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 About EAI
V Leading Indian renewable energy business intelligence, market
strategy consulting firm
V Work on all primary renewable energy sectors ʹ solar, wind,
biofuels/biomass, waste-to-energy and small hydro
V Work on market research, entry and diversification strategy,
economic and financial modelling and pre-feasibility analysis
V Team comprises professionals from IITs and IIMs, with
renewable energy, industry research and economics
backgrounds
V Based out of Chennai
V More from www.eai.in

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ance www.eai.in

 I·m here to talk about«

h India Energy - Current Status

h India Energy ² Strategy for the Future
h Electricity Grid Improvements
h Focus on Renewables
h Investments in Renewable Energy

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ance www.eai.in

 India Energy - Current Status
Õ

  




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ance www.eai.in

 0
0rowth

eriod 0
0rowth (%)

O

-O 
O
O 
-O 

O 
-2



2


-2

 

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ance www.eai.in

 Electricity emand 0rowth

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ance www.eai.in

 Energy Sources


  



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ance www.eai.in


eak Electricity Shortage

h India's peak power shortages are projected to

worsen from
h O peak deficit in 2

(shortfall of 2 GW), to
h 2 peak deficit by 2
O (shortfall of over 

GW)

h Electricity generation capacity, most of it coal

fired, will more than treble from 2

 to 2



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ance www.eai.in

 -illages without Electricity

h Úore than 
,


villages without access to

electricity

h Úinistry of Power has accelerated the Rural

Electrification Program with a target of providing
Power to All by 2
O2

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ance www.eai.in

 uuge Oil Import Bill

h Consume  million barrels per day

h Produce O million barrels per day
h Import about 

million barrers per year
h At $ per barrel, that·s about $
billion outflow
h Easily wipes out all the gains we make from FDI
(about $
billion per year)

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ance www.eai.in

 CO2 Emissions Increase

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ance www.eai.in

 Energy Sources

h Õotal primary energy usage ² approx 

ÚÕ E

(2

)
h Primary energy will be more than double this by
2


h For its electricity, transport and other industrial
and domestic needs, India needs energy Current
sources of primary energy are:
V Coal, Natural Gas, il
V Renewables ² Hydro, biomass
V Nuclear

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ance www.eai.in

 Oil
h Consumed  million barrels per day in 2

, up
from about O2 million barrels per day in O


h Production - from
 million barrels per day in

O
to about O million barrels per day in 2



h Recent findings of oil in Rajasthan by Cairn

Energy Cairn estimates that it will be able to
achieve peak production of about
24 million
barrels per day in 2
OO

h India currently imports about 
 of its oil

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ance www.eai.in

 |atural 0as
h Demand expected to nearly double to 2
million
standard cubic meters per day by 2
O (Source:
ÚcKinsey Study)

h Current demand of O mmscmd (million cu meter per

day) made up of O2 mmscmd from domestic and rest
from imported LNG

h Hydrocarbon Vision 2
2 ² increasing proportion of

natural gas in total energy consumption from  now to
2
 by 2
2 Will require investments of $4
- $

billion across value chain

h Country currently imports 2
 of its requirements

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ance www.eai.in

 Coal
h Ases about 

million Õ per annum

h Coal imports will increase almost seven-fold, accounting

for 2 of India's total coal needs in 2

from O2 in
2



h In 2

-O
, imported about 
million Õ (O
); expected

to hit O

million Õ within the next three years

Õ


     


    


Õ



2lephants r
ance www.eai.in

 áossil Summary

h Natural gas - imports about O of consumption;

imports could increase with the fast growth of
industrialization

h Coal - imports a little over O
 of its

requirements, likely to increase steeply over the
next five years

h il - pleasantly surprised by the recent oil finds

in Rajasthan, but over 
 reliance on outside
countries for oil for the foreseeable future
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ance www.eai.in
 Õhe
roblem with áossil

h Increases India·s reliance on outside countries

for critical energy inputs

h Úakes a big hole in our $ reserves

h Causes harm to the environment

2lephants r
ance www.eai.in

 India·s Energy Strategy
Õ

 
Õ 

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ance www.eai.in

 Energy Strategy

h ÷
 
Õ

 


÷ 




2lephants r
ance www.eai.in

 Energy Strategy

h 

÷  - buying up stakes in oil and

natural gas fields worldwide

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ance www.eai.in

 Energy Strategy

h Ú÷ 
÷ 
 -

increasing the investments and by easing the
restrictive policies for private sector investments

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ance www.eai.in

 Energy Strategy

h =



 ² A key strategy here is to
make the Indian electricity grid more efficient

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ance www.eai.in

 Energy Strategy

h á 

  - Increase reliance on
renewable energy

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ance www.eai.in

 Overhauling the Electricity 0rid
Õ

 



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 Electricity 0rid - Overview

V Generation capacity of about O
GW;  billion

units produced; CAGR of  over the last  years

V Õhe fifth largest electricity generation capacity

in the world

V Õransmission & Distribution network of 

million circuit km - the third largest in the world

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ance www.eai.in

 Electricity 0rid - Overview
h Úajority of Generation, Õransmission and
Distribution capacities are with public sector
companies or State Electricity Boards (SEBs)
h Private sector participation is increasing
h Distribution licences for several cities are
already with the private sector
h Õhree large ultra-mega power projects of
4


ÚW each have been recently awarded
to private sector

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ance www.eai.in

 0rid
roblems

h Poorly planned distribution networks ² cross

country grid not good enough
h verloading of system components
h Low metering efficiency and bill collection
h Power theft
h Low operational efficiency of the public
sector utilities

2lephants r
ance www.eai.in

 0rid
rogress
h Inter-regional power transfer capacity end 2

was
2
,


ÚW; plan to take it to ,


ÚW by 2
O2
h Anbundling State Electricity Board·s assets into
separate entities for generation, transmission, and
distribution - intention of eventual privatization
h Improving metering efficiency
h Auditing to create transparency and accountability at
the state level
h Improved billing and collection
h Úandating minimum amounts of electricity from
renewables; requiring preferential tariff rates for
renewables

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ance www.eai.in

 0rid
rogress
h Policy framework: Electricity Act 2

 and National
Electricity Policy 2



h O

 FDI permitted in Generation, Õransmission &

Distribution

h Incentives: Income tax holiday for a block of O
years in

the first O years of operation; waiver of capital goods'
import duties on mega power projects

h Independent regulators: Central Electricity Regulatory

Commission for central PSAs and inter-state issues
Each state has its own Electricity Regulatory
Commission

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ance www.eai.in

 0rid
rogress

h Implementation of key reforms is likely to foster

growth in all segments

h Anbundling of vertically integrated SEBs

h ´ pen Accessµ to Õransmission and Distribution
networks
h Select distribution circles to be
franchised/privatized
h Õariff reforms by regulatory authorities

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ance www.eai.in

 0rid
rogress

h Úobilising resources from private sector ² Õwo routes

for private sector participation:
h Joint Venture (JV) Route, wherein the CÕA/SÕA
shall own at least 2 equity and the balance shall
be contributed by the Joint Venture Partner (JVP);
h Independent Private Õransmission Company (IPÕC)
Route, wherein O

percent equity shall be owned
by the private entity

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ance www.eai.in

 0rid
rogress

h Smart 0rid

h Demand-side management to selectively curtail

electricity use for delinquent customers or
neighbourhoods, while improving power quality
for better customers
h Another driver behind the need for a smarter grid
in India is its need for energy efficiency and
increased use of renewables

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ance www.eai.in

 Opportunities in Õransmission
|etwork
h Additional 
,


circuit km of Õransmission
network expected for the period 2

-2
O2

h Private sector participation possible through JV

and O

 equity mode

h Õotal investment opportunity of about AS$ O

billion over a  year horizon (2

-2
O2)

2lephants r
ance www.eai.in

 áocus on Renewables


 

2lephants r
ance www.eai.in

 Renewables Contribution to
Electricity

RE  of RE contribution
Wind 
Small Hydro O
Cogeneration 4
Bio-power 2
thers 2

2lephants r
ance www.eai.in

 Renewables Contribution to
Õransport áuel

h Less than
 of total transportation fuels

comprises biofuels

h Õotal production of ethanol and biodiesel

combined were less than
2 million Õ (2

)

2lephants r
ance www.eai.in

 Renewables with Short and
Medium Õerm
otential
h Solar
h Solar PV
h Solar CSP
h ëind
h Biofuels
h Biodiesel
h Ethanol
h Second Generation Biofuels
h uydro
h Small Hydro
h Large Hydro
h Biomass-based electricity
h ëaste to Energy
2lephants r
ance www.eai.in
 Solar
- + CS

h Current installed capacity (grid connected) :

Approx  ÚW for PV and
for CSP

h Õargets under the National Solar Úission : 2
,

ÚW by 2
22 (for PV + CSP)
h 2


ÚW BY 2
O
h O



ÚW by 2
O

h Attractive Feed-in-tariffs and other incentives

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ance www.eai.in

 ëind

h
otential: 90000 Më
h Installed capacity ² Approx 12,000 Më,
expected to reach 17,000 Më by 2012

h Investments in wind energy

h 2

 - $22 billion
h 2

 - $2 billion ( of total RE
investments)
h 2

² ver $ billion (EAI estimate)
h Accelerated depreciation benefits, or GBI

2lephants r
ance www.eai.in

 Biofuels
h Potential: Significant for both biodiesel and
ethanol, esp with second gen crops - Jatropha
(biodiesel) and Cellulosic feedstock (ethanol)
h Currently, biofuels contribute less than
 of
total transport fuel
h Feedstock availability, prices major concerns
h Úandatory blending of  in petrol and diesel
h Future depends on both government incentives
and feedstock availability

2lephants r
ance www.eai.in

 uydro ² Small uydro

h Potential of up to O,


ÚW
h Current installed capacity ² about 2

ÚW
h Small hydro investment in India grew by 

 2

-


h $4 million in 2

 (O of total RE investments)
h $O4
million in 2


h Concerns
h Delays & long timelines
h Poor transmission and distribution
h Geological and social uncertainties
h Regulatory challenges

2lephants r
ance www.eai.in

 arge uydro
h Õotal potential of O
,


ÚW
h Installed capacity ² ,


ÚW
h Úost investments are government dominated, but
private investments beginning to happen
h Õotal investments of 2,


crores planned in the OOth
five year plan (2

-O2)
h Concerns
h High capex
h Large gestation periods
h Geological surprises
h Societal and environmental impacts
h Aneven distribution of hydro resources and possible
demand-supply mismatch
2lephants r
ance www.eai.in
 Biomass
ower
h Õotal available potential ² O 

ÚW
h Exploited potential ²   ÚW
h Expected installed capacity by 2
O2 ² O


ÚW
h Dominated by small ÚW plants (O- ÚW)
h Feedstocks used - waste biomass such as rice husk,
cotton seed husk, crop waste
h Gasification/pyrolysis is the process used for power
production
h Incentives from government - duty exemption on
components, exemption in sales tax, depreciation
benefits
h Concerns - feedstock availability and price stability

2lephants r
ance www.eai.in

 ëaste to Energy
h Õypes of waste considered ² ÚSW, industrial waste
h ÚSW ² biodegradable household waste and sewage
h Industrial waste ² non-hazardous biodegradable waste
h Potential - over 2
,


ÚW of power generation
h Õypical process used is anaerobic digestion
Gasification being explored

h Concerns
h Collection and segregation of waste
h Cost and efficiency of technology

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ance www.eai.in

 Attractive RE Sectors
Õhe most attractive renewable energy investment
opportunities for the short and medium term:

h Solar PV

h Wind

h Small Hydro

h Biomass-based Power

2lephants r
ance www.eai.in

 Investments in Indian
Cleantech ($ billion)

" # $ % & '(

ë.7 ë.8 1.1 3.3 3.7 5ë

ver 
 of the investment through project

finance, rest through VC and PE investments

2lephants r
ance www.eai.in

 áoreign Companies that uave
Invested in Renewable Energy
h Abengoa Solar ² CSP
h Centrotherm PV ² Polysilicon processing
h Signet Solar ² thin film module manufacturing
h Vestas ² wind turbine manufacturing
h Gamesa ² wind turbine manufacturing
h eSolar ² solar CSP power plants
h Siemens ² wind turbine manufacturing
h Refex Energy ² Solar PV
h BP ² Biodiesel
h GE ² wind turbine manufacturing
h Biogas Nord ² biogas plants
2lephants r
ance www.eai.in
 By 2020«
h India is likely to have about 38% of its total
electricity powered by renewables, from
about 33% today (including large hydro)
h About 300 Më of electricity installed capacity,
with a more efficient grid network
h Most of its villages electrified
h Much larger participation from private sector
in energy
h 
 much less reliance on foreign
sources of energy

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ance www.eai.in

 ëho Says Elephants Can·t ance?

All you need to do is to look at India to see an

elephant dancing, and A|CI|0
REÕÕ
ëE

Õhank you!

|arasimhan Santhanam
narsi@clixoocom
Úob: + O- 4O-4OO

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ance www.eai.in