The renewable energy sector in India is poised for strong growth as the government seeks to harness renewable energy sources to meet energy demand and reduce dependence on fossil fuels. Renewable energy accounts for around 10% of India's installed power capacity. Key factors driving growth include abundant domestic renewable resources, government initiatives and incentives, and increasing energy needs from economic and population growth. India has significant potential from sources like solar, wind, biomass and small hydro.

1. Sector Profile
Namrata Sundaresan
Tel: +91 98401 84541 Renewable Energy
Email:namrata.sundaresan
@ibipartners.com
The renewable energy sector in India is poised for strong growth as the
Giju Mathew government seeks to harness renewable energy sources to bridge the
Tel: +91 99164 80277 energy gap and reduce dependence on fossil fuels. Large, unexploited
Email:giju.mathew@ibipart
ners.com
domestic resources and a favourably aligned regulatory environment
further encourage investments in this sector.
Industry facts According to the UN World Economic and Social Survey 2009, India is the
most developed renewable energy market in South Asia with an annual
 Total installed power turnover of about $500 million. The report states that India’s generation
generation capacity – of power through renewable energy sources is only a fraction of the
1,61,352 MW estimated total economic potential of 100,000 MW.
 Share of renewable
energy – 17,222 MW
Government initiatives such as the National Electricity Policy and the
Renewable Energy Plan 2012 have helped India become the country with
(10 percent)
the most developed and diversified renewable energy market in South
Asia.
Why India for renewable energy investment?
Industry sub-segments
 Solar Energy Renewable energy is growing rapidly in India. With an installed capacity of
o Solar Thermal 17.2 GW, renewables (excluding large hydro) account for about 10 percent
o Solar Photovoltaic
of India’s overall power generation capacity.
Wind
According to E&Y’s renewable energy index (May 2010), which takes into
Ocean Thermal Energy account various factors governing renewable energy growth in a country,
Biomass India is ranked 4th overall. Depletion of fossil fuels and the need for energy
Geothermal security in addition to abundant natural resources and strong economic
Small Hydro growth drive the need for renewable energy in the country.
Wave Energy
Tidal Energy Rapid economic development and increasing population is driving the
demand for energy in India. A sustained 8 percent GDP growth in India
requires an annual increase of total primary energy supply from 2.2
percent to 5.1 percent. Harnessing renewable energy sources is expected
Attractive states for to help India cut emissions without compromising on economic growth.
investing
Wind Energy:
Tamil Nadu, Maharashtra, Renewable Energy Potential and Achievement (as on
Karnataka, Gujarat, Dec. 31, 2009)
Rajasthan Estimated
Source Achievement
Solar Energy: Potential
Rajasthan, Gujarat, West Biomass Power 16,881 MW 829.5 MW
Bengal Wind Power 45,195 MW 10,925.0 MW
Small Hydro:
Small Hydro Power 15,000 MW 2,558.9 MW
Arunachal Pradesh,
Cogeneration –
Himachal Pradesh, Jammu 5,000 MW 1,308.0 MW
and Kashmir, Uttarakhand bagasse
Biomass: Waste to energy 2,700 MW 65.0 MW
Andhra Pradesh, Solar Power 50 MW/sq.km. 9.13 MW
Chattisgarh, Karnataka, Source: Ministry of New and Renewable Energy, Annual Report 2009-2010
Maharashtra
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2. Major companies
Government incentives
investing in India
 GE, Vestas, As part of its efforts to address high energy demand and the potentially
Abengoa, Siemens, adverse environmental effects of intense energy use, India has enacted
Sharp, eSolar, BP, IBC legislation and pursued policies to improve the availability of alternative
Solar, DuPont, Suzlon
energy sources.
India has allowed 100 percent Foreign Direct Investment (FDI) in the
renewable energy sector and structures have been put in place to
facilitate power trading and open access. According to industry estimates,
Government agencies over $200 million is expected to flow in as FDI by 2010-11 in the
renewable energy sector.
 Ministry of New and
Renewable Energy Wind energy:
 Indian Renewable Wind power development benefits from fiscal and financial incentives,
Energy Development such as a provision for 80% accelerated depreciation for wind farms over
Agency Limited one or two years and a ten year tax holiday for wind power projects. In
 Centre for Wind addition, the Indian government set up the Indian Renewable Energy
Energy Technology Development Agency (IREDA), to provide loans for renewable energy
 Solar Energy Centre projects; and the Centre for Wind Energy Technology (C-WET) which does
R&D, training, certification and resource assessment for the sector.
Solar energy:
Recent investments – In November 2009, the Government of India approved the ‘Jawaharlal
private equity and Nehru National Solar Mission’ (JNNSM) which focuses on setting up an
venture capital
enabling policy environment for solar technology penetration in the
 Moser Baer Solar country. India offers several subsidies to solar power systems, such as
(Investors – CDC solar lanterns and home lighting systems and also generation based
Group, Credit Suisse, incentives of up to INR 12 per kWh for power plants.
IDFC, Morgan Stanley,
Nomura Biomass energy:
International) Incentives for biomass energy include accelerated depreciation, import
 SE Forge duty concessions, excise duty exemption and a ten year tax holiday.
(Investor – IDFC)
Small hydro:
 Vestas RRB India
Small hydro power projects are eligible for concessions on customs duty,
(Investor – Merrill
tax holidays and other state level incentives including sales and electricity
Lynch)
tax exemptions and preferential tariffs.
 Orient Green Power
Company
(Investor – Olympus
Capital) Source:
 Cobol Technologies Ministry of New and Renewable Energy, Global Wind Energy Council, UN World Economic and
(Investor – Pangea Social Survey, Press reports
Capital)
Source: Renewable Energy in
India – Evolving Dynamics,
E&Y, August 2009
IBI Consulting is the advisory arm of international research and consulting group IBI Partners.
www.consultIBI.com
Copyright © 2010 IBI Consulting. All rights reserved.