Renewable energy is energy generated from natural resources which are replenished such as wind, wave, solar, biomass

and tidal power. Governments and

companies around the world are investing heavily in developing technologies to harness the power of renewable energy sources because of their potential to
produce large quantities of energy without generating greenhouse gases which can contribute to climate change.

Renewable Energy Sources

Biomass
Biomass refers to a non-fossilized, biodegradable organic material. Biomass technology varies with the use of biogas, bagasse, rice hull, coconut husks and
shells, wood
chips/residues and other agri-wastes. Landfill waste is another source of biomass.

Hydropower
Hydropower is mostly derived from the potential energy of dammed water which is harnessed to turn a water turbine that further drives a generator that produces
electricity. Hydropower plants are classified based on their capacities, as follows:
Micro-hydro - 1 to 100 kW
Mini-hydro - 101 kW to 10 MW
Large hydro - more than 10 MW

Wind Energy
Wind energy is derived from wind that is converted into useful electrical or mechanical energy. Like oldfashioned windmills, todays wind machines (i.e., wind
turbines) use blades that are rotated by the winds kinetic energy. The blades are connected to a drive shaft that turns an electric generator to produce electricity.

Solar Energy
Solar energy is derived from solar radiation which is converted into useful electrical or thermal energy. Solar power systems can be classified into two general
categories Photovoltaic (PV) and Concentrating Solar Power (CSP) systems. A PV system that converts solar energy into an electrical energy includes a solar
photovoltaic plant that uses polycrystalline silicon solar panels exposed on a wide area.

Ocean Energy
Another form of kinetic power generation, the oceans constant movement by way of waves, tides, and currents is a powerful and clean energy resource.

Renewable Energy Market

The energy of the future will be and must be regenerative and sustainable. The generation and storage of renewable energy will be the fastest growing sector in
energy market for next 20 years. The market volume of renewable energy worldwide has increased from US$ 95.8 billion in 2007 to US$ 124.4 billion in 2010 and
will reach US$ 198.1 billion in 2015.

Indian energy sector has grown by leaps and bounds, both in terms of size, coverage and technological sophistication. India has been one of the top performing
clean energy economies in the 21st century, registering the fifth highest five-year rate of investment growth and eighth highest in installed renewable energy
capacity, according to a research report released by The Pew Charitable Trusts.

The country offers huge growth potential for solar photovoltaic (PV) industry. India is endowed with vast potential of solar energy and is quickly developing itself
as a major manufacturing hub for solar power plants. Besides, it is expected that, the annual PV-installed capacity will grow at a compound annual growth rate
(CAGR) of around 49.5 per cent during 2010-2014 to reach 1,500 megawatt (MW) by the end of 2014, according to RNCOS research report titled 'Indian Solar
Energy Market Analysis'.

The Indian energy sector is expected to become at par with the global stipulations on carbon emissions and sustainability through various changes in the current
set-up. The launch of Jawaharlal Nehru National Solar Mission (JNNSM) - a joint initiative of the Ministry of New and Renewable Energy (MNRE) and Ministry of
Power and the first of its kind in the world-is one of the most important environment-friendly energy solutions available in India. The immediate aim of the mission
is to focus on setting up an enabling environment for solar technology penetration in the country both at a centralized and decentralized level.

Power Generation and Capacity

India's electricity generation capacity will leapfrog to nearly 315 gigawatts (GW) by fiscal year 2016-17 with an estimated investment of about Rs 5 lakh crore
(US$ 88.91 billion), according to Shri Jyotiraditya Scindia, Minister of Power.

The present installed capacity of power generation in the country is about 212,829 MW which includes 26,920 MW from renewable sources. This constitutes 12.5
per cent contribution of renewable in the total power generation installed capacity in the country.

The Ministry of New and Renewable Energy has set a target of capacity addition of 29,800 MW from renewable energy sources during 12th Plan period. This
includes 15,000 MW from wind, 10,000 MW from solar, 2,100 MW from small hydro and 2,700 MW from biomass including waste to energy. It is expected that the
contribution of renewable power in the total installed capacity would be in the range of 16 to 17 per cent at the end of 12 th Five Year Plan.

Wind energy is also pegged as a key growth driver with the sector targeting 15,000 MW of new capacity in the next five years. India ranks fifth in terms of installed
capacity from wind energy projects globally which has reached to 18,522 MW as on 31.01.2013.

Sector Facts

Foreign direct investment (FDI) inflows from non-conventional energy sources during the period April 2000 to February 2013 stood at US$ 2,518.31 million,
according to department of industrial policy and promotion (DIPP)

Growth Drivers

Demand-Supply Gap:
The demand for power is huge in India due to rapid urbanization & industrialization this shows that huge capacity additions are required at good efficiency rates,
indicating that the opportunities available in this sector are huge. These capacity additions must be supplemented by adequate Transmission & Distribution (T&D)
infrastructure.

Fluctuation in prices of Raw Materials: -

With the thermal power generation segment facing the issue of shortages of coal (major raw material), other power generation sources like hydro and renewable
energy sources will get attention in the coming years. Using renewable sources to generate electricity has several advantages like a perennial energy source,
potential for lower reliance on imported fossil fuels and lower CO2 emissions. However, at present the major hurdle facing rapid expansion of renewable power is
high initial cost as compared to the competing fuels. But taking in to consideration the environmental concerns, this segment receives encouragement from the
Government.

Transmission and Distribution (Co-relation with the power generation industry):

Globally, every dollar invested in generation has an equal amount invested in transmission and distribution. However, in India traditionally every dollar invested in
generation has a corresponding half a dollar invested in transmission and distribution. The power transmission equipment industry is an important support
industry for the power sector of India and hence, the growth drivers for the power sector also act as growth drivers for the power transmission equipment industry.

FDI Equity Flows in Power Sector: -

In India, 100% FDI is allowed in the Generation, Transmission and Distribution segments of the Power Sector. The FDI inflow in the Power Sector has been on
the rise in the last 5 years. This trend is expected to continue in the coming years considering the huge opportunities available in the sector. FDI inflow is
important for the power sector because it brings in money and Indias power sector is in huge need of investments. More importantly, FDI also brings in advanced
technology making the sector more efficient. Hence, this proves to be a major growth driver for the power sector.

Monetary Benefit Through Tradable Carbon Credits

As India is a developing nation it has no emission target to follow. But, India can leverage upon this point by making more investment in renewable energy
sources and trying to reduce the emissions. India need to concentrate more on Clean Development Mechanism(CDM) projects and can become one of the
leading players in the carbon credit market.It was estimated that the number of carbon credit issued would be around 246 million by December 2012. India holds
a second position in the global carbon credits market and MCX has become the first exchange in Asia to trade carbon credits. As MCX is a futures exchange, it
relied on customers intution about the future of carbon market and used this as the trading point. An example of how companies can make use of this mechanism
is the Delhi metro rail corporation. It has become the first rail project to gain carbon credits because of the use of regenerative braking system in its rolling system
which reduces energy consumption by nearly 30%. In 2010 Barclays Capital has bought over 1 million carbon credits from projects in different countries like India,
China, Brazil, Thailand etc.

Key Players in Renewable Energy Sectors

CLP Holdings Ltd

Suzlon Energy Ltd.
KSK Energy Ventures Limited
Greenko Energies Pvt. Ltd
Adani Power Ltd

Government Support

Tax Benefit through Accelerated Depriciation Method

One of the incentive for clean energy project is the resulting tax benefit from Accelerated Depriciation Method which allows projects to deduct upto 80% of the
value of power equipment during first year of project operation.Investors are given tax benefits upto 10 years.

Indirect Tax Benefits

This includes concessions on excise duty and reduction in customs duty for renewable power equipment.Indirect tax benefits for manufacturers of specific energy
parts vary from 5 5-25% depending upon the component.

Central-Level Generation Level Generation-Based Incentives

Offered by the central government since June 2008 and administered by IREDA, the GBI is available for independent power producers with a minimum installed
capacity of 5 MW for projects commissioned on or before 31/03/2012.

Renewable Purchase Obligations

 Several states have implemented RPOs with a requirement that renewable energy supplies between 1% and 15% of total electricity. The impact of the RPOs on
renewable energy development may depend on the penalties and enforcement of the targets as well as an effective REC market to promote development of
areas of the country with the most abundant clean energy inputs resources.

Small Wind Energy and Hybrid Systems Programme

This programme is implemented through State Nodal Agencies for meeting water pumping and small power requirements in rural/semi urban/urban windy areas
for categories of users: Individuals, farmers, NGOs, Central / State Government agencies, local bodies and Government Panchayats, Autonomous Institutions,
Research Organizations, Cooperative Societies, Corporate Bodies, Small Business Establishments, Banks, etc.

Investment Policy Updates

To promote solar power for off-grid applications for both thermal as well as photovoltaic, the Government is offering financial support through a combination of 30
per cent subsidy and/or 5 per cent interest bearing loans for companies in the business.
Investment policies have been initiated to boost investments through regulated means. These include:
100% FDI into renewable energy through automatic route has been allowed by the Government.
The Ministry is also encouraging setting up of power generation projects from biomass. MNRE has proposed to continue fiscal and financial incentives during
12th five year plan such as capital subsidy linked with capacity and fiscal incentives such as concessional customs duty on import of machinery and components,
excise duty exemption, accelerated depreciation on major components and relief from taxes which are provided for setting up of biomass based power projects.
The Ministry of New and Renewable Energy, Government of India has signed a memorandum of understanding (MoU) with the Government of Denmark for
cooperation for development of new and renewable energy sector. The cooperation helped in establishment of centre for Wind Energy Technology (C-WET), and
establishment of Wind Turbine Testing Station at Kayathar and helped in developing Indian Wind Atlas.

Private Equity Scenario in Power Sector

India was the fastest growing PE market in Asia in 2011.PE investors poured $14.8B into the region, roughly a 55% increase over 2010.They closed 531 deals
40% more than the year before, major reasons for this were the higher cost of debt and choppy capital markets that drove Indian entrepreneurs to consider
private equity as the primary source of fund.
But since reaching its heights in 2011, the PE deals in the sector have cooled down, with the Power & Energy sector only constituting about 9% of the total PE
deals in India:-
Major reason for this slow down has the uncertainty in Government reforms in the sector.
Power sector is in desperate need of revival if India is to archive its goals set out by the planning commissionin 12 five-year plan of INR1,372 B to add
76,000 MW capacity needed.
Future Prospects Look Bright

Increased focus of government towards renewable energy has created attractive opportunities for investments in these sector recent solar bids concluded are
an indication that the players are becoming increasingly competitive in this space.
India is facing acute power deficit with base power deficit of 7.5% and peak power deficit of about 12.9%.
During 11thPlan 60,087 villages were electrified & in 12thplan, plans have been made to connect 125,000 villages to grid through several central government
programmes.
During 12th Plan renewable capacity of 18,500 MW and during 13th Plan 30,500 MW has been envisaged to be added through Wind, Biomass, Small Hydro
and Solar sources.
Coal requirement estimated in 12thplan works out to be 842MT for the year 2016-17 and coal availability is estimated around 604MT giving a shortfall of
238MT which is to be met from import.
 By 2017, demand for power is likely to be increased from 120GW at present to 315GW & it is required that annual power generation to be increased from
4GW to 30GW to meet such demand.
Residential power consumption is estimated to grow 14% per annum over next 10years.

Issues That Could Hinder Indias Progress in Renewable Energy Development

One challenge is Indias financial environment. While Indias abundant renewable energy potential and relatively low labour costs should provide a significant
advantage, its financial environment, and specifically the high cost of debt, wipes out those advantages. A joint Climate Policy Initiative-Indian School of
Business study found that high interest rates and relatively short-term loans for renewable energy projects in India add 2432% to the cost of financing
renewable energy in India compared with similar projects in the US and Europe.
The state of Indias electricity system and the poor financial condition of state electricity boards is another challenge. Efforts to keep electricity tariffs low have
undermined the finances of many state electricity boards to the extent that many renewable energy developers are unwilling to sign contracts with them. As a
result, renewable energy investments have been concentrated in a handful of states perceived to have a good business environment, such as Gujarat, while
others with ample wind or solar resources, such as Tamil Nadu, can no longer attract investors.

Conclusion

India has a severe electricity shortage. It needs massive additions in capacity to electricity meet the demand of its rapidly growing economy. The countrys overall
power deficit11 percent in 2009 has risen steadily, from 8.4 percent in 2006 Renewable energy can be an important part of Indias plan not only to add new
energy capacity but also to increase energy security, address environmental concerns, and lead the massive market for renewable energy. . The power sector
contributes nearly half of the countrys carbon emissions. On average, every 1GW of additional renewable energy capacity reduces CO2 emissions by 3.3 million
tons a year. Local ancillary benefits in terms of reduced mortality and morbidity from lower particulate concentrations are estimated at 334 lives saved/million tons
of carbon abated. Renewable energy is seen as the next big technology industry, with the potential to transform the trillion dollar energy industry across the world.
Indias early and aggressive incentives for the wind sector have led to the development of world-class players. Investing in renewable energy would enable India
to develop globally competitive industries and technologies that can provide new opportunities for growth and leadership by corporate India.