SolarEnergy Solar Energy India

February2009

ExecutiveSummary
SolarenergymarketinIndiaisworthUSD124mn Accountsforlessthan0.1%oftotalinstalledrenewableenergycapacity Governmentplanstoincreasetheshareofrenewableenergyto10%by2032 Solarenergyisharnessedthrougheitheroftwomethods:
SolarThermalPlant/ConcentratedSolarPowerPlant SolarPhotovoltaic(SPV)

Market

Drivers& Challenges

Drivers: Positive government policies, entry of new players in polysilicon market, abundant solar Drivers:Positivegovernmentpolicies,entryofnewplayersinpolysiliconmarket,abundantsolar radiationinIndia,exportdemandforsolarequipment Challenges:Highunitcostofsolarenergy,volatilityinpolysiliconprices,anddependenceonraw materialimports IncreaseinM&Aactivityinrenewableenergysector Domesticandinternationalplayersaremovinginsolarenergyspace Publicandprivateinvestmentshaveincreasedinsolarenergymarket

Trends

Competition

MajorplayersincludeTataBPSolar,MoserBaerPVLtd,RelianceIndustriesetc NewplayersenteringthesolarspaceincludeSuzlonEnergy C Companieshaveincreasedtheirinvestmentsinsolartechnologyandproducts i h i d h i i i l h l d d

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Introduction MarketOverview Drivers&Challenges Drivers & Challenges Trends GovernmentInitiatives G t I iti ti Competition KeyDevelopments

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Renewableenergysourcesaregainingshareinthetotalpower capacityinIndia
Overview
Principalrenewablesourcesofenergyare:
WindEnergy SmallHydroupto25MW Biogas SolarEnergy

PowerSectorBreakup
100 80 60 40 20 0

3%

6%

8%

Renewable

97%

94%

92%

Conventional

Renewableenergycapacityreached13,242Mw, accountingfor8%ofthetotalinstalledpowercapacity accounting for 8% of the total installed power capacity inIndia Renewableenergywitnessedthegrowthof128.2%in installedcapacityfrom3400MWin2002to7760MWin 2007 TheMinistryofNewandRenewableEnergy(MNRE) planstotakethetotalrenewableenergycapacityto morethan26,000MWduring11th FiveYearPlan Windenergyaccountsfor70%ofthetotalrenewable energycapacity

2002

2007

2008*

Thermal 65%

3% Nuclear 8% Renewable

25% Hydro

Indiaplanstomorethandoubleitsrenewableenergycapacityby2012 p gy p y y
*AsofFeb,2008 4

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Introduction MarketOverview Drivers&Challenges Drivers & Challenges Trends GovernmentInitiatives G t I iti ti Competition KeyDevelopments

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SolarenergyisatanascentstageinIndiaandtheSolar Photovoltaicmethodofpowergenerationisdominant
Overview
SolarenergymarketisworthUSD124mn
Solarenergyaccountsforafraction(lessthan0.1%) ofthetotalrenewableenergyinstalledcapacityin India

CapacityandGrowth
Sources/Systems DistributedRenewablePower
Solarpower

Estimated potential

Cumulative Achievement*

2.12MW

Indiahaslongtermgoalofgenerating10%ofthe countryselectricityfromrenewablesourcesby 2032 Solarenergycanbeharnessedthroughtwo methods Solar Photovoltaic (SPV) converts light SolarPhotovoltaic(SPV) convertslight directlyintoelectricity
E.g.StandalonePowerPlant MNREhasfunded33gridinteractiveSPVpower plantswithtotalcapacityof2.12MW plants with total capacity of 2 12 MW

DecentralizedEnergySystems SPVProgram
SolarStreetLighting HomeLightingSystem SolarLantern SolarPowerPlants Solar Power Plants SolarPhotovoltaicPumps

20MW/Sq.Km 140millionSq. mcollectorarea ll 2.45millionSq. mcollectorarea ll 0.63mn 70,474nos. 4,34,692nos. 6,97,419nos. 8.01Mwp 8 01 M 7,148nos.

SolarThermalProgram
SolarWaterHeating System S t SolarCooker

SolarThermal/ConcentratedSolarPower (CSP) convertslightfirstintoheatandthen electricity

E ExamplesWaterHeating,SolarPonds,Solar l W t H ti S l P d S l Cooker,SolarAirHeating

DistributedRenewablePower Gridinteractive DecentralizedEnergySystems OffGrid

*AsofOctober31,2008

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Someplayersinmarkethaveverticallyintegratedoperations whileothersfocusonindividualsegmentofvaluechain
SolarPhotovoltaicMarket
SiliconSuppliers pp Wafer&Cell Manufacturers PVModule Manufacturers PVSystems& ProductsMfg. Products Mfg Installation& Services

Indiaranks7th inworldwidesolarcellproduction Solarpanelproductionisdoneusingtwotechnologies

C Crystallinesiliconcells Mostdominanttechnologywithmorethan90%marketshare lli ili ll d i h l ih h 90% k h Thinfilmcells Fastestgrowingtechnologyduetosiliconshortage

SolarThermal/ConcentratedSolarpowerMarket
EquipmentSupplier CSPGeneration Transmission Distribution RetailConsumer

Grid

BulkConsumer

Insolarthermalenergyplants,sunlightisreflectedoffconcavemirrorsorlensestoheatoilinmetaltubes,whichis thenusedtogenerateelectricity P Powergeneratedcanbeconnectedtothegridorsuppliedtoretail/bulkconsumers t d b t d t th id li d t t il/b lk

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Introduction MarketOverview Drivers&Challenges Drivers & Challenges Trends GovernmentInitiatives G t I iti ti Competition KeyDevelopments

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DriversandChallenges

Challenges Drivers
TropicalLocation Governmentinitiatives Newplayersenteringpolysilicon N l t i l ili market Majorexportdemand Minimalfuelandenvironmentalrisks SolarPowerUnaffordableduetohigh costs Highdependenceonrawmaterial import Volatilityinpolysiliconprices Landscarcity

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Positivegovernmentpoliciesandentryofnewplayersmaking Indiaasolarhub
TropicalLocation
Indiahashighsolarinsolationwithabout300cleardaysofsunshineinayearacrossvarious locations Indiareceivessolarenergyequivalentofover5,000trillionKWhr/yr,whichisfarmorethanthe totalenergyconsumptionofthecountry Thedailyaveragesolarenergyintakevariesfrom 47KWhpersqmdependinguponthelocation

Impact

Governmentinitiatives Government initiatives

MNREisprovidingvariousincentivesandconcessionstothemanufacturersaswellusersofSPV basedproducts
Zeroexcisedutyformanufacturers 100% depreciation in the first year of installations of systems 100%depreciationinthefirstyearofinstallationsofsystems Lowimporttariffforseveralrawmaterialsandcomponents Softloans users,intermediariesandmanufacturers

Newplayersenteringpolysiliconmarket
About1015newplayersareexpectedtostartmanufacturingpolysilicon theprimeingredient forsolarphotovoltaiccells Increaseinsupplyofpolysiliconisexpectedtobringparityinpricesofpolysiliconandboostthe Increase in supply of polysilicon is expected to bring parity in prices of polysilicon and boost the solarphotovoltaicindustry

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Globaldemandandincreasingfocusonenvironmentalriskalso spurringsolarenergy
Majorexportdemand
AftertheKyotoprotocol,developedcountrieslikeUS,UK,Germanyaremovingtowardssolar powertobringdownpollutionlevelsfrompowergenerationsector ThesecountriesareimportingsolarpowergenerationequipmentsfromcountrieslikeIndia
Morethan80%ofthesolarPVcellsproducedinIndiaisexportedtocountrieslikeJapan,USandAustralia

Impact

Minimalfuelandenvironmentalrisks
Climatic changes imposing the government to give more importance to alternate sources Climaticchangesimposingthegovernmenttogivemoreimportancetoalternatesources
Insolarpowersystemstherearenoharmfulgasemission,nowastedwater,nonoiseandnowaste generation

Volatilityinoilpriceshaveincreasedthefocusonrenewablesourcesofenergylikesolarenergy
Oncesolarpowersystemisinstalled,thecostofgeneratingelectricityisfixedoverthelifespanofthe systemwithnoriskofshortageoffuelorriseinfuelprices h k f h ff l f l

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Solarindustrygrowthbeinghamperedbyhigherunitcost, dependenceonrawmaterialimport..
SolarPowerUnaffordableduetohighcosts
InitialcostofbothThermalandPVbasedsolarenergysystemsishighercomparedtothecostof conventionalenergysystemsandalsoothernonconventionalenergysystems Thecapitalcosttosetupaphotovoltaicplantgenerating1MWofelectricityisalmostUSD5.1 mn Therunningcostisalsohighasthesolarcellsalsoneedtobereplacedafterevery78years
Cents per Kwh
50 40 30 20 10 0 24 20 12 4 4 6 41 30

Impact

Minimum Maximum

Costofsolarenergyis4 5timeshigherthan othersourcesofenergy

Solar PV

Solar Thermal

Thermal

Wind

Highdependenceonrawmaterialimport
Indiadoesnothaveanymajordomesticsourceforpolysilicon,aprimeingredientforsolarcell production SolarcellproducersinIndiaimportalmost100%oftheirwafercellrequirement

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..increasingpolysiliconpricesandalternatelandrequirements
Volatilityinpolysiliconprices
Polysilicon,mainrawmaterialforsiliconwafercells,constitutesabout80%ofthesolarcellcost Higherpolysiliconpricesincreasethecostofinstallationofphotovoltaicpanelsandpushupthe costofsolarpowergeneration f l Spotpricestouched$380400/Kgin2008,almost10timesthe$40/Kgspotpricesin2004 Thepricesareexpectedtocomedownin2009astheglobalsupplyisexpectedtodoublein2009
USD Per Kg

Impact

400 300 200 100 0 2004

2005 2006 2007 2008 2009E 2010E

Longtermcontract pricesandonspot pricesofsiliconhave increased

LandScarcity
PercapitalandavailabilityisascarceresourceinIndia Dedicationoflandareaforexclusiveinstallationofsolarcellsmighthavetocompetewithother necessitiesthatrequireland Theamountoflandrequiredforsolarpowerplantsisabout1sqkmforevery20 60megawatts The amount of land required for solar power plants is about 1 sq km for every 2060 megawatts (MW)generated
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Introduction MarketOverview Drivers&Challenges Drivers & Challenges Trends GovernmentInitiatives G t I iti ti Competition KeyDevelopments

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KeyTrends

IncreaseinM&Aactivity

Trends
Newplayersenteringsolar energymarket k t Increaseinpublicandprivate investments i t t

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SectorwitnessinggrowthinM&Adealsandentryofdomestic andinternationalplayers
IncreaseinM&Aactivity
TotalrenewabledealsofUSD134mnsignedinIndiain2008,about7.3%oftotalAsiaPacific renewabledeals
SolardealsinIndiaaccountedfor26%ofthetotalsolardealssignedinAsiaPacific

Solarmarketisattractingplayersoutsideenergysectorwhoseekanearlyentryandaimsat scalinguptherequiredtechnology
DateAnnounced 04Sep08 TargetName MoserBaerPhotovoltaicLtd Acquirername NomuraHoldingsInc,CreditSuisse Group,IDFCPrivateEquityCoLtd, MorganStanley,CDCGroup GoldstoneInfratechLtd DealValue(USDmn) 92.28

M&Adeals addingtothe adding to the growthofsolar energysector

10Jun08

TFSolarPowerPvt.Ltd.

34.98

Newplayersenteringsolarenergymarket
Manynewdomesticandinternationalplayershaveentered/planstoentersolarenergymarket inIndia
SuzlonEnergy,windpowerequipmentmaker,isventuringintosolarenergymarket USpowermajorAESCorpandprivateequityfirmRiverstoneHoldingsLLC,whichjointlyplanstoinvestUSD1 bninphotovoltaicsolarprojectaroundtheworldalsoeyingIndianmarket Germanrenewableenergyfirms,ProzopSolarandQCells,planstosetupmanufacturingfacilitiesinIndiato takeadvantageofabundantsolarenergyinthecountry take advantage of abundant solar energy in the country

Variousnew playerslooking foropportunities insolarmarket

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Publicandprivateinvestmenthasalsoincreasedinsolarenergy market
Increaseinpublicandprivateinvestments
Governmenthasconciselyreleasedfundsforvarioussolarenergyprogramsinthecountry
USD

150,000 100,000 50,000 50 000 0

200405 200506 200607 Governmentalsoplanstosetup60solarcities p p TheSemiconductorPolicyandGovernmentincentivesforGridinterconnectedSolarpowerplantsresultedin severalcompaniesaggressivelyfocusingontheSolarPVspaceinIndia
IndiareceivedcommittedinvestmentsofaboutUSD7bn. IndiacouldpotentiallyreceiveanadditionalinvestmenttothetuneofUSD1520bn(FDIandprivatesector)by2012

102,690 45,189 45 189

90,382

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Introduction MarketOverview Drivers&Challenges Drivers & Challenges Trends GovernmentInitiatives Go ernment Initiati es Competition KeyDevelopments

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Governmentisprovidingvariousdirectandindirectincentivesto encourageinvestmentinsolarenergy..
DirectInitiatives FinancialassistanceamountinguptoINR12(Cents24)perKWhourincaseofsolarPV withmaximumcapacityof50MWanduptoINR10(Cents20)PerKWincaseofthermal Powerplantforaperiodof10years Indian Renewable Energy Development Agency (IREDA) provides revolving fund to IndianRenewableEnergyDevelopmentAgency(IREDA)providesrevolvingfundto financingandleasingcompaniesofferingcreditforthepurchaseofPVsystems DirectInvestmentofupto100%ispermittedinnonconventionalenergysectorthrough theautomaticroute

IndirectInitiatives

InMarch2007theIndiangovernmentannouncedasemiconductorpolicyunderits SpecialIncentivePackageScheme(SIPS). TypeofUnit Fabrication* EcoSystem ThresholdNPVof investment USD0.51bn USD0.20bn IncentivesinSEZ 20% 20% IncentivesinNon SEZ 25%+ExemptionfromCVD 25%+ExemptionfromCVD

Note: *Fabricationunitmeansasemiconductorwaferfabricationfacility **Ecosystemunitsmeansunits,otherthanafabunit,formanufactureofsemiconductors,displaysincludingLiquidCrystalDisplays(LCD),OrganicLightEmitting ** Eco s stem nits means nits other than a fab nit for man fact re of semicond ctors displa s incl ding Liq id Cr stal Displa s (LCD) Organic Light Emitting Diodes(OLED),PlasmaDisplayPanels(PDP),anyotheremergingdisplays;storagedevices;solarcells;Photovoltaics;otheradvancedmicroandnanotechnologyproducts

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Governmenthasvariousschemesinplaceatcentralandstate leveltoincreasedomesticdemandforsolarpower
Program/Scheme
Aditya/AkshayUrjaShops RenewableEnergyParks

Target
1shopineachdistrictofthe country

Progress
268Aditya/AkshayUrjaShopshavebeen sanctioned

2DistrictLevelEnergyParks(DLEP) Some500oddRenewableEnergyParksare perdistrict alreadyoperational 1StateLevelEnergyPark(SLEP)Per State 8buildingIntegratedPhotovoltaic System(BIPV)buildingsinatleast 10statesby2010 Buildinghavebeentriedoutinfewsates AdministrativebuildingofWBREDA,Punjab EnergyDevelopmentAgency GovernmentofHimachalPradeshhaveadeit mandatorytocontructallitsfuturebuildings d t t t t ll it f t b ildi usingpassivedesignfeatures WBREDAisalsoactivelyconsideringonthelines ofmandatoryuseofsolarpowerinnew multistoriedbuildings multistoried buildings

SolarBuildings

RemoteVillageLighting Program

5,000villagesand1,500hamletsby Around3,330unelectrifiedcensusvillagesand 2012 830electrifiedhamletsofelectrifiedvillages havesofarbeenprovidedwithbasicelectricity facilities

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GujaratGovernmentannouncedaradicalsolarpolicyin2009to encouragesolarpowergeneration
GujaratSolarPowerPolicy2009
GujaratSolarpolicyallowsinstallationofmaximumof500MWproject,whileminimum installedcapacityofanyprojectisat5MW
State'spolicyisradicalsinceitputacap10timesmorethantheCentre'scapof5MWforsolarpower projectsinIndiais50MW

Anycompanyorentityisallowedtosetupthesolarpowerprojectforeithercaptiveuseorfor sellingofelectricity Nofossilfuel(coal,gas,lignite,naphtha,woodetc)isallowedtobeusedinsolarthermal No fossil fuel (coal gas lignite naphtha wood etc) is allowed to be used in solar thermal powerproject Policyallowsdeveloperstosellsolarenergyfor25yearstolicenseedistributorsinthestate underaPowerPurchaseAgreement(PPA)tobespecifiedbythestateutility GujaratUrjaVikas NigamLimited(GUVNL) SolarPhotovoltaic SolarThermal ProjectcommissionedbeforeDecember INR13perunitforthe INR10perunitforthe 31,2010 first12years first12years INR 3 per unit form 13th to INR 3 per unit form INR3perunitform13t to INR3perunitform th year 25 13th to25th year ProjectcommissionedafterDecember 31,2010andbeforeMarch31,2014 INR12perunitforthe INR9perunitforthe first12years first12years INR 3 per unit form 13th to INR 3 per unit form INR3perunitform13 to INR3perunitform 25th year 13th to25th year
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Introduction MarketOverview Drivers&Challenges Drivers & Challenges Trends GovernmentInitiatives G t I iti ti Competition KeyDevelopments

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Majorplayersinsolarmarkethaveincreasedinvestmentsin solarsectorvaluechain
MajorPlayers
SolarPVMarket:
Thereare9solarcellmanufacturers,22PVmodulemanufacturersand50PVsystemsmanufacturersinIndia KeyplayersinIndianSolarPVmarketareBHEL,BEL,TataBPSolar,CentralElectronics,MaharishiSolarTechnology,Synergy RenewableEnergy,Schottsolar,MoserBaer,andSignetSolarIndia.

SolarThermalMarket:
AcmeEnergySolutionsplanstosetupAsiasbiggestsolarthermalenergypowerplantof10MWcapacityinNagpur

Manycompanieshaveannouncedsizeableinvestmentinsolarpower
CompanyName RelianceIndustries SolarSemiconductorsPvtLtd RelianceIndustries SignetSolarInc. MoserBaerPV TitanEnergySystemLtd KSKEnergyVenturesPvtLtd TFSolaPowerLtd TataBPSolarIndiaLtd PhoenixSolarIndiaLtd Products Solarfabrication Assembly Test MarkPack(ATMP) SolarPV SolarPV Polysilicon,Wafers,Cellsandmodules SolarPVandassociatedproducts(thisfilmbased) Siliconcells,modules,thinfilmconcentrators Solarcells,solargradesemiconductorwafers,solarPVmodulesandpolysilicon IntegratedsolarpanelbasedonthinfilmandCadmiumTelluride(CdTe)technology Solarthinfilmpanels SolarPV SolarPV Investments(USD) 4.63bn 2.96bn 2.91bn 2.42bn 1.50bn 1.47bn 0.80bn 0.59bn 0.42bn 0.30bn

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Introduction MarketOverview Drivers&Challenges Drivers & Challenges Trends GovernmentInitiatives G t I iti ti Competition KeyDevelopments

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KeyDevelopments
Date
15Jan09

Development
MNREisconsideringaproposaltosetupacompanyforgeneratingpowerfromrenewablesources.Thegovernmentis expectedtobea100%owneroftheproposedfirmanditwilltapsolar,geothermal,wind,biofuelandbiomasssourcesfor powergeneration GujaratGovernmentisgivingathrusttosolarpowergenerationandofferinganumberofincentivesunderitsnewsolarenergy policy(200914).GovernmentwouldprovideincentivestothoseinstallingaminimumSPGcapacityof5MWincaseofsolar photovoltaicorsolarthermalmeans.ElectricitygeneratedfromtheSPGsforselfconsumptionorsaletolicenseesorthird partiesshallbeexemptedfrompaymentofelectricityduty TransIndiaAcquisitionCorporationhasenteredintoadefinitiveagreementtoacquirenotlessthan80%ofprivatelyheldSolar SemiconductorLtdinashareswapdealworthUSD375mn. DuPonthasopenedasolarmaterialsbusinessinIndia.DuPontPhotovoltaicSolutionswillsellfilms,resins,encapsulantsheets, flexiblesubstratesandconductivepastesforbothcrystallinesiliconandthinfilmmodulestotheAsiannation'ssolarindustry. TataBPSolartodayannouncedthattheyhadsignedanagreementwithCalyonBank(CreditAgricoleCIB)andBNPParibasand amongothers,toraiseUSD78mntofundits128MWSolarCellExpansionProject

08Jan09

27Oct08

04Sept08

17Mar08

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Thankyouforyourtime
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