Instead of signing MoU, PPA, submitting performance bank guarantee etc for 25 years or participating in cut throat bidding process (project is viable only to module manufacturers for the rate it can be achieved), I suggest to develop the solar project under REC Mechanism, as for selling the power through average exchange rate and realizing the mean value of REC rate for first five years and half of the floor price for next 5 years, yields levellised rate of Rs.10.536*. [Solar Tariff in Gujarat: Rs. 9.28 for project commissioned up to 2013, Rs. 8.63 for project commissioned up to 2014 and Rs. 8.03 for project commissioned up to 2015]. Even if REC floor price is reduced by half for next 5 years and NIL thereafter, developing the project under REC and selling the power through Energy Exchange, would yield rate of Rs.9.647 which is more than maximum rate of NVVN against cost of generation not more than Rs.6.50. [NVVN is the nodal agency of NTPC for procuring solar power to meet their REC requirement. In the 1st phase NVVN finalized bid for 150 MW Solar Projects and in latest bid for 350 MW Solar Projects. In the latest NVVN bid the price offer for solar power projects were minimum Rs.7.49 and maximum Rs.9.44]

1. Solar Power Projects
under REC Mechanism
in India

2. Power Scenario : India
» India, for electricity generation is fifth in the world with
185496.62 MW installed capacity, and third largest for
transmission & distribution network. However, increasing
infrastructure activities, growing population and the rising
needs of a rapidly growing consumer base has led to
situation where the supply of energy falls short of the
demand. We face a peck shortage of almost 12% and an
average shortage of 9 to 10%.

3. Per Capita Consumption
» The per capita consumption (gross electrical energy
availability per population) in India is merely 681
units, against World Average of about 2596 unit. Per capita
consumption is highest in Canada (17179 Kwh) followed by
USA (13338 Kwh) & Australia (11126 Kwh). If we target to
meet the world average, we need to increase our capacity by
more than 4 times, i.e. by 850,000 MW.
» This means India deserves to be one of the most attractive
investment destinations for power in the world. May be in
that perspective out of fortune 500 companies, around 200
have set up there base in India.

4. Targets : Capacity Addition
» There is track record in world history that India is
maintaining its natural environment while contributing for
the development and welfare of the human kind. So while
achieving 9% GDP growth, Govt. of India has adopted and
also pursuing a Low Carbon Growth Strategy for the Indian
Power Sector. Accordingly 78,700 MW capacity addition is
targeted for the 11th Five Year Plan (2007-12) and 82,200
MW capacity addition for the 12th Five Year Plan (2012-17) as
recommended by working group committee.

5. Low Carbon Growth Strategy
» Amongst the many elements of Low Carbon Growth
Strategy, adoption of super critical technology in thermal
power plants, rapid induction of clean coal
technology, sharper focus on generation from
wind, solar, biomass & hydro etc, reforestation plan, fly ash
utilization plan, clean development mechanism (CDM) and
introduction of ISO 14001 are the main. For reducing the CO2
emission from new coal fired capacity, it is envisaged that
more than 50-60% of capacity addition of thermal plants
during 11th & 12th Five Year Plans period would be based on
super critical technology keeping proper fuel mixture to

6. Low Carbon Growth Strategy
» Supercritical and ultra-supercritical plants can achieve
efficiencies of ~ 40 and ~ 45% respectively, compared to
about 35% achieved by subcritical plants. For every 1 % rise
in efficiency, there is a 2% decrease in CO2 release.
Besides, there is a substantial reduction in NOx emissions.
» International major like Mitsubishi, Toshiba, Hitachi, Alstom
and Ansaldo have already started the process of partnering
with Indian companies to set up super critical technology
based manufacturing facilities in India.

7. Nuclear Power Program
» To achieve the capacity addition target while following Low
Carbon Growth Strategy, Govt. of India has launched
flourishing & largely indigenous nuclear power program to
have 20,000 MW nuclear capacities by 2020 and to supply
25% of electricity from nuclear power by 2050.

8. Clean Coal Technology
» Gasification is the first step towards a clean coal technology:
Carbon to capture from the syn-gas produced and
sequestered in the mine or pump back in oil or gas fields to
enhance oil or gas recovery. In-situ coal gasification with or
without carbon sequestration could be eligible for carbon
credit. ONGC trials to establish the feasibility & economics of
in situ gasification technology for Indian coal & lignite in
collaboration with Russia. Neyveli has tied up with an
Australian Group to pursue in-situ gasification of Lignite.
However, in-situ gasification has not been deployed
commercially anywhere in the world.

9. Jawaharlal Nehru National Solar Mission
» Under the Low Carbon Growth Strategy Govt. of India has
launched Jawaharlal Nehru National Solar Mission to create
a capacity of over 20,000 MW based on solar energy by the
pear 2020 with the target of setting up 1,000 MW grid
connected (33 KV and above) solar plants, 100 MW of roof
top and small solar plants connected to LT/11 KV grid, 200
MW capacity equivalent off grid solar applications and 7
million sq. meters of solar thermal collector area during the
first phase till March, 2013.

10. Renewable Energy Sources : Potential
» National Electricity Policy envisages “Power for all by 2012”
and per capita availability of power to be increased to over
1,000 units by 2011-12. Our country has significant potential
for generation of power from Non- Conventional Energy
Sources such as Wind, Small Hydro, Bio mass and Solar
Energy. The total estimated medium-term potential (2032)
for power generation from renewable energy sources such
as wind, small hydro, solar, waste to energy and biomass in
the country is about 1,83,000 MW.

11. Renewable Energy Sources : Potential
Estimated Mid-Term (2032) Potential
Sources / Systems MW
Wind Power 45000
Bio Power (Agro Residues & Plantations) 61000
Co-generation Baggasse 5000
Small Hydro (Up to 25 MW) 15000
Waste to Energy 7000
Solar Photovoltaic 50000
Total 183000

12. Renewable Energy Sources : Optimization
» In June 2008 Hon’ble Prime Minister of India announced National
Action Plan for Climate Change (NAPCC) to outline its strategy
to meet the challenge of Climate Change. NAPCC envisages several
measures to address global warming. One of the measure is
increasing the share of renewable energy in total electricity
consumption in the country.
» The National Action Plan of Climate Change (NAPCC) has set the
target of 5% renewable energy purchase for FY 2009-10 which
will increase by 1% for next 10 years. The NAPCC further
recommends strong regulatory measures to fulfill these targets.

13. REC : The Concept
» The NAPCC provided a roadmap for increasing the share of
renewable in the total generation capacity in the
country, but there are constraints in terms of availability of
RE sources evenly across different parts of the country.
» The concept of Renewable Energy Certificate (REC) assumes
significance to address the mismatch between availability of
RE sources and the requirement of the obligated entities to
meet their renewable purchase obligation.

14. REC : The Concept
» REC would be exchanged within the forbearance price and
floor price. The forbearance and floor price would be
determined by CERC in consultation with Central agency and
FOR from time to time.
» In case of default SERC may direct obligated entity to deposit
into a separate fund to purchase the shortfall of REC at
forbearance price.
» However, in case of genuine difficulty in complying with the
renewable purchase obligation because of non-availability of
certificates, the obligated entity can approach the
Commission for carry forward of compliance requirement to
the next year.

15. Regulatory Commission : Role
» The Electricity Act, 2003 entrusts on the appropriate
commission the responsibility of promotion of co-generation
and generation based on renewable energy sources.
“86. (1) The State Commission shall discharge the following
functions, namely: -
» (a) …….
» (e) promote cogeneration and generation of electricity from
renewable sources of energy by providing suitable measures
for connectivity with the grid and sale of electricity to any
person, and also specify, for purchase of electricity from
such sources, a percentage of the total consumption of
electricity in the area of a distribution licensee;
» (f) ………”

16. RPO : Quantum of purchase
Year Total Wind Solar
» Against the
% MW MW
2010-11 5% 20000 1000 requirement of REC
2011-12 6% 22000 2000 Certificate of 20000
2012-13 7% 24500 4500 MW from Wind and
2013-14 8% 26500 6500
2000 MW from Solar
2014-15 9% 29000 9000
2015-16 10% 31000 11000 Projects, the available
2016-17 11% 33500 13500 is 14158 MW from
2017-18 12% 35500 15500 Wind and only 183
2018-19 13% 37500 17500
2019-20 14% 40000 20000 MW from Solar.

17. REC : Forbearance and Floor Price
» Under section 66 and 178 of the Electricity Act, 2003 the
CERC has notified the Terms and Conditions for recognition
and issuance of Renewable Energy Certificate (REC) for
Renewable Energy Generation Regulations, 2010
Period : Non Solar REC Solar REC
1st June 2010 – 31st March 2012 Rs/MWh Rs/MWh
Forbearance Price 3900 17000
Floor Price 1500 12000
1st April 2012 – 31st March 2017
Forbearance Price 3300 13400
Floor Price 1500 9300

18. Sensitivity Analysis: Revenue Realization
Scenario REC Rate Period of For Exchange For DISCOM’s
REC Average Sale Average
Rs./ Kwh Years Rate: Purchase
Rs.3.5/ Kwh Cost:
Rs.2.7/ Kwh
1 Floor Price 5 8.437 7.430
2 9.30 10 9.647 8.640
3 15 9.886 9.433
4 Mean Price 5 9.326 8.318
5 11.35 10 10.802 9.795
6 15 11.628 11.175
7 Forbearance 5 10.214 9.207
8 Price 10 11.958 10.950
9 13.40 15 13.370 12.917

19. Finance for Solar Project:
» Investments from NGO,REC India, Green Energy funds
» Export-Import Bank
» Approved $75 million for four solar projects in India
» a $16 million, 16.5 - year loan to Azure Power Rajasthan
Pvt. Ltd. for 5 MW
» a $9.2 million, 18 - year loan to Punj Lloyd Solar Power
Ltd. for 5 MW
» $500 million for solar projects in the pipeline that will
generate an estimated 315 MW of solar power.
» European Investment Bank (EIB) has granted a EUR 200
million loan to ICICI Bank for renewable energy projects
supporting climate change mitigation under the EUR 4.5bn
Energy Sustainability and Security of Supply Facility (ESF).

20. Global Annual Installation:
Germany is the Market Leader

21. Solar Market India:

22. Levellised Cost Comparison:
Utility Scale PV & Conventional Power at Grid Parity

23. Thank You
? Query : mail to – parmarbr@yahoo.co.in or call 9909904332