# 65 June 2017

RENEWABLE
Rural Electrification
ENERGY and Reverse Migration
A rural electrification model that
• Barriers for
provides reliable, resilient and
Institutional sustainable electricity as well as,
Investors in open window of many
India’s Renewable other economic activities for
rural populace.
Energy Industry

POWER SECTOR
• The role of Coal
in Southeast Asia
Power Sector

• Rural
Electrification
and Reverse
Migration; TERI
E D I TO R I A L
Dear Energetica India Readers,
Energetica India welcomes you to the June
2017 issue.
Indian solar industry, recently, reached
another historical milestone with record low
tariffs achieved in the auction concluded for
Bhadla Phase-IV Solar Park, Rajasthan. The
low tariff comes fixed for 25 years with no
escalation and no VGF from the Government.
The solar developers here are ACME Solar
Holdings (200 MW) at a tariff of Rs. 2.44 per
unit and SBG Cleantech One (300 MW), with
a tariff of Rs. 2.45 per unit.
The good news does not end here. On the
wind side, India has seen record growth in the
wind power capacity addition by adding over
5400 MW in 2016-17 against the target of
4000 MW. This year's achievement surpassed
the capacity addition of 3.423 MW achieved
in the previous year. The leading States in the
wind power capacity addition during 2016-17
are
— Andhra Pradesh 2190 MW,
— Gujarat 1275 MW,
— Karnataka 882 MW.
To further drive the growth of renewable
energy in the country, The Indian Union
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04
Cabinet has given its approval to raise bonds renewable energy targets, it's important to
of Rs. 2360 crores for renewable energy. The first understand their barriers to investment.,
bonds will be raised by the MNRE through the Climate Policy Initiative (CPI) in their report
Indian Renewable Energy Development studying role of Institution Investors in India's
Agency (IREDA) during the 2017-18. Renewable Energy has examined and
prioritized the barriers facing foreign
These funds will be used by MNRE in the institutional investors, who have the most
approved programmes/schemes for solar potential to fill the debt financing gap and
park, green energy corridor, generation- domestic institutional investors, who have the
based incentives for wind projects, CPSU and most potential to fill the equity financing gap.
defence solar projects, viability gap funding
for solar projects, roof-top solar, off-grid/grid- — The role of Coal in Southeast Asia
distributed and decentralized renewable Power Sector
power, investment in corporations and Sylvie Cornot-Gandolphe an independent
autonomous bodies. consultant on energy and raw materials, has
collaborated with the Oxford Institute for
Energetica India, in its June 2017 issue, meets Energy Studies (OIES) as a Research Fellow and
up with industry leaders to learn more about carried out a research on Southeast Asian coal
the industry's latest trends and opinions: markets and their implications for global coal
— Mr. Nitin Kalothia, Director, Sustainability trade
Initiatives Practice, Frost & Sullivan
— Pankaj Goyal, Director & CFO, Angelique — Rural Electrification and Reverse
International Limited Migration; TERI
The scope of this article is to discuss a rural
Highlights of the June 2017 Issue electrification model that provides reliable,
resilient and sustainable electricity as well as,
— Barriers for Institutional Investors in open window of many other economic
India's Renewable Energy Industry activities for rural populace.
In order to utilize the full potential of
institutional investors to finance India's We hope you enjoy reading our work.
www.energetica-india.net
EDITOR. EUGENIO PÉREZ DE LEMA eugenio@energetica-india.net
DIRECTOR. GISELA BÜHL gisela@energetica-india.net
INDIA COUNTRY MANAGER, INDIA.
SONAM RAINA sonam.r@energetica-india.net Tel: + 91 9920590078
JOURNALIST. RASHMI NARGUNDKAR journalist@energetica-india.net
info@energetica-india.net I
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FINANCIAL DIRECTOR. CARLOS FERNÁNDEZ carlos.f@energetica-india.net
LAYOUT & DESIGN. DANIEL CONEJERO contras-t.com I PRINTER. GRAFISUR
The views expressed in the magazine are not necessarily those of the editor or publisher. The
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you may obtain the rights by calling OMNIMEDIA, S.L.
energetica INDIA · JUNE17
 # 65 - June 2017

INTERVIEW
— Mr. Nitin Kalothia, Director, Sustainability Initiatives Practice, Frost and Sullivan…………….………..14
8th WRETC 7 — Mr. Pankaj Goyal, Director & CFO, Angelique International Ltd.……...............................……………..18

3rd Environtech Asia 41

SOLAR POWER
Angelique International Online — Solar PV Price Trends; Summarised by Energetica India……………...........................………………20

Excon 2017 Inside — Impact of Diversified Module Capacity on the Cost of Solar PV Projects; NVS Manyam Telukuntla,
back and Payal Saxena; Gensol Consultants Pvt Ltd………….............................................................…….24
cover

Energy Storage India 2018 9

CLIMATE CHANGE
Exxon Mobil 5 — Investing for Climate in Asia; Summarised by Energetica India …………..............................………...26

Frost & Sullivan Sustainability 17

Awards RENEWABLE ENERGY
— Renewable Energy Investments in Asia; Summarised by Energetica India..............................................31
Infineon 3 — Barriers for Institutional Investors in India's Renewable Energy Industry; Energetica India…….....….…34

Ingeteam Online — Renewable Energy Mini-Grids; Summarised by Energetica India….......................................…………38

Inter Solar India Back

Cover WIND POWER
— Guidelines for 1000 MW ISTS connected Wind Power Projects; Summarised by Energetica India...……42
IPTEX & GRINDEX 49
POWER SECTOR
Jinko Solar Online
— Fossil Fuel Subsidy; a barrier to Low Carbon Economy; Summarised by Energetica India……………..46
Magnetrol Online — The role of Coal in Southeast Asia Power Sector; Summarised by Energetica India……........…………50
Inside — Captive Power Plants in India 2016-17; An Enincon Consulting Report; Energetica India
Renewable Energy Expo India front
cover speaks to Mr. Ravi Shekhar, Partner & Head - Research and Consulting ..............................................55
— Rural Electrification and Reverse Migration; Ashutosh Negi; Department of Energy &
Environment; & Aaina Dutt; Ph.D. Scholar, Department of policy and regulatory issues;
TERI………………………………………………………………...……………………………..58

INDUSTRY JEWEL
— Industry Jewel - Shailesh Vaidya, CEO, Scorpius Trackers ...................................................................61

2017
# 65 June

4. Editorial / 6. Contents / 8. Take advice / 10. Energy News / 62. Subscription Form

Rural Electr
ification
e Migration
ON COVER Rural Electrification and Reverse Migration
RENEWABLE and Revers model that
ification
ENERGY A rural electr le, resilient and
reliab
for provides as well as,
• Barriers e electricity
sustainabl
ow of many for
Institutional
A rural electrification model that provides reliable, resilient and Sustainable electricity as well
open wind ties
omic activi
Investors in other econ
lace.
wable rural popu
India’s Rene
stry
Energy Indu

POWER SEC
TOR
as, open window of many other economic activities for rural populace.
of Coal
• The role
t Asia
in Southeas
or
Power Sect

• Rural
Electrification
and Reverse
TERI
Migration;

06 energetica INDIA · JUNE17

 AUGUST 2017

KEY HIGHLIGHT
15
 INTERSOLAR NORTH AMERICA 2017
Date: 11th to 13th July 2017
Place : Moscone Center in San Francisco,
California, USA
Organizer: Intersolar Team North America
Tel : +49 761 3881 3800
Email:
Website : https://www.intersolar.us/en/attend/
about-intersolar/intersolar-north-america.html
RENEWABLE ENERGY INDIA EXPO
Date: 20th to 22nd September 2017
Place : India Expo Centre, Greater Noida, India
Organizer: UBM Event
Tel : +91 9810930171
Email: Rajneesh.khattar@ubm.com
Website: http://www.renewableenergyindiaexpo.com/
Copies of Energetica India's October 2017
issue shall be distributed for free at
3rd Environtech Asia in Mumbai.
For Advertisement enquiry, please send an email
at sonam.r@energetica-india.net
Early Bird Discount on Advertisements Valid
Upto 15th October 2017
EXCON 2017
Date: 12th to 16th December 2017
Place : BIEC, Bangalore, India.
Organizer: Confederation of Indian Industry
Tel : + 91 - 80562 68841 (Kesavan P S)
Email: kesavan.ps@cii.in
Website : www.cii.in / www.excon.in
IPTEX-GRINDEX EXPO 2018
Date: 22nd to 24th Feb 2018
Place : Mumbai Bombay Exhibition Centre,
Mumbai, India.
Organizer: Virgo Communication &
Exhibitions Pvt Ltd
Tel : +91 97406 11121
Email: vashdev@virgo-comm.com
Website : http://www.iptexpo.com/
3RD SOLAR INDIA 2018 EXPO
Date: 23th to 25th May 2018
Place : Pragati Maidan, New Delhi, India.
Tel : + 91 9990 584 185
Email: praveens@eigroup.in
Website : http://www.solarindiaexpo.com
08
8TH WORLD RENEWABLE ENERGY
TECHNOLOGY CONGRESS
Date: 21st to 23rd August 2017
Place : Expo & Convention Centre Manekshaw
Centre New Delhi,India .
Near Dhaula Kuan, Delhi Cantt
Organizer: Energy and Environment Foundation
Tel : +91 9213901510 (Punit Singh)
Email: punit.nagi@ee-foundation.org
Website: http://wretc.in/
Copies of Energetica India's September 2017
issue shall be distributed for free at Renewable
Energy India Expo in Greater Noida.
For Advertisement enquiry, please send an email
at sonam.r@energetica-india.net
Early Bird Discount on Advertisements Valid
Upto 15th August, 2017
INDIA ENERGY EFFICIENCY CONCLAVE 2017
Date: 29th November to 1st December 2017
Place : Jaipur, Rajasthan
Organizer: Alliance for an Energy Efficient Economy
Tel : Tel : +91-11-40567344, 46635600
Email: secretariat@aeeeconclave.org
Website : mailto:www.aeeeconclave.org
Copies of Energetica India's Nov - Dec. 2017
issue shall be distributed for free at
Intersolar India 2017 in Mumbai.
For Advertisement enquiry, please send an email
at sonam.r@energetica-india.net
Early Bird Discount on Advertisements Valid
Upto 15th November 2017
INDIA SMART GRID WEEK 2018
Date: 5th to 9th March 2018
Place : New Delhi, India.
Organizer: India Smart Grid Forum Team
Tel : + 91 11 4103 0398
Email: isgw@isgw.in
Website : http://www.isgw.in/
Copies of Energetica India's 2018 May issue shall
be distributed for free at 3rd Solar India 2018
Expo in New Delhi.
For Advertisement enquiry, please send an email
at sonam.r@energetica-india.net
Early Bird Discount on Advertisements Valid
Upto 15th November 2017
Copies of Energetica India's July - August 2017 issue
shall be distributed for free at 8th World Renewable
Energy Technology Congress in New Delhi
For Advertisement enquiry, please send an email
at sonam.r@energetica-india.net
Last date to confirm Advertisement
- 15th July 2017
3RD ENVIRONTECH ASIA
Date: 22nd - 24th November 2017
Place : Bombay Exhibition Centre,
Goregaon(E), Mumbai.
Organizer: Radeecal Communications.
Tel : +91 77188 84496
Email: sales@envirotechasia.com
Website : http://www.envirotechasia.com/
INTERSOLAR INDIA 2017
Date: 5th to 7th December 2017
Place : Bombay Exhibition Centre (BEC)
Western Express Highway, Goregaon East Mumbai
400 063, India, Mumbai (India)
Organizer: Team Intersolar India
Tel : +91 22 4255-4707
Email: ball@intersolar.in
Website : http://www.intersolar.in/en/home.html
PLAST INDIA 2018
Date: 7th to 12th Feb 2018
Place : Gandhinagar - Ahemdabad, Gujarat, India.
Organizer: PlastIndia Foundation.
Tel : + 91-22-26832911-14
Email: mamtakoza@plastindia.org
Website : http://www.plastindia.org/plastindia-2018
/index.html
ELECRAMA 2018
Date: 10th to 14th March 2018
Place : India Expo Mart, Greater Noida, NCR, INDIA
Organizer: Indian Electrical & Electronics
Manufacturers' Association (IEEMA)
Tel : + 91 9980053992
Email: murlikrishna@ieema.org
Website : http://elecrama.com/
4TH SMART CITIES INDIA 2017 EXPO
Date: 23th to 25th May 2018
Place : Pragati Maidan, New Delhi, India
Tel : +91 7827 855 273
Email: aruns@eigroup.in
Website : http://www.smartcitiesindia.com/
energetica INDIA · JUNE17
Cabinet approves Initial Public Offer of Indian
Renewable Energy Development Agency Limited.
The Cabinet Committee on book-building basis, with MNRE / IREDA through visibility in domestic and
Economic Affairs, chaired by cap of 0.5% on equity Book Running Lead international financial
the Prime Minister Shri post issue for CPSE Manager (BRLM) as per markets. IREDA, being the
Narendra Modi, has given its employees and the the guidelines of premier institution for RE
approval to: allocation to retail Department of Sector, will be required to
(a) issue 13,90,00,000 fresh investors in the net offer Investment and Public raise equity funds to leverage
equity shares of Indian will not be less than 35%, Asset Management loan financing for RE Sector.
Renewable Energy as per the ICDR, (DIPAM) and as per IREDA has to cater to the
Development Agency 2009.However, the guidance of the Inter- increasing needs of the sector
(IREDA) of Rs.10 each to number of shares Ministerial Group. to sustain its contribution to
the public on book- proposed to be issued to The Public issue of equity will the Renewable Energy Sector.
building basis through employees and retail enable IREDA to increase its Government of India has
the IPO; investors will be finalized equity base which will help scaled-up the RE targets to
(b) issue shares to retail in consultation with the them raise more debt 175 GW by the year 2022. To
investors and IREDA lead managers and as per resources for funding RE achieve this ambitious target,
employees at a discount the SEBI regulations and projects. Such public issue substantial investments in RE
of 5% on the issue price (c) conduct book building will also enable it to unlock its sector will be required.
of each equity share on process for the said IPO by true value and increase its

Major Advancement in Commercial Solar

Technology - RenewSys launches
5BB PV Solar Cells
RenewSys, India's first & of Bus Bars (BBs) in a
only integrated photovoltaic cell lowers the
manufacturer of Solar PV series resistance and thus
Modules & its components increases the current.
i.e. Encapsulants, Eventually, the PV cell power
Backsheets and PV Solar increases, which improves
Cells, became the first the overall module
Indian company to launch performance. Apart from the
the production of five Bus advanced technologies such
Bar (BB) Solar Photovoltaic as PERC, PERT and IBC,
(PV) Cells. The 5BB cells, increasing the number of Bus
part of RenewSys' Bars, is an attractive
RESERV® range of solar PV technology development to
cells, will be manufactured produce solar panels with
using world class European higher efficiency.
PV cell equipment. RenewSys will start
Increasing the number commercial production of its
5BB Solar PV Panels/ Modules
from July 2017 onwards.
5BB cells are expected to
noticeably improve the panel/
module efficiency when
compared to solar panels/
solar modules that use 4BB or
3BB cells. The additional Bus
Bar in conventional silicon
solar cells (with respect to
3BB/4BB) facilitates a uniform
distribution of stress, making
5BB cells more durable.
Dr. Stephan Wansleben,
CEO of Solsol, adds: "One
cannot stress enough the
importance of high
performing, reliable
products. RenewSys has
quickly established itself as
one of India's dependable
technology leaders among
PV Solar Cell and PV Solar
Panel manufacturers."
Commending the team
at Solsol for their support
Mr. Hiranandani says,
"Solsol is a great
technology partner with a
vast project experience.
They helped us reach
competitive productivity in
the shortest possible time."

10 energetica INDIA · JUNE17

IBC SOLAR commission 22.5 MWp project in India
IBC SOLAR, a global
leader in photovoltaic (PV)
systems and energy storage,
have continued their success
in India with their sixth PV
power plant located in
Rajasthan in the north of
India. Last week the 22.5
MWp project Phalodi was
commissioned on time and
handed over to the investor.
IBC SOLAR have doubled the
size of their previous project
for the second time in a row.
TÜV Rheinl and confirms
Trina Solar's PV Modules
Operational in a 455 MW
DC Solar Project developed
by SB Energy
Trina Solar's PV modules
have commenced
operations in a 455MW DC
solar power plant in Andhra
Pradesh developed by SB
Energy, a joint venture
between SoftBank Group,
Bharti Enterprises and
Foxconn Technology
Group. This is the largest
single order that Trina Solar
has ever closed in India.
The PV modules
supplied for this project
were TALLMAX 72-cell
polycrystalline panels.
TALLMAX modules are
recognised by industry
professionals for their
proven historical
performance in the field
and the high quality
standard. It is one of the
industries most trusted
products for large-scale
solar projects.
T h e p l a n t ,
commissioned on March
29, 2017, was designed and
energetica INDIA · JUNE17
highest German engineering
standards.
With this 22.5 MWp-
project IBC SOLAR continue
on their road to success in
India. The new utility-scale PV
plant is located near Phalodi
in Rajasthan which is one of
the federal states with the
largest amount of installed
solar capacity in India. The
project was a cooperation
between IBC SOLAR Projects
based in Mumbai and their
parent company in Germany.
developed by SB Energy
using the latest technology
of module cleaning, site
maintenance and security
from global best practices.
It has the capacity to
produce clean electricity
for over 700,000 Indian
households.
Mr Jifan Gao,
Chairman and CEO of
Trina Solar said: "We are
proud to be the trusted
partner of SB Energy for its
first large-scale solar
project in Andhra Pradesh.
This is part of our
continued effort to
contribute to India's
national target of 100GW
of solar generation
capacity by 2022. We are
committed to working
with SB Energy in meeting
the country's energy
demands through clean
sources and building a
green and sustainable
environment."
While IBC SOLAR in India had
the lead and overall
responsibility for the project,
the engineering and technical
supervision was done by the
German parent company who
also provided some key
components.
The project is a
combination of IBC SOLAR
group's local competencies
and IBC SOLAR's global
standards. Shailendra
Bebortha, Managing Director
of IBC SOLAR in India, is
Vikram Solar achieves
a milestone of 1GW solar
manufacturing capacity
Vikram Solar, the globally
recognized and India's
leading solar energy
solutions provider,
reached 1GW of
manufacturing capacity.
This feat is a major
contribution towards the
100 GW target set by the
Indian government by
2022. With this
accomplishment, Vikram
Solar cements its position
as a forerunner of the
Indian Solar energy
segment, which is
emerging to be the largest
PV market in the world.
With a capacity of 1 GW,
Vikram Solar Pvt. Ltd is
well equipped to cater not
only to the Indian needs,
but also contribute to the
International solar
industry.
Vikram Solar is driving
the manufacturing
excellence in the Indian
solar industry while
bringing for the best in
particularly proud that
despite all challenges the
project was finalised on
schedule.
The plant has been
certified by the Bangalore
branch of TÜV Rheinl and, a
leading provider of technical
services worldwide,
according to IEC62446
confirming that the PV plant
combines the highest
German quality standards,
maximum cost efficiency and
best operating results.
class technology backed
by an aggressive R&D.
During FY 2016-17, the
company reported close
to INR 1700 crores
revenue, a significant
increase compared to INR
900 crores in FY 2015-16.
Expressing his
satisfaction on this feat,
Gyanesh Chaudhary, MD
& CEO, Vikram Solar said,
"For the past decade we
have been toiling away,
shaping the solar
landscape in the country,
with our high efficiency
modules 'made in India'.
Today we pride ourselves
in being an Indian
company to have fortified
manufacturing capacity to
1GW. India has today
come into its own as one
of the largest emerging PV
markets in the world and
we are geared up to do
our bit in the 'Make in
India' initiative as well."
11
Global wind operations and maintenance market
set to hit $27.4 billion by 2025, says GlobalData
The global wind
operations and maintenance
(O&M) market is set to grow
from just over $13.7 billion in
2016 to around $27.4 billion
by 2025, representing a
compound annual growth
rate of 8.0%, according to
research and consulting firm
GlobalData.
The company's latest
report states that the O&M of
a wind farm is essential as it
contributes to value creation,
increases turbine availability,
and improves returns. Aging
GE and Solaire direct India Partner
for the Next 25 Years
India's booming economy
and the increasing need
for electricity have made
the country quickly
emerge as one of the
world's hotspots for solar
power. Today, GE Energy
Connections is partnering
with Solairedirect, a
subsidiary of Engie, to
equip its plants with 140
megawatts (MW) of LV5 1-
MW solar inverters as well
as a 25-year, long-term
service agreement (LTSA).
Inverters will be installed in
two solar plants with 70-
MW capacity each.
Included in the service
agreement is the provision
12
wind turbines and the failure
of components such as
blades and gearboxes are the
major driver of the
burgeoning market.
China is the largest wind
O&M market in the world
and accounted for 30% of
the global market size in
2016. GlobalData expects
that the country will maintain
its leading position, with a
share of 27.4% in 2025.
Increasing installations of
wind power will provide
opportunities for O&M in the
of parts when needed and
the required man-hours for
repairs and maintenance for
these two plants.
The right technology is key to
the plant's success, but
ensuring that the technology
can continue to keep
performing to the desired
standard is arguably just as
important. GE's LTSA ensures
high availability and high
energy output of the plant.
Thanks to the service
agreement, the customer can
benefit from improved
project bankability and
reduce the total cost of
ownership throughout the
lifespan of the two solar
forecast period. A large
installation base, government
plans, and strict
environmental laws are the
major drivers for the growth
of the country's wind power
market.
The US is the second-
largest wind O&M market,
with a share of 14.6% in
2016, and is also expected to
maintain its position in 2025.
Germany - the largest
European wind O&M market
-accounted for 14.3% of the
global market in 2016, and is
plants.
"In an ever more competitive
solar industry, service
becomes the differentiator.
Thanks to the LTSA provided
by GE, lifetime support is
guaranteed for our two
plants. We are confident in
the knowledge that we will
be able to continue efficiently
supplying solar-fueled
power. We look forward to
continuing to work with GE,"
comments by Solairedirect.
"GE's experience in turnkey
projects execution and its
strong footprint in India
assures the customer of our
reliability and ability to supply
quality products that adhere
expected to hold an 11.9%
share in 2025. The major
reason for key countries
losing their market share is
the emergence of newer
markets, such as India and the
UK. India's share of the global
wind O&M market is expected
to increase from 5.6% in
2016 to 6.4% in 2025, while
the UK's share will increase
from 5.3% to 7.1% over the
same period.
to their technical
requirements. With a
400/220 kV substation
under execution at the
same location-Bhadla in
Rajasthan-the customer is
confident of meeting the
stiff completion schedule
with available site
establishment," said Sujoy
Ray, regional commercial
leader, South Asia, GE
Energy Connections' Grid
Solutions.
energetica INDIA · JUNE17
Energy Conservation Building Code 2017 launched
by Hon'ble Minister Piyush Goyal
Shri Piyush Goyal, Hon'ble
Minister of State with
Independent Charge for
Power, Coal, New and
Renewable Energy and Mines
today launched the Energy
Conservation Building Code
2017 (ECBC 2017) in the
nation's capital. Developed
by Ministry of Power and
Bureau of Energy Efficiency
(BEE), ECBC 2017 prescribes
the energy performance
standards for new
commercial buildings to be
constructed across India.
The updated version of
ECBC provides current as well
as futuristic advancements in
building technology to
further reduce building
energy consumption and
promote low-carbon growth.
ECBC 2017 sets parameters
for builders, designers and
architects to integrate
renewable energy sources in
building design with the
inclusion of passive design
strategies. The code aims to
optimise energy savings with
the comfort levels for
occupants, and prefers life-
cycle cost effectiveness to
achieve energy neutrality in
commercial buildings.
Speaking at the launch
event, Shri Goyal, said,
"ECBC 2017 is a leap forward
towards strengthening
India's capabilities to combat
climate change in a
sustainable manner. I have
recommended that all new
buildings and offices in the
future be Super ECBC and
Net Zero Energy Buildings."
Shri Pradeep Kumar
energetica INDIA · JUNE17
Pujari, Secretary, Power,
stated that ECBC 2017 will
give clear direction and have
criteria for new buildings to
be Super ECBC: "The new
code reflects current and
futuristic advancements in
building technology, market
changes, and energy demand
scenario of the country,
setting the benchmark for
Indian buildings to be
amongst some of the most
efficient globally."
In order for a building to
be considered ECBC-
compliant, it would need to
demonstrate minimum
energy savings of 25%.
Additional improvements in
energy efficiency
performance would enable
the new buildings to achieve
higher grades like ECBC Plus
or Super ECBC status leading
to further energy savings of
35% and 50%, respectively.
With the adoption of
ECBC 2017 for new
commercial building
construction throughout the
country, it is estimated to
achieve a 50% reduction in
energy use by 2030. This will
translate to energy savings of
about 300 Billion Units by
2030 and peak demand
reduction of over 15 GW in a
year. This will be equivalent
to expenditure savings of Rs
35,000 crore and 250 million
tonnes of CO2 reduction.
ECBC 2017 was
developed by BEE with
technical support from
United States Agency for
International Development
(USAID) under the U.S.-India
bilateral Partnership to
Advance Clean Energy -
Deployment Technical
Assistance (PACE-D TA)
Program.
The launch event was
attended by senior officers of
Ministries, State
Governments, technical
Azure Power Commissions
100 MW NTPC Solar Project
in Andhra Pradesh
Azure Power, a leading
independent solar power
producer in India, has
announced that it has
commissioned a 100-
megawatt (MW) solar
power plant in Andhra
Pradesh.
The project was
auctioned by NTPC, which
has a AAA debt rating and
is the Government of
India's largest power
utility. The solar plant has
been set up at Kurnool
Ultra Mega Solar Park with
a total capacity of 1,000
MWs. The solar park is
being developed by Solar
Park Implementation
Agency (SPIA) and Andhra
Pradesh Solar Power
Corporation Limited
(APSPCL). Azure Power will
supply power to NTPC for
25 years at a tariff of INR
5.12 (~USD 7.9 cents) per
kWh. Spread across 500
acres of land in Andhra
bodies, public utilities,
multilateral agencies,
international funding bodies,
academicians and industry
experts and consultants from
across the building,
infrastructure, real estate,
energy and construction
sectors.
Pradesh, the project will
help in electrifying the
nearby areas.
Speaking on this
occasion, Inderpreet
Wadhwa, Founder and
Chief Executive Officer,
Azure Power said, "With
the commissioning of this
plant, we have once again
demonstrated our strong
project development,
engineering, and execution
capabilities. We are
delighted to make a
contribution towards
realization of our Hon'ble
Prime Minister's
commitment towards clean
and green energy, through
solar power generation.
Our sincere gratitude to
NTPC and the State of
Andhra Pradesh for all the
cooperation and support
extended."
13
INTERVIEW

Mr. Nitin Kalothia

Director, Sustainability Initiatives Practice,
Frost & Sullivan

“Today, SMEs are increasingly being faced with pressure to

measure and manage their impact on the environment. While the
sustainability commitment is there, implementation can be
challenging, especially in SME's, where cash flow and financing
options are the concerns"
Energetica India catches up with Mr. Nitin Kalothia, Director, Sustainability Initiatives Practice,
Frost & Sullivan duringSustainability 4.0 Awards 2017 in Mumbai to get more insights into
sustainability trends among Indian companies.

ENERGETICA INDIA : What are the current
growth drivers for sustainability
focus within organizations??
NITIN KALOTHIA: In this era of reforms,
organizations are under tremendous and
increasing pressures from shifting
demographics, new technological
challenges, shortages of skilled
professionals, and increasing costs in
many arenas. The company CXO's often
pursue sustainability initiatives which has
helped them to integrate the broader
strategies to address larger
organizational challenges and priorities.
The sustainability focus/drivers within
organizations often include - managing
risk and regulatory compliance, cost
benefits, increase employee satisfaction
and retention, fostering good public
image, improving brand Image and
building reputation.
ENERGETICA INDIA: What business value
can organizations achieve through
their sustainability initiatives?
NITIN KALOTHIA: Today organizations are
dealing with a complex and
unprecedented brew of social and
environmental trends. These require
robust sustainability-based management
system in place. Embedding
sustainability to the core of business
strategy clearly result in a positive impact
on business performance. The business
values experienced by organizations
include -
— Driving competitive advantage
through stakeholder engagement:
Sustainable businesses are redefining
the corporate ecosystem by
designing models that create value
for all the stakeholders, including
employees, shareholders, supply
chains, and the civil society.
— Improving risk management: Unlike
traditional forms of business risk,
social and environmental risks
(climate change, water scarcity, poor
labor conditions, etc) often affect the
business on many dimensions, and
are largely outside the organization's

14 energetica INDIA · JUNE17


control. Adopting sustainability assist
managing these risks by making
investment decisions today for
longer-term capacity building and
developing adaptive strategies.
— Fostering innovation: Investing in
sustainability is not only a risk
management tool; it can also drive
innovation. Redesigning products to
meet environmental standards or
social needs offers new business
opportunities.
— Improving Financial Performance:
Companies are realizing significant
cost savings through environmental
sustainability related operational
efficiencies. Investors are now able to
track the high performers on ESG
(environmental, social and
governance factors) and are
correlating better financial
performance with better ESG
performance.
energetica INDIA · JUNE17
— Building Customer Loyalty:
Consumers today expect more
transparency, honesty and tangible
global impact from companies and
can choose from a raft of sustainable,
competitively priced, high quality
products. In fact, a study found that
among numerous factors surveyed,
environmental and social
responsibility was one of the
significant factors that affected
respondents' evaluation of a firm and
intent to buy.
ENERGETICA INDIA: How can sustainability
initiatives keeping organizations
better positioned as a brand?
NITIN KALOTHIA: Brand value and
sustainability are related, and a company
that seeks to do well in one area should
consider also investing in the other. That
means companies must make
investment decisions that will benefit the
INTERVIEW
environment and society, and guarantee
the sustainability of its product or service.
There are several company case studies
(ITC Limited, AkzoNobel, Johnson &
Johnson, Walmart, Unilever etc) with
strong sustainability program who has
created demand for product and service
by influencing customers buying
behavior and leading to repeated
purchasing. Therefore a strong
sustainability program that is consistent
in its positioning will create value for the
company by creating more value for its
brands.
ENERGETICA INDIA: How can we grow the
adoption of sustainability practices
within smaller organizations in the
country?
NITIN KALOTHIA: Small- and medium-sized
entities (SME's) are crucially important to
the health and stability of the global
economy. They are an integral part of the
15
INTERVIEW
supply chain where there is a growing
demand for sustainability management
both from customers and suppliers.
Today, SMEs are increasingly being faced
with pressure to measure and manage
their impact on the environment. While
the sustainability commitment is there,
implementation can be challenging,
especially in SME's, where cash flow and
financing options are the concerns.
Given that SMEs are keen to realize the
benefits by adopting more sustainable
practices, it is important to establish the
link to the cash flow achieved from
minimizing costs and maximizing
potential revenue streams. Further there
are several lending organization in India
and globally like Global Environment
Facility (GEF), Asian Development Bank
(ADB), World Bank, Small industries
Development Bank of India (SIDBI) who
are promoting and assisting financing
options to SME's to implement energy
efficiency and cleaner production
technologies.
ENERGETICA INDIA: What are the challenges
being faced by organizations to
better adopt sustainable practices?
NITIN KALOTHIA : Implementing corporate
sustainability strategies is increasingly
becoming a standard practice. Despite
this encouraging progress, a confluence
of global challenges is putting more
pressure on corporate sustainability
strategies to get to the scale quickly.
Having said that, it is important to note
that change isn't an easy process in any
organization. The key challenge for the
experts in sustainable business is to drive
and oversee these changes to ensure
positive impact on business. A number of
factors frequently stand between ideas
and execution, like - making a clear
business case for sustainability or in other
words the goals of sustainability and
financial strategy are not well-aligned,
lack of metrics to access the initiatives,
engaging management and colleagues
to the common cause, external factors
such as climate change and water
scarcity and not being integrated to long-
16
term business strategy. The good news is
that businesses are finding ways to
overcome these barriers by adapting
strategies and techniques already at their
disposal.
ENERGETICA INDIA: On what elements of
sustainability, are the organizations
being assessed for the Sustainability
Awards?
NITIN KALOTHIA: Frost & Sullivan and The
Energy and Resources Institute (TERI)
Sustainability 4.0 Awards is designed
with an objective to identify companies
that are well equipped to respond to the
emerging opportunities and risks
resulting from the sustainability trends.
The assessment criteria's are broadly
categorized under 4 parameters -
Purpose, Partnership, Planet and People.
Purpose -looks at evaluating the process
that an organization follows through its
values, policies, risk management and
strategy to meet the needs of the
enterprise and its stakeholders today
while protecting, sustaining and
enhancing human and natural resources
that will be needed in the future.
PARTNERSHIP looks at the collaborations
and programs undertaken by the
organization along with the partners in
its value chain (suppliers / vendors /
retailers / customers / community) to
underpin sustainability.
PLANET delves with the systems
developed and results achieved by the
organization to showcase how
organization optimizes its functions to
reduce the impact on the planet.
PEOPLE element looks at evaluating
organization practices toward managing
human capital and implementing safe
working condition that contributes
towards enhanced employee delight.
ENERGETICA INDIA: Are there any new
categories under the awards
umbrella in "Sustainability 4.0
Awards 2017"?
NITIN KALOTHIA: The awards platform,
instituted in 2009 has been through a
series of transformation in the scope of
assessment, sector coverage and the
program title itself. While there are no
new categories defined in the 2017
edition of "Sustainability 4.0 Awards",
the 2016 edition was opened for the
service sector industries which until then
was only manufacturing sector focused.
Also the nominations are accepted now
for corporates, which until 2015 was only
unit/facility specific.
ENERGETICA INDIA: What services does Frost
& Sullivan offer in Sustainability?
NITIN KALOTHIA: Frost & Sullivan through its
"Sustainability Initiative Practice" is
working with companies to build
Sustainable Businesses. The sustainability
service model of Frost & Sullivan is based
on the following broad principles
Analyze: assess risks & opportunities,
engage with stakeholders and identify
material issues, Plan: identify gaps,
develop strategy and set goals (long and
short term), Measure: compile data,
analyze and quantify impact, Report:
design reporting approach and integrate
financial & non-financial information
Within the Sustainability consulting
platform, we enable organization on its
journey towards "Sustainability" and
"Business Continuity". Few of the
deliverables through this platform are:
— Formulation of roadmap towards
sustainability,
— Empowering employees through
training and capacity building on
sustainability,
— Prioritizing focus areas,
— Defining goals such as mapping
greenhouse gas emissions,
formulate EHS requirements for the
supply chain,
— Culmination of all activities into a
"sustainability Report" based on
internationally accepted frameworks.
energetica INDIA · JUNE17
INTERVIEW

Mr. Pankaj Goyal

Director & CFO,
Angelique International Limited

“It is recently that Angelique has bagged orders of approx. INR 5.50
billion in India and physical execution of these projects are in the
initial stages. Projects have been of small value mainly consisting of
low voltage transmission lines/ substation in Odissa, Madhya
Pradesh and domestic power distribution projects in Rajasthan"
Energetica India speaks to Mr. Pankaj Goyal, Whole Time Director & CFO, Angelique International
Limited to learn more about the company, its operations outside India and their plans for the Indian
market.

ENERGETICA INDIA : Can you elaborate on
Angelique's journey so far and a bit
of your journey in the industry and
Angelique?
PANKAJ GOYAL: The foundation stones of
Angelique were laid by a professional
engineer entrepreneur, late founder
Chairman Shri Daya Krishna Goyal, for
whom creation of Angelique was a
mission for setting up a world class EPC
Company, much above merely a
business venture. Angelique made slow
but solid start, expanded its foot print,
delivered projects of small value with
signatures of quality, commitment and
cost efficiency and expanded foot prints
and name for itself. The vision and
mission with which Angelique was
founded, has always been in sight over
this journey of 20 years and is reflected in
customer satisfaction centric approach.
Angelique chose market domain in
Africa, East Asia, South East Asia, which
was always remained unexplored or
considered too risky. With this self-
belief, Angelique earned leadership
position among Indian Companies in
these markets. The focus has been on
growth with a fine mix of north bound
trajectory and highly prudent mix which
placed Angelique in unique position to
withstand the storm which uprooted or
shook almost entire spectrum of EPC
Companies in India in last few years..

18 energetica INDIA · JUNE17


After having worked for industry
leaders in consumer goods, bulk
Industrial chemicals, packing, telecom
and Specialized steel manufacturers both
in India and abroad, Angelique was a
relatively very small platform but ethos,
customer orientation, the vision of
founders, was one traction, coupled with
charm of new industry, free operating
hand , good team work within company,
made by personal professional goal
converge with the Company growth as
such working with Angelique has been
very satisfactory, as a complete package
of opportunities and challenges in terms
of professional realization, over this long
association of just over a decade.
ENERGETICA INDIA : Since you are at helm of
affairs at Angelique now, how much
of India do you see amongst global
business for Angelique in Future
PANKAJ GOYAL: Angelique will continue to
have focus on the markets where, with its
remarkable project delivery record, it has
created a name for itself i.e. Sub Saharan
Africa, South East and South Asia.
Angelique would like take to itself further
into these markets with diversified and
larger denomination projects of high
visibility, social development impact, skill
and employment generation with
contribution to clients' national GDP.
Though opportunities are being explored
in Central America too but it will be very
early to say on this market at present.
The Indian portion of the overall business
is expected to be a secondary only.
ENERGETICA INDIA : Also tell us about some
turnkey projects you have executed
around the world?
PANKAJ GOYAL: Angelique has delivered over
100 complete EPC projects world wide,
all of them have been completed by
equal amount of planning and
commitment in the wake of unique
challenges, yet if I have to name a few I
will say
(1) Nyabarongo Hydro Electricity Project
- 28 MW Capacity cost approx. USD
110 Million, in consortium with BHEL.
energetica INDIA · JUNE17
This is project which has transformed
lives of about 10 Million people in
Rwanda
(2) Salma Dam, ( Now Friendship Dam
Power Project ) in Afghanistan,
though the role of Angelique has
been that of Electro-mechanical,
Penstock, power house work, over
the period from 2005 until June 2014
when the project was commissioned,
there has been splendid display of the
perseverance of team Angelique, to
respond to adversities of highest
order
(3) Projects for setting up facilities in six
far flung far flung areas in Sierra
Leone, right from tapping water from
falls and other resources, storage,
treatment and distribution with all
the challenges including Ebola
period.
(4) Setting up of water treatment and
distribution facilities in Tanzania by
sourcing water from deep sea bed
away from shore line. The water
sourcing mechanical system is on
floating buoys and Angelique is
possibly the only Indian company
having done such a work.
(5) Setting of modern agriculture model
farms, standard methodology
handouts for increasing production
of Rice, wheat and Maize with soil
testing, seed gradation facilities in 5
states of Mozambique. This project is
having huge impact on the lives of
the people with huge step towards
food security like green revolution in
India post-independence.
(6) Information Technology Park in
Swaziland, a state of the art facilities
with most modern equipment which
will house national data center base
for the country and an incubator for
upcoming entrepreneurial skill for
the young.
(7) In addition Company has set up
transmission line across Africa
continent, on some of the
transnational power transmission
INTERVIEW
projects in Ivory Coast-Mali- Guinea
Sierra Leone and also extensive
substation / transmission line projects
in Lao PDR, Papua New Guinea and
other countries in South East Asia and
South Asia.
ENERGETICA INDIA : Going forward how does
Angelique view Indian market in its
business plans? Have there been any
recent projects that Angelique has
executed in India? Which are the key
segments within India that
Angelique would be eyeing in
future?
P ANKAJ G OYAL : The serious push for
infrastructure growth in India, under the
new leadership surely throws open large
opportunities for EPC Companies in
India. However Angelique by its very
business philosophy would move in a
very selective manner both in terms of
nature of jobs, geographies and the
clients. Angelique would like to have a
mix of up to about 20% Indian business
component in coming years.
In a nutshell preferred areas are
railways, electrical substations, and
transmission lines. With strength
building in these areas, very calculated
diversification plans will remain of
interest.
It is recently that Angelique has
bagged orders of approx. INR 5.50 billion
and physical execution of these projects
are in the initial stages. In India, projects
have been of small value mainly
consisting of low voltage transmission
lines/ substation in Odissa, Madhya
Pradesh and domestic power distribution
projects in Rajasthan. Additionally the
work has been done on signaling of
railways in various sections of Railways in
India. Recently Company has company a
132/22Kv, substation with other facilities
in Kangra District of Himachal Pradesh
for HPSEB.
19
SOLAR POWER

SUMMARIZED BY ENERGETICA INDIA

Solar PV Price Trends

PV module prices decreased by around 80% between 2009 and 2015. Moreover, owing to
economies of scale and reductions in soft costs, the levelised cost of electricity (LCOE) from
solar PV fell 58% between 2010 and 2015.

S
olar PV modules have been
deployed at a fast rate with a steep
learning curve. The total global
installed capacity grew from 2 GW in
2012 to 222 GW by the end of 2015.
Driven by technological improvements
and manufacturing advances, and with
the overcapacities in the market peaking
in 2011, PV module prices decreased by
around 80% between 2009 and 2015.
Moreover, owing to economies of scale
and reductions in soft costs, the levelised
cost of electricity(LCOE) from solar PV fell
58% between 2010 and 2015. The
decreasing costs of installing solar PV
projects were reflected in the falling
prices of auctions.
Figure 1 illustrates the downward Figure 1: Evolution of average solar prices in auctions, Jan 2010- Sept 2016
trend in auctioned solar prices in selected
countries, many of which have been Although the figure shows a Downward Trends in South Africa
organising solar power auctions on a convergence in average prices, reflecting The steep price decrease observed in
regular basis for years. As shown in the the increased maturity of the sector, it South African solar auctions, especially
figure, average prices fell in all countries also shows large disparities between between the first and second rounds, can
between 2010 and 2016 (with prices in countries in earlier years. Such disparities be attributed to learning-curve effects,
the period between 2010 and 2014 are shown, for example, in the price increased investor confidence,
decreasing at a faster rate than between difference between Peru and South development of a local industry and
2014 and 2016). Prices in Peru, for Africa, the country with the clearest adaptations in the South African auction
example, fell from USD 220/MWh in downward trend. The figure also shows design (particularly regarding volume
2010 to USD 48.5/MWh in the last sinuous patterns in India, remarkably auctioned and the disclosure of ceiling
auction in 2016. In South Africa, the drop lower prices in the United States and a prices).
was even sharper, from USD 345/MWh in persistence of prices in the upper range in First, a learning curve achieved by the
2011 to USD 64/MWh in 2015. Germany. bidders and the auctioneer reduced the

20 energetica INDIA · JUNE17

 SOLAR POWER

gap in prices considerably. This

phenomenon is quite common, as
project developers typically require
higher risk premiums in countries that do
not yet have a track record in renewable
energy deployment. The success of early
auctioning experiences leads to more
successful subsequent bidding rounds,
increasing investors' confidence over
time.
Moreover, it is possible that some
potential bidders who had already
qualified for the first round did not need
to reinvest in obtaining the necessary
documentation in the second round,
decreasing their transaction costs and
thus resulting in lower prices.
Second, the presence of a domestic
solar industry made itself felt in the cost
of projects. As South African
policymakers sought to prioritise social
development goals beyond minimising
prices, the local content requirements
imposed in the first round led to higher
prices, with subsequent reductions as the
local industry developed.
Third, the design of South Africa's
auctions contributed to the high prices
resulting from the first round, where a
large volume of 3 750 MW was
auctioned at once. This and the lower
level of development of the domestic
industry at the time meant that
opportunities for competition among
suppliers was limited. Moreover, ceiling
prices were fully disclosed prior to the
first round, which led to bids close to the
ceiling price, with little incentive to bid
lower.

Ups and Downs in India

India has held at least 47 solar auctions
since 2010, more than any other country.
The prices resulting from these auctions
are characterised by their sinuous
pattern, with their average slightly on the
higher side.
The sinuous pattern is explained by
the fact that auctions are decentralised:
while some are organized at the national
level, most are state auctions, with each
state adopting its own auction design
Figure 2: Highlights of Renewable Energy Auctions, 2016

energetica INDIA · JUNE17 21

SOLAR POWER

which have an impact on the final bid.

The diversity in the underlying conditions
of these independent auctions results in
oscillating prices. Among other reasons,
some auctions yielded higher prices
owing to strict local content
requirements.
The relatively higher prices in India
compared with Peru, the United States
and South Africa can often be traced to
the remuneration profile and the type of
contract offered. Unlike other auction
contracts that are indexed to inflation or
denominated in US dollars, as is the case
in all Latin American countries (except
Brazil), the Indian auctions offer
contracts in the local currency and are Figure 3: The effect of inflation indexing on contract price
not corrected for inflation or foreign
exchange rates. Taking into account the
high inflation rates in India, the contract's
value in real terms may be expected to
decrease substantially over time

Remuneration profile in Indian auctions

Figure 3 illustrates the effect of inflation
on remuneration profiles in contracts
indexed for inflation versus those not
indexed. Looking at the nominal contract
price, the unindexed contract appears to
yield constant remuneration, whereas
the energy price in the indexed contract
appears to rise. In fact, taking into
account factors such as inflation, and
looking at the contract price in real terms
(second panel of figure), the indexed
contract will maintain the same value
over time, whereas an unindexed one will
lose value. The perception that inflation
adjustments make contracts more
expensive is incorrect, as nominal prices
have no economic meaning. Therefore,
to shield developers from inflation risk,
contracts are often indexed to inflation;
when they are not, as in India, developers
factor inflation into their bid price. The
resulting bids are higher so that
developers can recover their investment
despite the contract's loss of value over
time.
Lower Prices in the United States
In a solar power auction conducted in
Figure 4: US solar prices: actual vs. estimated effective prices, February 2013-May 2016
Texas in 2013, contracts were awarded
at a price averaging USD 60/MWh,
substantially lower than the prices
attained in most other countries in the
same period, which were closer to USD
80/MWh. In all subsequent auctions up
to the present, auction results in the
United States have continued to prove
extremely competitive and sometimes
are noticeably lower than those recorded
in other countries - among them Peru,
Germany, France and South Africa. The
main reason behind these low prices is
the fact that the United States offers an
investment tax credit, known as the
federal solar tax credit that reduces the
cost of installation by about 30%.
Figure 4 illustrates actual prices in the
United States versus estimated effective
prices, namely the prices that investors
would need to bid if they were not
eligible for the investment tax credit. The
estimated effective prices are around it
becomes 1.43 times higher, reflecting
the original investment cost before
applying the 30% reduction. After this
correction, prices in the United States are
commensurate with those recorded in
other countries at the same time.
Higher Prices in Germany
The case of Germany illustrates that

22 energetica INDIA · JUNE17


Figure 5: Solar prices in France & Germany; actual results vs adjusted results
assuming benchmark capacity factor of 25%; Feb 2010-Aug 2016
other factors, such as the capacity factor
and the project costs, can explain price
differences between countries -and even
between regions in the same country.
A price resulting from a project with a
capacity factor of 11%, as is mostly the
case of Germany, cannot be compared to
the record-low solar price in Chile, where
the capacity factor is on average 29%.
Capacity factors vary with available solar
resources and, to some extent, with the
state of technology(such as increased
energetica INDIA · JUNE17
SOLAR POWER
efficiency, lower degradation and loss
factors, and technological solutions such
as PV panels with sun tracking systems).
However, solar resources are very site-
specific, and therefore the average
values for a country or region can be
misleading when applied to a specific
project.
Figure 5 illustrates the actual prices
obtained for solar power in Germany and
France versus hypothetical adjusted
prices that would be obtained under the
same conditions but where a higher
capacity factor applied. As a solar
generator's revenue is proportional to its
generation, doubling its capacity factor
should allow its selling price per MWh to
be reduced by roughly one-half while
yielding the same amount of revenue.
The figure shows that solar prices
recorded in German auctions since 2015
might all from around USD 85/MWh to
USD 40/MWh if projects were located in
sites where solar resource sproduced a
capacity factor of 25% instead of the
actual 11%. Similarly, assuming a
capacity factor of25% instead of 18% in
France, prices would also become more
competitive.
Moreover, the costs of installing and
operating solar plants in Germany and
France are higher than in emerging
economies such as Chile, India, Mexico
and South Africa, taking into account the
cost of, land, labour and other factors.
Figure 5: Solar prices in France &
Germany; actual results vs adjusted
results assuming benchmark capacity
factor of 25%; Feb 2010-Aug 2016
Source: "Renewable Energy Auctions, Analysing 2016";
IRENA
23
SOLAR POWER
NVS Manyam Telukuntla &
Payal Saxena,
Gensol Consultants Pvt Ltd

Impact of Diversified Module Capacity

on the Costof Solar PV Projects
Increased structure cost is inversely proportionate to the generation of the solar power plant on
increasing the module capacity (Wp). However, the cost of the increased structure cost is not
that noteworthy when compared it with the revenue rise affecting the returns on the investment.

T
here is a blind belief that module Figure 1 Number of modules for section has been illustrated as
capacity of higher capacity having equivalent DC capacity of plant follows:
higher efficiencies leads to Module Capacity Vs. No of Modules - PV Plant of 19.50 MWp
upsurge the overall project cost;
although it has been observed and
studied that the impact of the higher
module (especially more than 300 Wp)
capacity lead toreduced / declining
Balance of Structure (BOS) cost
specifically the structure cost and
eventually the increased revenue.
The brief description has been
analyzed and reported below will
substantially wipe off this blind belief:
a) A case study has been deliberated in
this sectionof a solar PV plant with an
equivalent DC capacity of 19.50 both the cases. Hence, higher no. of Figure 2: GCR Scenario
MWp which has installed two modules will be required for modules of
different module capacities namely lower capacity (less than 300 Wp). As per Figure 2, it is observed that the
260 Wp and 320 Wp of same b) Now, the parameter which has been more number of modules in case of 260
technology i.e. poly-crystalline. The explained upin this section is the GCR Wp modules results in lower GCR since it
number of modules required to meet - Ground Coverage Ratio that defines has increased the requirement of land
the captioned capacity are as follows: amount of land covered with the area for the installation of additional
modules to that of the land area in a modules as compared to 320 Wp and
From Figure 1, it is clear that the Photo Voltaic Power plant. The similarly, Vis-à-vis for the 320 Wp module
numbers of modules are more in the case scenario with respect to GCR for both case.
of 260 Wp module than that of 320 Wp the cases, module with 260 Wp and This in turn, reveals that the modules
module for the equivalent Dc capacity in 320 Wp, as spelled in the previous of lower Watt-peaks (capacity)hintsto

24 energetica INDIA · JUNE17


increased land area requirement which in
turn raise the portion of land cost of the
project.Notably, with the increase in
number of modules, the Module
Mounting Structure (MMS) cost also get
anupswing and has been reported as
follows:
Figure 3 Impact on Structure Cost
c) Nevertheless, it is also witnessed from
the technical specification of the
respective modules that the
efficiency of 260 Wp modules are
lower than that of 320Wp. With the
increase in efficiency of the module,
keeping system configuration
identical, the energy yield assessment
energetica INDIA · JUNE17
SOLAR POWER
has been performed and the scenario
observed has been plotted below :
Figure 4 Variation in Generation
Figure 3 outlines that the increased
efficiency of the modules results in linear
increased generation with the increase in
efficiency of the modules. This increase in
generation will lead to the revenue rise.
d) The structure cost has been
compared for both the cases with the
respective generation from the Solar
Photo Voltaic plant is as follows:
Structure Cost Vs. Generation
Structure Cost (INR in Crores /Mwp)
Generation (kWh)
Module Capacity (Wp)
Structure Cost (INR Cr) Generation (MWh/year)
Figure 5 Structure Cost Vs Generation
Conclusion
On the final hand, it has been concluded
that the increased structure cost is
inversely proportionate to the generation
of the solar power plant on increasing the
module capacity (Wp). However, the cost
of the increased structure cost is not that
noteworthy when compared it with the
revenue rise affecting the returns on the
investment. It is also concluded that the
efficient plant operation in long run will
be achieved by SPV due to higher
efficiencies of the 320 Wp modules than
that of the 260 Wp modules. As a final
point, neither the efficiency nor the cost
of the project can alone drive the project
towards its successful execution, it will be
the show of both efficiency and cost
together.
25
CLIMATE INVESTMENTS

SUMMARIZED BY ENERGETICA INDIA

Investing for Climate in Asia

Financial Institution, ANZ, has carried out a research to understand the state of play of the
finance industry in the Asia Pacific region in relation to climate change.

T
he report assessed the regulatory
drivers and industry initiatives
across the major Asia Pacific
markets looking at the major domestic
and international initiatives. ANZ also
reviewed the disclosure of leading
domestic financial institutions across the
Asia Pacific region to understand the
state of the finance industry's response
to climate change.
Domestic Regulatory and Industry
Initiatives
The past few years have seen a number of
major domestic initiatives to encourage
more sustainable approaches to finance
across the Asian markets. These are
shown in Table 1.
Beyond regulatory approaches,
Australia, Japan, and South Korea all
have domestic Sustainable Investment
Forums. These act as a hub promoting
sustainable and responsible investment
in their respective markets.
The banking initiatives have taken
different forms in different markets. The
China Banking Regulatory Commission
Green Credit Guidelines was one of the
first. More recently eight leading banks in
Indonesia signed a commitment to
implement sustainable finance.
Investors across the region have seen
the introduction of stewardship codes
providing guidance on ownership
responsibilities. Japan was first, with
Malaysia, Hong Kong and Taiwan also
acting. Hong Kong provides a statement
of principles, while the other three are
codes to which investors can become
signatories. Thailand, Singapore and
South Korea have draft codes under
discussion. India has taken a different
approach with a requirement for mutual
funds to provide their voting records. The
Hong Kong, Malaysia, and Taiwan codes
refer to ESG or sustainability.
ANZ has also reviewed the ESG
disclosure guidelines for each market.

Table 1: Regulations & Initiatives supporting responsible finance & investment

Country Banking Initiative Stewardship Code ESG Disclosure Requirement
Australia - - Company law requires material ESG risk reporting
China Green Credit Guidelines - CSR report requirement for central government owned companies
Hong Kong - Principles for Responsible Ownership Listing rules require ESG report
India National Voluntary Guidelines on Responsible Finance SEBI voting guidelines Requirement for business responsibility report
Indonesia Sustainable Finance Roadmap/ eight banks commitment - Company law requires report on CSR practices
Japan Principles for Financial Action towards a Sustainable Society Principles for Responsible Institutional Investors -
Malaysia - Malaysian Code for Institutional Investors Listing rules require sustainability statement
Philippines - - -
Singapore ABS Guidelines on Responsible Financing Draft Listing rules require sustainability report
South Korea - Draft National regulation on environmental disclosure for large companies
Taiwan - Stewardship Principles for Institutional Investors CSR reporting rule for selected and large capital listed companies
Thailand - Draft CSR reporting required for all companies

26 energetica INDIA · JUNE17

 CLIMATE INVESTMENTS

sustainability. For the PRI, UNEP FI, the

Equator Principles and SSE, we have
shown the number of organisations
headquartered in each Asia Pacific
market. ACGA is a regional initiative, so
to provide a basis for comparison, we
have shown statistics they provided
based on members headquartered in
Asia or with a major presence in the
region (these were assigned to a market
where the member had a regional
headquarters or significant operations).
Australia is also shown separately to
avoid distorting total figures.

Table 2: Membership by country for

international initiatives
Equator
UNEP FI Principles PRI SSE ACGA
Global TOTAL 214 84 1554 57 112
China 6 1 5 - 1
Hong Kong 2 0 11 - 43
India 2 1 3 2 0
The past few years have seen an increase investment and ownership decisions Indonesia 2 0 4 - 0
in reporting requirements, with ESG — United Nations Environment Japan 10 4 48 - 5
reporting rules for listed companies in Programme Finance Initiative (UNEP Malaysia 1 0 1 1 3
Philippines 3 0 0 - 1
Hong Kong, India, Malaysia, Singapore, FI) works with banks, investors and
Singapore 0 0 6 - 10
and Taiwan. In Hong Kong the rules insurers to address systemic
South Korea 6 0 4 1 0
specify that listed companies disclose sustainability issues Thailand 2 0 0 1 0
carbon emissions. National regulations in — The Equator Principles is a risk Taiwan 0 2 0 - 1
South Korea require the largest management framework for banks Other Asia 2 0 1 3 2
companies to disclose carbon emissions. to address environmental and social TOTAL 36 8 83 8 66
In China, central government owned risks in projects % of global 17% 10% 5% 14% 59%

companies have had to produce a CSR
report since 2012.
International Networks
While there is growing domestic support
for sustainable finance across Asia, a
knowledge gap remains for institutions
that want to take advantage of
opportunities in sustainable or green
finance. There are a number of
international organisations that address
the knowledge gaps and facilitate
collective action.
Each organisation fulfils a different
function:
— The Principles for Responsible
Investment (PRI) helps investors
integrate sustainability and corporate
governance factors into their
— The Sustainable Stock Exchanges Australia 10 5 116 - 7
TOTAL
Initiative (SSE) is a platform for stock
inc-Australia 46 13 199 8 73
exchanges to enhance corporate % inc-Australia 21% 15% 13% 14% 65%
transparency on ESG
— The Asian Corporate Governance Banks Review - Upside over
Association (ACGA) works with Downside
investors, companies, regulators, and The low carbon economy presents a
professional firms to implement multi trillion dollar financing opportunity
effective corporate governance for the banks that choose to address it -
practices throughout Asia and more than half of the banks we
— The Asia Investor Group on Climate reviewed are doing so. This is a strong
Change (AIGCC) aims to create positive. Yet the transition to low carbon
awareness among Asia's asset activities also requires banks to
owners and financial institutions progressively reallocate capital away
about the risks and opportunities from the carbon intensive industries,
associated with climate change and particularly coal.
low carbon investing. It is natural that banks seek new
The table 2 shows Asian participation markets before reducing exposure to the
in leading finance industry initiatives old ones. However, without taking steps
addressing governance and to limit exposure to carbon-intensive

energetica INDIA · JUNE17 27

CLIMATE INVESTMENTS

assets, banks may fail to address related
risks and fail to decarbonize their overall
growth.
Banks that do not specifically assess
high carbon and the physical impacts of
climate change as forward looking risk
factors in client acquisition and credit
pricing will face higher risks as their
clients adjust to more regulation and
more volatile weather patterns.
From the review, 22 out of 36 (61%)
of the banks provided details of their
green finance solutions and 20 (56%) of
the banks provided some quantification
of their exposure - in some cases this was
not material in the context of the bank's
financing activities.
The figures for a broad ESG policy
were even higher - 29 out of 36 (81%) of
the banks had some policy on responsible
lending. Further, all countries had at least
one major bank with relevant policy.
Generally, these policies did not
specifically mention climate change,
referring instead to environmental track
record such as violations and pollution
incidents. Only 10 (28%) of the banks
included reference to climate change as a
factor that may result in limiting finance.
Overall the Australian and Chinese
banks had very good disclosure on
providing new finance and limiting
exposure to high carbon industries and,
in the case of Chinese banks, to
industries with overcapacity.
The drivers have been very different.
In China, the banks have moved in line
with green credit guidelines from the
China Banking Regulatory Commission
(CBRC). Conversely, the Australian banks
have adopted voluntary policies and
standards - sometimes in response to
reputational pressure from civil society
organisations.
Given its emerging market status, the
development. This has followed intense
concern over development that has
damaged forests and peatlands leading
to significant carbon emissions.
The Singaporean banks have all made
a statement on ESG, following the
announcement of responsible lending
guidelines by the Association of Banks in
Singapore in October 2015. However,
the statements are limited and none of
the banks mentioned provision of green
finance, which may represent a missed
opportunity.
Malaysian banks had the least
applicable disclosure overall. They all
mentioned the Government's Green
Technology Financing Scheme, but did
not provide details of their own green
financing.
Investors are more Active
Large funds face long-term portfolio
level risks from the effects of climate
change, as well as stock and sector
specific risks from both physical risks and
regulation to reduce carbon emissions. A
critical tool that investors have to reduce
long term risks from climate change is
their influence as owners of companies.
Investors across Asia have taken a
more active approach to ownership over
the last few years. Large domestic Asian
investors have started to publish
corporate governance policies relating to
their voting and dialogue with investee
companies. Regulators have
supported this trend and more
than half of the markets we Table 3: Green finance disclosure at major banks
covered already have a
stewardship code or are in
consultation on one. These Country
developments are positive. Australia
However, there is less China
information on specific steps Hong Kong 3
relating to climate change. India
policy.
Beyond this 15 out of 30 investors
provided a statement on ESG. In many
cases this was included in the corporate
governance policy or statement on
stewardship. In some this was separate.
In the case of Thailand's Social Security
Fund, we could not find a voting or
stewardship policy in English (we
understand there is one in Thai), but the
fund noted that it avoided "investments
that cause social or environmental
problems".
However, when it comes to climate
change there is less disclosure. Only 9
(30%) of the investors referenced climate
change in some way through their
policies and only 8 (27%) outlined steps
that they took. Interestingly, the South
Korean investors, which disclosed less on
governance, had more disclosure relating
to climate change risks and mitigation.
In general, where investors disclose
steps on climate change these are still
vague. Malaysia's Employee Provident
Fund includes climate change in the list of
factors that it states are "areas of
discussion in our ESG investing
approach". Singapore's Temasek
mentions climate change in a list of major
trends and goes on to state: "We
consider environmental, social and
governance factors together with
commercial and other critical
considerations when we make decisions
Responsible Policy Sector Green
Number lending includes level finance Quantifies
assessed policy climate policy solutions green
product
change
3 3 3 2 3 2
3 3 3 2 3 3
3 1 2 1 1
3 2 0 1 1 1

Indonesian banks have reasonable Indonesia 3 2 0 1 2 2

It was found that 16 out of
Japan 3 2 1 0 2 2
disclosure. The Indonesian Financial 30 (53%) of the large investors
Malaysia 3 1 0 0 0 0
Services Authority (Otoritas Jasa had publicly available policy or Philippines 3 2 0 1 2 1
Keuangan, OJK), together with WWF, details related to active Singapore 3 3 0 0 0 0
have supported this, announcing in ownership, voting, or South Korea 3 2 0 1 3 3
November 2015 that eight leading banks stewardship. Most markets had Taiwan 3 3 2 0 3 3
will work to address sustainable funds that disclosed such Thailand 3 3 0 0 2 2
TOTAL 36 29 10 10 22 20

28 energetica INDIA · JUNE17

 CLIMATE INVESTMENTS

Table 4: Responsible ownership at major funds

Policy on
Corporate Policy Climate Climate
Number Governance includes Change Change Risk
Assessed Policy Mitigation
ESG Risk
Country
Australia 3 3 3 3 3
China 3 0 0 0 0
Hong Kong 2 0 0 0 0
India 3 2 1 0 0
Indonesia 2 0 0 0 0
Japan 3 3 2 0 0
Malaysia 3 2 2 1 0
Singapore 3 1 1 1 0
South Korea 3 1 1 2 3
Taiwan 3 3 3 1 1
Thailand 2 1 2 1 1
TOTAL 30 16 15 9 8

Table 5: Climate disclosure at Major Insurers

as an investor, shareholder and owner." QBE insurance Group provided an Identifies Provides
Number Climate Green
HESTA Super Fund, the Australian example of risk identification disclosure: Assessed Change Risk Products
pension fund for health and community "QBE recognises the impact climate Country
services, had the most detailed public change can have in terms of potential Australia 2 2 2
policy on climate change of the investors claim activity as well as the potential for China 2 1 1
reviewed.In relation to thermal coal, extending and adapting our product Hong Kong 2 0 0

HESTA will restrict investment to lines and services in response to the India 2 0 0
Indonesia 2 0 0
companies with more than 15% revenue changing world."
Japan 2 2 2
or net asset value in thermal coal Many insurers discussed their efforts
Malaysia 2 1 0
exploration, development, or in risk solutions and natural disaster risk Philippines 2 0 0
transportation. mitigation. Taiwan's Cathay Financial Singapore 2 0 0
Holding provided some interesting South Korea 2 1 2
Insurers find new Risks, new product examples in transport. It stated: Taiwan 2 2 2

Products "Cathay Century launched a "Green Thailand 2 0 0

Changing weather patterns are changing
the risks of catastrophic events and
flooding leading to changing payout
patterns for insurance companies. We
reviewed leading insurers from across the
region to understand the extent to which
they factored climate change into their
underwriting.
Here ANZ looked for steps on risk
identification and green product
provision. In each case the proportion
was 38%. However, there was a slight
difference in that one company identified
the climate change risks without stating
it provided relevant products and one
provided green products without
acknowledging the changing risk
patterns.
Companies in Australia, Japan, and
Taiwan led efforts among the insurers.
TOTAL 24 9 9
vehicle insurance" project in 2013 that
gives owners of hybrid cars, electric cars
Listed Company Disclosure
and electric motorcycles a 10% discount
For over 20 years, investors have sought
on premiums of optional insurance
better disclosure from listed companies
coverage ... by 2014, a total of 2055
on how they have managed their
vehicles were insured under this
exposures to social and environmental
scheme."
risks and opportunities. In recent years,
Further, noting Taiwan's leading
the pressure for this has increased as
position in bicycles the company stated:
stock exchanges (via their listing rules)
"Cathay Century launched in 2014 the
have added their weight to calls for
first tailor-made insurance package for
companies to disclose. More recently,
the cycling population with the broadest
investors themselves have come under
and most comprehensive coverage. It
increasing pressure to report on their
remains today the only insurance
own exposures (via 'portfolio carbon foot
package that covers rented bicycles on
printing' and other reporting
theft, collision and third-party liabilities,
frameworks).
thereby keeping cyclists covered against
The focus on carbon emissions
injuries and property damages."
disclosure is set to increase. The Financial
Stability Board has convened a Taskforce

energetica INDIA · JUNE17 29

CLIMATE INVESTMENTS

on Climate- Related Financial Disclosure are likely missing out on opportunities; the bank at savings of 23 million tons
(TCFD) to develop "voluntary, consistent many that undertake carbon reporting of standard coal annually and 54.2
climate-related financial risk disclosures state that they are able to make targeted million tons of carbon dioxide
for use by companies in providing investments and find cost efficiencies as emissions
information to investors, lenders, a result of the process. — In 2015, reduced by 0.5 percentage
insurers, and other stakeholders". China had a notably lower points the proportion of total
Capital market regulators have proportion. The central government corporate loans to industries with
usually prompted companies to disclose owned companies have had to provide high energy consumption, high
sustainability information through CSR reports since 2012 under a rule pollution or overcapacity
issuing guidance and then bringing in a dating from 2008. There are general
requirement or listing rules often under provisions in place relating to discussion Green bond issuance
the comply or explain regime. Often of material environmental issues and — In October 2015, issued dual currency
there is a higher burden for larger, better violations. These is also ESG related green bonds worth USD 995 million,
resourced companies. guidance from both stock exchanges. including through listing on the
Investors have requested such However, this has not driven widespread London Stock Exchange.
disclosure individually or collaboratively. carbon disclosure.
CDP was the most common international The Hong Kong numbers should Green fund
collaborative platform for investors to increase as regulation takes effect, while — Set up a China-France fund with
request carbon information from the high level in South Korea has support Amundi Asset Management to invest
companies. from a national requirement on carbon in energy transition
It was found that where listing rules measurement and disclosure applying to — Invested the first tranche in green
required disclosure of a sustainability large companies. energy development in China and
report or statement they usually left it to The following summarises some of France
the board to determine what elements to the steps on green finance the bank — Planned to invest further tranches in
actually disclose. Hong Kong was an outlined in its 2015 Annual Report, other countries and in agricultural
exception in that it specified certain KPIs, covering credit, bond issuance, and cooperation.
including carbon emissions. establishing a fund:
The following table 6provides the Example
number and proportion of large Green credit The Agricultural Bank of China
capitalization companies (above USD 2 — Incorporated green credit elements The Agricultural Bank of China provided
billion) per market that disclosed GHG into credit policy guidelines an interesting example of the steps
emissions as well as the number of — Established an indicator system for leading banks are taking. It gave
responders to CDP. green credit and adjusting customer information on total exposure to high
It shows that overall there is a long admission, credit review, approval impact industries in its 2014 CSR report
way to go in terms of disclosure and likely and post-disbursement management (the 2015 version was not yet available).
also emissions management. Companies accordingly It stated:
— Applied indicators to 16 "By taking credit management
Table 6: Greenhouse Gas Emission Disclosure Rates industries including measures such as industry credit policy,
cement, iron and steel, customer list management and limits on
Mandatory No. Companies Proportion Number of
petrochemicals, float industries, ABC has effectively controlled
ESG Marketcap > Disclosing GHG CDP
Disclosure USD 2 billion Emissions % Responders glass, wind power and the increase of loans to high energy
Australia - 91 70 91 photovoltaic, which consumption, high pollution and excess
China Limited 446 4.8 45 involved 4,935 capacity industries. By the end of 2014,
Hong Kong Yes 264 24 17 customers the balance of its loans to the above
India Yes 123 33 74 — Increased loans related mentioned industries was 521.611
Indonesia Yes 33 15 6
to green credit 16% to billion yuan, a decrease of 10.341 billion
Japan - 412 67 261
RMB 540 billion, yuan from the beginning of the year.
Malaysia Yes 40 30 9
Philippines - 32 22 4
accounting for 10.1% ABC continuously pushes forward the
Singapore Yes 48 42 15 of domestic corporate green credit system and mechanism
South Korea Limited 92 76 87 loans innovations.”
Taiwan Selected & 60 78 51 — Assessed benefit of
Large Capital projects supported by Source: "Investing for the climate in Asia"; Asia Investor
Thailand - 62 42 11 Group on Climate Change.

30 energetica INDIA · JUNE17

 RENEWABLE ENERGY

SUMMARIZED BY ENERGETICA INDIA

Renewable Energy Investments

in Asia
Emerging Asia is expected to account for an increasingly large share of future global energy
demand. The large increase in fossil fuel use indicated in these projections confirms the region's
hunger for energy and illustrates the need for policies that promote alternative energies. Most of
the region has set targets for renewable energy technologies and implemented measures to
encourage their development, though challenges remain in making these policies effective and
efficient. In addition, financing renewables, which often have relatively large up front costs,
requires diverse sources of investment. Private investment can be one source of finance that can
also create jobs and facilitate technological diffusion.

Investments in Renewable Energy While China by far led the net

In 2015, China invested USD 102.9
billion in renewables (excluding large-
scale hydro), which accounted for 36%
of global renewables investments. The
majority of China's investments were in
asset finance (USD 95.7 billion), while
USD 5.5 billion were invested in small-
scale projects. With investments in
renewables to talling USD 10.2 billion in
2015, India was the second largest
investor in Emerging Asia, and the fifth
largest in the world.
Of this, USD 4.6 billion were invested
in utility scale solar power, while USD 4.1
billion of asset finance were invested in
wind power.
Following China and India, Thailand
was the only other country in Emerging
Asia to reach USD 1 billion in asset
finance for renewable energy in 2015.
With investments in
renewables to talling
USD 10.2 billion in
2015, India was the
second largest investor
in Emerging Asia, and
the fifth largest in the
world.
According to International
Renewable Energy Agency (IRENA) ,
China was the global leader in terms of
net capacity additions in 2015 of
hydropower, solar PV, wind power and
solar water heating, where as India was
among the top five countries in the world
for these four technologies.
additions of hydropower capacity in
2015 with its 16 GW of new hydropower
capacity, the net additional capacity of
hydropower in India, Vietnam, Malaysia
and Lao PDR were also significant on a
global scale.
Large-scale hydro power made up the
vast share of new installed capacity of
renewable energy in ASEAN in 2015. If
large-scale hydropower is excluded, on
the other hand, Thailand led the new
capacity of renewable energy in ASEAN
in 2015 through its solar power
deployment. In contrast, wind was the
major source of new installed renewable
energy capacity in China and India.
India, China and the Philippines are
the major recipients of foreign direct

energetica INDIA · JUNE17 31

RENEWABLE ENERGY
investment in renewable energy in
Emerging Asia
Foreign Direct Investment (FDI) is one of
the practical ways to develop the efficient
energy sector as it enables the transfer of
capital, technology and expertise from
home countries to host countries; in
other words, it allows both
multinationals and local companies to
engage in such transfers through trade
and investment for climate smart goods
and technologies.
From 2003 to 2016, the largest
recipients of green field FDI1 for
renewable energy projects in Emerging
Asia were India (USD 24 688 million),
China (USD 13 555 million) and
Indonesia (USD 11 930 million). These
three countries accounted for more than
60% of the total green field FDI received
in the region in the renewable energy
sector.
Brunei, Darussalam and Singapore
are two of the least attractive markets for
the renewable energy sector (USD 409
million and USD 946 million,
32
respectively). ASEAN countries(USD 24
347 million) receive together about the
same amount as India but Indonesia
alone welcomes almost half of this.
Regarding the investors of origin, the
European countries are the main
investors with 28.7% of the total capital
invested.
It is, however, important to note that
the United Kingdom represents by itself
one third of the investments from
European countries and more than 17%
of India's FDI in this sector.
China and the United States,
followed by Japan, Malaysia and the
Republic of Korea, are the next main
investors in the region, particularly in
India, which welcomes more than half of
their FDI.
Among the ASEAN countries, Brunei
Darussalam, Cambodia, Lao PDR and
Myanmar do not make any outward
investment to other countries in
emerging Asia, while they received
12.6% of the capital invested in the
region.
India is the largest recipient for FDI in
renewable energy; however, it is among
the less investing countries. The inverse
trend is observed for Singapore, which is
the eighth largest investor in the world in
the renewable energy sector whereas it is
one of the bottom two recipient
countries in the region, with Brunei
Darussalam. ASEAN countries invest
more among themselves than toward
India and China.
Renewable energy projects are
contributing to job creation in the
region
Green jobs have been growing rapidly in
the Asia-Pacific region, with the total
number employed in the sector reaching
4.3 million people in China, India and
Japan in 2015. The trend of renewable
energy employment indicates that solar
and wind are among the most dominant
and fast-growing renewable energy sub
sectors in both the world and the Asia-
Pacific region.
While domestic investments in
energetica INDIA · JUNE17
 RENEWABLE ENERGY

renewable energy have been a major
driver for green job creation in China and
India, green field FDI in the renewable
energy sector has also been expanding in
Emerging Asia, which has had both direct
and indirect influences on job creation. It
is worth noting that, in the case of FDI,
jobs are created principally in the
recipient, or host, country, where a new
power facility is set up or a project is
developed. Indirect influence of FDI to
employment in the renewable energy
sector may also include new jobs
attributable to the knowledge
acquisition and economic activity of
foreign firms, orto increase local
spending by direct FDI-induced
employees. The number of jobs created
through FDI in the renewable energy
sector in Emerging Asia has been
gradually growing for the last five years,
albeit from low levels.
Meanwhile, job creation through
greenfield FDI projects in the traditional
fossil fuel energy sector has fallen
dramatically in ASEAN, India and China.
Consequently, the gap between job
creation from FDI projects in the
conventional energy sector and the
renewable energy sector is narrowing.
While job creation from FDI projects
in renewable energy a decade ago was
dominated by jobs in the biomass power
sector, in 2015 it came from a more
diversified combination of renewable
energy sub sectors, both in the Asia-
Pacific region and in ASEAN. This trend is
present in China and India as well,
although biomass power-related FDI still
created the largest number of jobs in
China in 2015. At the same time, the
total number of jobs created from 2011
to 2015 in China through solar power-
related FDI increased significantly
compared to those created between
2006 and 2010.
Favourable and systematic policy
frameworks are likely to accelerate
investment inthe use of renewable
energy sources, and its impact on
creating green jobs has significant
implications not only on energy,
infrastructure or transport policy, but
also on labour and social welfare policy in
Emerging Asia.
Added to direct job creation,
increased FDI in the renewable energy
industry can contribute to consolidating
the foundation of multiplier effects that
ripple through indirect and induced
employment. Moreover, it is plausible to
assume that those green jobs tend to
create good-quality jobs, with higher
wages and employment stability, which
may exert a positive influence on
domestic working environment and
labour policy.
The trade and investment of
renewable energy products and
technologies must also be promoted
among the countries of emerging Asia.
Governments can facilitate the trade and
investment in renewable energy
technologies through the reduction of
non-tariff barriers, tradeable renewable
energy certificates and FDI promotion. By
reducing or eliminating import tariffs and
non-tariff barriers for renewable goods,
services and technologies, the sector can
avoid bureaucratic redundancy and
reduce the transactional costs of
renewable energy to be deployed
throughout the country. At the same
time, major obstacles still remain to be
over come in order to boost investments
in renewable energy further in emerging
Asia.
Source: "Economic Outlook for Southeast Asia, China and
India2017"; OECD Development Centre.

INDIA

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energetica INDIA · JUNE17 33

RENEWABLE ENERGY
SUMMARIZED BY ENERGETICA INDIA
Barriers for Institutional Investors
in India's Renewable Energy Industry
Investment in renewable energy from institutional investors remains seriously constrained by
certain barriers.
Barriers to Institutional Investment
in Renewable Energy
In order to utilize the full potential of
institutional investors to finance India’s
renewable energy targets, it’s important
to first understand their barriers to
investment., Climate Policy Initiative (CPI)
in their report studying role of Institution
Investors in India’s Renewable Energy has
has examined and prioritized the barriers
facing foreign institutional investors,
who have the most potential to fill the
debt financing gap and domestic
institutional investors, who have the
most potential to fill the equity financing
gap.
In order to indicate the significance of
the various barriers, CPI have prioritized
the barriers according to their severity
level, using a ranking system of 1 to 5,
with 1 being the most severe.
CPI has ranked the top five most severe
barriers for each investor category,
shown in Table 1.
CPI have also categorized the
investment barriers as binary or non-
binary. Binary barriers directly affect the
34
investor’s decision on whether or not to Table 1: Ranking of investment Barriers
invest, whereas non-binary barriers, by Investor Class
while still significant, are typically matters Foreign Domestic
of a risk/return trade-off. Barrier institutional institutional
investors investors
The methodology is based on Off-taker risk 1
interviews with domestic and foreign Lack of transmission 2
investors, in which it was requested to evacuation infrastructure
the participants to rank the barriers in Currency risk 3
Regulatory/policy risk 4 5
order of their severity level. CPI used a
Unfavorable return expectations 5
modified Borda count method to
Limited understanding of the 1
prioritize the barriers – a preferred voting renewable energy sector
procedure in which a barrier is identified Lack of intermediaries 2
by the highest average preference score. Lack of liquid instruments to 3
invest in renewable energy
Barriers facing Foreign Institutional Low credit rating of operational 4
assets
Investors
Foreign institutional investors – OECD infrastructure are the two most
investment funds, insurance companies,
significant barriers impeding
and pension funds – have the ability to
foreign institutional investment.
completely fill the debt financing gap for
Both of these barriers are binary,
India’s renewable energy targets, but
meaning they directly affect foreign
first certain barriers need to be
institutional investors’ decisions on
addressed. Table 2 shows the most
whether or not to invest.
significant barriers facing foreign
institutional investors, in order of priority:
Off-taker risk
1. Off-taker risk and lack of
An off-take agreement is a power
transmission evacuation
purchase agreement between a
energetica INDIA · JUNE17
 RENEWABLE ENERGY

producer and buyer (or offtaker) of

power, typically negotiated prior to
construction of a project, that
guarantees that the buyer will purchase a
certain amount of electricity. This makes
it easier for the producer to secure
financing. Off-taker risk is the risk that
the buyer/off-taker will not fulfill its
contractual obligations and will make
delayed or incomplete payments.
Off-taker risk is a major issue in India,
where the primary off-takers are the
state-level public sector distribution
companies, DISCOMs. Because
DISCOMs are in a poor financial state,
there is a high risk of them being unable
to make timely payments for power
procured. As of 2014, state-level
DISCOMs held debt in excess of INR 3.04
trillion and had accumulated losses of
INR2.52 trillion. Off-taker risk increases
the overall risk of a renewable energy
The pace of development of to protect against currency risk. Market-
project. Because foreign institutional
evacuation infrastructure has not kept up based currency hedging in India is
investors look for investments with
with renewable energy capacity addition expensive, adding approximately 7
steady returns and low risk, addressing
in the past few years, resulting in delayed percentage points to the cost of debt.
off-taker risk will be key to enabling more
commissioning of renewable energy This makes fully-hedged foreign debt
foreign institutional investment.
projects, congestion, and stranded nearly as expensive as domestic debt, and
There are several short-term solutions
generation assets. This is corroborated by renders investments from foreign
to manage off-taker risk. However,
the fact that power generation capacity investors, including institutional
ultimately, addressing off-taker risk will
grew around 50% in the last five years, investors, less competitive when
require long-term financial structural
whereas transmission capacity increased compared to domestic investment.
fixes for DISCOMs, some of which are
by just about 30%.
currently under consideration.
2. Currency risk, regulatory and Regulatory and policy risks
policy risks, and unfavorable A stable policy regime is critical for
Lack of transmission evacuation
return expectations are the non- sustained investment in the renewable
infrastructure
binary barriers to foreign energy sector. Frequent changes in
The lack of proper transmission
institutional investment. This policies have resulted in sharp
evacuation infrastructure – which is the
means these barriers don’t fluctuations in renewable energy
infrastructure required to transmit power
directly affect decisions to invest, capacity addition in India in the past.
from generation to distribution, and the
but do affect investors’ returns. Uncertainty around the continuity and
time taken to get clearances and permits
amount of certain government
to build and operate transmission
Currency risk incentives, including an accelerated
evacuation infrastructure – is another
Currency risk is the risk of loss from depreciation benefit, a generation-based
serious barrier to investment for foreign
unexpected and volatile fluctuations in incentive, and waving off the
institutional investors. Delays in getting
foreign exchange rates, when a foreign transmission charges for solar energy, are
clearances and permits can add onto
investor has exposure to foreign currency some examples of the regulatory risks.
project construction time, which results
or in foreign-currency-traded The poor implementation of net
in delayed commissioning of the project
investments. Currency risk is the most metering and variability in net metering
and delayed revenues. This directly
significant non-binary risk facing foreign policies across states adds to regulatory
increases the risks for foreign
institutional investors. When a and policy risk. Regulatory and policy risk
institutional investors and compromises
renewable energy project is financed by a increases foreign institutional investors’
the steady returns that they require.
foreign loan, it requires a currency hedge perception of the risk involved in

energetica INDIA · JUNE17 35

RENEWABLE ENERGY

investing in renewable energy in India,

resulting in decreased investment and/or
increased cost of finance.

Unfavourable return expectations

The primary research suggests that
renewable energy projects are not able to
meet the risk-return expectations of
investors, and especially so for foreign
institutional investors. Because the risks
for renewable energy projects in India are
relatively high, the returns need to be
equally high. The returns offered by
renewable energy projects are do not
compensate for the risks involved, and
the returns have further reduced
predominantly for solar power projects
because of very aggressive competitive
bidding during recent times. The solar
bids involving tariffs of as low as INR 4.34
($0.06) per kWh have further worsened
the case for foreign institutional investors
interested in renewable energy projects.
Investors are sceptical about the level of
returns they would be able to generate of foreign institutional capital. renewable energy sector
from such low solar tariffs. The lowered Domestic institutional investors
returns resulting from lower solar tariffs Barriers facing Domestic Institutional essentially make liability-driven
are not able to meet the return Iinvestors investments, meaning they avoid riskier
expectations of foreign institutional Domestic institutional investors – investments. Their line of investments is
investors, which is 19% or higher. domestic insurance companies and traditionally in securities and other
Currency hedging protects foreign pension funds – have the ability to fill financial assets that are more liquid and
institutional investors against currency more than half of the equity financing less risky. The renewable energy sector
volatility but pushes up the cost of gap for India’s renewable energy targets, falls is outside of their typical
foreign institutional capital resulting in but first certain barriers to investment investments, and domestic institutional
higher cost of financing. Since the cost need to be addressed. Table3 shows the investors do not fully understand the
for foreign institutional capital is high, so most significant barriers facing domestic Indian renewable energy market, causing
are their return expectations. One way to institutional investors, in order of priority: them to be reluctant to invest.
overcome this barrier is through The most significant barriers facing Additionally, a lack of sufficient liquid
instruments that can reduce currency domestic institutional investors are a investment instruments for renewable
hedging costs, thereby reducing the cost limited understanding of the renewable energy and the low credit rating of
energy sector and a lack of operational assets (both explained
intermediaries. further below) add to their limited
Table 2: Barriers facing foreign
These are both binary barriers, exposure to the renewable energy sector.
institutional investors, in order of
meaning they directly affect domestic They look for liquid investments that
significance
institutional investors’ decisions on have a credit rating of AA or higher which
Binary or
Ranking Non-Binary whether or not to invest. is a rarity for Indian renewable energy
Barrier
These barriers are binary, meaning projects.
Off-taker risk 1 Binary
Lack of transmission 2 Binary
they directly affect domestic institutional
evacuation infrastructure investors’ decisions on whether or not to 2. Lack of intermediaries
Currency risk 3 Non-binary invest in renewable energy. There is a lack of financial intermediaries
Regulatory / Policy risk 4 Non-binary for investments in the renewable energy
Unfavorable return expectations 5 Non-binary 1. Limited understanding of the sector. The role of intermediaries is to
*Ranked on a scale of 1 to 5, with 1 being the most severe

36 energetica INDIA · JUNE17


provide first-hand information about risk
mitigation measures and investment
opportunities in the renewable energy
market to the investors. Domestic
institutional investors find it difficult to
invest in the sector because they don’t
have adequate information, resulting
from a lack of financial intermediaries to
inform their investment.
3. A lack of liquid instruments to
invest in renewable energy, the low
credit rating of operational assets,
and regulatory and policy risks are
the non-binary barriers to domestic
institutional investment.
This means these barriers don’t
directly affect decisions to invest, but do
affect investors’ returns.
Lack of liquid instruments to invest in
renewable energy
Domestic institutional investors prefer to
invest in liquid assets with stable returns
as their investments are liability-driven.
There is a lack of liquid instruments for
investing in renewable energy projects,
as indicated in the primary research.
There is a need for pooled investment
vehicles to enable domestic institutional
investment in the renewable energy
sector.
Low credit rating of operational
renewable energy assets
Domestic institutional investors require
operational assets with stable cash flows
and that have a credit rating of AA or
higher, as per their investment criteria.
The research indicates that operational
renewable energy assets are typically
rated BBB or below, falling below their
investment standards. While they
generate stable cash flows, the
operational renewable energy assets do
not meet the credit rating criteria needed
to attract investments from domestic
institutional investors. There is therefore
a need for pooled investment vehicles
that can enhance the debt credit rating
for operational renewable energy
projects.
energetica INDIA · JUNE17
RENEWABLE ENERGY
Regulatory and policy risks
Inconsistent policies between the central
and state levels of government have
created uncertainty around India’s policy
regime. A stable policy regime is critical
for sustained investment in the
renewable energy sector. Similarly to
foreign institutional investors (Section
1.1), regulatory and policy risk increases
domestic institutional investors’
perception of the risk involved in
investing in renewable energy, resulting
in decreased investment and/or
increased cost of finance.
Table 3: Barriers facing domestic
institutional investors, in order of
significance
Binary or
Ranking Non-Binary
Barrier
Limited understanding of the 1 Binary
renewable energy sector
Lack of intermediaries 2 Binary
Lack of liquid instruments to 3 Non-binary
invest in renewable energy
Low credit rating of operational assets 4 Non-binary
Regulatory/Policy risks 5 Non-binary
*Ranked on a scale of 1 to 5, with 1 being the most severe
Additional Barriers facing all
Domestic Investors
In addition to the barriers discussed
above, there are several other significant
barriers facing domestic institutional
investors, which are shared with all
domestic investors in India. These are
land acquisition issues, which is a binary
barrier, and curtailment issues, which is
non-binary.
While these barriers are more significant
for domestic institutional investors, they
are also likely to be affected by land
acquisition issues and curtailment risk,
given that they affect all domestic
investors in India.
1. Land acquisition and securitization
issues
Issues that delay the securitization of
land for renewable energy projects are a
significant barrier to investment. The
crux of this matter lies with the way land
is owned in India. Most of land that is
used for renewable energy projects is in
rural areas and owned by undivided
families that have multiple stake-owners.
While project developers want to deal
with as few land owners as possible,
multiple stake-owners make the
acquisition and transfer of land complex,
which makes securitization a lengthy and
costly process.
Many investors become wary of such
challenges and hesitate on investment
decisions. Those who do decide to invest
have to accommodate the cost of delays
into their project cash flows, thereby
raising the overall cost of capital. Even
traditional lenders like banks and
financial institutions realize the effect of
delays on project cash flows and
therefore the profitability. This makes
them consider investments in renewable
energy projects to be riskier propositions
and therefore lend at higher rates.
2. Curtailment risk
Curtailment risk is the risk of reducing
power generation at a facility below
what it is capable of producing, and is a
significant risk facing operational wind
and solar projects. Wind developers
especially have been facing curtailment
risk due to backing down instructions
passed by state load dispatch centers
during high wind seasons, which has
resulted in generated power that’s been
stranded and not consumed. This has
also happened with solar installations
when they have received backing down
instructions. Stranded power decreases
the profitability of solar and wind
facilities, making them a riskier
investment. This is exacerbated by the
fact that state DISCOMs have been
unwilling to sign power purchase
agreements (PPAs) or have delayed the
execution of PPAs, rendering renewable
energy investments even riskier.
Source: “Reaching India’s Renewable Energy Targets: The
Role of Institutional Investors”; Climate Policy Initiative- Mr.
Vivek Sen Mr. Kuldeep Sharma & Mr. Gireesh Shrimali
37
RENEWABLE ENERGY

SUMMARIZED BY ENERGETICA INDIA

Renewable Energy Mini-Grids

Government agencies, state-owned utilities, co-operatives, community groups, NGOs and in
some cases small local private firms have been the main driving forces behind the growth of mini
grids so far. However, limited economic viability and scalability of the traditional business models
remains a key challenge for further growth in the sector.

M
ini-grids fall between Renewable-based mini-grids can also be
individual home systems and In unconnected rural a less expensive option than grid
the main electric grid. They areas, mini-grids have extension for reaching remote and rural
are often considered to be the most communities.
economical long term solution for
proved attractive for
Government agencies, state-owned
electricity access. They involve providing a wide range utilities, co-operatives, community
generation assets between around 1 of electricity services. groups, NGOs and in some cases small
kilowatt (kW) and 10 MW, 24 and supply Their flexibility in terms local private firms have been the main
electricity to multiple customers via a driving forces behind the growth of mini
distribution grid that operates in isolation
of sizing, resource
grids so far. However, limited economic
from the national grid. In unconnected utilisation and viability and scalability of the traditional
rural areas, mini-grids have proved management makes business models remains a key challenge
attractive for providing a wide range of them highly adaptable for further growth in the sector.
electricity services (e.g., household use, to local needs and Increased private sector involvement
street lighting, water pumping, has several advantages. Further private
productive use). Their flexibility in terms
conditions.
participation in mini-grid financing
of sizing, resource utilisation and through purely private ventures or
management makes them highly public-private partnerships can
bio-gasification plants that power
adaptable to local needs and conditions. complement government efforts,
electric motors in workshops and
Renewable-based mini-grids particularly those of public utilities.
households, to mini-hydro plants. They
generate electricity using diverse and Private entities can reduce pressure on
are reliable and cost-competitive with
locally available renewable resources. public utilities to invest in and operate
fossil fuel-based generation systems,
They can range from solar battery based mini-grids in rural areas, allowing them
such as diesel generators, which are
direct current (DC) mini-grids for basic to concentrate on improving electricity
polluting and expensive to operate.
lighting and mobile phone charging, to services in more densely populated areas.

38 energetica INDIA · JUNE17


Moreover, private sector mini-grid
development tends to have a different
emphasis from the traditional centralised
model. It is more concerned with its
customers and with long-term
productive uses of energy (households,
local businesses, agriculture and
industry), building sustainability into the
system and boosting the socio-economic
benefits of electricity access. Other
private sector advantages might include
decentralised decision-making, local
presence, community mobilisation and
flexible management structures.
A shift towards greater private sector
engagement in financing, developing,
operating and managing mini-grids has
occurred in recent years. Participants
range from local entrepreneurs to large
international utilities. Combining
technology with new business and
financing models, the private sector is
deploying mini-grid solutions using
diverse financing options. Given its
importance, it is vital that governments
adopt policies and regulations to
facilitate private sector engagement.
energetica INDIA · JUNE17
RENEWABLE ENERGY
Recognising this need, several countries
have turned to policies and regulations
dedicated to mini-grid development.
Policies and Regulations for private
sector mini-grid development
The policy and regulatory landscape for
mini-grids is highly dynamic as
governments introduce dedicated
measures, gain experience and
incorporate this learning to shape a more
effective framework. This evolution is
essential for successfully adapting to
local conditions and reducing
deployment barriers. International
Renewable Energy Agency's (IRENA)
analysis of recent policy and regulatory
developments relevant to the support of
private sector mini-grids, examines legal
provisions, tariff regulation, financing
and arrival of the main grid.
Legal Provisions
First and foremost, mini-grid operators
should have the legal right to generate,
distribute and sell electricity to rural
consumers Forming clear processes and
procedures to facilitate project licensing,
and streamlining requirements
(particularly for smaller mini-grid
projects) can reduce the costs and time
required for project development. As a
general guideline, fees and other
development costs should not exceed
1%-2% of the total cost of a project.
A common approach to main
streaming processes and procedures is
to establish a single-window facility
hosted at a rural electrification agency or
similar body, which reduces the number
of institutions with whom developers
must engage.
The Indian state of Uttar Pradesh, for
example, has established a one-stop
shop at the New and Renewable Energy
Development Agency for coordinating
stakeholders, managing the approval
process, facilitating capacity building,
and administering financial incentive
schemes. Information on processes and
procedures should also be easily
accessible (e.g., Tanzania's online
information portal, mini-grids.go.tz).
39
RENEWABLE ENERGY
Tariff Regulation
The viability and sustainability of mini-
grids depend on well-designed tariff
regulations. With costs of renewables
decreasing, mini-grid solutions are
becoming more competitive than grid
extension. One approach to setting the
tariffs of private sector mini-grids is to
impose a national uniform tariff and
provide viability gap funding. Another is
to allow mini-grid tariffs that are high
enough to cover costs but still well
beneath current customer spending on
conventional energy in off-grid areas.
Increasingly, countries are taking a
tailored-approach to tariff regulation. For
example, they exempt small-scale
systems (e.g., less than 100 kW in United
Republic of Tanzania and Nigeria) from
tariff regulation (although communities
can appeal in any tariff dispute) and
regulate tariffs for large-scale systems.
Common approaches include tariff caps
or project-by project approvals.
However, the tariff determination
approach should be standardised and
well-defined to ensure systematic
assessments and approvals by regulators.
Arrival of the Main Grid
It is important to have an electrification
strategy (location and timeline) to
provide guidance and transparency to
public authorities and private mini-grid
developers. Kenya's National Energy and
Petroleum Policy, for instance, provides
the basis for the development of a
comprehensive electrification strategy
to-wards universal access by 2020.
Well-defined interconnection or
compensation mechanisms are also
being employed to reduce risk to mini-
grid operators should the main grid
arrive. In Cambodia, for example, 250
formerly isolated mini-grids, have been
licensed as smallpower distributors by
the Electricity Authority of Cambodia.
Operators also may be compensated for
the residual value of the mini-grid assets
rendered uncompetitive by the main
grid, as is the case in Rwanda and in the
United Republic of Tanzania, where
40
regulators assign adepreciation scenario
for fixed assets.
Access to Finance
Governments can take several measures
to facilitate access to equity, debt and
grant financing at different phases of
mini-grid development. For example,
improving access to information required
for initial market assessments and co-
operating with regional or global
funding facilities can attract equity and
grants during the project development
stage.
In 2015, Rwanda was awarded a USD
840,000 grant by the Sustainable Energy
Fund for Africa to co-finance feasibility
studies of 20 micro-hydro sites, rollout,
and implementation plans that include
tariff and business models for mini-grids.
Financial support such as public
grants can be designed to leverage
capital from commercial financial
institutions. An example is the Inter-
American Development Bank's USD 9.3
million programme implemented by
Bancoldex, a commercial bank in
Colombia that aims to deliver long-term
concessional financing for private
entities engaged in mini-grid
development. In addition, public private
partnerships can be used to reduce risk
and improve project bankability.
The regulation of renewable mini-
grids is still evolving. However, a growing
number of countries has recognised the
opportunity offered by mini-grids and
the potential for private sector
engagement. These countries have
introduced dedicated policies and
regulations to establish a supportive
environment for mini-grid development.
Experience demonstrates that a
considerable number of policy and
regulation design elements work in
tandem to facilitate mini-grid
development (see Tanzania's example).
A well-designed policy and regulatory
framework not only improves project
sustainability but also maximises the
socio-economic benefits of renewable
energy systems.
Policies and regulations for the mini-
grid sector strongly influence
deployment as well as innovation in
technology design, finance and business
models. They could also enable the
participation of non-traditional entities,
such as off-grid telecommunication
infrastructure operators, in markets
outside their core business.
Tanzani: Mini-Grid Policy and
Regulation design elements working
in tandem
Tanzania's Energy and Water Utilities
Regulatory Authority (EWURA)
announced in March 2016 the
"Development of Small Power Projects
Rules 2016", which laid out licensing and
tariff regulation requirements for mini-
grids. As a result, mini-grids with a
capacity below 1 MW are exempt from
applying for a licence and need only to
register with the regulator for
informational purposes. For Very Small
Power Producers (less than 100 kW), the
regulator requires no prior regulatory
review or approval of proposed retail
tariffs; however, it reserves the right to
review the Very Small Power Producer
tariffs if 15% of its customers file
complaints.
If the main grid arrives, the mini-grid
can become a small power distributor,
keeping its retail customers and
purchasing electricity at wholesale rates
from the national utility. In addition,
these small power producers can sell
electricity to the main grid at
standardised tariffs. The government has
also established a standard PPA and tariff
methodology for any electricity that
these producers feed into the main grid.
Tanzania's Rural Energy Agency offers
results-based funding (performance
grants) of around USD 500 per
household or business connection. This is
funded through a levy on electricity sales
and donor contributions.
Source: "ReThinking Energy 2017"; IRENA
energetica INDIA · JUNE17
WIND ENERGY
SUMMARIZED BY ENERGETICA INDIA
Guidelines for 1000 MW ISTS connected
Wind Power Projects
Ministry of New and Renewable Energy (MNRE) issued Guidelines for transparent bidding
process for implementation of Scheme for setting up of 1000 MW Wind Power Project connected
to inter-state transmission system (ISTS).
Introduction
The obligated entities under respective
renewable purchase obligation (RPO)
regulations require large quantum of
non-solar power to fulfil their non-solar
RPO. In order to facilitate these entities to
comply their non-solar RPO, another
scheme for setting-up of 1000 MW wind
power projects is formulated.
Procurement of wind power from these
projects will be at a tariff discovered
through transparent process of bidding
by Solar Energy Corporation of India
(SECI).
These Guidelines will provide
framework for transparent bidding
process for implementation of the
Scheme.
Total Capacity of Wind Power
Projects
The scheme will be implemented for
setting up 1000 MW capacity of Inter-
State Transmission System (ISTS)
connected WPPs by Wind Power
Developers (WPDs) on build, own and
operate (BOC ) basis through open and
transparent competitive bidding to
provide wind power at tariff discovered
through e-reverse auction.
Additional 100 MW capacity can be
allotted to Central Public Sector
Enterprises (CPSEs) willing to undertake
development Of ISTS connected wind
power projects on build, own and
42
operate basis as per provisions of the
scheme without participation in the
bidding process, however, such
allocation will be at the lowest bid tariff
discovered through reverse auction
under the Scheme.
Projects under construction, projects
which are not yet commissioned and
projects already commissioned but
which do not have any long-term PPA
with any agency and selling power on
short-term or merchant plant basis will
also be considered.
Implementation Agency
SECI will be the nodal agency for
implementation of this scheme. SECI will
prepare Request for Selection (RfS)
document and invite bids for selection of
wind power project under the scheme
through e-bidding process followed by
e-reverse auction and develop a suitable
mechanism for monitoring the
performance of the projects.
Selection and Implementation of
Wind Power Projects
Selection of Wind Power Projects
The selection of 1000 M W capacity wind
power projects under the Scheme will be
through a transparent e-bidding process
for procurement of wind power at tariff
discovered through open competitive
bidding process followed by e-Reverse
Auction' process. The upper ceiling of
the tariff that can be quoted by the
bidders at the time of bid submission
would be Rs. 4.00 per unit i.e. bidders
cannot quote tariff of more than Rs. 4.00
per unit for supply of wind power.
The bidders will be free to avail fiscal
and financial incentives available for such
projects as per prevailing conditions and
rules from Central/State Governments.
Additional 100 MW capacity can be
allotted to Central Public Sector
Enterprises (CPSEs) willing to undertake
development of IST S connected Wind
Power Projects on build, own and
operate basis as per provisions of the
scheme without participation in the
bidding process, however, such
allocation will be at the lowest bid tariff
discovered through reverse auction
under the scheme. Minimum capacity
that can be allotted to a CPSE will be 50
MW and the allocation of the capacity
will be on the basis of first come first
serve basis.
Mechanism of Operation of the
Scheme
The salient feature of the overall
mechanism would be as follows:
— SECI shall sign Power Purchase
Agreement (PPA) with WPDs at
bidded tariff and with selected CPSEs
at lowest bid tariff discovered
through reverse auction and also
back-toback PSA with buyers at a
energetica INDIA · JUNE17
 WIND ENERGY

pooled price of the total capacity

allotted. The duration of PPA and PSA
will be 25 years from Commercial
Operation Date (COD) of the project.
SECI will be entitled to charge trading
margin as mutually agreed with
buyer or as decided by the CERC for
long-term power purchases,
whichever is less.
— Projects could be set up on the
locations, selected by the bidders on
their own considering the techno-
economic feasibility and other
clearance as required under
applicable rules and guidelines from
Central and respective State
Governments.

power project of minimum capacity installed transformation capacity and

Number of Applications by a
of 25 M W at one location as on capacity available in MVA which can
Company and Capacity limit of
original date Of bid opening; be injected/evacuated from these
allocation
OR substations at a particular time. Such
Under the scheme minimum bid capacity
— The Developers of Wind Power availability of transmission system
shall be 50 MW at one project site. A
Projects, being dynamic in nature, the bidder
maximum capacity of 250 M W WPPs
(i) Who have installed a wind power has to ensure actual availability of
shall be allotted to one company
project of minimum capacity of 25 power injection/evacuation capacity
including its Parent, Affiliate or Ultimate
MW at one location as on original at an ISTS substation. The
Parent-or any Group Company.
date of bid opening; maintenance of Transmission system
The bidder, including its Parent,
OR upto the interconnection point shall
Affiliate or Ultimate Parent-or any Group
(ii) Who have completed the financial be the responsibility of the WPD.
Company, shall submit one single
closure of at least 50 M W wind — The arrangement of connectivity can
application in the prescribed format
power projects and project is under be made by the WPD through a
detailing all projects for which the bidder
execution as on original date of bid dedicated transmission line which the
is submitting the application.
opening, will be eligible for WPD may construct himself or get
WPDs will be allowed to install wind
participation in the Bid. constructed by PGCIL/State
turbine generators of total rated capacity
The Bidders may meet technical Transmission Company or any other
not more than 105 percent of project
eligibility criteria through either of the agency on deposit work basis. The
capacity allotted to them. The additional
modes (a), (b) or (c) above. entire cost of transmission including
5 percent will take care for auxiliary
cost of construction of line, wheeling
consumption and losses up to
Financial Criteria charges, losses, etc., from the project
interconnection point.
The Net-Worth of the Bidder should not upto the interconnection point will
be less than Rs. 1.50 Crore per MW (of be borne by the WPD.
Qualification Criteria for Short-
the capacity quoted). — The WPDs shall comply CERC/SERC
Listing of Wind Power Projects
regulations on Forecasting,
Technical Criteria
Connectivity with the Grid Scheduling and Deviation
— The Owner of wind power projects
— The project should be designed for Settlement, as applicable and are
having ownership of a wind power
interconnection with the ISTS. The responsible for all liabilities related
project of minimum capacity of 25
responsibility of getting the IST S LTA and Connectivity.
MW at one location continuously for
connectivity and Long Term Access — The Buying Entity will be responsible
not less than one year as on original
(LTA) shall entirely be with the WPD. for all transmission charge and losses
date of bid opening;
For the information of the bidders, C and any other charges as applicable
OR
TU may provide the details of ISTS under the respective regulations
— The EPC contractors of wind power
Sub-station of the windy States with beyond the Delivery Point and up to
projects having commissioned a wind
indicative information on total the Drawl Point.

energetica INDIA · JUNE17 43

WIND ENERGY
Selection of Projects under the
Scheme
The selection of Projects shall be done
through single stage two envelope, e-
bidding and ereverse auction, as detailed
in the RfS document to be issued by SECI.
The procedure for conducting e-bidding
and e-auctioning shall be framed by SECI.
Power Purchase / Power Sale
Agreement (PPA/PSA)
A copy of Standard Power Purchase
Agreement to be executed between the
SECI and the WPD shall be provided by
SECI along with Invitation for submission
of response to RfS. Within six month of
the date of issue of Letter of Award (LoA),
the Power Purchase Agreement (PPA)
between the SECI and the WPD for
purchase of power from the project will
be executed. The PPA shall be for a period
of 25 years from the date of COD.
The buyer will be obliged to buy the
entire power as per generation schedule
to be provided by the WPDs, subject to
limitations as per Clause 3.5, required
under grid regulations.
The SECI will execute a PSA valid for 25
years with the Buying Entities for sale of
wind power. Further, these Buying
Entities will have to maintain LC and
Escrow Arrangement as may be defined
in the PSA.
Bank Guarantees
The Bidder shall provide the following
Bank Guarantees to SEC in a phased
manner as follows:
— Earnest Money Deposit (EMD) of Rs.
10 Lakh/MW in the form of Bank
Guarantee along with RfS.
— Performance Bank Guarantee (PBG)
of Rs. 20 Lakh/MW within 30 days
from date of issue of Letter of Award.
The Bank Guarantees against EMD
shall be returned to the selected bidders
after PBGs submitted by them is verified
by SECI.
The selected bidders are required to
sign PPA with the SECI in line with the
timeline given in the guidelines. In case,
the selected bidder refuses to execute the
44
PPA within the stipulated time period,
the Bank Guarantees equivalent to EMD
shall be en-cashed by SECI as penalty.
Minimum Paid up Share Capital to be
held by Project Promoter
The Company developing the project
shall provide complete information in
their bid against RfS about the Promoters
and their shareholding in the company
indicating the controlling shareholding
before signing of PPA with SECI.
No change in the shareholding in the
Company developing the Project shall be
permitted from the date of submitting
the response to RfS till the execution of
the PPA. However, this condition will not
be applicable if a listed company is
developing the Project.
After execution of PPA, the
controlling shareholding (controlling
shareholding shall mean more than 26
percent of the voting rights and paid-up
share capital) in the company/
Consortium developing the project shall
be maintained for a period of one year
after commencement of supply of
power. Thereafter, any change can be
undertaken under intimation to SECI.
Transfer of controlling the shareholding
within the same group of companies will
however be allowed after COD, with the
permission of SECI, subject to the
condition that, the management control
remains within the same group of
companies.
Financial Closure/Project Financing
Arrangements
The WPD shall report tie-up of financing
arrangements for the projects within
nine months from the date of issue of
LoA. At this stage, the WPD would
furnish within the aforesaid period the
necessary documents to establish that
the required land for project
development is in clear possession of the
Project Developer. The WPD shall be
required to submit the transmission
connectivity agreement with the ISTS
and also with InSTS, if applicable.
In case of delay in achieving above
condition as may be applicable, SECI shall
encash Performance Bank Guarantees
and shall remove the project from the list
of the selected projects, unless the delay
is on account of Force Majeure.
Commissioning
Part Commissioning:
The minimum capacity for acceptance of
par commissioning shall be 50 MW or 50
percent of the allocated Project Capacity,
whichever is higher and balance capacity
thereafter in batches of capacity not less
than 50 MW or in one go.
Commissioning Schedule and Penalty for
Delay in Commissioning:
The selected projects shall be
commissioned within 18 months from
date of issuance of Letter of Award.
A duly constituted Committee will
physically inspect and certify successful
commissioning of the project. In case of
failure to achieve this milestone, SECI
shall encash the Performance Bank
Guarantee (PBG) in the following
manner:
— Delay up to six months - The total PBG
on per day basis and proportionate to
the balance Capacity not
commissioned.
— In case the commissioning of the
project is delayed over six months,
the tariff discovered after e-Reverse
Auction shall be reduced at the rate
of 0.50 paise/kWh per day of delay
for the delay in such remaining
capacity which is not commissioned.
The maximum time period allowed
for commissioning of the full Project
Capacity with encashment of
Performance Bank Guarantee and
reduction in the fixed tariff shall be
limited to 27 months from the date of
LOA.
Electricity Generation from Wind
Power Projects
Criteria for generation:
The WPDs will declare the annual CUF of
their Project at the time of signing of PPA
and will be allowed to revise the same
once within first year of COD. The
declared annual CUF shall in no case be
energetica INDIA · JUNE17

less than 20 percent yearly.
WPD shall maintain generation so as
to achieve annual CUF not less than 90
percent of the declared value and not
more than 120 percent of the declared
CUF value, during the PPA duration of 25
years. The lower limit will, however, be
relaxable by the buyer to the extent of
non-availability of grid for evacuation
which is beyond the control of the WPD.
Shortfall in minimum generation:
During PPA, if for any year, it is found that
the developer has not been able to
generate minimum energy
corresponding to the lower limit of CUF
declared by the developer, such shortfall
in performance shall make WPD liable to
pay the compensation as provided in the
PSA to the buyer. This will, however be
relaxable to the extent of grid non-
availability for evacuation, which is
beyond the control of the WPD.
Commercial Operation Date (CoD):
The Commercial Operation Date (CoD)
shall be considered as the actual date of
commissioning of the project as declared
by the SNA/Commissioning Committee.
COD will be declared only when the WPD
has commissioned at least 50 M W
capacity or 50 percent of the allotted
project capacity whichever is higher. PPA
energetica INDIA · JUNE17
WIND ENERGY
tenure will be counted from the COD
irrespective of the date of commissioning
of the balance capacity.
The following two milestone dates
for commissioning may therefore be
observed and may fall on separate dates:
(I) Inter connection with Grid:
This may be provided by the PGCIL/State
Transmission Company on the request of
the WPD, to facilitate testing and allow
flow of power generated into the grid to
avoid wastage of Power.
(ii) Commissioning of Project:
This will be on a date, when the project
meets the criteria defined for project
commissioning.
Provisions related to CPSEs
CPSEs willing to undertake wind power
projects under the scheme have to apply
for the same to SECI in the format along
with details of the projects as may be
required by SECI within one month of the
completion of the reverse auction
process. SECI may charge non-
refundable processing fee of Rs. 1 Lakhs
(plus taxes as applicable) for each such
application from CPSEs.
The change of controlling
shareholding is not permitted in case of
projects allotted to CPSEs for at least 10
years from the date of signing of PPA.
Further, no JV with any private entities is
allowed for the wind projects allotted to
CPSEs under the Scheme.
Other Provisions
Role of State Nodal Agencies (SNAs)
The State Nodal Agency will provide
necessary support to facilitate the
required approvals and sanctions in a
time bound manner so as to achieve
commissioning of the Projects within the
scheduled Timeline. This may include
facilitation in the following areas:
— Coordination among various State
and Central agencies for speedy
implementation of projects
— Support during commissioning of
projects and issue of commissioning
certificates.
Role of CTU/PGCIL/State Transmission
Company
It is envisaged that the CTU/PGCIL/State
Transmission Company will provide
transmission system to facilitate the
evacuation of power from the Projects
which may include the following:
(i) Upon application of LTA/Connectivity
as per CERC Regulations, CTU shall
coordinate with the concerned
agencies for grant of connectivity and
LTA.
(ii) Support during commissioning of
projects
Performance Monitoring:
All wind power projects under the
scheme shall comply the Grid Code and
Regulations made thereunder. They must
install necessary equipment to
continuously measure wind resource
data and other weather parameters and
simultaneously measure the electricity
generated from the each wind turbine.
They will be required to submit this data
to SECI and MNRE or any other
designated agency through on-line
and/or a report on regular basis every
month for the entire duration of PPA.
Source: “Guidelines for transparent bidding process for
implementation of scheme for setting upto 1000 MW ISTS
connected Wind Power Projects”: Ministry of New and
Renewable Energy (MNRE), Government of India.
45
POWER SECTOR

United Nations ESCAP

Fossil Fuel Subsidy; a barrier to

Low Carbon Economy
The Economics of Climate Change in the
Asia Pacific region
Fossil fuel subsidy reform to phase out consumer and producer subsidies will be a key element
to rebalance economic incentives away from fossil fuels and in favour of cleaner sources of energy.
It can also help to achieve the SDGs, due to the significant and negative macroeconomic,
environmental, social and equity implications of energy subsidies. Economic
and Social Commission for Asia and the Pacific (ESCAP) has carried out a research about the
economics of climate change in the Asia-Pacific region.

Fossil fuel subsidy reform is required
to move to a low-carbon economy
Global energy subsidies are significant
and in the next few years, are expected to
grow. If left un addressed, they could
generate a significant fiscal burden for
public finances. For countries in the
region that are shifting toward increased
coal-based power and will soon have to
import substantial amounts of coal, the
exposure to international coal prices will
convert the indirect subsidy to a direct
subsidy with significantfiscal costs if
domestic coal prices are not allowed to
rise. The same is true for natural gas.
The carbon budget of 565-886 Gt
CO2to 2050,compatible with a 2°C
warming scenario means that only
around one-fifth of total existing fossil
fuel reserves can be burned by 2050.
Efforts are needed to keep much of that
coal in the ground and the region will be
central to the success of this undertaking
considering that currently about 85 per
cent of the regional electricity generation
is powered by coal.
Fossil fuel subsidy reform to phase
out consumer and producer subsidies
will be a key element to rebalance
economic incentives away from fossil
fuels and in favour of cleaner sources of
energy. It can also help to achieve the
SDGs, due to the significant and negative
macroeconomic, environmental, social
and equity implications of energy
subsidies.
Impact of Eenergy’s Subsidies
Energy subsidies have broad economic
ramifications. Beyond their contribution
to fiscal imbalances and public debt,
subsidies depress investment in the
energy sector. They cause losses for
producers, limiting their ability to expand
energy production, and discourage
private investment. This hampers energy
supply and leads to economic losses.
Firms and households in developing
countries often need to resort to own
generation, which imposes significant
costs on them, over and above the price
of electricity from the public grid.
Second, they crowd-out productive
pro-poorspending in the social sectors
which boosts growth in the longer-run.
In many countries in the region, so called
post-tax subsidies, which are essentially
made up of the energy subsidy plus an
adjustment to take into account the costs
of the externalities caused byfossil fuel
consumption, considerably outpace
socials pending. For example, in 2010,
Uzbekistan had post-taxenergy subsidies
of over 35 per cent of GDP, around seven
times its critical social spending in health
and education. A similar picture emerged
in Turkmenistan and Iran.
Third, subsidies lock in economic
development into a high energy-intensity

46 energetica INDIA · JUNE17


Figure 1- Asia-Pacific Fossil Fuel Subsidies, 2012-2014 (average pre-tax, real 2013 US$ bn)
mode, which can make countries
uncompetitive especially when energy
prices increase. Fourth, in the case of net
energy importers, higher energy
consumption caused by subsidies puts
pressure on the balance of payments
unless higher international prices can be
passed through to domestic fuel prices to
mitigate the effect. Finally, they promote
capital- and energy-intensive activity and
associated technology choices, which are
at odds with the need to generate
employment in developing and emerging
economies.
Energy subsidies have significant
environmental implications. Subsidies
distort resource allocation decisions by
encouraging wasteful fossil fuel
consumption and reducing incentives for
investment in renewable energy. This
leads to higher global warming, more air
pollution, greater traffic congestion,
accidents and road damage. Subsidies of
diesel can lead to the overuse of irrigation
pumps, and the over-cultivationof water-
intensive crops, resulting in a depletion of
ground water.
Energy subsidies have social and
equity dimensions. Energy subsidies are
highly regressive and benefit mainly the
higher income groups. The highest
energetica INDIA · JUNE17
POWER SECTOR
income quintile in low- and middle-
income countries receives on average
around six times more in subsidies (43
percent) than the poorest quintile (7 per
cent). Gasoline has been found to be the
most regressive energy product. As
poorer households have a higher price
elasticity of demand, the removal of
subsidies and consequent price spike in
energy prices can have a significant
impact on poor households,
underscoring the need to couple any
fossil fuel subsidy reform with targeted
social transfers to mitigate these effects.
Energy subsidies also crowd out pro-
poor spending, especially in areas of
health, education and social protection.
Despite often being viewed as a tool for
redistributing oil wealth in oil-exporting
countries, the above suggests that
subsidies are not an efficient instrument
for distributing wealth.
Trends in Asia-Pacific
Asia made up around one-third of global
energy subsidies in 2013. Regarding
composition, the subsidies were
overwhelming concentrated on
petroleum products and electricity,
accounting for some 90 per cent of the
total. The region is home to some major
subsidizing nations (Figure 1). Based one
stimates for 2014, Iran's fossil fuel
subsidies amounted to around 20 per
cent of GDP, followed by Russia and India
(both around 10 per cent), Indonesia (7
percent)and China (4 percent).
In absolute terms, China and Russia
were among the top three subsidizers,
with US$279 bn and US$116 bn
respectively. In post-tax terms, Coady-et
al. (2015) it has been calculated that the
Asia accounts for the largest share of
global post-tax subsidies, namely just
under 60 percent. Looking at total
subsidies, this region represents a
staggering 16-17 per cent of regional
GDP, with coal subsidies dominating the
picture, reflecting the substantial
undercharging for coal's environmental
impact.
Energy subsidies impose a large fiscal
cost. Modelling results estimate the fiscal
gain from removing energy subsidies for
2013 data in the order of US$3bn
globally, with around two-thirds of this
pertaining to the Asian region. In terms
of regional GDP this amounts to
around10 per cent, and in terms of share
of government revenue, it just exceeds
30 per cent.
Coady et al. (2015) It has been
47
POWER SECTOR
calculated that eliminating the full post-
tax subsidies in 2015 would raise
government revenue by $2.9 trillion (3.6
per cent of global GDP), cutglobal CO2
emissions by more than 20 per cent, and
cut pre-mature air pollution deaths by
more than half. For the Asian region, the
percentage reduction of Co2 emissions is
in the range of 18-25 per cent, while the
reduction of air pollution deaths is
around 55-60 percent. The resulting
welfare gains are also very large, in the
range of 5-7 per cent of regional GDP. If
fiscal gains are recycled towards reducing
distortionary labour taxes or increasing
productive social spending, the total
welfare gain would be magnified. An
examination of post-tax energy subsidies
shows that around three quarters of
these are related to local environmental
damage and the remaining quarter
pertain to the impact on global warming.
This suggests that, in addition to the
fiscal gains, energy subsidy reform would
have large benefits to the local
populations.
Energy Subsidy Reform
Phasing out energy subsidies is a complex
challenge. First, as the full cost of these
subsidies is only partially reflected on
budget, there is a general lack of
awareness about the magnitude of
subsidies. Second, there may be a
perceived lack of trust in the government
to re-distribute the fiscal savings of
reform to benefit the wider population
and to protect vulnerable groups. This is
particularly challenging in the case of oil
48
consultation; and
(6) a transparent communications
strategy.
Building on the political momentum,
practical next steps for Asia-Pacific
countries should include:
— Reform of coal subsidies through an
environmental tax should be at the
top of the policy agenda to limit the
environmental damage from coal
consumption;
— Introduction of mechanisms to reflect
the gradual increase in costs and
exporters where subsidies are widely
acceptable profits towards efficient
viewed as a means to redistribute the
prices of electricity and petroleum
benefits of rich natural resource
products and to avoid shocks to the
endowments. Third, governments can
economy, including through
also be concerned by potential inflation
inflation;
caused by higher energy prices post-
— Speeding up the creation of
reform, and the short-termimpact of
competitive energy markets,
higher prices on growth and
especially electricity markets;
competitiveness. Fourth, vested interests
— Strengthening of the electricity block
can be particularly vocal in blocking
tariff scheme, which provides a cross
reform. Finally, there are concerns about
subsidy from high- to low consuming
the adverse impact that reform can have
users;
on the poor.
— Improvement of the operational
Experience from different countries
efficiency of state-owned utilities to
suggests that there are at least six
provide a source of price decreases;
common elements to successful fossil
— Strengthening of other social safety
fuel subsidy reform.
nets to mitigate the impact from rising
To reduce subsidies, an appropriate
electricity prices that cannot be offset
policy mix is needed, which should
by cross-subsidies alone (or
include the following elements:
potentially strengthen social safety
(1) improving delivery of social support
nets enough to replace tariff subsidy);
through subsidy targeting and cash
— Consider temporary relief measures
transfers
for energy intensive firms;
(2) institutional reforms to facilitate
— Ensuring that the fiscal gains from
market-level pricing of energy (and
energy subsidy reform are redirected
depoliticize pricing)
to spending in the social sectors;
(3) a p p r o p r i a t e p h a s i n g - i n a n d
— Communicating to the public the
sequencing of price increases,
benefits of price reform (and the cost
differentiating across energy
of a status quo) and the measures
products
being taken to mitigate the impact of
(4) facilitating improvements in energy
price increases; and
efficiency (as away to reduce the
— Continuing building strong,
energy intensity of large energy
transparent mechanisms for setting
consumers, especially state-owned
prices, including by increasing
enterprises)
linkages between relevant ministries.
(5) a comprehensive energy sector
reform with clear objectives together
with a good understanding of its Source: "The Economics of Climate Change in the Asia-
Pacific region"; United Nation's Economic and Social
impacts and broad stakeholder
Commission for Asia and Pacific .
energetica INDIA · JUNE17
POWER SECTOR
SUMMARIZED BY ENERGETICA INDIA
The role of Coal in Southeast
Asia Power Sector
Sylvie Cornot-Gandolphe an independent consultant on energy and raw materials, has
collaborated with the Oxford Institute for Energy Studies (OIES) as a Research Fellow and
carried out a research on Southeast Asian coal markets and their implications for global coal
trade.
M
ajor reassessments of
national power
development plans and
the future role of coal in the power
sector
Environmental concerns over local
pollutants, together with the
commitments to reduce Greenhouse gas
(GHG) emissions agreed by Southeast
Asian countries at 21st Conference of the
Parties (COP21), have started to erode
coal's dominance, although the current
wave of new power capacity to be
completed by 2020 is still dominated by
coal. However, power development
plans are actively being reassessed in the
region, making the future of coal more
uncertain.
Alignment of power development
plans with INDCs results in lower coal
capacity
Southeast Asian countries have
commenced aligning their national
Power Development Plans (PDPs) with
their Intended Nationally Determined
Contribution (INDC) targets, which
increase the role of RE in the energy mix
and reduce fossil fuel use in electricity
50
generation and energy supply. The
revised PDPs adopted recently (in 2015 or
2016 in most cases) introduced major
changes in comparison with previous
ones. These changes include:
— A slower pace of growth in electricity
demand, driven by energy efficiency
efforts. Electricity demand is
expected to remain strong over the
next 10/15 years. However, the
growth is lower than expected in
previous plans due to increased
energy efficiency efforts.
— A diversification of the electricity mix
(away from gas in Thailand, away
from hydro in Vietnam) and a shift
away from reliance on fossil fuels in
most countries.
— A strong development of renewable
energy (RE) RE. All plans put a strong
emphasis on RE-power development.
Indonesia's development.
Indonesia's draft General Plan for
National Electricity Development
(RUKN), adopted in 2015, raises RE-
power to 49 GW by 2025, an
increase of 29 GW compared with
the previous plan. In Vietnam, the
plan adopted in March 2016 raises
capacity from solar power to 12 GW
and wind power to 6 GW by 2030. In
Thailand, the government has set out
a target of 20 GW of RE, or a tripling,
by 2036.
— Some total capacity additions that
could be higher than previously
expected (despite the slower pace of
growth in electricity demand), as
more RE is added (characterized by
low capacity factor and a need for
backup capacity in the case of
intermittent RE). For instance, in
Indonesia, the figure for annual
capacity additions over the next ten
years is raised from 7 GW in the
previous plan to 8 GW in the plan
adopted by PLN in June 2016.
— Lower growth in coal additions. In all
new plans, the additional coal
capacity has been revised downward.
Lower electricity demand and
stronger RE power displace some coal
power plants. In Vietnam, the
national plan adopted in 2010
envisaged a large-scale transition to
coal for baseload power generation.
However, the plan adopted in March
2016 reduces coal capacity by 30 per
cent in 2030 compared with previous
plans. In Indonesia, the additional
energetica INDIA · JUNE17

coal capacity over the next 10 years is
reduced by 17 per cent (-7.3 GW)
compared with the previous plan.
— Additional opportunities offered by
integration of the region. More
countries are targeting power
imports, mostly based on
hydropower developed in Lao PDR.
— A reconsideration of the gas option in
Figure 1: Capacity additions by Country and Technology
(2016-25)
Notes: Malaysia: only Peninsular Malaysia (includes 2 GW of hydropower
imported from Sarawak in 2025).
energetica INDIA · JUNE17
POWER SECTOR
view of: lower gas prices, current are not shown in the figure as little
ample availability of LNG, and the capacity is added.
development and flexibility of Despite the overall downward
Floating Storage Regasification Unit revision, coal still dominates additions to
(FSRU) technology, which facilitates thermal capacity in most plans. Coal
quick access to LNG. additions are set at 86 GW by 2025,
compared with 48 GW for natural gas.
But coal still dominates additional National PDPs emphasize the role of coal
power capacity as a stable and secure source for power
generation at an affordable cost.
Coal Domination Only RE power is expected to increase
According to the most more steeply, driven by a dramatic
recent PDPs, total increase in hydropower and other RE
capacity additions are sources. Collectively, Southeast Asian
set to total 211 GW by countries plan to construct 42.5 GW of
2025, meaning that new hydropower capacity through 2025.
power capacity in the If the targets are met, hydropower
region would double capacity will double by 2025. The relative
by 2025. Indonesia, increase in non-hydro RE is even more
Vietnam, and Thailand pronounced. Non-hydro RE capacity
lead the increase in additions total 32 GW by 2025, almost
total capacity, three times higher than the current
accounting for three- capacity (11.6 GW). Indonesia, Vietnam,
quarters of the Thailand, and Malaysia dominate RE
additional capacity capacity additions. These countries have
(Figure 1). established medium- and long-term RE
Philippines: Philippine targets and FITs to facilitate the
Energy Plan 2012-30 development of RE sources. The
does not give the aggressive development of RE is key to
breakdown of fuels for reconciling increased coal-based
thermal generation. generation with national commitments
Only RE targets to to reduce GHG emissions. For instance,
2030 are specified. Thailand's PDP projects an increase in the
The capacity indicated contribution of coal to 20-25 per cent of
here for coal and the electricity mix by 2036, from 20 per
n a t u r a l g a s cent in 2014. However, the relatively
corresponds to larger increase in RE (including hydro)
committed power means that the overall carbon intensity of
plant projects. The the power system declines over the
new government is timeline of the plan, from 500 g
formulating a revised CO2/kWh in 2015 to 300 g CO2/kWh in
plan which is expected 2036.
to be published at the Despite the dominance of coal in
end of 2016. thermal power capacity, one major
Thailand: excludes change is the increasing role that natural
power imports (2.3 gas is expected to play in displacing coal
GW in 2025). or in complementing variable RE power.
Vietnam: excludes For instance, in Indonesia, to meet the
power imports (1.4 government's new objective to reduce
the share of coal to 50 per cent of
GW in 2025).
electricity generation by 2025, the plan
Lao PDR: only to 2020.
Brunei and Singapore elaborated by PLN foresees the building
51
POWER SECTOR
Figure 2: Existing coal capacity and capacity additions in Southeast Asia by 2025
Figure 3: Evolution of coal consumption in Southeast Asia (2000-15)
of eight 800 MW gas units, in
replacement of additional coal capacity.
In Vietnam, while coal capacity is
increased to meet baseload power
demand, gas-fired power plants are
added to the mix to meet variable power
demand.
Nuclear is projected to be added as a
long-term option in some ASEAN
countries. Vietnam expects to have its
first nuclear power plant in operation in
2028. In Indonesia, Thailand, and the
Philippines, nuclear power is a long-term
option. However, due to the long lead
times of nuclear power, it does not
contribute to the regional electricity mix
by 2025, and only marginally in 2030 (6
percent of the electricity mix in Vietnam,
52
for instance).
Additional coal capacity in Indonesia
and Vietnam is concentrated in two
countries and remains uncertain
Altogether, 86 GW of coal-based power
capacity is expected to be added
between 2016 and 2025. Considering
the huge pipeline of proposed coal-fired
power plants in the region, achieving this
capacity is feasible. If the PDPs targets are
met, Southeast Asian coal capacity could
reach 148 GW in 2025, 51 up 139 per
cent from 2015. Coal capacity would
represent 37 per cent of total Southeast
Asian capacity, gaining 7 percentage
points over 2015, and would surpass gas
as the number one fuel for electricity
generation. The IEA's NPS projects a coal
fleet of 108 GW in 2025, which would be
significantly exceeded under current
plans.
But the additional coal capacity is
concentrated in two countries: Indonesia
and Vietnam account for 81 per cent of
the regional total. Notably, Indonesia and
Vietnam together plan to add some 70
GW of coal capacity between 2016 and
2025. The emission impacts of these coal
power development trajectories are large
- not only for these two countries but for
Southeast Asia as a whole, given the
overwhelming dominance of their
planned capacity additions in the
regional power mix.
In Indonesia, PLN intends to increase
its coal capacity by almost 35 GW by
2025, representing a 130 per cent
increase from the current 27 GW. But
given the delays and revisions that have
affected previous and ongoing power
capacity building programmes in
Indonesia, it is unlikely that the target will
be met by 2025. The Ministry of Industry
and Trade in Vietnam aims to increase
coal capacity by nearly 35 GW by 2025,
nearly three times the current coal
capacity (13 GW in 2015). However, in
the wake of the Paris Agreement,
Vietnam's prime minister announced his
intention to review the development
plans of all coal plants, and halt any new
coal power development, which makes
the current plan uncertain. Compared to
Indonesia and Vietnam, targeted
additional coal capacity in Malaysia,
Thailand, and the Philippines is moderate
at around 5 GW each between 2016 and
2025. However, in the three countries,
this development trajectory means that
coal is steadily catching up with gas as a
baseload power source, and is slated to
surpass gas as the number one fuel for
electricity generation in Malaysia and the
Philippines. Coal additions in the other
ASEAN countries are limited and are
concentrated in Lao PDR.
Despite the evident shift to coal
generation in the short term and up to at
least 2020 (and longer in Indonesia) there
energetica INDIA · JUNE17

are further emerging policy indications
that this coal boom will not be sustained
in the medium to long term; further
downward revisions to coal capacity
additions can thus be expected in
forthcoming PDPs (for example, in
Vietnam). This has significant
implications for future coal demand in
the region and consequently for its
import demand.
Steep increase in Coal demand
expected A steep increase in coal
demand in the short term, but
uncertainties on the horizon.
Southeast Asian coal demand has
more than doubled between 2000 and
2007, to 131 Mt, under the pressure of
Indonesian domestic demand. After a
pause in 2008, it has surged since 2009.
Regional coal demand increased from
143 Mt in 2009 to 232 Mt in 2015,
growing at a compound average growth
rate (CAGR) of 8.4 per cent, boosted by
the commissioning of numerous coal-
energetica INDIA · JUNE17
POWER SECTOR
fired power plants in the region. Coal
demand is dominated by the power
sector, which consumes 80 per cent of
regional demand. Other users, mainly
the cement industry, absorb the
remaining 20 per cent. Use of coal by the
residential/commercial sector has almost
disappeared. Coal demand is met
through a combination of local
production and, to an increasing extent,
by imported coal, the only exception
being Indonesia which is self-sufficient.
To some degree, coal is consumed in
all Southeast Asian countries, except
Brunei,52 while Indonesia and Vietnam
dominate regional coal demand. Coal
consumption in Indonesia has grown
almost four fold since 2000, to 91 Mt in
2015. The electricity sector is the largest
coal consumer, and is expanding as a
result of the addition of coal-fired
generation capacity. The Indonesian
government encourages increased use of
coal in the power sector, because of
abundant domestic supply and the need
to reduce the use of expensive diesel and
fuel oil for power generation. In order to
guarantee sufficient domestic supply, the
Indonesian government introduced a
Domestic Market Obligation (DMO) in
2010; this required nominated coal
producers to sell a minimum percentage
of their coal output to the domestic
market. Despite significant growth, the
level of coal consumption has been much
lower than had been foreseen in
government plans.
Vietnam's coal consumption has
surged, growing at a CAGR of 9 per cent
over the period 2009-15 and reaching an
estimated 45 Mt in 2015, boosted by
surging demand by the power sector
which accounted for more than half of
coal demand in 2015. Coal consumption
in Thailand has been relatively flat since
2009 and totalled 37 Mt in 2015. The
largest user was the Thai power sector
(64 per cent) and the country's industrial
53
POWER SECTOR
Figure 114: Outlook for coal demand in ASEAN countries by 2030
sector consumed the remaining 36 per
cent. Malaysian coal demand has
doubled since 2005, in line with the
commissioning of new coal-fired power
plants; its coal demand totalled an
estimated 29 Mt in 2015, most of it used
to fuel power plants in Peninsular
Malaysia. Philippine coal demand has
surged since 2009, rising from 12 Mt in
2009 to 22 Mt in 2015, driven by the
needs of the power sector. Some 80 per
cent of coal supply is used by the
Philippine power sector, 15 per cent by its
cement industry, and 5 per cent by
industrial and direct processing
industries. Coal consumption in other
countries is limited, except in Lao PDR
where it surged in 2015 (to an estimated
5 Mt), boosted by the opening of the
Hongsa lignite-fired power plant in June
2015.
Future coal demand is expected to
increase strongly, at least in the next ten
years. With 29 GW of coal capacity under
construction, the pace of growth will be
steep in the near term. In addition,
Indonesian targets are much more
ambitious, as the government has fast
tracked the construction of an additional
20 GW of coal capacity by 2019, above
the capacity currently under construction
at the beginning of 2016. Yet, as
mentioned before, the targets set in the
Indonesian PDP are ambitious and,
despite government efforts aimed at
54
accelerating the construction of the
much-needed capacity, delays cannot be
excluded. In Indonesia, but also more
widely in the region, the building of new
coal-fired power plants has become
more challenging, due to environmental
concerns and local opposition,
permitting and land acquisition issues,
and financing issues.
This report has therefore built two
scenarios to assess future regional coal
demand by 2030:
— The 'PDP scenario' is based on the
targets set in power development
plans for the next 10 or 20 years.
After 2025, the final year of most
PDPs (except Vietnam [2030] and
Thailand [2036]) the trend has been
extended to 2030.
— The 'Low-case scenario'. This includes
delays in the commissioning of power
plants currently under construction,
and less capacity added after 2020
than currently planned (mainly in
Indonesia and Vietnam) in view of
greater energy efficiency efforts,
quicker and larger development of
RE, and greater interconnection of
the grid allowing more hydro and
other RE to be developed on a
regional basis. Natural gas also
increases its share of the power mix
compared with the PDP scenario.
Coal demand by the industrial sector,
although representing only 20 per cent
of the region's coal demand, is important
in assessing future coal demand and
imports in some countries (Thailand for
instance) where industrial coal demand is
mostly met by imported coal. In both
scenarios, coal demand by the industrial
sector (mainly cement producers) has
been estimated based on coal
development plans (when available) or in
line with the development of economic
activity.
The scenarios are detailed in Annex 1
of this report for each country. Figure 1
4shows the outcome of the two
scenarios for coal demand. In the PDP
scenario, coal demand almost triples over
the period 2015-30, growing at 6.8 per
cent per year on average, driven by
growth in Indonesia and Vietnam; it
reaches 619 Mt by 2030. In the Low-case
scenario, demand still increases
significantly (at a CAGR of 5.4 per cent)
to 507 Mt by 2030, but the growth
diverges considerably among the
countries. While Indonesia and Vietnam
are still expected to raise their coal
demand significantly, coal demand in
most other countries peaks after 2025. In
the short/medium term (2020), the two
scenarios do not diverge significantly as
the coal capacity targeted in the PDPs is
already under construction, except in
Indonesia and Thailand. In both
scenarios, regional coal demand surges
from 2015 to 2020 to reach 411 Mt in
the PDP scenario, and 363 Mt in the Low-
case scenario.
The wide range of future coal
demand in Southeast Asia has a
significant impact on coal trade in the
region, as well as on CO2 emissions. The
impact of the two scenarios on coal trade
is analysed in the next section.
Source: "The role of coal in Southeast Asia's power sector
and implications for global and regional coal trade"; The
Oxford Institute for Energy Studies. A report by Sylvie
Cornot-Gandolphe, OIES Research Associate
energetica INDIA · JUNE17

ENERGETICA INDIA
Captive Power Plants in India 2016-17:
Opportunity Tracker for Value Chain
Players
Enincon Consulting has come out with a research report focused on captive power plants in India.
Energetica India brings, for the readers, the highlights of the report. We also speak to Mr. Ravi
Shekhar, Partner & Head - Research and Consulting on the research conclusions.
Need for Captive Power Plants
India, identified as one of the major
growth economy of not only South Asia
but across the globe in the current
dynamics for which global agencies have
earmarked an economic bloom at the
rate of if not more than certainly not less
than 7-8% annually. Given the fillip to
the economy underline to be witnessed
the power demand of the country is
certain to increase. From the current
levels of installed capacity of 315 GW it is
quite obvious that India is bound to grow
in terms of installed capacity on the same
rate as observed in the growth of
economy. Also, the rate of
industrialization shall be embellished
courtesy the ease of business drive of
Government of India. In conjunction,
what follows for India as a country overall
is the need of lower cost of variable
power to support the base load
requirements. This shall happen only
once the contribution of thermal power
retains its supremacy in the generation
mix of the country, which arguably is
challenged due to the impetus witnessed
in renewable sector growth coupled with
lowered capacity utilization of thermal
power units courtesy, crippled finances
energetica INDIA · JUNE17
POWER SECTOR
of power distribution companies cost
and regime.
To further elaborate upon the
understanding of likely power demand
supply dynamics of the country it is an
imperative to demystify the consumer
mix of the country at large. If we analyze
the power consumer matrix for the
distribution utilities, the chunk of
revenue flows from the industrial and
commercial users with no aberration
noticed at pan India levels. This suggests
that the need for power for industrial and
commercial consumers shall grow
analogous to the growth rate
compounded for the economy i.e. India.
It also means that the base load
requirements of such consumers shall
increase in analogy to the demand. This
scenario shall clearly invite for the power
distribution utilities to effect more power
procurement agreements on long term
basis (LT) to negate any potential hike in
variable cost associated with fuel price
and acts as a pass through controller for
especially the industrial and commercial
consumers. The business case for inking
such long term agreements shall be an
uphill task for power distribution utilities
which already are plagued by in
surmountable losses for which
government already has announced
multitude of bail out schemes at different
junctures with UDAY being the latest.
Ironically, due to the flow of reforms
from distribution sector in India we still
lack homogeneity under the subsequent
sectors of transmission and generation.
To exemplify, apart from the commercial
losses witnessed by the discoms the
amount of cross subsidy surcharge being
levied on the commercial and industrial
consumers also makes the case of open
market transactions unviable for them.
This scenario projects that the power
demand is on rise but availability is of
serious concern for such consumers. The
factor of availability brings captive power
generation into foray. The fact that
effectively power being available nearly
in the range of INR 8-15/unit to the
industrial and commercial consumers
(depending upon their consumption
levels) impacts the 24x7 of their
operations and may harm their respective
business cause. This leaves such
consumers to expedite establishing the
captive power units to relentlessly
support their business need and at the
same time draw a ceiling upon the cost
55
POWER SECTOR

incurred in terms of power sourcing

coupled with giving them luxury of
flexibility as well.
The report supports the gambit of all
value chain players equally to scale the
tune of opportunities involved in the
business case of captive power
generation in India. An in-depth primary
and secondary research was carried out
to unearth the tune of opportunities and
project a path finding guide for the value
chain players such as captive power plant
developers, OEM manufacturers,
equipment suppliers/vendors, EPC
service providers, fuel suppliers, power
traders and contractors etc.

Key Findings of the Report

Northern Region Snapshot of Cumulative
Upcoming Captive Power Capacity in
India:
The state of Rajasthan boasts the highest
of plant orders are to be placed state The northern region states cumulatively
upcoming capacity of CPP units in the
offers highest potential for equipment hold a market size of close to USD 600
northern region followed by Uttar
suppliers and vendors in the region. million for the equipment suppliers and
Pradesh and Punjab respectively. The
vendors to the captive power plants. Of
other states do not have significant
Opportunity for Equipment Suppliers & the total market size about 32% of the
capacities.
Vendors in Northern Region States for business case exists in Uttar Pradesh and
With close to 78% capacities stacked
Captive Power Segment: Punjab.
in Rajasthan for which main and balance

Mr. Ravi Shekhar

SPEAKING TO...
Partner & Head - Research and
to get some more details on Consulting, Enincon Consulting
the captive power plants in LLP
India.

ENERGETICA INDIA: What is the market size
potential of captive power plants in
India, as per your research?
RAVI SHEKHAR: In the present case scenario,
captive power plant segment in India has
an upcoming market size potential of
close to 7 GWs. The CPP business is
witnessing a consistent northbound
trend from almost a decade now, given
the fact that tariff of power has been on
steady rise coupled with the supply
reliability issues (which always is
considered a driver for industries setting
up of CPPs in India. Also, the case of fuel
availability specifically of coal has
improved considerably in the country
thus felicitating better operations of the
CPPs. Given the underutilization at the
utility scale coal based thermal power
plants the potential of CPPs arguably
looks robust in the country as the power
demand from industrial consumer is
slated to rise on a consistent basis for
coming years too.
E NERGETICA I NDIA : Will we also see
renewable energy technologies also
as captive power plants?
RAVI SHEKHAR: Yes, we can definitely see
renewable energy technologies as a
captive mode of power supply in India.
However, the extent might not be that
aggressive as of now. It is pertinent to

56 energetica INDIA · JUNE17


Also, the gas based power
generations are likely to drive business
prospects for the equipment suppliers in
the northern region.
Northern Region - Highest Fuel
Contributor:
The region offers maximum upcoming
capacities surprisingly of gas based units
followed by Waste Heat Recovery Boilers
(WHRB) and multi fuel set ups. Coal
constitutes of 197 MW of the upcoming
capacity, while bagasse contributes to 49
MW only. The opportunity tune for
WHRB is best as far as the region is
considered for the equipment suppliers
followed by multi fuel set ups.
Western Region Snapshot of Cumulative
Upcoming Captive Power Capacity in
India:
The state of Maharashtra boasts the
highest upcoming capacity of CPP units
in the Western region followed by
Gujarat and Chhattisgarh respectively.
While the state of Madhya Pradesh has
close to 256 MW of Captive Power
Capacities coming up. With close to 66%
take note of the impetus country is
observing in terms of capacity additions
of renewable power in the especially in
the solar roof top segment. Essentially,
this segment is touted as disruptive for
discoms and likely to give boost to the
group captive mode operated in the
range of 50-100 MW scale. However, the
cost economics being supportive enough
for the project life cycle needs better
assessment for the renewable technolo-
gies (like solar) completely being adaptive
under the CPP space. Also, the capacity
utilisation factor (CUF) and availability
across all seasonal variance may affect
the business case of complete adaptation
of renewable technologies under captive
space in future.
energetica INDIA · JUNE17
POWER SECTOR
capacities stacked in Maharashtra for
which main and balance of plant orders
are to be placed state offers highest
potential for equipment suppliers and
vendors in the region followed by
Gujarat.
Western Region - Highest Fuel
Contributor:
The region offers maximum upcoming
capacities of Coal based units followed
by Gas and WHRB set ups. Bagasse
constitutes of 354.7 MW of the
upcoming capacity closely followed by
Multi fuel with 310.5 MW capacity. The
opportunity tune for coal is best as far
as the region is considered for the
equipment suppliers followed by Gas
based set ups.
Opportunity for Equipment Suppliers &
Vendors in Western Region States for
Captive Power Segment:
The northern region states cumulatively
hold a market size of close to USD
2467.74 million for the equipment
suppliers and vendors to the captive
power plants. Of the total market size
ENERGETICA INDIA: Which of the regions in
India has the most captive power
plants? Why is it so?
RAVI SHEKHAR: Both Western & southern
region states presents a good market
case for captive power value chain
players. Due to the high industrial set up
maximum captive power plants find their
home in these two regions. Also, cost of
power available in these regions is higher
as the discoms impose heavy cross
subsidy burden upon the industrial
consumers. However, in coming years
Southern region states are projected to
take significant leap with a total of 69
captive power projects projected to be
upcoming.
Maharashtra holds about 45% of the of
the business case for OEMs.
Southern Region Snapshot of
Cumulative Upcoming Captive Power
Capacity in India:
The state of Karnataka boasts the highest
upcoming capacity of CPP units in the
Southern region followed by Andhra
Pradesh. The other states do not have
significant capacities. With close to 84%
capacities stacked in Karnataka for which
main and balance of plant orders are to
be placed state offers highest potential
for equipment suppliers and vendors in
the region.
Southern Region - Highest Fuel
Contributor:
The region offers maximum upcoming
capacities coal based units followed by
WHRB and multi fuel set ups. Bagasse
constitutes of 112.7 MW of the
upcoming capacity, while Gas
contributes to 80.5 MW only. The
opportunity tune for Coal is best as far as
the region is considered for the
equipment suppliers followed by multi
fuel set ups.
ENERGETICA INDIA: Are captive power plants
more beneficial for industries?
RAVI SHEKHAR: Yes. The rationale for any
industrial set up choosing to establish
CPP units can broadly be classified
primarily under two faceted aspects, with
first being the cost of power available in
the region, the industry operates coupled
with degree of subsidy burden upon
them and second being the cycle time for
which the power is available to them
across a day on hourly basis. Factoring
these two reasons apart from the size
and scale of operations of the industry
typically the landed cost of power from
the power distribution utility across any
state in the country turns out less feasible
for the industrial users, provided
constraints like fuel availability is negated
at their end for captive usage.
57
POWER SECTOR

Ashutosh Negi & Aaina Dutta, TERI

Ashutosh Negi, Department of Energy & Environment, TERI University
Aaina Dutta, Ph.D Scholar, Department of policy and regulatory issues

Rural Electrification and

Reverse Migration
The scope of this article is to discuss a rural electrification model that provides reliable, resilient
and sustainable electricity as well as, open window of many other economic activities for rural
populace.

Introduction:
India, one of the fastest growing
economies of the world with GDP
growth rate more than 7 Percent; still
have a large share of population without
access of reliable electricity. Majority of
this share resides in rural areas. At
present, electricity is the main
instrumentfor growth of any country.
Every service/facility is directly or
indirectly linked with electricity. In rural
areas where reliable,resilient electricity is
still a dream; for betterment of family and
search for employment opportunities
millions of people every year migrate to
urban areas. Rural to urban migration is
a response to diverse economic
opportunities across urban areas.
Rural and urban divide according to
census of India 1961:
Urban areas either have a Municipality,
Corporation or Cantonment or Notified
town area, or all other places which
satisfied the following criteria:
(i) A minimum population of 5,000.
(ii) At least 75% of the male working
population is non-agricultural.
(iii) Density of population at least 400 sq.
Km.
Area/place which does not falls in the
category of mentioned criteria termed as
rural area.
The scope of this article is to discuss a
rural electrification model that provides
reliable, resilient and sustainable
electricity as well as, open window of
economic activities for rural populace.
Article is divided into three sections;
Section 1 briefly discussed various rural
electrification schemes and their impact.
Then effect of rural to urban migration is
discussed in section 2.Proposed model
with technical and financial analysis is
discussed in section 3.
The reliability of rural electric power
supply can be analysed by the reports of
Electricity Supply Monitoring Initiative (
ESMI);that shows average non-supply
hours per rural location in December
2015 was 448, 39 and 76 in Uttar
Pradesh (6 Locations), Maharashtra( 12
locations) and Karnataka ( 5 locations )
respectively.The latest report of ESMI(
March 2017 ) shows that average non
supply hours per locations in rural areas
are still 221, and 72 in rural areas of
Uttar Pradesh ( 20 locations) and
Maharastra( 9 locations).Other rural
areas follows the similar trends.
As shown in the figure 1, onlyless
than one-fourth ESMI locations received
reliable evening electric power supply (5-
11PM) during April 2016 to March 2017.
As mentioned earlier, every service/
facility is directly or indirectly related to
electricity and without its reliable
availability the chances of livelihood
opportunities diminishes in rural areas
and it may be considered a reason for
rural to urban migration. In next section
effect of rural-urban migration are
discussed.

58 energetica INDIA · JUNE17

 POWER SECTOR

Table 1: Roadmap of Rural electrification programs till date Proposed Model:

Rural Electrification Program
Minimum Needs
Program
Kutir Jyoti Yojna
Pradhan Mantri
Gramodaya Yojna
Rural Electricity Supply
Technology Mission
Accelerated Rural
Electrification Program
Rajeev Gandhi Grameen
Vidyutikaran Yojna
Deen Dayal Upadhyaya
Gram Jyoti Yojana
Year Objective In our proposed model, animal waste is
1974 Deployment of basic social services across the country within stipulated time used to produce bio-gas; which further
frame, maintaining national standards.
utilized to produce electricity.
1988-89 Providing single point light connections to all the rural BPL families.
2000-01 Development of villages by providing facilities for primary health, housing,
education, rural roads, safe drinking water and rural electrification (2001-02 )
Assumption made in proposed
2002 Boost the pace of rural electrification through deployment of decentralized model:
renewable energy technologies, alongwith central grid connections. ¡ A village consisting of 200
2003 Providing interest subsidy of 4 % to state governments for Rural Electrification households.
programs. ¡ Every household has 2 cattle on an
2005 Development/upgradation of rural electricity infrastructure to improve
average.
household electrification.
¡ Animal waste collected in the vicinity
2015 Improvement in hours of power supply in rural areas along with billed energy
based on metered consumption and expand comprehensive development
of village only.
opportunities in rural areas, ¡ Assuming every HH requires
electricity for 2 CFL, 2 Fan, and 1 TV.

Technical Details:

Table 2: Calculation of biogas production

Parameter Symbol Value
Number of HH in Village A 200
Average cattle per HH a 2
Total cattle in village B=a*A 400
Animal waste production per m 10
cattle per day (kg)
Total waste production per day (kg) C=B*m 4000
Amount of biogas production (m3) D=C/20 200

20 kg cow dung is required to produce 1 m3 of biogas.

Figure 1: Reliable evening supply in rural ESMI locations
1- ESMI is an initiative of Prayas (Energy Group), Pune provides monthly evidence Table 3: Calculation of electrical energy
based reports on quality of power supplied in various parts of India. requirement 3
Appliances Wattage Operating No. electrical energy consumed
[www.watchyourpower.org]
(a) (b,W) Hours (c) (d) (E,Wh) = b*c*d
LED 8 5 2 80
Effects of Rural -Urban Migration on push and pulls factors, which may or may Fan 60 5 2 600
Indian Economy: not be favorable for the economy. It Television 90 4 1 360
We all know that mobility is an important raises inequality. Though it increases Total 1040

factor of human existence since the days
of civilization. The migration is not only
related to economic factor but also to
other factors such as political, social,
cultural etc. Everything has its pros and
cons and so does migration. The
interesting fact is that migration
enhances the welfare of the rural
population disproportionately. The
migrant's remittances increase domestic
savings as well as improve financial
intermediation. It serves as the link
between the sending and the receiving
communities. It leads to human capital
formation and may help in shaping the
supply of labour but at the same time it
increases the population share in the Flow diagram of proposed Model:
urban sector, which in return leads to
Animal waste storage
decrease in per capita availability of land.
It may also lead to loss of jobs and burden
Anaerobic Digester (35-40°C)
on public services. It will also lead to
increase in competition in the existing
Bio-GasCH4 ~55%
jobs that ultimately exert downward CO2 ~ 40%
pressure on salaries. It is the duty of the Others ~ 5%
government to integrate this process
efficiently. It also raises the point that if Purification CH4~90%
provided with suitable livelihood
opportunities and facilities, rural Biogas Generator
population may never go for
migration.To provide livelihood Electricity Generation

values and attitudes towards gender role. opportunities for rural populace a
But if we look at the other side, there is a business model is presented in next Distributed to households

dark picture which highlights certain section.

energetica INDIA · JUNE17 59

POWER SECTOR

Total electrical energy kWh more electricity. This extra

required to meet daily electricity can be utilized to generate
demand numureous employment opportunities
= 200*1040= 208kWh in the village.
or 208 units of electricity.
Maximum peak Employment opportunities that can
load[maximum be generated within village
connected electrical load premises are:
at any point of ¡ As reliable electricity is available at
time]=45kW cheap price within the premises of
Capacity of biogas Gen- village, small milk industry can be
set to meet the load = established; that will provide the
(50+30) kVA. employment opportunities for rural
people.
Funding: ¡ The manure obtained after
For mentioned size Bio- production of biogas can be utilized
gas plant 35,000 per kW as organic fertilizers in fields, which
or 40 % of total plant will improve the fertility of soil,
cost( whichever is less), promotes sustainable farming and
central finance raise annual income of farmers.
assistance is provided by ¡ Electricity is the basic requirement
MNRE .Rest funding can for any modern facility at present,
be taken either from with its reliable availability, it's easy
IREDA or village co- to provide modern services within
operatives at low interest premises of village e.g. Internet
Table 4: Financial analysis of Model rates. This can be return café, electrical repair shop,
Parameter Symbol Value Unit after revenue generated computer center.Now local tea
Total animal waste production per day C 4000 kg
by sale of electricity, and owner can also keep cold drinks in
Biogas produced per day D 200 m3
organic fertilizer. his/her shop.
Electricity generation potential G 400 kWh
Electricity requirement per day E 270 kWh
1 m3 of biogas can ¡ People can work up to late evening,
Biogas Gen-set cost (50+30)kVA B (4.75+3.8) Lakh INR produce 2kWh of usable which was not possible before.
Electricity Tariff R 2 INR/kWh electricity. The manure ¡ A Coldstorage unit can be installed
Manure production per day M 667 kg obtained after within the village which will provide
Annual revenue from manure sale (1.5Rs/kg) I 365000 INR production of bio-gas good income to farmers, because
Annual revenue from Electricity sales ER 197100 INR
contain high amount of now their fruits and vegetables can
Total Annual Revenue T 562100 INR
nitrogen, phosphorus, last of months.
Civil Works CW 120000 INR
Land Cost @ 200 INR per sq.m. LC 200000 INR
potassium, which is
Total Plant cost (excluding land cost) TC 975000 INR potential organic The way forward:
Plant expenses PE 300000 INR fertilizer and can be sold To improve the socio-economic
MNRE subsidy MS 390000 INR in nearby areas. condition of rural India distributed
Other expenses OE 100000 INR electricity generation options should
Net plant cost NC 885000 INR
Feasibility of Proposed beprioritize. It is important to mention
Net savings NS 262100 INR
Model: that the proposed business model not
Pay back period PB 3.377 Year
Feasibility : only provide reliable electricity supply
D=C/20
G (net electricity generation) =D*2
At present Biogas production is mature but also provide livelihood
E=Total HH*Daily Consumption technology and can provide electrical opportunities to rural populace that
B=Details from manufacturer
M=C/6Kg energy in reliable, sustainable manner. may reduce migration from rural to
I=M(kg)*1.5INR/kg*365
ER=E(kWh)*R(INR/kWh)*365 Table 4 confirms that, model is urban and helps to create happy
T=I+ER
LC=1000sq.m*200INR/sq.m economically feasible and self- societies.
TC=(B+CW)INR
PE=Salary paid to 2 employee (10K/mpmth each)+O&M cost
sustainable.
Sources
MS = Minimum of 40% of total plant cost or 35000 per kW It is important to mention that the (50+30) kVA is chosen considering future addition in peak
OE = Transportation of assets + documentation
NC = TC + LC-MS pay back period considered sale of load, assuming power factor( 0.8-1.0)
NS = T-PE File No. 25-2/2013-BE, "Government of India Ministry of
PB = NC / NS electricity to households only whereas New and Renewable Energy (Biogas Power (off-grid)
the system can generate around 200 Group)," no. 25, 2015.

60 energetica INDIA · JUNE17

 In constant business meetings and deals, we forget the human aspect of business

INDUSTRY JEWELS and are not able to get an opportunity to understand the human being we are dealing with.
Industry Jewel column helps the Industry Professional understand each other better.

Shailesh Vaidya
CEO, Scorpius Trackers Pvt. Ltd.

NAME:
Mr. Shailesh Vaidya The Goal is to be one of the LARGEST Tracker supplier by 2020.

EDUCATION BACKGROUND:
BE (computers) MBA (Finance)

WORK EXPERIENCE:
Shailesh co-founded Chroma Systems in
1992 while pursuing BE. Chroma
Systems is India's largest company
making imaging systems for
metallurgical testing In 2005, he
launched Systems Inc. to make BOLT ON
systems for CNC upgrades of manual
lathe machines. Systems Inc sold more
than 1,000 systems across India before
Shailesh sold off the company.
Next came Chroma Energy in 2010, to
work on a high efficiency CPV system
with 1024x concentration, with a AC
panel efficiency of demonstrated 30%.
In 2012, Shailesh co-founded
Scorpius Trackers, now India's largest
and one of world's top 10 tracker technologies, to deliver the lowest LCOE aggressive adoption by IPPs as trackers
companies, with a bankable and to customers. enable less DC in the plant, thereby
competitive globally patented ZERO In early 2018, Scorpius will launch an reducing module cleaning and O&M
mechanical O&M tracker technology. integrated FULL BOS solution, thereby costs over a 25 year period (which
drastically reducing the installation time otherwise would only increase).
CURRENT WORK GOALS AND and labour costs and also a state of are Also, trackers provide a uniform
ACHIEVEMENTS robotic cleaning solution. generation for most parts of the day,
Scorpius is India's largest Tracker while all fixed TILT plants (whatever the
technology company with more than INDUSTRY OUTLOOK DC ration - 1.35 / 1.40) will give peak
250 MW supplied. Increasing global The solar Industry will continue its power only for a couple of hours in the
installations with supplies done to Japan, growth on back of falling installed solar afternoon. At some point in the near
Middle East, Africa and USA. In 2017, the plant prices, aggressive bidding and future, the utilities may decide to switch
trackers have already been displayed at more capacities being added by the of this EXCESS peak power being
trade shows in Japan, China, Abu Dhabi currently dormant states, which are more generated in the afternoon, as the need
and Mexico with plans to promote the than 15 at present. will be for uniform power at peak
product in USA, Brazil and India in later Trackers are seeing very fast adoption morning and late afternoon time, which
part of this year. in this market, up from 0.5% in 2015 to can be provided only by TRACKING the
Scorpius is a Technology company more than 7% in 2016 to more than sun.
with plans in robotic cleaning systems 15% in 2017. Even after the low module
and many other exiting cutting-edge prices, trackers will continue to see

energetica INDIA · JUNE17 61

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