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Elephants can dance    renewable energy finance, spore - eai
 

Elephants can dance renewable energy finance, spore - eai

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    Elephants can dance    renewable energy finance, spore - eai Elephants can dance renewable energy finance, spore - eai Presentation Transcript

    • Elephants CanDanceRenewable Energy in India – Implications for Investment
      Narasimhan Santhanam
      Renewable Energy Finance, Singapore
      Apr 13, 2010
    • About EAI
      Leading Indian renewable energy business intelligence, market strategy consulting firm
      Work on all primary renewable energy sectors – solar, wind, biofuels/biomass, waste-to-energy and small hydro
      Work on market research, entry and diversification strategy, economic and financial modelling and pre-feasibility analysis
      Team comprises professionals from IITs and IIMs, with renewable energy, industry research and economics backgrounds
      Based out of Chennai
      More from www.eai.in
      www.eai.in
      ElephantsCanDance
    • I’m here to talk about…
      • India Energy - Current Status
      • India Energy – Strategy for the Future
      • Electricity Grid Improvements
      • Focus on Renewables
      • Investments in Renewable Energy
      www.eai.in
      ElephantsCanDance
    • India Energy - Current Status
      The Elephant Has Just Begun to Roar
      www.eai.in
      ElephantsCanDance
    • GDP Growth
      www.eai.in
      ElephantsCanDance
    • Electricity Demand Growth
      www.eai.in
      ElephantsCanDance
    • Energy SourcesBut…the Elephant Has a Problem
      www.eai.in
      ElephantsCanDance
    • Peak Electricity Shortage
      • India's peak power shortages are projected to worsen from
      • 17% peak deficit in 2009 (shortfall of 23 GW), to
      • 25% peak deficit by 2015 (shortfall of over 60 GW)
      • Electricity generation capacity, most of it coal fired, will more than treble from 2005 to 2030.
      www.eai.in
      ElephantsCanDance
    • Villages without Electricity
      • More than 60,000 villages without access to electricity
      • Ministry of Power has accelerated the Rural Electrification Program with a target of providing Power to All by 2012
      www.eai.in
      ElephantsCanDance
    • Huge Oil Import Bill
      • Consume 3 million barrels per day
      • Produce 1 million barrels per day
      • Import about 700 million barrers per year
      • At $75 per barrel, that’s about $50 billion outflow
      • Easily wipes out all the gains we make from FDI (about $30 billion per year).
      www.eai.in
      ElephantsCanDance
    • CO2 Emissions Increase
      www.eai.in
      ElephantsCanDance
    • Energy Sources
      • Total primary energy usage – approx 600 MTOE (2008)
      • Primary energy will be more than double this by 2030.
      • For its electricity, transport and other industrial and domestic needs, India needs energy. Current sources of primary energy are:
      Coal, Natural Gas, Oil
      Renewables – Hydro, biomass
      Nuclear
      www.eai.in
      ElephantsCanDance
    • Oil
      • Consumed 3 million barrels per day in 2009, up from about 1.2 million barrels per day in 1990.
      • Production - from 0.7 million barrels per day in 1990 to about 1 million barrels per day in 2009.
      • Recent findings of oil in Rajasthan by Cairn Energy. Cairn estimates that it will be able to achieve peak production of about 0.24 million barrels per day in 2011
      • India currently imports about 70% of its oil
      www.eai.in
      ElephantsCanDance
    • Natural Gas
      • Demand expected to nearly double to 320 million standard cubic meters per day by 2015 (Source: McKinsey Study)
      • Current demand of 166 mmscmd (million cu meter per day) made up of 132 mmscmd from domestic and rest from imported LNG
      • Hydrocarbon Vision 2025 – increasing proportion of natural gas in total energy consumption from 8% now to 20% by 2025. Will require investments of $40 - $50 billion across value chain.
      • Country currently imports 20% of its requirements
      www.eai.in
      ElephantsCanDance
    • Coal
      • Uses about 600 million T per annum
      • Coal imports will increase almost seven-fold, accounting for 28% of India's total coal needs in 2030 from 12% in 2005
      • In 2009-10, imported about 60 million T (10%); expected to hit 100 million T within the next three years.
      This for a country which has the fourth largest coal reserves in the world – about 100 billion T of proven reserves
      www.eai.in
      ElephantsCanDance
    • Fossil Summary
      • Natural gas - imports about 15% of consumption; imports could increase with the fast growth of industrialization
      • Coal - imports a little over 10% of its requirements, likely to increase steeply over the next five years
      • Oil - pleasantly surprised by the recent oil finds in Rajasthan, but over 60% reliance on outside countries for oil for the foreseeable future.
      www.eai.in
      ElephantsCanDance
    • The Problem with Fossil
      • Increases India’s reliance on outside countries for critical energy inputs
      • Makes a big hole in our $ reserves
      • Causes harm to the environment
      www.eai.in
      ElephantsCanDance
    • India’s Energy Strategy
      The Elephant Starts Thinking
      www.eai.in
      ElephantsCanDance
    • Energy Strategy
      • Strengthen Ties with Existing Sources – Realpolitik
      www.eai.in
      ElephantsCanDance
    • Energy Strategy
      • Diversify Sources - buying up stakes in oil and natural gas fields worldwide
      www.eai.in
      ElephantsCanDance
    • Energy Strategy
      • More Support from Domestic Supplies - increasing the investments and by easing the restrictive policies for private sector investments
      www.eai.in
      ElephantsCanDance
    • Energy Strategy
      • Increase Efficiency – A key strategy here is to make the Indian electricity grid more efficient
      www.eai.in
      ElephantsCanDance
    • Energy Strategy
      • Focus on Renewables - Increase reliance on renewable energy
      www.eai.in
      ElephantsCanDance
    • Overhauling the Electricity Grid
      The Elephant Begins to Act
      www.eai.in
      ElephantsCanDance
    • Electricity Grid - Overview
      Generation capacity of about 150 GW; 663 billion units produced; CAGR of 5% over the last 5 years
      The fifth largest electricity generation capacity in the world
      Transmission & Distribution network of 6.6 million circuit km - the third largest in the world
      www.eai.in
      ElephantsCanDance
    • Electricity Grid - Overview
      • Majority of Generation, Transmission and Distribution capacities are with public sector companies or State Electricity Boards (SEBs)
      • Private sector participation is increasing
      • Distribution licences for several cities are already with the private sector
      • Three large ultra-mega power projects of 4000MW each have been recently awarded to private sector
      www.eai.in
      ElephantsCanDance
    • Grid Problems
      • Poorly planned distribution networks – cross country grid not good enough
      • Overloading of system components
      • Low metering efficiency and bill collection
      • Power theft
      • Low operational efficiency of the public sector utilities
      www.eai.in
      ElephantsCanDance
    • Grid Progress
      • Inter-regional power transfer capacity end 2009 was 20,000 MW; plan to take it to 37,000 MW by 2012.
      • Unbundling State Electricity Board’s assets into separate entities for generation, transmission, and distribution - intention of eventual privatization
      • Improving metering efficiency
      • Auditing to create transparency and accountability at the state level
      • Improved billing and collection
      • Mandating minimum amounts of electricity from renewables; requiring preferential tariff rates for renewables
      www.eai.in
      ElephantsCanDance
    • Grid Progress
      • Policy framework: Electricity Act 2003 and National Electricity Policy 2005
      • 100% FDI permitted in Generation, Transmission & Distribution
      • Incentives: Income tax holiday for a block of 10 years in the first 15 years of operation; waiver of capital goods' import duties on mega power projects
      • Independent regulators: Central Electricity Regulatory Commission for central PSUs and inter-state issues. Each state has its own Electricity Regulatory Commission
      www.eai.in
      ElephantsCanDance
    • Grid Progress
      • Implementation of key reforms is likely to foster growth in all segments
      • Unbundling of vertically integrated SEBs
      • “Open Access” to Transmission and Distribution networks
      • Select distribution circles to be franchised/privatized
      • Tariff reforms by regulatory authorities
      www.eai.in
      ElephantsCanDance
    • Grid Progress
      • Mobilising resources from private sector – Two routes for private sector participation:
      • Joint Venture (JV) Route, wherein the CTU/STU shall own at least 26% equity and the balance shall be contributed by the Joint Venture Partner (JVP);
      • Independent Private Transmission Company (IPTC) Route, wherein 100 percent equity shall be owned by the private entity.
      www.eai.in
      ElephantsCanDance
    • Grid Progress
      • Smart Grid
      • Demand-side management to selectively curtail electricity use for delinquent customers or neighbourhoods, while improving power quality for better customers.
      • Another driver behind the need for a smarter grid in India is its need for energy efficiency and increased use of renewables.
      www.eai.in
      ElephantsCanDance
    • Opportunities in Transmission Network
      • Additional 60,000 circuit km of Transmission network expected for the period 2007-2012
      • Private sector participation possible through JV and 100% equity mode
      • Total investment opportunity of about US$ 150 billion over a 5 year horizon (2007-2012)
      www.eai.in
      ElephantsCanDance
    • Focus on Renewables
      A New Elephant
      www.eai.in
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    • Renewables Contribution to Electricity
      www.eai.in
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    • Renewables Contribution to Transport Fuel
      • Less than 0.5% of total transportation fuels comprises biofuels
      • Total production of ethanol and biodiesel combined were less than 0.25 million T (2009)
      www.eai.in
      ElephantsCanDance
    • Renewables with Short and Medium Term Potential
      • Solar
      • Solar PV
      • Solar CSP
      • Wind
      • Biofuels
      • Biodiesel
      • Ethanol
      • Second Generation Biofuels
      • Hydro
      • Small Hydro
      • Large Hydro
      • Biomass-based electricity
      • Waste to Energy
      www.eai.in
      ElephantsCanDance
    • Solar PV + CSP
      • Current installed capacity (grid connected) : Approx 6 MW for PV and 0 for CSP
      • Targets under the National Solar Mission : 20,000 MW by 2022 (for PV + CSP)
      • 2000 MW BY 2013
      • 10000 MW by 2017
      • Attractive Feed-in-tariffs and other incentives
      www.eai.in
      ElephantsCanDance
    • Wind
      • Potential: 90000 MW
      • Installed capacity – Approx 12,000 MW, expected to reach 17,000 MW by 2012
      • Investments in wind energy
      • 2007 - $2.2 billion
      • 2008 - $2.7 billion (63% of total RE investments)
      • 2009 – Over $3 billion (EAI estimate)
      • Accelerated depreciation benefits, or GBI
      www.eai.in
      ElephantsCanDance
    • Biofuels
      • Potential: Significant for both biodiesel and ethanol, esp with second gen crops - Jatropha (biodiesel) and Cellulosic feedstock (ethanol)
      • Currently, biofuels contribute less than 0.5% of total transport fuel
      • Feedstock availability, prices major concerns
      • Mandatory blending of 5% in petrol and diesel
      • Future depends on both government incentives and feedstock availability
      www.eai.in
      ElephantsCanDance
    • Hydro – Small Hydro
      • Potential of up to 15,000 MW
      • Current installed capacity – about 2500 MW
      • Small hydro investment in India grew by 300% 2007-08
      • $543 million in 2008 (15% of total RE investments)
      • $140 million in 2007
      • Concerns
      • Delays & long timelines
      • Poor transmission and distribution
      • Geological and social uncertainties
      • Regulatory challenges
      www.eai.in
      ElephantsCanDance
    • Large Hydro
      • Total potential of 150,000 MW
      • Installed capacity – 36,000 MW
      • Most investments are government dominated, but private investments beginning to happen
      • Total investments of 28,000 crores planned in the 11th five year plan (2007-12)
      • Concerns
      • High capex
      • Large gestation periods
      • Geological surprises
      • Societal and environmental impacts
      • Uneven distribution of hydro resources and possible demand-supply mismatch
      www.eai.in
      ElephantsCanDance
    • Biomass Power
      • Total available potential – 19500 MW
      • Exploited potential – 795 MW
      • Expected installed capacity by 2012 – 1000 MW
      • Dominated by small MW plants (1-5 MW)
      • Feedstocks used - waste biomass such as rice husk, cotton seed husk, crop waste
      • Gasification/pyrolysis is the process used for power production
      • Incentives from government - duty exemption on components, exemption in sales tax, depreciation benefits
      • Concerns - feedstock availability and price stability
      www.eai.in
      ElephantsCanDance
    • Waste to Energy
      • Types of waste considered – MSW, industrial waste
      • MSW – biodegradable household waste and sewage
      • Industrial waste – non-hazardous biodegradable waste
      • Potential - over 20,000 MW of power generation
      • Typical process used is anaerobic digestion. Gasification being explored
      • Concerns
      • Collection and segregation of waste
      • Cost and efficiency of technology
      www.eai.in
      ElephantsCanDance
    • Attractive RE Sectors
      The most attractive renewable energy investment
      opportunities for the short and medium term:
      • Solar PV
      • Wind
      • Small Hydro
      • Biomass-based Power
      www.eai.in
      ElephantsCanDance
    • Investments in Indian Cleantech($ billion)
      Over 80% of the investment through project finance, rest through VC and PE investments
      www.eai.in
      ElephantsCanDance
    • Foreign Companies that Have Invested in Renewable Energy
      • Abengoa Solar – CSP
      • Centrotherm PV – Polysilicon processing
      • Signet Solar – thin film module manufacturing
      • Vestas – wind turbine manufacturing
      • Gamesa – wind turbine manufacturing
      • eSolar – solar CSP power plants
      • Siemens – wind turbine manufacturing
      • Refex Energy – Solar PV
      • BP – Biodiesel
      • GE – wind turbine manufacturing
      • Biogas Nord – biogas plants
      www.eai.in
      ElephantsCanDance
    • By 2020…
      • India is likely to have about 38% of its total electricity powered by renewables, from about 33% today (including large hydro)
      • About 300 MW of electricity installed capacity, with a more efficient grid network
      • Most of its villages electrified
      • Much larger participation from private sector in energy
      • Hopefully much less reliance on foreign sources of energy
      www.eai.in
      ElephantsCanDance
    • Who Says Elephants Can’t Dance?
      All you need to do is to look at India to see an elephant dancing, and DANCING PRETTY WELL.
      Thank you!
      NarasimhanSanthanam
      narsi@clixoo.com
      Mob: +91-98413-48117
      www.eai.in
      ElephantsCanDance