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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, 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.,
Energetica India welcomes you to the June bonds will be raised by the MNRE through the Climate Policy Initiative (CPI) in their report
2017 issue. Indian Renewable Energy Development studying role of Institution Investors in India's
Agency (IREDA) during the 2017-18. Renewable Energy has examined and
Indian solar industry, recently, reached prioritized the barriers facing foreign
another historical milestone with record low These funds will be used by MNRE in the institutional investors, who have the most
tariffs achieved in the auction concluded for approved programmes/schemes for solar potential to fill the debt financing gap and
Bhadla Phase-IV Solar Park, Rajasthan. The park, green energy corridor, generation- domestic institutional investors, who have the
low tariff comes fixed for 25 years with no based incentives for wind projects, CPSU and most potential to fill the equity financing gap.
escalation and no VGF from the Government. defence solar projects, viability gap funding
The solar developers here are ACME Solar for solar projects, roof-top solar, off-grid/grid- — The role of Coal in Southeast Asia
Holdings (200 MW) at a tariff of Rs. 2.44 per distributed and decentralized renewable Power Sector
unit and SBG Cleantech One (300 MW), with power, investment in corporations and Sylvie Cornot-Gandolphe an independent
a tariff of Rs. 2.45 per unit. autonomous bodies. consultant on energy and raw materials, has
collaborated with the Oxford Institute for
The good news does not end here. On the Energetica India, in its June 2017 issue, meets Energy Studies (OIES) as a Research Fellow and
wind side, India has seen record growth in the up with industry leaders to learn more about carried out a research on Southeast Asian coal
wind power capacity addition by adding over the industry's latest trends and opinions: markets and their implications for global coal
5400 MW in 2016-17 against the target of — Mr. Nitin Kalothia, Director, Sustainability trade
4000 MW. This year's achievement surpassed Initiatives Practice, Frost & Sullivan
the capacity addition of 3.423 MW achieved — Pankaj Goyal, Director & CFO, Angelique — Rural Electrification and Reverse
in the previous year. The leading States in the International Limited Migration; TERI
wind power capacity addition during 2016-17 The scope of this article is to discuss a rural
are Highlights of the June 2017 Issue electrification model that provides reliable,
— Andhra Pradesh 2190 MW, resilient and sustainable electricity as well as,
— Gujarat 1275 MW, — Barriers for Institutional Investors in open window of many other economic
— Karnataka 882 MW. India's Renewable Energy Industry activities for rural populace.
In order to utilize the full potential of
To further drive the growth of renewable institutional investors to finance India's We hope you enjoy reading our work.
energy in the country, The Indian Union
The views expressed in the magazine are not necessarily those of the editor or publisher. The
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INTERVIEW
— Mr. Nitin Kalothia, Director, Sustainability Initiatives Practice, Frost and Sullivan…………….………..14
8th WRETC 7 — Mr. Pankaj Goyal, Director & CFO, Angelique International Ltd.……...............................……………..18
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
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;
KEY HIGHLIGHT
15
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ENERGETICA INDIA : What are the current benefits, increase employee satisfaction values experienced by organizations
growth drivers for sustainability and retention, fostering good public include -
focus within organizations?? image, improving brand Image and — Driving competitive advantage
NITIN KALOTHIA: In this era of reforms, building reputation. through stakeholder engagement:
organizations are under tremendous and Sustainable businesses are redefining
increasing pressures from shifting ENERGETICA INDIA: What business value the corporate ecosystem by
demographics, new technological can organizations achieve through designing models that create value
challenges, shortages of skilled their sustainability initiatives? for all the stakeholders, including
professionals, and increasing costs in NITIN KALOTHIA: Today organizations are employees, shareholders, supply
many arenas. The company CXO's often dealing with a complex and chains, and the civil society.
pursue sustainability initiatives which has unprecedented brew of social and — Improving risk management: Unlike
helped them to integrate the broader environmental trends. These require traditional forms of business risk,
strategies to address larger robust sustainability-based management social and environmental risks
organizational challenges and priorities. system in place. Embedding (climate change, water scarcity, poor
The sustainability focus/drivers within sustainability to the core of business labor conditions, etc) often affect the
organizations often include - managing strategy clearly result in a positive impact business on many dimensions, and
risk and regulatory compliance, cost on business performance. The business are largely outside the organization's
control. Adopting sustainability assist — Building Customer Loyalty: environment and society, and guarantee
managing these risks by making Consumers today expect more the sustainability of its product or service.
investment decisions today for transparency, honesty and tangible There are several company case studies
longer-term capacity building and global impact from companies and (ITC Limited, AkzoNobel, Johnson &
developing adaptive strategies. can choose from a raft of sustainable, Johnson, Walmart, Unilever etc) with
— Fostering innovation: Investing in competitively priced, high quality strong sustainability program who has
sustainability is not only a risk products. In fact, a study found that created demand for product and service
management tool; it can also drive among numerous factors surveyed, by influencing customers buying
innovation. Redesigning products to environmental and social behavior and leading to repeated
meet environmental standards or responsibility was one of the purchasing. Therefore a strong
social needs offers new business significant factors that affected sustainability program that is consistent
opportunities. respondents' evaluation of a firm and in its positioning will create value for the
— Improving Financial Performance: intent to buy. company by creating more value for its
Companies are realizing significant brands.
cost savings through environmental ENERGETICA INDIA: How can sustainability
sustainability related operational initiatives keeping organizations ENERGETICA INDIA: How can we grow the
efficiencies. Investors are now able to better positioned as a brand? adoption of sustainability practices
track the high performers on ESG NITIN KALOTHIA: Brand value and within smaller organizations in the
(environmental, social and sustainability are related, and a company country?
governance factors) and are that seeks to do well in one area should NITIN KALOTHIA: Small- and medium-sized
correlating better financial consider also investing in the other. That entities (SME's) are crucially important to
performance with better ESG means companies must make the health and stability of the global
performance. investment decisions that will benefit the economy. They are an integral part of the
supply chain where there is a growing term business strategy. The good news is assessment, sector coverage and the
demand for sustainability management that businesses are finding ways to program title itself. While there are no
both from customers and suppliers. overcome these barriers by adapting new categories defined in the 2017
Today, SMEs are increasingly being faced strategies and techniques already at their edition of "Sustainability 4.0 Awards",
with pressure to measure and manage disposal. the 2016 edition was opened for the
their impact on the environment. While service sector industries which until then
the sustainability commitment is there, ENERGETICA INDIA: On what elements of was only manufacturing sector focused.
implementation can be challenging, sustainability, are the organizations Also the nominations are accepted now
especially in SME's, where cash flow and being assessed for the Sustainability for corporates, which until 2015 was only
financing options are the concerns. Awards? unit/facility specific.
Given that SMEs are keen to realize the NITIN KALOTHIA: Frost & Sullivan and The
benefits by adopting more sustainable Energy and Resources Institute (TERI) ENERGETICA INDIA: What services does Frost
practices, it is important to establish the Sustainability 4.0 Awards is designed & Sullivan offer in Sustainability?
link to the cash flow achieved from with an objective to identify companies NITIN KALOTHIA: Frost & Sullivan through its
minimizing costs and maximizing that are well equipped to respond to the "Sustainability Initiative Practice" is
potential revenue streams. Further there emerging opportunities and risks working with companies to build
are several lending organization in India resulting from the sustainability trends. Sustainable Businesses. The sustainability
and globally like Global Environment The assessment criteria's are broadly service model of Frost & Sullivan is based
Facility (GEF), Asian Development Bank categorized under 4 parameters - on the following broad principles
(ADB), World Bank, Small industries Purpose, Partnership, Planet and People. Analyze: assess risks & opportunities,
Development Bank of India (SIDBI) who Purpose -looks at evaluating the process engage with stakeholders and identify
are promoting and assisting financing that an organization follows through its material issues, Plan: identify gaps,
options to SME's to implement energy values, policies, risk management and develop strategy and set goals (long and
efficiency and cleaner production strategy to meet the needs of the short term), Measure: compile data,
technologies. enterprise and its stakeholders today analyze and quantify impact, Report:
while protecting, sustaining and design reporting approach and integrate
ENERGETICA INDIA: What are the challenges enhancing human and natural resources financial & non-financial information
being faced by organizations to that will be needed in the future. Within the Sustainability consulting
better adopt sustainable practices? PARTNERSHIP looks at the collaborations platform, we enable organization on its
NITIN KALOTHIA : Implementing corporate and programs undertaken by the journey towards "Sustainability" and
sustainability strategies is increasingly organization along with the partners in "Business Continuity". Few of the
becoming a standard practice. Despite its value chain (suppliers / vendors / deliverables through this platform are:
this encouraging progress, a confluence retailers / customers / community) to — Formulation of roadmap towards
of global challenges is putting more underpin sustainability. sustainability,
pressure on corporate sustainability PLANET delves with the systems — Empowering employees through
strategies to get to the scale quickly. developed and results achieved by the training and capacity building on
Having said that, it is important to note organization to showcase how sustainability,
that change isn't an easy process in any organization optimizes its functions to — Prioritizing focus areas,
organization. The key challenge for the reduce the impact on the planet. — Defining goals such as mapping
experts in sustainable business is to drive PEOPLE element looks at evaluating greenhouse gas emissions,
and oversee these changes to ensure organization practices toward managing formulate EHS requirements for the
positive impact on business. A number of human capital and implementing safe supply chain,
factors frequently stand between ideas working condition that contributes — Culmination of all activities into a
and execution, like - making a clear towards enhanced employee delight. "sustainability Report" based on
business case for sustainability or in other internationally accepted frameworks.
words the goals of sustainability and ENERGETICA INDIA: Are there any new
financial strategy are not well-aligned, categories under the awards
lack of metrics to access the initiatives, umbrella in "Sustainability 4.0
engaging management and colleagues Awards 2017"?
to the common cause, external factors NITIN KALOTHIA: The awards platform,
such as climate change and water instituted in 2009 has been through a
scarcity and not being integrated to long- series of transformation in the scope of
“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 business venture. Angelique made slow Africa, East Asia, South East Asia, which
Angelique's journey so far and a bit but solid start, expanded its foot print, was always remained unexplored or
of your journey in the industry and delivered projects of small value with considered too risky. With this self-
Angelique? signatures of quality, commitment and belief, Angelique earned leadership
PANKAJ GOYAL: The foundation stones of cost efficiency and expanded foot prints position among Indian Companies in
Angelique were laid by a professional and name for itself. The vision and these markets. The focus has been on
engineer entrepreneur, late founder mission with which Angelique was growth with a fine mix of north bound
Chairman Shri Daya Krishna Goyal, for founded, has always been in sight over trajectory and highly prudent mix which
whom creation of Angelique was a this journey of 20 years and is reflected in placed Angelique in unique position to
mission for setting up a world class EPC customer satisfaction centric approach. withstand the storm which uprooted or
Company, much above merely a Angelique chose market domain in shook almost entire spectrum of EPC
Companies in India in last few years..
After having worked for industry This is project which has transformed projects in Ivory Coast-Mali- Guinea
leaders in consumer goods, bulk lives of about 10 Million people in Sierra Leone and also extensive
Industrial chemicals, packing, telecom Rwanda substation / transmission line projects
and Specialized steel manufacturers both (2) Salma Dam, ( Now Friendship Dam in Lao PDR, Papua New Guinea and
in India and abroad, Angelique was a Power Project ) in Afghanistan, other countries in South East Asia and
relatively very small platform but ethos, though the role of Angelique has South Asia.
customer orientation, the vision of been that of Electro-mechanical,
founders, was one traction, coupled with Penstock, power house work, over ENERGETICA INDIA : Going forward how does
charm of new industry, free operating the period from 2005 until June 2014 Angelique view Indian market in its
hand , good team work within company, when the project was commissioned, business plans? Have there been any
made by personal professional goal there has been splendid display of the recent projects that Angelique has
converge with the Company growth as perseverance of team Angelique, to executed in India? Which are the key
such working with Angelique has been respond to adversities of highest segments within India that
very satisfactory, as a complete package order Angelique would be eyeing in
of opportunities and challenges in terms
(3) Projects for setting up facilities in six future?
of professional realization, over this long
far flung far flung areas in Sierra P ANKAJ G OYAL : The serious push for
association of just over a decade.
Leone, right from tapping water from infrastructure growth in India, under the
falls and other resources, storage, new leadership surely throws open large
ENERGETICA INDIA : Since you are at helm of
treatment and distribution with all opportunities for EPC Companies in
affairs at Angelique now, how much
the challenges including Ebola India. However Angelique by its very
of India do you see amongst global
period. business philosophy would move in a
business for Angelique in Future
(4) Setting up of water treatment and very selective manner both in terms of
PANKAJ GOYAL: Angelique will continue to
distribution facilities in Tanzania by nature of jobs, geographies and the
have focus on the markets where, with its
sourcing water from deep sea bed clients. Angelique would like to have a
remarkable project delivery record, it has
away from shore line. The water mix of up to about 20% Indian business
created a name for itself i.e. Sub Saharan
sourcing mechanical system is on component in coming years.
Africa, South East and South Asia.
floating buoys and Angelique is In a nutshell preferred areas are
Angelique would like take to itself further
possibly the only Indian company railways, electrical substations, and
into these markets with diversified and
having done such a work. transmission lines. With strength
larger denomination projects of high
building in these areas, very calculated
visibility, social development impact, skill (5) Setting of modern agriculture model
diversification plans will remain of
and employment generation with farms, standard methodology
interest.
contribution to clients' national GDP. handouts for increasing production
It is recently that Angelique has
Though opportunities are being explored of Rice, wheat and Maize with soil
bagged orders of approx. INR 5.50 billion
in Central America too but it will be very testing, seed gradation facilities in 5
and physical execution of these projects
early to say on this market at present. states of Mozambique. This project is
are in the initial stages. In India, projects
The Indian portion of the overall business having huge impact on the lives of
have been of small value mainly
is expected to be a secondary only. the people with huge step towards
consisting of low voltage transmission
food security like green revolution in
lines/ substation in Odissa, Madhya
ENERGETICA INDIA : Also tell us about some India post-independence.
Pradesh and domestic power distribution
turnkey projects you have executed (6) Information Technology Park in projects in Rajasthan. Additionally the
around the world? Swaziland, a state of the art facilities work has been done on signaling of
PANKAJ GOYAL: Angelique has delivered over with most modern equipment which railways in various sections of Railways in
100 complete EPC projects world wide, will house national data center base India. Recently Company has company a
all of them have been completed by for the country and an incubator for 132/22Kv, substation with other facilities
equal amount of planning and upcoming entrepreneurial skill for in Kangra District of Himachal Pradesh
commitment in the wake of unique the young. for HPSEB.
challenges, yet if I have to name a few I
(7) In addition Company has set up
will say
transmission line across Africa
(1) Nyabarongo Hydro Electricity Project
continent, on some of the
- 28 MW Capacity cost approx. USD
transnational power transmission
110 Million, in consortium with BHEL.
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
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
increased land area requirement which in has been performed and the scenario Structure Cost Vs. Generation
Structure Cost (INR in Crores /Mwp)
turn raise the portion of land cost of the observed has been plotted below :
Generation (kWh)
project.Notably, with the increase in
number of modules, the Module
Mounting Structure (MMS) cost also get
anupswing and has been reported as
follows:
Module Capacity (Wp)
Structure Cost (INR Cr) Generation (MWh/year)
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
Figure 4 Variation in Generation module capacity (Wp). However, the cost
of the increased structure cost is not that
Figure 3 outlines that the increased noteworthy when compared it with the
Figure 3 Impact on Structure Cost efficiency of the modules results in linear revenue rise affecting the returns on the
increased generation with the increase in investment. It is also concluded that the
c) Nevertheless, it is also witnessed from efficiency of the modules. This increase in efficient plant operation in long run will
the technical specification of the generation will lead to the revenue rise. be achieved by SPV due to higher
respective modules that the efficiencies of the 320 Wp modules than
efficiency of 260 Wp modules are d) The structure cost has been that of the 260 Wp modules. As a final
lower than that of 320Wp. With the compared for both the cases with the point, neither the efficiency nor the cost
increase in efficiency of the module, respective generation from the Solar of the project can alone drive the project
keeping system configuration Photo Voltaic plant is as follows: towards its successful execution, it will be
identical, the energy yield assessment the show of both efficiency and cost
together.
T
he report assessed the regulatory across the Asian markets. These are the introduction of stewardship codes
drivers and industry initiatives shown in Table 1. providing guidance on ownership
across the major Asia Pacific Beyond regulatory approaches, responsibilities. Japan was first, with
markets looking at the major domestic Australia, Japan, and South Korea all Malaysia, Hong Kong and Taiwan also
and international initiatives. ANZ also have domestic Sustainable Investment acting. Hong Kong provides a statement
reviewed the disclosure of leading Forums. These act as a hub promoting of principles, while the other three are
domestic financial institutions across the sustainable and responsible investment codes to which investors can become
Asia Pacific region to understand the in their respective markets. signatories. Thailand, Singapore and
state of the finance industry's response The banking initiatives have taken South Korea have draft codes under
to climate change. different forms in different markets. The discussion. India has taken a different
China Banking Regulatory Commission approach with a requirement for mutual
Domestic Regulatory and Industry Green Credit Guidelines was one of the funds to provide their voting records. The
Initiatives first. More recently eight leading banks in Hong Kong, Malaysia, and Taiwan codes
The past few years have seen a number of Indonesia signed a commitment to refer to ESG or sustainability.
major domestic initiatives to encourage implement sustainable finance. ANZ has also reviewed the ESG
more sustainable approaches to finance Investors across the region have seen disclosure guidelines for each market.
companies have had to produce a CSR — The Sustainable Stock Exchanges Australia 10 5 116 - 7
TOTAL
report since 2012. 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%
International Networks transparency on ESG
While there is growing domestic support — The Asian Corporate Governance Banks Review - Upside over
for sustainable finance across Asia, a Association (ACGA) works with Downside
knowledge gap remains for institutions investors, companies, regulators, and The low carbon economy presents a
that want to take advantage of professional firms to implement multi trillion dollar financing opportunity
opportunities in sustainable or green effective corporate governance for the banks that choose to address it -
finance. There are a number of practices throughout Asia and more than half of the banks we
international organisations that address — The Asia Investor Group on Climate reviewed are doing so. This is a strong
the knowledge gaps and facilitate Change (AIGCC) aims to create positive. Yet the transition to low carbon
collective action. awareness among Asia's asset activities also requires banks to
owners and financial institutions progressively reallocate capital away
Each organisation fulfils a different about the risks and opportunities from the carbon intensive industries,
function: associated with climate change and particularly coal.
— The Principles for Responsible low carbon investing. It is natural that banks seek new
Investment (PRI) helps investors The table 2 shows Asian participation markets before reducing exposure to the
integrate sustainability and corporate in leading finance industry initiatives old ones. However, without taking steps
governance factors into their addressing governance and to limit exposure to carbon-intensive
assets, banks may fail to address related development. This has followed intense policy.
risks and fail to decarbonize their overall concern over development that has Beyond this 15 out of 30 investors
growth. damaged forests and peatlands leading provided a statement on ESG. In many
Banks that do not specifically assess to significant carbon emissions. cases this was included in the corporate
high carbon and the physical impacts of The Singaporean banks have all made governance policy or statement on
climate change as forward looking risk a statement on ESG, following the stewardship. In some this was separate.
factors in client acquisition and credit announcement of responsible lending In the case of Thailand's Social Security
pricing will face higher risks as their guidelines by the Association of Banks in Fund, we could not find a voting or
clients adjust to more regulation and Singapore in October 2015. However, stewardship policy in English (we
more volatile weather patterns. the statements are limited and none of understand there is one in Thai), but the
From the review, 22 out of 36 (61%) the banks mentioned provision of green fund noted that it avoided "investments
of the banks provided details of their finance, which may represent a missed that cause social or environmental
green finance solutions and 20 (56%) of opportunity. problems".
the banks provided some quantification Malaysian banks had the least However, when it comes to climate
of their exposure - in some cases this was applicable disclosure overall. They all change there is less disclosure. Only 9
not material in the context of the bank's mentioned the Government's Green (30%) of the investors referenced climate
financing activities. Technology Financing Scheme, but did change in some way through their
The figures for a broad ESG policy not provide details of their own green policies and only 8 (27%) outlined steps
were even higher - 29 out of 36 (81%) of financing. that they took. Interestingly, the South
the banks had some policy on responsible Korean investors, which disclosed less on
lending. Further, all countries had at least Investors are more Active governance, had more disclosure relating
one major bank with relevant policy. Large funds face long-term portfolio to climate change risks and mitigation.
Generally, these policies did not level risks from the effects of climate In general, where investors disclose
specifically mention climate change, change, as well as stock and sector steps on climate change these are still
referring instead to environmental track specific risks from both physical risks and vague. Malaysia's Employee Provident
record such as violations and pollution regulation to reduce carbon emissions. A Fund includes climate change in the list of
incidents. Only 10 (28%) of the banks critical tool that investors have to reduce factors that it states are "areas of
included reference to climate change as a long term risks from climate change is discussion in our ESG investing
factor that may result in limiting finance. their influence as owners of companies. approach". Singapore's Temasek
Overall the Australian and Chinese Investors across Asia have taken a mentions climate change in a list of major
banks had very good disclosure on more active approach to ownership over trends and goes on to state: "We
providing new finance and limiting the last few years. Large domestic Asian consider environmental, social and
exposure to high carbon industries and, investors have started to publish governance factors together with
in the case of Chinese banks, to corporate governance policies relating to commercial and other critical
industries with overcapacity. their voting and dialogue with investee considerations when we make decisions
The drivers have been very different. companies. Regulators have
In China, the banks have moved in line supported this trend and more
with green credit guidelines from the than half of the markets we Table 3: Green finance disclosure at major banks
China Banking Regulatory Commission covered already have a Responsible Policy Sector Green
Number lending includes level finance Quantifies
(CBRC). Conversely, the Australian banks stewardship code or are in assessed policy climate policy solutions green
product
change
have adopted voluntary policies and consultation on one. These Country
standards - sometimes in response to developments are positive. Australia 3 3 3 2 3 2
reputational pressure from civil society However, there is less China 3 3 3 2 3 3
organisations. information on specific steps Hong Kong 3 3 1 2 1 1
Given its emerging market status, the relating to climate change. India 3 2 0 1 1 1
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
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.
investment in renewable energy in respectively). ASEAN countries(USD 24 India is the largest recipient for FDI in
Emerging Asia 347 million) receive together about the renewable energy; however, it is among
Foreign Direct Investment (FDI) is one of same amount as India but Indonesia the less investing countries. The inverse
the practical ways to develop the efficient alone welcomes almost half of this. trend is observed for Singapore, which is
energy sector as it enables the transfer of Regarding the investors of origin, the the eighth largest investor in the world in
capital, technology and expertise from European countries are the main the renewable energy sector whereas it is
home countries to host countries; in investors with 28.7% of the total capital one of the bottom two recipient
other words, it allows both invested. countries in the region, with Brunei
multinationals and local companies to It is, however, important to note that Darussalam. ASEAN countries invest
engage in such transfers through trade the United Kingdom represents by itself more among themselves than toward
and investment for climate smart goods one third of the investments from India and China.
and technologies. European countries and more than 17%
From 2003 to 2016, the largest of India's FDI in this sector. Renewable energy projects are
recipients of green field FDI1 for China and the United States, contributing to job creation in the
renewable energy projects in Emerging followed by Japan, Malaysia and the region
Asia were India (USD 24 688 million), Republic of Korea, are the next main Green jobs have been growing rapidly in
China (USD 13 555 million) and investors in the region, particularly in the Asia-Pacific region, with the total
Indonesia (USD 11 930 million). These India, which welcomes more than half of number employed in the sector reaching
three countries accounted for more than their FDI. 4.3 million people in China, India and
60% of the total green field FDI received Among the ASEAN countries, Brunei Japan in 2015. The trend of renewable
in the region in the renewable energy Darussalam, Cambodia, Lao PDR and energy employment indicates that solar
sector. Myanmar do not make any outward and wind are among the most dominant
Brunei, Darussalam and Singapore investment to other countries in and fast-growing renewable energy sub
are two of the least attractive markets for emerging Asia, while they received sectors in both the world and the Asia-
the renewable energy sector (USD 409 12.6% of the capital invested in the Pacific region.
million and USD 946 million, region. While domestic investments in
renewable energy have been a major While job creation from FDI projects employment. Moreover, it is plausible to
driver for green job creation in China and in renewable energy a decade ago was assume that those green jobs tend to
India, green field FDI in the renewable dominated by jobs in the biomass power create good-quality jobs, with higher
energy sector has also been expanding in sector, in 2015 it came from a more wages and employment stability, which
Emerging Asia, which has had both direct diversified combination of renewable may exert a positive influence on
and indirect influences on job creation. It energy sub sectors, both in the Asia- domestic working environment and
is worth noting that, in the case of FDI, Pacific region and in ASEAN. This trend is labour policy.
jobs are created principally in the present in China and India as well, The trade and investment of
recipient, or host, country, where a new although biomass power-related FDI still renewable energy products and
power facility is set up or a project is created the largest number of jobs in technologies must also be promoted
developed. Indirect influence of FDI to China in 2015. At the same time, the among the countries of emerging Asia.
employment in the renewable energy total number of jobs created from 2011 Governments can facilitate the trade and
sector may also include new jobs to 2015 in China through solar power- investment in renewable energy
attributable to the knowledge related FDI increased significantly technologies through the reduction of
acquisition and economic activity of compared to those created between non-tariff barriers, tradeable renewable
foreign firms, orto increase local 2006 and 2010. energy certificates and FDI promotion. By
spending by direct FDI-induced Favourable and systematic policy reducing or eliminating import tariffs and
employees. The number of jobs created frameworks are likely to accelerate non-tariff barriers for renewable goods,
through FDI in the renewable energy investment inthe use of renewable services and technologies, the sector can
sector in Emerging Asia has been energy sources, and its impact on avoid bureaucratic redundancy and
gradually growing for the last five years, creating green jobs has significant reduce the transactional costs of
albeit from low levels. implications not only on energy, renewable energy to be deployed
Meanwhile, job creation through infrastructure or transport policy, but throughout the country. At the same
greenfield FDI projects in the traditional also on labour and social welfare policy in time, major obstacles still remain to be
fossil fuel energy sector has fallen Emerging Asia. over come in order to boost investments
dramatically in ASEAN, India and China. Added to direct job creation, in renewable energy further in emerging
Consequently, the gap between job increased FDI in the renewable energy Asia.
creation from FDI projects in the industry can contribute to consolidating
conventional energy sector and the the foundation of multiplier effects that
Source: "Economic Outlook for Southeast Asia, China and
renewable energy sector is narrowing. ripple through indirect and induced India2017"; OECD Development Centre.
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Barriers to Institutional Investment investor’s decision on whether or not to Table 1: Ranking of investment Barriers
in Renewable Energy invest, whereas non-binary barriers, by Investor Class
In order to utilize the full potential of while still significant, are typically matters Foreign Domestic
institutional investors to finance India’s of a risk/return trade-off. Barrier institutional institutional
investors investors
renewable energy targets, it’s important The methodology is based on Off-taker risk 1
to first understand their barriers to interviews with domestic and foreign Lack of transmission 2
investment., Climate Policy Initiative (CPI) investors, in which it was requested to evacuation infrastructure
in their report studying role of Institution the participants to rank the barriers in Currency risk 3
Regulatory/policy risk 4 5
Investors in India’s Renewable Energy has order of their severity level. CPI used a
Unfavorable return expectations 5
has examined and prioritized the barriers modified Borda count method to
Limited understanding of the 1
facing foreign institutional investors, prioritize the barriers – a preferred voting renewable energy sector
who have the most potential to fill the procedure in which a barrier is identified Lack of intermediaries 2
debt financing gap and domestic by the highest average preference score. Lack of liquid instruments to 3
institutional investors, who have the invest in renewable energy
most potential to fill the equity financing Barriers facing Foreign Institutional Low credit rating of operational 4
assets
gap. Investors
In order to indicate the significance of Foreign institutional investors – OECD infrastructure are the two most
the various barriers, CPI have prioritized investment funds, insurance companies,
significant barriers impeding
the barriers according to their severity and pension funds – have the ability to
foreign institutional investment.
level, using a ranking system of 1 to 5, completely fill the debt financing gap for
Both of these barriers are binary,
with 1 being the most severe. India’s renewable energy targets, but
meaning they directly affect foreign
CPI has ranked the top five most severe first certain barriers need to be
institutional investors’ decisions on
barriers for each investor category, addressed. Table 2 shows the most
whether or not to invest.
shown in Table 1. significant barriers facing foreign
CPI have also categorized the institutional investors, in order of priority:
Off-taker risk
investment barriers as binary or non- 1. Off-taker risk and lack of
An off-take agreement is a power
binary. Binary barriers directly affect the transmission evacuation
purchase agreement between a
provide first-hand information about risk crux of this matter lies with the way land
mitigation measures and investment Regulatory and policy risks is owned in India. Most of land that is
opportunities in the renewable energy Inconsistent policies between the central used for renewable energy projects is in
market to the investors. Domestic and state levels of government have rural areas and owned by undivided
institutional investors find it difficult to created uncertainty around India’s policy families that have multiple stake-owners.
invest in the sector because they don’t regime. A stable policy regime is critical While project developers want to deal
have adequate information, resulting for sustained investment in the with as few land owners as possible,
from a lack of financial intermediaries to renewable energy sector. Similarly to multiple stake-owners make the
inform their investment. foreign institutional investors (Section acquisition and transfer of land complex,
1.1), regulatory and policy risk increases which makes securitization a lengthy and
3. A lack of liquid instruments to domestic institutional investors’ costly process.
invest in renewable energy, the low perception of the risk involved in Many investors become wary of such
credit rating of operational assets, investing in renewable energy, resulting challenges and hesitate on investment
and regulatory and policy risks are in decreased investment and/or decisions. Those who do decide to invest
the non-binary barriers to domestic increased cost of finance. have to accommodate the cost of delays
institutional investment. into their project cash flows, thereby
This means these barriers don’t raising the overall cost of capital. Even
Table 3: Barriers facing domestic
directly affect decisions to invest, but do traditional lenders like banks and
institutional investors, in order of
affect investors’ returns. financial institutions realize the effect of
significance
delays on project cash flows and
Lack of liquid instruments to invest in Binary or
Ranking Non-Binary therefore the profitability. This makes
Barrier
renewable energy them consider investments in renewable
Limited understanding of the 1 Binary
Domestic institutional investors prefer to energy projects to be riskier propositions
renewable energy sector
invest in liquid assets with stable returns and therefore lend at higher rates.
Lack of intermediaries 2 Binary
as their investments are liability-driven. Lack of liquid instruments to 3 Non-binary
There is a lack of liquid instruments for invest in renewable energy 2. Curtailment risk
investing in renewable energy projects, Low credit rating of operational assets 4 Non-binary Curtailment risk is the risk of reducing
as indicated in the primary research. Regulatory/Policy risks 5 Non-binary power generation at a facility below
There is a need for pooled investment *Ranked on a scale of 1 to 5, with 1 being the most severe what it is capable of producing, and is a
vehicles to enable domestic institutional significant risk facing operational wind
investment in the renewable energy Additional Barriers facing all and solar projects. Wind developers
sector. Domestic Investors especially have been facing curtailment
In addition to the barriers discussed risk due to backing down instructions
Low credit rating of operational above, there are several other significant passed by state load dispatch centers
renewable energy assets barriers facing domestic institutional during high wind seasons, which has
Domestic institutional investors require investors, which are shared with all resulted in generated power that’s been
operational assets with stable cash flows domestic investors in India. These are stranded and not consumed. This has
and that have a credit rating of AA or land acquisition issues, which is a binary also happened with solar installations
higher, as per their investment criteria. barrier, and curtailment issues, which is when they have received backing down
The research indicates that operational non-binary. instructions. Stranded power decreases
renewable energy assets are typically While these barriers are more significant the profitability of solar and wind
rated BBB or below, falling below their for domestic institutional investors, they facilities, making them a riskier
investment standards. While they are also likely to be affected by land investment. This is exacerbated by the
generate stable cash flows, the acquisition issues and curtailment risk, fact that state DISCOMs have been
operational renewable energy assets do given that they affect all domestic unwilling to sign power purchase
not meet the credit rating criteria needed investors in India. agreements (PPAs) or have delayed the
to attract investments from domestic execution of PPAs, rendering renewable
institutional investors. There is therefore 1. Land acquisition and securitization energy investments even riskier.
a need for pooled investment vehicles issues
that can enhance the debt credit rating Issues that delay the securitization of
Source: “Reaching India’s Renewable Energy Targets: The
for operational renewable energy land for renewable energy projects are a Role of Institutional Investors”; Climate Policy Initiative- Mr.
projects. significant barrier to investment. The Vivek Sen Mr. Kuldeep Sharma & Mr. Gireesh Shrimali
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.
Moreover, private sector mini-grid Recognising this need, several countries procedures to facilitate project licensing,
development tends to have a different have turned to policies and regulations and streamlining requirements
emphasis from the traditional centralised dedicated to mini-grid development. (particularly for smaller mini-grid
model. It is more concerned with its projects) can reduce the costs and time
customers and with long-term Policies and Regulations for private required for project development. As a
productive uses of energy (households, sector mini-grid development general guideline, fees and other
local businesses, agriculture and The policy and regulatory landscape for development costs should not exceed
industry), building sustainability into the mini-grids is highly dynamic as 1%-2% of the total cost of a project.
system and boosting the socio-economic governments introduce dedicated A common approach to main
benefits of electricity access. Other measures, gain experience and streaming processes and procedures is
private sector advantages might include incorporate this learning to shape a more to establish a single-window facility
decentralised decision-making, local effective framework. This evolution is hosted at a rural electrification agency or
presence, community mobilisation and essential for successfully adapting to similar body, which reduces the number
flexible management structures. local conditions and reducing of institutions with whom developers
A shift towards greater private sector deployment barriers. International must engage.
engagement in financing, developing, Renewable Energy Agency's (IRENA) The Indian state of Uttar Pradesh, for
operating and managing mini-grids has analysis of recent policy and regulatory example, has established a one-stop
occurred in recent years. Participants developments relevant to the support of shop at the New and Renewable Energy
range from local entrepreneurs to large private sector mini-grids, examines legal Development Agency for coordinating
international utilities. Combining provisions, tariff regulation, financing stakeholders, managing the approval
technology with new business and and arrival of the main grid. process, facilitating capacity building,
financing models, the private sector is and administering financial incentive
deploying mini-grid solutions using Legal Provisions schemes. Information on processes and
diverse financing options. Given its First and foremost, mini-grid operators procedures should also be easily
importance, it is vital that governments should have the legal right to generate, accessible (e.g., Tanzania's online
adopt policies and regulations to distribute and sell electricity to rural information portal, mini-grids.go.tz).
facilitate private sector engagement. consumers Forming clear processes and
Tariff Regulation regulators assign adepreciation scenario Policies and regulations for the mini-
The viability and sustainability of mini- for fixed assets. grid sector strongly influence
grids depend on well-designed tariff deployment as well as innovation in
regulations. With costs of renewables Access to Finance technology design, finance and business
decreasing, mini-grid solutions are Governments can take several measures models. They could also enable the
becoming more competitive than grid to facilitate access to equity, debt and participation of non-traditional entities,
extension. One approach to setting the grant financing at different phases of such as off-grid telecommunication
tariffs of private sector mini-grids is to mini-grid development. For example, infrastructure operators, in markets
impose a national uniform tariff and improving access to information required outside their core business.
provide viability gap funding. Another is for initial market assessments and co-
to allow mini-grid tariffs that are high operating with regional or global Tanzani: Mini-Grid Policy and
enough to cover costs but still well funding facilities can attract equity and Regulation design elements working
beneath current customer spending on grants during the project development in tandem
conventional energy in off-grid areas. stage. Tanzania's Energy and Water Utilities
Increasingly, countries are taking a In 2015, Rwanda was awarded a USD Regulatory Authority (EWURA)
tailored-approach to tariff regulation. For 840,000 grant by the Sustainable Energy announced in March 2016 the
example, they exempt small-scale Fund for Africa to co-finance feasibility "Development of Small Power Projects
systems (e.g., less than 100 kW in United studies of 20 micro-hydro sites, rollout, Rules 2016", which laid out licensing and
Republic of Tanzania and Nigeria) from and implementation plans that include tariff regulation requirements for mini-
tariff regulation (although communities tariff and business models for mini-grids. grids. As a result, mini-grids with a
can appeal in any tariff dispute) and Financial support such as public capacity below 1 MW are exempt from
regulate tariffs for large-scale systems. grants can be designed to leverage applying for a licence and need only to
Common approaches include tariff caps capital from commercial financial register with the regulator for
or project-by project approvals. institutions. An example is the Inter- informational purposes. For Very Small
However, the tariff determination American Development Bank's USD 9.3 Power Producers (less than 100 kW), the
approach should be standardised and million programme implemented by regulator requires no prior regulatory
well-defined to ensure systematic Bancoldex, a commercial bank in review or approval of proposed retail
assessments and approvals by regulators. Colombia that aims to deliver long-term tariffs; however, it reserves the right to
concessional financing for private review the Very Small Power Producer
Arrival of the Main Grid entities engaged in mini-grid tariffs if 15% of its customers file
It is important to have an electrification development. In addition, public private complaints.
strategy (location and timeline) to partnerships can be used to reduce risk If the main grid arrives, the mini-grid
provide guidance and transparency to and improve project bankability. can become a small power distributor,
public authorities and private mini-grid The regulation of renewable mini- keeping its retail customers and
developers. Kenya's National Energy and grids is still evolving. However, a growing purchasing electricity at wholesale rates
Petroleum Policy, for instance, provides number of countries has recognised the from the national utility. In addition,
the basis for the development of a opportunity offered by mini-grids and these small power producers can sell
comprehensive electrification strategy the potential for private sector electricity to the main grid at
to-wards universal access by 2020. engagement. These countries have standardised tariffs. The government has
Well-defined interconnection or introduced dedicated policies and also established a standard PPA and tariff
compensation mechanisms are also regulations to establish a supportive methodology for any electricity that
being employed to reduce risk to mini- environment for mini-grid development. these producers feed into the main grid.
grid operators should the main grid Experience demonstrates that a Tanzania's Rural Energy Agency offers
arrive. In Cambodia, for example, 250 considerable number of policy and results-based funding (performance
formerly isolated mini-grids, have been regulation design elements work in grants) of around USD 500 per
licensed as smallpower distributors by tandem to facilitate mini-grid household or business connection. This is
the Electricity Authority of Cambodia. development (see Tanzania's example). funded through a levy on electricity sales
Operators also may be compensated for A well-designed policy and regulatory and donor contributions.
the residual value of the mini-grid assets framework not only improves project
rendered uncompetitive by the main sustainability but also maximises the
grid, as is the case in Rwanda and in the socio-economic benefits of renewable Source: "ReThinking Energy 2017"; IRENA
United Republic of Tanzania, where energy systems.
Introduction operate basis as per provisions of the the tariff that can be quoted by the
The obligated entities under respective scheme without participation in the bidders at the time of bid submission
renewable purchase obligation (RPO) bidding process, however, such would be Rs. 4.00 per unit i.e. bidders
regulations require large quantum of allocation will be at the lowest bid tariff cannot quote tariff of more than Rs. 4.00
non-solar power to fulfil their non-solar discovered through reverse auction per unit for supply of wind power.
RPO. In order to facilitate these entities to under the Scheme. The bidders will be free to avail fiscal
comply their non-solar RPO, another Projects under construction, projects and financial incentives available for such
scheme for setting-up of 1000 MW wind which are not yet commissioned and projects as per prevailing conditions and
power projects is formulated. projects already commissioned but rules from Central/State Governments.
Procurement of wind power from these which do not have any long-term PPA Additional 100 MW capacity can be
projects will be at a tariff discovered with any agency and selling power on allotted to Central Public Sector
through transparent process of bidding short-term or merchant plant basis will Enterprises (CPSEs) willing to undertake
by Solar Energy Corporation of India also be considered. development of IST S connected Wind
(SECI). Power Projects on build, own and
These Guidelines will provide Implementation Agency operate basis as per provisions of the
framework for transparent bidding SECI will be the nodal agency for scheme without participation in the
process for implementation of the implementation of this scheme. SECI will bidding process, however, such
Scheme. prepare Request for Selection (RfS) allocation will be at the lowest bid tariff
document and invite bids for selection of discovered through reverse auction
Total Capacity of Wind Power wind power project under the scheme under the scheme. Minimum capacity
Projects through e-bidding process followed by that can be allotted to a CPSE will be 50
The scheme will be implemented for e-reverse auction and develop a suitable MW and the allocation of the capacity
setting up 1000 MW capacity of Inter- mechanism for monitoring the will be on the basis of first come first
State Transmission System (ISTS) performance of the projects. serve basis.
connected WPPs by Wind Power
Developers (WPDs) on build, own and Selection and Implementation of Mechanism of Operation of the
operate (BOC ) basis through open and Wind Power Projects Scheme
transparent competitive bidding to Selection of Wind Power Projects The salient feature of the overall
provide wind power at tariff discovered The selection of 1000 M W capacity wind mechanism would be as follows:
through e-reverse auction. power projects under the Scheme will be — SECI shall sign Power Purchase
Additional 100 MW capacity can be through a transparent e-bidding process Agreement (PPA) with WPDs at
allotted to Central Public Sector for procurement of wind power at tariff bidded tariff and with selected CPSEs
Enterprises (CPSEs) willing to undertake discovered through open competitive at lowest bid tariff discovered
development Of ISTS connected wind bidding process followed by e-Reverse through reverse auction and also
power projects on build, own and Auction' process. The upper ceiling of back-toback PSA with buyers at a
PPA within the stipulated time period, encash Performance Bank Guarantees
Selection of Projects under the the Bank Guarantees equivalent to EMD and shall remove the project from the list
Scheme shall be en-cashed by SECI as penalty. of the selected projects, unless the delay
The selection of Projects shall be done is on account of Force Majeure.
through single stage two envelope, e- Minimum Paid up Share Capital to be
bidding and ereverse auction, as detailed held by Project Promoter Commissioning
in the RfS document to be issued by SECI. The Company developing the project Part Commissioning:
The procedure for conducting e-bidding shall provide complete information in The minimum capacity for acceptance of
and e-auctioning shall be framed by SECI. their bid against RfS about the Promoters par commissioning shall be 50 MW or 50
and their shareholding in the company percent of the allocated Project Capacity,
Power Purchase / Power Sale indicating the controlling shareholding whichever is higher and balance capacity
Agreement (PPA/PSA) before signing of PPA with SECI. thereafter in batches of capacity not less
A copy of Standard Power Purchase No change in the shareholding in the than 50 MW or in one go.
Agreement to be executed between the Company developing the Project shall be
SECI and the WPD shall be provided by permitted from the date of submitting Commissioning Schedule and Penalty for
SECI along with Invitation for submission the response to RfS till the execution of Delay in Commissioning:
of response to RfS. Within six month of the PPA. However, this condition will not The selected projects shall be
the date of issue of Letter of Award (LoA), be applicable if a listed company is commissioned within 18 months from
the Power Purchase Agreement (PPA) developing the Project. date of issuance of Letter of Award.
between the SECI and the WPD for After execution of PPA, the A duly constituted Committee will
purchase of power from the project will controlling shareholding (controlling physically inspect and certify successful
be executed. The PPA shall be for a period shareholding shall mean more than 26 commissioning of the project. In case of
of 25 years from the date of COD. percent of the voting rights and paid-up failure to achieve this milestone, SECI
The buyer will be obliged to buy the share capital) in the company/ shall encash the Performance Bank
entire power as per generation schedule Consortium developing the project shall Guarantee (PBG) in the following
to be provided by the WPDs, subject to be maintained for a period of one year manner:
limitations as per Clause 3.5, required after commencement of supply of — Delay up to six months - The total PBG
under grid regulations. power. Thereafter, any change can be on per day basis and proportionate to
The SECI will execute a PSA valid for 25 undertaken under intimation to SECI. the balance Capacity not
years with the Buying Entities for sale of Transfer of controlling the shareholding commissioned.
wind power. Further, these Buying within the same group of companies will — In case the commissioning of the
Entities will have to maintain LC and however be allowed after COD, with the project is delayed over six months,
Escrow Arrangement as may be defined permission of SECI, subject to the the tariff discovered after e-Reverse
in the PSA. condition that, the management control Auction shall be reduced at the rate
remains within the same group of of 0.50 paise/kWh per day of delay
Bank Guarantees companies. for the delay in such remaining
The Bidder shall provide the following capacity which is not commissioned.
Bank Guarantees to SEC in a phased Financial Closure/Project Financing The maximum time period allowed
manner as follows: Arrangements for commissioning of the full Project
— Earnest Money Deposit (EMD) of Rs. The WPD shall report tie-up of financing Capacity with encashment of
10 Lakh/MW in the form of Bank arrangements for the projects within Performance Bank Guarantee and
Guarantee along with RfS. nine months from the date of issue of reduction in the fixed tariff shall be
— Performance Bank Guarantee (PBG) LoA. At this stage, the WPD would limited to 27 months from the date of
of Rs. 20 Lakh/MW within 30 days furnish within the aforesaid period the LOA.
from date of issue of Letter of Award. necessary documents to establish that
The Bank Guarantees against EMD the required land for project Electricity Generation from Wind
shall be returned to the selected bidders development is in clear possession of the Power Projects
after PBGs submitted by them is verified Project Developer. The WPD shall be Criteria for generation:
by SECI. required to submit the transmission The WPDs will declare the annual CUF of
The selected bidders are required to connectivity agreement with the ISTS their Project at the time of signing of PPA
sign PPA with the SECI in line with the and also with InSTS, if applicable. and will be allowed to revise the same
timeline given in the guidelines. In case, In case of delay in achieving above once within first year of COD. The
the selected bidder refuses to execute the condition as may be applicable, SECI shall declared annual CUF shall in no case be
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.
less than 20 percent yearly. tenure will be counted from the COD Role of CTU/PGCIL/State Transmission
WPD shall maintain generation so as irrespective of the date of commissioning Company
to achieve annual CUF not less than 90 of the balance capacity. It is envisaged that the CTU/PGCIL/State
percent of the declared value and not The following two milestone dates Transmission Company will provide
more than 120 percent of the declared for commissioning may therefore be transmission system to facilitate the
CUF value, during the PPA duration of 25 observed and may fall on separate dates: evacuation of power from the Projects
years. The lower limit will, however, be (I) Inter connection with Grid: which may include the following:
relaxable by the buyer to the extent of This may be provided by the PGCIL/State (i) Upon application of LTA/Connectivity
non-availability of grid for evacuation Transmission Company on the request of as per CERC Regulations, CTU shall
which is beyond the control of the WPD. the WPD, to facilitate testing and allow coordinate with the concerned
flow of power generated into the grid to agencies for grant of connectivity and
Shortfall in minimum generation: avoid wastage of Power. LTA.
During PPA, if for any year, it is found that (ii) Commissioning of Project: (ii) Support during commissioning of
the developer has not been able to This will be on a date, when the project projects
generate minimum energy meets the criteria defined for project
corresponding to the lower limit of CUF commissioning. Performance Monitoring:
declared by the developer, such shortfall All wind power projects under the
in performance shall make WPD liable to Provisions related to CPSEs scheme shall comply the Grid Code and
pay the compensation as provided in the CPSEs willing to undertake wind power Regulations made thereunder. They must
PSA to the buyer. This will, however be projects under the scheme have to apply install necessary equipment to
relaxable to the extent of grid non- for the same to SECI in the format along continuously measure wind resource
availability for evacuation, which is with details of the projects as may be data and other weather parameters and
beyond the control of the WPD. required by SECI within one month of the simultaneously measure the electricity
completion of the reverse auction generated from the each wind turbine.
Commercial Operation Date (CoD): process. SECI may charge non- They will be required to submit this data
The Commercial Operation Date (CoD) refundable processing fee of Rs. 1 Lakhs to SECI and MNRE or any other
shall be considered as the actual date of (plus taxes as applicable) for each such designated agency through on-line
commissioning of the project as declared application from CPSEs. and/or a report on regular basis every
by the SNA/Commissioning Committee. The change of controlling month for the entire duration of PPA.
COD will be declared only when the WPD shareholding is not permitted in case of
has commissioned at least 50 M W projects allotted to CPSEs for at least 10
Source: “Guidelines for transparent bidding process for
capacity or 50 percent of the allotted years from the date of signing of PPA. implementation of scheme for setting upto 1000 MW ISTS
project capacity whichever is higher. PPA Further, no JV with any private entities is connected Wind Power Projects”: Ministry of New and
Renewable Energy (MNRE), Government of India.
Fossil fuel subsidy reform is required considering that currently about 85 per supply and leads to economic losses.
to move to a low-carbon economy cent of the regional electricity generation Firms and households in developing
Global energy subsidies are significant is powered by coal. countries often need to resort to own
and in the next few years, are expected to Fossil fuel subsidy reform to phase generation, which imposes significant
grow. If left un addressed, they could out consumer and producer subsidies costs on them, over and above the price
generate a significant fiscal burden for will be a key element to rebalance of electricity from the public grid.
public finances. For countries in the economic incentives away from fossil Second, they crowd-out productive
region that are shifting toward increased fuels and in favour of cleaner sources of pro-poorspending in the social sectors
coal-based power and will soon have to energy. It can also help to achieve the which boosts growth in the longer-run.
import substantial amounts of coal, the SDGs, due to the significant and negative In many countries in the region, so called
exposure to international coal prices will macroeconomic, environmental, social post-tax subsidies, which are essentially
convert the indirect subsidy to a direct and equity implications of energy made up of the energy subsidy plus an
subsidy with significantfiscal costs if subsidies. adjustment to take into account the costs
domestic coal prices are not allowed to of the externalities caused byfossil fuel
rise. The same is true for natural gas. Impact of Eenergy’s Subsidies consumption, considerably outpace
The carbon budget of 565-886 Gt Energy subsidies have broad economic socials pending. For example, in 2010,
CO2to 2050,compatible with a 2°C ramifications. Beyond their contribution Uzbekistan had post-taxenergy subsidies
warming scenario means that only to fiscal imbalances and public debt, of over 35 per cent of GDP, around seven
around one-fifth of total existing fossil subsidies depress investment in the times its critical social spending in health
fuel reserves can be burned by 2050. energy sector. They cause losses for and education. A similar picture emerged
Efforts are needed to keep much of that producers, limiting their ability to expand in Turkmenistan and Iran.
coal in the ground and the region will be energy production, and discourage Third, subsidies lock in economic
central to the success of this undertaking private investment. This hampers energy development into a high energy-intensity
Figure 1- Asia-Pacific Fossil Fuel Subsidies, 2012-2014 (average pre-tax, real 2013 US$ bn)
mode, which can make countries income quintile in low- and middle- subsidizing nations (Figure 1). Based one
uncompetitive especially when energy income countries receives on average stimates for 2014, Iran's fossil fuel
prices increase. Fourth, in the case of net around six times more in subsidies (43 subsidies amounted to around 20 per
energy importers, higher energy percent) than the poorest quintile (7 per cent of GDP, followed by Russia and India
consumption caused by subsidies puts cent). Gasoline has been found to be the (both around 10 per cent), Indonesia (7
pressure on the balance of payments most regressive energy product. As percent)and China (4 percent).
unless higher international prices can be poorer households have a higher price In absolute terms, China and Russia
passed through to domestic fuel prices to elasticity of demand, the removal of were among the top three subsidizers,
mitigate the effect. Finally, they promote subsidies and consequent price spike in with US$279 bn and US$116 bn
capital- and energy-intensive activity and energy prices can have a significant respectively. In post-tax terms, Coady-et
associated technology choices, which are impact on poor households, al. (2015) it has been calculated that the
at odds with the need to generate underscoring the need to couple any Asia accounts for the largest share of
employment in developing and emerging fossil fuel subsidy reform with targeted global post-tax subsidies, namely just
economies. social transfers to mitigate these effects. under 60 percent. Looking at total
Energy subsidies have significant Energy subsidies also crowd out pro- subsidies, this region represents a
environmental implications. Subsidies poor spending, especially in areas of staggering 16-17 per cent of regional
distort resource allocation decisions by health, education and social protection. GDP, with coal subsidies dominating the
encouraging wasteful fossil fuel Despite often being viewed as a tool for picture, reflecting the substantial
consumption and reducing incentives for redistributing oil wealth in oil-exporting undercharging for coal's environmental
investment in renewable energy. This countries, the above suggests that impact.
leads to higher global warming, more air subsidies are not an efficient instrument Energy subsidies impose a large fiscal
pollution, greater traffic congestion, for distributing wealth. cost. Modelling results estimate the fiscal
accidents and road damage. Subsidies of gain from removing energy subsidies for
diesel can lead to the overuse of irrigation Trends in Asia-Pacific 2013 data in the order of US$3bn
pumps, and the over-cultivationof water- Asia made up around one-third of global globally, with around two-thirds of this
intensive crops, resulting in a depletion of energy subsidies in 2013. Regarding pertaining to the Asian region. In terms
ground water. composition, the subsidies were of regional GDP this amounts to
Energy subsidies have social and overwhelming concentrated on around10 per cent, and in terms of share
equity dimensions. Energy subsidies are petroleum products and electricity, of government revenue, it just exceeds
highly regressive and benefit mainly the accounting for some 90 per cent of the 30 per cent.
higher income groups. The highest total. The region is home to some major Coady et al. (2015) It has been
consultation; and
(6) a transparent communications
strategy.
M
ajor reassessments of generation and energy supply. The and wind power to 6 GW by 2030. In
national power revised PDPs adopted recently (in 2015 or Thailand, the government has set out
development plans and 2016 in most cases) introduced major a target of 20 GW of RE, or a tripling,
the future role of coal in the power changes in comparison with previous by 2036.
sector ones. These changes include: — Some total capacity additions that
Environmental concerns over local — A slower pace of growth in electricity could be higher than previously
pollutants, together with the demand, driven by energy efficiency expected (despite the slower pace of
commitments to reduce Greenhouse gas efforts. Electricity demand is growth in electricity demand), as
(GHG) emissions agreed by Southeast expected to remain strong over the more RE is added (characterized by
Asian countries at 21st Conference of the next 10/15 years. However, the low capacity factor and a need for
Parties (COP21), have started to erode growth is lower than expected in backup capacity in the case of
coal's dominance, although the current previous plans due to increased intermittent RE). For instance, in
wave of new power capacity to be energy efficiency efforts. Indonesia, the figure for annual
completed by 2020 is still dominated by — A diversification of the electricity mix capacity additions over the next ten
coal. However, power development (away from gas in Thailand, away years is raised from 7 GW in the
plans are actively being reassessed in the from hydro in Vietnam) and a shift previous plan to 8 GW in the plan
region, making the future of coal more away from reliance on fossil fuels in adopted by PLN in June 2016.
uncertain. most countries. — Lower growth in coal additions. In all
— A strong development of renewable new plans, the additional coal
Alignment of power development energy (RE) RE. All plans put a strong capacity has been revised downward.
plans with INDCs results in lower coal emphasis on RE-power development. Lower electricity demand and
capacity Indonesia's development. stronger RE power displace some coal
Southeast Asian countries have Indonesia's draft General Plan for power plants. In Vietnam, the
commenced aligning their national National Electricity Development national plan adopted in 2010
Power Development Plans (PDPs) with (RUKN), adopted in 2015, raises RE- envisaged a large-scale transition to
their Intended Nationally Determined power to 49 GW by 2025, an coal for baseload power generation.
Contribution (INDC) targets, which increase of 29 GW compared with However, the plan adopted in March
increase the role of RE in the energy mix the previous plan. In Vietnam, the 2016 reduces coal capacity by 30 per
and reduce fossil fuel use in electricity plan adopted in March 2016 raises cent in 2030 compared with previous
capacity from solar power to 12 GW plans. In Indonesia, the additional
coal capacity over the next 10 years is view of: lower gas prices, current are not shown in the figure as little
reduced by 17 per cent (-7.3 GW) ample availability of LNG, and the capacity is added.
compared with the previous plan. development and flexibility of Despite the overall downward
— Additional opportunities offered by Floating Storage Regasification Unit revision, coal still dominates additions to
integration of the region. More (FSRU) technology, which facilitates thermal capacity in most plans. Coal
countries are targeting power quick access to LNG. additions are set at 86 GW by 2025,
imports, mostly based on compared with 48 GW for natural gas.
hydropower developed in Lao PDR. But coal still dominates additional National PDPs emphasize the role of coal
— A reconsideration of the gas option in 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
Figure 1: Capacity additions by Country and Technology the share of coal to 50 per cent of
GW in 2025).
(2016-25) electricity generation by 2025, the plan
Lao PDR: only to 2020.
Notes: Malaysia: only Peninsular Malaysia (includes 2 GW of hydropower
Brunei and Singapore elaborated by PLN foresees the building
imported from Sarawak in 2025).
are further emerging policy indications fired power plants in the region. Coal abundant domestic supply and the need
that this coal boom will not be sustained demand is dominated by the power to reduce the use of expensive diesel and
in the medium to long term; further sector, which consumes 80 per cent of fuel oil for power generation. In order to
downward revisions to coal capacity regional demand. Other users, mainly guarantee sufficient domestic supply, the
additions can thus be expected in the cement industry, absorb the Indonesian government introduced a
forthcoming PDPs (for example, in remaining 20 per cent. Use of coal by the Domestic Market Obligation (DMO) in
Vietnam). This has significant residential/commercial sector has almost 2010; this required nominated coal
implications for future coal demand in disappeared. Coal demand is met producers to sell a minimum percentage
the region and consequently for its through a combination of local of their coal output to the domestic
import demand. production and, to an increasing extent, market. Despite significant growth, the
Steep increase in Coal demand by imported coal, the only exception level of coal consumption has been much
expected A steep increase in coal being Indonesia which is self-sufficient. lower than had been foreseen in
demand in the short term, but To some degree, coal is consumed in government plans.
uncertainties on the horizon. all Southeast Asian countries, except Vietnam's coal consumption has
Southeast Asian coal demand has Brunei,52 while Indonesia and Vietnam surged, growing at a CAGR of 9 per cent
more than doubled between 2000 and dominate regional coal demand. Coal over the period 2009-15 and reaching an
2007, to 131 Mt, under the pressure of consumption in Indonesia has grown estimated 45 Mt in 2015, boosted by
Indonesian domestic demand. After a almost four fold since 2000, to 91 Mt in surging demand by the power sector
pause in 2008, it has surged since 2009. 2015. The electricity sector is the largest which accounted for more than half of
Regional coal demand increased from coal consumer, and is expanding as a coal demand in 2015. Coal consumption
143 Mt in 2009 to 232 Mt in 2015, result of the addition of coal-fired in Thailand has been relatively flat since
growing at a compound average growth generation capacity. The Indonesian 2009 and totalled 37 Mt in 2015. The
rate (CAGR) of 8.4 per cent, boosted by government encourages increased use of largest user was the Thai power sector
the commissioning of numerous coal- coal in the power sector, because of (64 per cent) and the country's industrial
ENERGETICA INDIA
Need for Captive Power Plants of power distribution companies cost surmountable losses for which
India, identified as one of the major and regime. government already has announced
growth economy of not only South Asia To further elaborate upon the multitude of bail out schemes at different
but across the globe in the current understanding of likely power demand junctures with UDAY being the latest.
dynamics for which global agencies have supply dynamics of the country it is an Ironically, due to the flow of reforms
earmarked an economic bloom at the imperative to demystify the consumer from distribution sector in India we still
rate of if not more than certainly not less mix of the country at large. If we analyze lack homogeneity under the subsequent
than 7-8% annually. Given the fillip to the power consumer matrix for the sectors of transmission and generation.
the economy underline to be witnessed distribution utilities, the chunk of To exemplify, apart from the commercial
the power demand of the country is revenue flows from the industrial and losses witnessed by the discoms the
certain to increase. From the current commercial users with no aberration amount of cross subsidy surcharge being
levels of installed capacity of 315 GW it is noticed at pan India levels. This suggests levied on the commercial and industrial
quite obvious that India is bound to grow that the need for power for industrial and consumers also makes the case of open
in terms of installed capacity on the same commercial consumers shall grow market transactions unviable for them.
rate as observed in the growth of analogous to the growth rate This scenario projects that the power
economy. Also, the rate of compounded for the economy i.e. India. demand is on rise but availability is of
industrialization shall be embellished It also means that the base load serious concern for such consumers. The
courtesy the ease of business drive of requirements of such consumers shall factor of availability brings captive power
Government of India. In conjunction, increase in analogy to the demand. This generation into foray. The fact that
what follows for India as a country overall scenario shall clearly invite for the power effectively power being available nearly
is the need of lower cost of variable distribution utilities to effect more power in the range of INR 8-15/unit to the
power to support the base load procurement agreements on long term industrial and commercial consumers
requirements. This shall happen only basis (LT) to negate any potential hike in (depending upon their consumption
once the contribution of thermal power variable cost associated with fuel price levels) impacts the 24x7 of their
retains its supremacy in the generation and acts as a pass through controller for operations and may harm their respective
mix of the country, which arguably is especially the industrial and commercial business cause. This leaves such
challenged due to the impetus witnessed consumers. The business case for inking consumers to expedite establishing the
in renewable sector growth coupled with such long term agreements shall be an captive power units to relentlessly
lowered capacity utilization of thermal uphill task for power distribution utilities support their business need and at the
power units courtesy, crippled finances which already are plagued by in same time draw a ceiling upon the cost
ENERGETICA INDIA: What is the market size reliability issues (which always is slated to rise on a consistent basis for
potential of captive power plants in considered a driver for industries setting coming years too.
India, as per your research? up of CPPs in India. Also, the case of fuel
RAVI SHEKHAR: In the present case scenario, availability specifically of coal has E NERGETICA I NDIA : Will we also see
captive power plant segment in India has improved considerably in the country renewable energy technologies also
an upcoming market size potential of thus felicitating better operations of the as captive power plants?
close to 7 GWs. The CPP business is CPPs. Given the underutilization at the RAVI SHEKHAR: Yes, we can definitely see
witnessing a consistent northbound utility scale coal based thermal power renewable energy technologies as a
trend from almost a decade now, given plants the potential of CPPs arguably captive mode of power supply in India.
the fact that tariff of power has been on looks robust in the country as the power However, the extent might not be that
steady rise coupled with the supply demand from industrial consumer is aggressive as of now. It is pertinent to
Also, the gas based power capacities stacked in Maharashtra for Maharashtra holds about 45% of the of
generations are likely to drive business which main and balance of plant orders the business case for OEMs.
prospects for the equipment suppliers in are to be placed state offers highest
the northern region. potential for equipment suppliers and Southern Region Snapshot of
vendors in the region followed by Cumulative Upcoming Captive Power
Northern Region - Highest Fuel Gujarat. Capacity in India:
Contributor: The state of Karnataka boasts the highest
The region offers maximum upcoming Western Region - Highest Fuel upcoming capacity of CPP units in the
capacities surprisingly of gas based units Contributor: Southern region followed by Andhra
followed by Waste Heat Recovery Boilers The region offers maximum upcoming Pradesh. The other states do not have
(WHRB) and multi fuel set ups. Coal capacities of Coal based units followed significant capacities. With close to 84%
constitutes of 197 MW of the upcoming by Gas and WHRB set ups. Bagasse capacities stacked in Karnataka for which
capacity, while bagasse contributes to 49 constitutes of 354.7 MW of the main and balance of plant orders are to
MW only. The opportunity tune for upcoming capacity closely followed by be placed state offers highest potential
WHRB is best as far as the region is Multi fuel with 310.5 MW capacity. The for equipment suppliers and vendors in
considered for the equipment suppliers opportunity tune for coal is best as far the region.
followed by multi fuel set ups. as the region is considered for the
equipment suppliers followed by Gas Southern Region - Highest Fuel
Western Region Snapshot of Cumulative based set ups. Contributor:
Upcoming Captive Power Capacity in The region offers maximum upcoming
India: Opportunity for Equipment Suppliers & capacities coal based units followed by
The state of Maharashtra boasts the Vendors in Western Region States for WHRB and multi fuel set ups. Bagasse
highest upcoming capacity of CPP units Captive Power Segment: constitutes of 112.7 MW of the
in the Western region followed by The northern region states cumulatively upcoming capacity, while Gas
Gujarat and Chhattisgarh respectively. hold a market size of close to USD contributes to 80.5 MW only. The
While the state of Madhya Pradesh has 2467.74 million for the equipment opportunity tune for Coal is best as far as
close to 256 MW of Captive Power suppliers and vendors to the captive the region is considered for the
Capacities coming up. With close to 66% power plants. Of the total market size equipment suppliers followed by multi
fuel set ups.
take note of the impetus country is ENERGETICA INDIA: Which of the regions in ENERGETICA INDIA: Are captive power plants
observing in terms of capacity additions India has the most captive power more beneficial for industries?
of renewable power in the especially in plants? Why is it so? RAVI SHEKHAR: Yes. The rationale for any
the solar roof top segment. Essentially, RAVI SHEKHAR: Both Western & southern industrial set up choosing to establish
this segment is touted as disruptive for region states presents a good market CPP units can broadly be classified
discoms and likely to give boost to the case for captive power value chain primarily under two faceted aspects, with
group captive mode operated in the players. Due to the high industrial set up first being the cost of power available in
range of 50-100 MW scale. However, the maximum captive power plants find their the region, the industry operates coupled
cost economics being supportive enough home in these two regions. Also, cost of with degree of subsidy burden upon
for the project life cycle needs better power available in these regions is higher them and second being the cycle time for
assessment for the renewable technolo- as the discoms impose heavy cross which the power is available to them
gies (like solar) completely being adaptive subsidy burden upon the industrial across a day on hourly basis. Factoring
under the CPP space. Also, the capacity consumers. However, in coming years these two reasons apart from the size
utilisation factor (CUF) and availability Southern region states are projected to and scale of operations of the industry
across all seasonal variance may affect take significant leap with a total of 69 typically the landed cost of power from
the business case of complete adaptation captive power projects projected to be the power distribution utility across any
of renewable technologies under captive upcoming. state in the country turns out less feasible
space in future. for the industrial users, provided
constraints like fuel availability is negated
at their end for captive usage.
Introduction: (i) A minimum population of 5,000. hours per rural location in December
India, one of the fastest growing (ii) At least 75% of the male working 2015 was 448, 39 and 76 in Uttar
economies of the world with GDP population is non-agricultural. Pradesh (6 Locations), Maharashtra( 12
growth rate more than 7 Percent; still (iii) Density of population at least 400 sq. locations) and Karnataka ( 5 locations )
have a large share of population without Km. respectively.The latest report of ESMI(
access of reliable electricity. Majority of March 2017 ) shows that average non
this share resides in rural areas. At Area/place which does not falls in the supply hours per locations in rural areas
present, electricity is the main category of mentioned criteria termed as are still 221, and 72 in rural areas of
instrumentfor growth of any country. rural area. Uttar Pradesh ( 20 locations) and
Every service/facility is directly or The scope of this article is to discuss a Maharastra( 9 locations).Other rural
indirectly linked with electricity. In rural rural electrification model that provides areas follows the similar trends.
areas where reliable,resilient electricity is reliable, resilient and sustainable As shown in the figure 1, onlyless
still a dream; for betterment of family and electricity as well as, open window of than one-fourth ESMI locations received
search for employment opportunities economic activities for rural populace. reliable evening electric power supply (5-
millions of people every year migrate to Article is divided into three sections; 11PM) during April 2016 to March 2017.
urban areas. Rural to urban migration is Section 1 briefly discussed various rural As mentioned earlier, every service/
a response to diverse economic electrification schemes and their impact. facility is directly or indirectly related to
opportunities across urban areas. Then effect of rural to urban migration is electricity and without its reliable
discussed in section 2.Proposed model availability the chances of livelihood
Rural and urban divide according to with technical and financial analysis is opportunities diminishes in rural areas
census of India 1961: discussed in section 3. and it may be considered a reason for
Urban areas either have a Municipality, The reliability of rural electric power rural to urban migration. In next section
Corporation or Cantonment or Notified supply can be analysed by the reports of effect of rural-urban migration are
town area, or all other places which Electricity Supply Monitoring Initiative ( discussed.
satisfied the following criteria: ESMI);that shows average non-supply
Technical Details:
factor of human existence since the days supply of labour but at the same time it
of civilization. The migration is not only increases the population share in the Flow diagram of proposed Model:
related to economic factor but also to urban sector, which in return leads to
Animal waste storage
other factors such as political, social, decrease in per capita availability of land.
cultural etc. Everything has its pros and It may also lead to loss of jobs and burden
Anaerobic Digester (35-40°C)
cons and so does migration. The on public services. It will also lead to
interesting fact is that migration increase in competition in the existing
Bio-GasCH4 ~55%
enhances the welfare of the rural jobs that ultimately exert downward CO2 ~ 40%
population disproportionately. The pressure on salaries. It is the duty of the Others ~ 5%
migrant's remittances increase domestic government to integrate this process
savings as well as improve financial efficiently. It also raises the point that if Purification CH4~90%
intermediation. It serves as the link provided with suitable livelihood
between the sending and the receiving opportunities and facilities, rural Biogas Generator
communities. It leads to human capital population may never go for
formation and may help in shaping the 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
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
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