecom towers (without DCR)

Our customers

We have serviced many international solar players with our Indian market knowledge

Solar Companies C o n g lo m e ra te s I n st i t u t i o n s

Government of Madhyapradesh
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Our publications

To read more about the Indian solar market, download our free reports from our website

INDIA SOLAR COMPASS

October 2012 Quarterly update on key drivers Assessment of current projects and policies Upstream industry analysis Outlook on the market

INDIA SOLAR HANDBOOK

June 2012 A first hand introduction on: Indian solar market Policies Manufacturing Future potential

INDIA SOLAR DECISION BRIEF

September 2012 REC Mechanism in India Current market status Business models Future projections

www.bridgetoindia.com/our-reports
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Contact tobias.engelmeier@bridgetoindia.com www.bridgetoindia.com Follow us on facebook.com/bridgetoindia

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