Increasing Renewable
Energy Investments in INDIA
Realising Synergies
A Knowledge Report prepared by
The 1st Energy Global Investment Promotion Meet & Expo (RE-INVEST 2015) is being organised with the
intent of providing a platform to the global investment community to connect with stakeholders in India. The
central theme of the Meet is to further the growth of Renewable Energy '(RE)' and energy efficiency in the
country. The Summit has been inaugurated by Shri Narendra Modi, Hon'ble Prime Minister of India, on
February 15, 2015 and addressed by high level dignitaries at Vigyan Bhawan, New Delhi and are being
followed by interactive and high quality Plenary & Breakout Sessions and Exhibition at The Ashok Hotel, New
Delhi on February 16-17, 2015.
More than 200 Global investors from various countries, international financial institutions, bilateral and
multilateral financial institutions along with Indian Banks, non-banking financial companies (NBFCs), State
Governments, PSUs concerned, renewable power developers and manufacturers, state renewable energy
nodal agencies and other related stakeholders are expected to participate in RE-INVEST.
Objective of RE-INVEST
The investment Meet is designed to showcase India as an investment destination for Renewable Energy and
encourage investors for setting up projects and manufacturing facilities of Renewable Energy equipment &
products in India.
The Expo will be a global platform for mutual dialogues and interactions between captains of Indian industry,
high-level dignitaries and policymakers from State and Central Governments. It will be an ideal an
opportunity for manufacturers, promoters and developers to showcase India's manufacturing capabilities
and latest technologies which will provide valuable insights to domestic and foreign investors into the
potential areas of investment in the Indian Renewable Energy sector and the policy environment and
investment potential of leading States as excellent destination for generating energy from Renewable
sources.
Increasing Renewable Energy Investments in INDIA - Realising Synergies 01
Executive Summary
This paper has four distinct sections with the intention of providing an Indian financial institution
perspective on Renewable Energy (RE) investments in India; it will also look at the various human,
technological and natural resources present in India which are important ingredients for creating synergy for
increasing investments into the Indian RE sector.
The first three sections point towards the factors which are already present in the Indian economy which can
be mapped towards creating positive impact for RE investments in India; the final section provides insights
from various countries on financially successful RE models and the collaborations that exist between India
and the discussed countries in the RE space.
Section Abstracts
ü
Readiness of the Indian Banking Sector for the required RE growth: this section focuses on the
readiness with respect to financial resource availability and innovations in financial models which
are required to bring about the substantial increase in investments for RE in India and the readiness
of the financial institutions to build capacity to understand RE as a resource for power generation,
which can then help reduce risk and make financial models and cash flows more robust.
o
Finance: The Indian banking sector has been a critical support pillar for all the economic
development that the country has witnessed. A major part of all the financing for any sector
comes in form of debt financing from the banks, as corporate debt market is yet to take its
footholds in India. At the same time banks are the keeper of public funds and have been
regulated with various caps on their industry exposures and Priority Sector Lending (PSL) norms
for directing finances to the right sectors of the economy. According to an estimate total
investment required to fund 100 GW solar target by 2022 will be in the tune of INR 6 Lakh Crore
(~ USD 100 bn). According to IBA-FICCI-BCG (2011) study the Indian banking sector will grow to
USD 28,500 bn by 2025 from an asset size of USD 1,350 bn in 2010, which will entail a new asset
creation of more USD 25,000 bn. Going by the above estimates, only solar will require for ~0.5%
of the new asset creation. Therefore, it is need of the hour to explore other financing
mechanisms like dedicated RE bonds or creating special provisions for RE in PSL and creating
depth in the corporate bond markets to make resources available for the large scale RE
implementation.
02 Increasing Renewable Energy Investments in INDIA - Realising Synergies
o
Indian banking sector is responding by building capacity in-house and externally to understand
RE as a resource. This is in addition to Government and institutional initiatives to mainstream RE
as a resource for power. One important requirement will be, better and more accurate
forecasting of wind and sunlight availability at specific sites. This will lead to better RE
utilization, and therefore more predictable cash flows, which will make lending decisions easier.
India is bestowed with great scientists who can run accurate regional climate models, which can
become important inputs to making RE financial models more robust and hence more bankable.
ü
Rooftop Solar Plans: Rooftop solar requires a special mention as it can not only be used to bridge the
grid availability gap at the last mile but also to convert electricity consumers to 'prosumers'. This in
turn will require special provisions for development of inverter technologies which can manage
generation, storage and feedback to the grid for the micro power houses. The grid should accordingly
upgrade itself to accept power from these micro sources.
ü
Factors for RE utilization: Storage Systems, Storage Solutions (including Electric Vehicles) and Smart
Grids; Micro Storage Systems and Storage Devices (considering 40 GW from Rooftop is planned). This
section provides insights on the following aspects:
o
Storage Systems, Storage Solutions and Smart Grids – for each of these, there are specific
policies and are being synchronized at the national policy level
o
Given that 40 GW is planned from roof-top solar, this section will have case studies and business
models which can work for the roof-top solar space integrated with storage systems, solutions
and smart homes
o
Case studies on a viable decentralized model and an off grid model
ü
Business models from different countries: This section has cases from Germany and USA; the
collaborations India has with these countries to create synergies in knowledge, technology and
human capital
In India the Sanskrit word for Industry is 'Shilpa'; and
interestingly 'Shilpa' also means Art.
To some extent, transition to Renewable Energy needs
the synergy from both Industry and Art, something not
new to India.
Table of Contents
Introduction
05
Section I: Readiness of Indian Banking Sector for the required Renewable Energy growth
07
a. Readiness with respect to availability of finance and financial mechanisms
08
b. Readiness with respect to Renewable Energy as a resource
10
Section II: Rooftop Solar Plans
17
Section III: Factor for RE utilization: Storage Systems, Storage Solutions and Smart Grids
23
a. Storage Systems, Storage Solutions and Smart Grids
24
b. Policy dimensions in Storage Systems, Storage Solutions and Smart Grids
25
c. Rooftop solar model integrated with storage systems, solutions and smart homes
27
d. Case studies on a viable decentralized model and an off grid model
28
Section IV: Business models from different countries
31
Conclusion
36
Increasing Renewable Energy Investments in INDIA - Realising Synergies 05
Introduction
India needs Renewable Energy (RE) for energy security; reducing dependency on energy imports; increasing
opportunities in green economy and green employment; fighting climate change; strengthening local
economies; and finally providing social justice. In some essence, India needs an energy transition towards
Renewable Energy.
Renewable Energy will need natural resources, sunlight, wind, biomass, et al – all of which is present in India
abundantly. To bring these resources to become energy there will be a need for many talented people,
capable of thinking on the ground, and looking for gainful employment – again, another aspect which India is
blessed with too.
Building the ecosystem for RE, starting from homes with roof top solar, to villages and communities with
smart mini grids and large RE parks for power to the grid – this is the work which needs to be done.
India has great scientists, information technology professionals, managers who are amazingly adaptive,
thinking on the ground - they manage and implement projects with quick turn-around periods in complex
environments. India is also a young nation, with a substantial part of the employable population below the
age of 35 – something known to macroeconomists as the demographic dividend.
The environment is conducive to bring the resource pool, talent pool, and the market need for power access
together to the table and realize the investment potential of the Indian RE sector. This knowledge report
provides insights into how that can be possible.
Section I:
Readiness of Indian Banking Sector
for the required RE growth
08 Increasing Renewable Energy Investments in INDIA - Realising Synergies
Section I: Readiness of Indian Banking
Sector for the required RE growth
This section focuses on the readiness with respect to financial resource availability and innovations in financial models
which are required to bring about the substantial increase in investments for RE in India and the readiness of the financial
institutions to build capacity to understand RE as a resource for power generation, which can then help reduce risk and
make financial models and cash flows more robust.
Availability of Finance and Financial Mechanisms
The Indian banking sector has been a critical support pillar for all the economic development that the country has
witnessed. A major part of all the financing for any sector comes in form of debt financing from the banks, as corporate debt
market is yet to take its footholds in India. At the same time banks are the keeper of public funds and have been regulated
with various caps on their industry exposures and Priority Sector Lending (PSL) norms for directing finances to the right
sectors of the economy. According to an estimate total investment required to fund 100 GW solar target by 2022 will be in the
tune of INR 6 Lakh Crore (~ USD 100 bn). According to IBA-FICCI-BCG (2011) study the Indian banking sector will grow to
USD 28,500 bn by 2025 from an asset size of USD 1,350 bn in 2010, which will entail a new asset creation of more USD
25,000 bn. Going by the above estimates, only solar will require for ~0.5% of the new asset creation. Therefore, it is need of
the hour to explore other financing mechanisms like dedicated RE bonds or creating special provisions for RE in PSL and
creating depth in the corporate bond markets to make resources available for the large scale RE implementation.
The current Renewable Energy Financing
New technology has traditionally seen definite financing transitions from a niche usage to mainstream usage,
with financing going from Private Equity (PE) to debt financing. It has been well documented that the mass
scale adoption of any technology has to be supported by large scale debt financing.
Funding in RE has come from various sources in India, with wind taking the first lead with 21.1 GW (Make in
India, 2014) of installed capacity where banks have come up in a big way. The initial impetus for financing
came from the tax incentives and accelerated depreciations being integrated in financial models to make the
projects viable. The first wind projects have already come to their near closures, showing the actual viability
of RE projects. Wind also saw huge participation from across sectors which adopted it for tax incentives and
carbon mitigations. Practically same kind of policy scenario is present now for Solar projects also(MNRE
Circular, 2014).
Increasing Renewable Energy Investments in INDIA - Realising Synergies 09
The RE Ecosystem
Today RE forms 13% of the installed
capacity and is expected to become
nearly 35% by 2022. This would
need an ecosystem to support the
targeted approximately 160 GW
(100 GW Solar, 60 GW wind) of
cumulative capacity of RE by 2022.
At the same time, e xtensive
Research & Development (R&D) is
required for Solar RE technologies
that are still evolving and need to
be funded to bring the costs down
for panels, climate mapping of
various regions to reduce climate
risks on production and more
ef f icient and cheaper storage
technologies. The 100 GW of solar Photo Voltaic (PV) installation will also require 1600 km2 of panels (Bridge
to India, 2014) to be produced along with Smart grids and intelligent micro-equipments to support the power
evacuation and large storage facilities for effective utilization. The solar power produced will also create an
ecosystem of new products and services which will be utilizing the renewable power for new and innovative
usage for e.g. Solar water pumps for remote locations. This system will then need to be supported with skilled
professionals who could provide the support in the form of scientists (for R &D), engineers (for new product
development), and technicians (for repair and maintenance).
According to an estimate, the finding required for delivering 100 GW of Solar power
installations will be INR 6 lakh crores till 2022
Funding will be required not only for the installation of approximately 160 GW RE capacity but also for the
ecosystem which would make the real impact in terms of carbon reduction and social up-liftment. According
to an estimate, the funding required for delivering 100 GW of Solar power installations will be INR 6 lakh
crores (~ USD 100 bn) till 2022. The requirement for other renewable sources and the support ecosystem
could well be in the multiples of this amount. For e.g. Power Grid corporation is planning to invest INR 1 Lakh
Crore for grid up-gradations by 2017 (Power grid, 2014). Providing finance of this scale though debt will put a
huge amount of pressure on the Indian banking system. According to an estimate only solar will require for
~0.5% of the new asset creation. But to achieve the above assets size of USD 28,500 bn, the flags have
already been raised where only PSU banks will need an equity infusion of more than INR 9 lakh crores(KPMG,
2013) by FY21 in next and government will have to pump in more than INR 4 lakh crores to retain its
shareholdings.
10 Increasing Renewable Energy Investments in INDIA - Realising Synergies
Renewable Energy as a resource
Indian banking sector is responding by building capacity in-house and externally to understand RE as a resource. This is in
addition to Government and institutional initiatives to mainstream RE as a resource for power. One important requirement
will be, better and more accurate forecasting of wind and sunlight availability at specific sites. This will lead to better RE
utilization, and therefore more predictable cash flows, which will make lending decisions easier. India is bestowed with great
scientists who can run accurate regional climate models, which can become important inputs to making RE financial models
more robust and hence more bankable.
Knowledge is increasingly becoming a key part of financial institutions. Renewable Energy is very local in
nature, and therefore in terms of knowledge there are two requirements from a financial institution or
investment perspective:
ü
Innovative Financial Mechanisms
ü
Availability of relevant scientists and engineers
Exhibit 1.1: Framework for Energy Transitions
Renewable Energy (RE) in many ways is a call for energy transition. For us to use RE effectively such that
everyone (given that there are multiple stakeholders involved in the energy space) understands this - a
Multi-Level Perspective (MLP) is important. A simplified understanding of MLP is given in Figure 1.1.
The MLP stems from evolutionary economics and sociology of technology (Geels, 2002).
Energy transitions are in a way socio-technical phenomenon where both public and private finance play
important roles.
For simplicity, let us consider (the following is an interpretation):
Niches as pilots on RE being supplied to a grid, or small decentralized projects of RE in villages
or localities.
Patchwork of regimes is a situation where a considerable part of power demand whether
decentralized or not comes from RE sources; not yet a full transition.
Landscape is a situation where a full RE transition has happened; where policy, people, science,
financial mechanisms and so on – all have made a successful energy transition possible
Increasing Renewable Energy Investments in INDIA - Realising Synergies 11
Figure 1.1
Increasing
structuration
of activities
in local practices
Landscape
Patchwork
of regimes
Niches
(novelty)
Source: Geels, 2002, p 1261; multiple levels of nested hierarchy
Innovative Financial Mechanisms
Historically, energy transitions took place when the existing energy source was getting depleted or
increasingly very scarce. However, it has been shown that financial innovations have always been one of the
most critical pivots in energy transitions, and these innovations were surprisingly very local in nature.
Therefore the financial innovations which will be required for India will need to be local too (see Exhibit 1.2;
Pathania and Bose, 2014).
Exhibit 1.2: Role of Finance in Energy Transitions;
What does it mean for India?
The objective of this exhibit is to critically appreciate the role of finance in energy transitions which
policy makers, investors, sustainability/renewable energy specialists and other stakeholders should
consider while formulating financial aspects of sustainable energy policy and making sustainable energy
investment decisions.
12 Increasing Renewable Energy Investments in INDIA - Realising Synergies
It can be noted that while renewable energy is the most important part of what constitutes the entire set
of sustainable energy, however this set will also include smart grids, electric vehicles, energy efficient
industry, smart buildings and so on. The fact that proper utilization of renewable energy is dependent on
various other issues, including people and culture, is something that should be kept in mind while
creating strategies to increase investments in Renewable Energy. Given the complexity, it can be said
that in essence, financing sustainable energy means financing an energy transition.
This exhibit starts with a background on previous energy transitions, and the role of finance in them.
There is also a short note on recent investment flows into renewable energy. Thereafter, we come to the
two examples of innovations in finance.
Previous Energy Transitions: The Role of Finance
Let us first look at the energy transition to the 'steam engine' during the Industrial Revolution. In this
case it will be essential to note that a marked large-scale shift in the sources of energy and their
utilization took place in Britain between 1550 and 1700, with a conscious shift in place from wood to
coal for industrial purposes. This was spurred by an energy crisis at that time arising due to the shortage
of wood consequent to deforestation. What marks this period of transition right through the Industrial
Revolution are the repeated examples of the use of private finance to spur this change and a form of
investment into intellectual property. In 1712, Thomas Newcomen started work on the first workable
steam engine, and he was financed by an organized secret community of Baptists from Dartmouth, set up
by Reverend John Havel, whose financial works can be considered to mirror a bank. Similarly, by 1768,
James Watt's steam engine, a massive improvement over the original engine, had a private investor,
John Roebuck, financing it. In 1769, once the patent was registered, Matthew Boulton, earlier
approached with a franchise offer, in turn offered to set up a factory in Birmingham for manufacturing
these engines. Boulton was member of the Lunar Society like Watt, whose aim was to spread scientific
knowledge for general good. These cases highlight a form of investment via ownership of the intellectual
property. It should be noted that there was also some support from macro-economics and policy aspects
too - like John Locke's '1689 Treatise of Government', which had vastly explained what intellectual
property means; or the emergence of double entry book keeping lowering transaction cost while
maintaining processes for scrutiny and accountability. It was during the Industrial Revolution that the
establishment of the double entry bookkeeping system of accounting in tracking joint stock company
finances really took root, as exemplified in 1772 by Josiah Wedgwood's pottery business leading to the
rise of cost accounting.
Oil exploration and refining was another area that was spurred entirely by private finance, with a similar
coincidence of policy, macro-economic factors and banking and accounting principles driving the
growth. By 1850, major accounting firms of today like PriceWaterhouseCoopers and Deloitte had been
set up. Accounting as a profession had gained root. In the United States, the Civil War led to an increase
in tariffs for financing the War. These remained high after the War as a result of the prevalent political
climate combined with specific duties and falling import duties. In fact, high tariffs and protectionist
policies were common in the major economies like United States and Germany, and have a positive
correlation to the economic growth seen in them. Parallel to this event, an energy crisis was brewing in
the United States, which in the 1850s faced a shortage of whale oil. A depleted whale population was
forcing ships sailing from places like New Bedford and Nantucket, Massachusetts, to travel farther to
catch fewer whales, prompting scientists to look for other sources of light.
Increasing Renewable Energy Investments in INDIA - Realising Synergies 13
Around the same time, the consistent research of Dr. Abraham Gesner, a medicine man, into geology,
culminated into the development of the first successful oil refinery business to produce kerosene for
lighting purposes following the registry of patents to the same, simultaneously matched by the
enterprises of Drake and Bissell. The subsequent booming of the petroleum refining industry of the1870s
saw changes taking place in the manner in which commodity transaction took place. Formal oil
exchanges were set up for the first time in Titusville, Pennsylvania, the home of oil production in United
States, and the sales were conducted in three manners – spot, regular and futures, with the combined
forces asserting the price of the commodity in question – crude oil.
Another good example of innovation binging private investment was the continuous stress on improved
productivity by John Rockefeller Jr. in the business. Rockefeller was an accountant by training, and so it
was important for him to improve productivity at whatever cost. Rockefeller engaged in self-insurance
against fires while striving to improve safety standards, helping him to save millions of dollars in what
was otherwise a dangerous business. He had a team of chemists who always looked at improving the
refining process, and his company, unlike its competitors, sold a wide range of petroleum products
besides kerosene.
By the end of the nineteenth century, the oil industry faced a new challenge – electricity. Edison's
invention of the light bulb and the subsequent development of electricity for lighting severely
threatened the industry. However, a simultaneous change was taking place in the sector of
transportation. While personal automobiles were already in use as a vehicle of luxury and in the taxis,
Henry Ford in his quest to build cheap, sturdy cars developed and launched the Model T in 1908.
Moreover, even as the transition towards electricity for lighting happened, he diversified his business
towards fuel for motor vehicles at the same time that Henry Ford launched the first Model T vehicle.
Thus we see that at the point of inflexion of all the previous energy transitions there were great
innovations in finance. For the transition to renewable energy as well it should not be any different,
therefore it will be pertinent to show what kind of investment flows into RE are there at present.
Global Renewable Energy Investments
At a global level, renewable energy investments have had a very interesting growth story as the figure
1.2. suggests The figures are for new investments in renewable energy. Projected growth in renewable
energy investments is also noteworthy (refer Table 1.1 and Figure 1.2).
14 Increasing Renewable Energy Investments in INDIA - Realising Synergies
Table 1.1: Six years of clean energy investment in India (USD)
2015
$10.0bn+
2014
$7.9bn
2013
$7.0bn
2012
$7.8bn
2011
$13.1bn
2010
$9.3bn
Source: http://about.bnef.com/press-releases/india-clean-energy-investments-bounce-back-set-breach-10bn-mark-2015/
Figure 1.2: Global new investment in clean energy in USD billion.
-7%
16%
-9%
17%
$99bn
32%
$113bn
$79bn
0.5%
$126bn
17%
$52bn
36%
46%
46%
$26bn
$19bn
$13bn
$28bn
$23bn
2004
2005
$39bn
$31bn
$86bn
$65bn
$69bn
$41bn
$63bn
$50bn
$90bn
$91bn
2008
2009
$59bn
$124bn
$53bn
2006
2007
EMEA
$71bn
$68bn
$44bn
$75bn
$154bn
AMER
$132bn
2010
2011
$78bn
$109bn
2012
$74bn
$78bn
2013
2014
APAC
Note: Total include estimates for undisclosed deals. Includes corporate and government R&D, adn spending
for digital energy and energy storage projects (not reported in quarterly statistics).
socurce: Bloomberg New Energy Finance
(Source: Bloomberg New Energy Financehttp://about.bnef.com/presentations/clean-energy-investment-q4-2014-fact-pack
/content/uploads/sites/4/2015/01/Q4-investment-fact-pack.pdf)
What does it mean for India?
With respect to a transition to renewable energy in India, therefore, there is clearly a need for creative
financial instruments, implying significant leap in innovative thought. Moreover, a great deal of such
innovation will be systems dependent; that is, the innovation will have to come from various
stakeholders, and all their respective innovations will need to synergize to make the transition to
renewable energy possible. Two such game-changing innovations in finance, may already be present –
'financial gradients' (Bose, 2011) and 'real options' (Dixit and Pindyck 1995). It is these two
innovations which might help many economies, including India, in transitioning toward sustainable
energy.
'Financial gradients' is a method to study various sources of finance. It can be noticed that
sustainability projects including renewable energy have sources of finance other than debt and equity.
Increasing Renewable Energy Investments in INDIA - Realising Synergies 15
While the interaction of debt and equity is well researched in corporate finance, the interaction of other
sources like pure public finance and grants and their interaction with other forms of finance were not
well researched. 'Financial gradients' can help us assess the financial flows into a renewable energy
project; they can also help formulate financial ratios which are used by investors and financial
stakeholders around the world to gauge the performance of the company or a project; further this
method can help structure public–private partnerships which have become integral to develop
infrastructure in various parts of the world. (refer case study 3.2)
'Real options' is a method of valuation which includes the various choices that a project has. A
traditional method of valuation might disregard the choices and undervalue a project which has a
sufficient amount of flexibility. This method of valuation is perhaps particularly important for renewable
energy projects which have a good amount of flexibility and various kinds of choice sets which when
taken into account make renewable energy worthy investments.
Therefore, the need of the hour is having new sources of debt finance which can essentially be channelized
from different private sources and PPP models to fund the same. The corporate debt market, which is still in a
nascent phase in India, requires the depth with real time trading platforms and market makers. This will allow
foreign debt funding to come directly to the sector. Sector specific bonds like RE bonds or Green bonds can be
used to generate resources. The Reserve Bank of India (RBI) announcements in line with the Union Budget
2014 are steps in the right direction to increase bank finance towards sectors like infrastructure and housing
(RBI circular, 2014).
Availability of scientists and engineers
India has recently completed a very successful mission to Mars, and earlier to the Moon, and was applauded
and appreciated for it the world over. India also has a rich pool of scientists, a very important aspect in RE. RE
is an in-firm source of energy, unlike traditional sources. The Plant Load Factor (PLF) or the Capacity
Utilization Factor (CUF) is strikingly different in RE sources than traditional sources; the supply chain is also
different.
RE sources like wind and solar will need very good weather forecasting, for which Regional Climate Models
(RCMs) are being developed in India across various research institutes. The data from the RCMs can help
understand the supply of energy both in terms of time and quantity. The demand management side of energy
will also be better as less energy will be wasted. All this will lead to better and more robust financial models
and provide better cash flows and more investments.
Renewable Energy, as a resource, needs to be understood at a very local level. Availability of engineers is very
important too. Decentralized smart grids or even Smart Mini Grids (SMGs) will need technicians on the
ground. Smart Grids of all types will need Information Technology professionals too.
India's demographic dividend and an enormous pool of engineers are critical for a transition to cleaner
energies. The Government is already training thousands in the young population for this task.
India has professionals who have shown, on several occasions, flexibility and adaptability on the
ground for project implementation; it also has qualified information technology professionals and a
young population – all qualities which will be very important for better RE utilization.
Section II:
Rooftop Solar Plans
18 Increasing Renewable Energy Investments in INDIA - Realising Synergies
Section II:
Rooftop Solar Plans
Rooftop solar requires a special mention as it can not only be used to bridge the grid availability gap at the last mile but also
to convert electricity consumers to 'prosumers'. This in turn will require special provisions for development of inverter
technologies which can manage generation, storage and feedback to the grid for the micro power houses. The grid should
accordingly upgrade itself to accept power from these micro sources.
India suffers from dual challenges of availability of power as well as availability of grid across the length and
breadth of the country. While many areas do not have access to any kid of power, there is a big population
which suffers from power shortages. The national grid has itself not been very successful in delivering power
1
efficiently with Transmission & Distribution (T & D) losses consistently being above 20% .
Rooftop Solar has been rightly targeted by the National Solar Mission to provide 40% of the total solar
installed capacity of 100 GW by 2022. The same can be used to achieve triple objectives in energy security 1)
Provide alternate source to the Grid power 2) Bridge the gap for power availability 3) Provide access to power
in remote locations. Apart from meeting other social and environment objectives of 1) climate change
mitigation 2) job creation and 3) social upliftment. The triple objective for energy security will need synergies
among the various national missions to achieve its target (Refer Table 2.1).
1
http://indiaenergy.gov.in/demand_tdloss.php
Increasing Renewable Energy Investments in INDIA - Realising Synergies 19
Table 2.1: Synergies to achieve energy security target through Rooftop solar
Objective
Provide
alternate
source to grid
power
Advantage
a. Reduces loads on
grids for supply of
peak demands
b. Large roof tops
can become a net
producer of
electricity
Roadblocks
Next steps
a. Grid Parity(Bridge to
India, 2014) for solar not
yet achieved for domestic
consumers
a. Work in line with the
California model (California
case study 4.1)
b. Grid not yet ready to buy
power from the net
producers
b. Upgradation of grids and
power exchanges at locality
level (Smart Grids Incentives)
c. Equipment upgrades
required to create micro
power exchanges at
household level
d. Availability of per capita
rooftop area is low
because of high
population concentration
areas
Bridge the gap
for power
availability
a. Reduces loads on
grids for
supplying higher
demands
b. Increases
productivity by
reducing power
outages
Provide access
to power in
remote
locations
a. Huge power storage and
inverter requirements
b. Mass level technicians
required to provide local
repair and maintenance
network
c. Requirement of retail
finance for equipment
purchases / upgrades
a. Reduces demands a. Marketing / supply
for grid expansion
channels for solar
equipment
b. Highest rooftop /
land available per b. Huge power storage and
capita
inverter requirements
c. New business
opportunities due
to availability of
power
c. Mass level technicians
required to provide local
repair and maintenance
network
d. Agglomerations
can be sources of
power to local
utilities
d. Requirement of retail
finance for equipment
purchase /upgrades
Source: Yes Bank Analysis
a. Creation of technicians
through ITIs (Mission for skill
development)
b. Storage systems have to
ramped up (Storage
Incentives)
c. New products offered by
Banks which incorporate
prevalent subsidies (PMJDY)
a. Creation of technicians
through ITIs, which in turn
would create pool of local
service providers (Mission for
skill development)
b. Storage systems have to be
ramped up (Storage
Incentives)
c. New products offered by
Banks which incorporates
prevalent subsidies (PMJDY)
d. Micro Smart Grids to create
agglomerations of localized
power sources (Smart Grids
Incentives)
20 Increasing Renewable Energy Investments in INDIA - Realising Synergies
To achieve the objectives discussed in the table 2.1, it is essential to draw synergies from different schemes of
the Government like Pradhan Mantri Jan-Dhan Yojana (PMJDY), National Skill Development Mission, and
supporting the same with taking Smart Grids and Storage systems in a mission mode. The synergies created
can create a baseline for business to create opportunities for economic growth in the large market spaces
created. A case in point is the Gandhinagar model for roof-tops where the roofs are being lent out to
renewable power companies who could sell the power to the grid at preferential rates and solve the perennial
problem of land availability at the points of consumption(refer Case Study 2.1). The system provides an
excellent example for companies to adopt to the local conditions and create new profitable models. There
might be some potential drawback in the current system (Bridge to India, 2014), but they provide a very
important takeaway for any system i.e. Gross Metering (the rent of the renewable energy and payment for
household consumption are metered and billed separately at different rates). The Gross Metering System as
against Net Metering System (Refer case study 4.1) can be customized based on the incentives like the
Renewable Purchase obligations (RPOs) or Preferential Tarrifs etc and can also be implemented on a standalone micro smart grids in remote locations, where the difference can provide the economic incentive to
maintain the grid.
Case Study 2.1: Gandhinagar (Solar) Photovoltaic Roof-top Programme
The program was launched by the Government of Gujarat in Aug 2010 to create a PPP model for roof-top
solar program across the city of Gandhinagar, Gujarat on a pilot basis. The basic aim was to create Green
power as well as to involve local population as producers of solar power. In this model, the rooftops of
house owners are leased out by Project developers (Azure Power and SunEdison) who, in turn, will set up
solar panels on the roof of the house owners and pay them a rent of INR 3 / Unit. At the same time,
Government buildings are also given to the Project developers to set up similar solar installation. Power
Purchase Agreements (PPAs) for 25 years are signed between the home owners and Project developers
and the Grid for streamlining the revenues. The overall structure is shown below.
GEDA
(Nodal Agency)
IFC & Consultants
(Transaction Str. Advisor)
GPCL
(Implementing Agency)
GERMI
(Project Str., Bid Process)
GoG
(For Govt, Approval)
ect
ion
Proj mentat
e
l
Imp ment
e
Agre
)
A
I
(P
Selection
through
RFP
GERC
(For Regulatroy Approval)
2 MW Govt. Rooftops
0.5 MW Private Rooftops
2 MW Govt. Rooftops
0.5 MW Private Rooftops
Green
incentive
2.5MW
2.5MW
Screening &
Selection
Approvals
GOG/EPD
(Project Proponent)
Azure Sun Energy
(Capacity: 2.5 MW)
SPV by SunEdison
(Capacity: 2.5MW)
PPA, based on GERC
solar tariff
Torrent Power Ltd.
(off-taker)
Increasing Renewable Energy Investments in INDIA - Realising Synergies 21
For the home owners, however, a Gross Metering System is adopted where he gets paid for the energy
generated from the rooftop but has to pay the power distributor for the consumption inside the house.
Photovoltaic Modules
(Approx. 1 - 100 kWp)
Grid-tied
inverter
Meter 2: Solar Electricity
Generation
Meter 1: Conventional
Electricity Consumption
Transformer
Grid
However, from an implementation standpoint it is more prudent to push for providing access at remote
locations, as it will serve multiple purposes of :
1.
Maximum economic and social gains at the ground level in the remotest locations
a.
Value of power available is more than providing power alternatives at lower costs
b.
Network of support network creates job opportunities at local levels
c.
Social benefits of power availability
2. The Grid can be upgraded with one Micro Smart Grid at a time integrated linearly to create a network
of Smart Grid enabling the concept of 'Prosumers'
3. Creation of a truly decentralized power generation and consumption to reduce loads on the National
Grid
Section III:
Factor for RE utilization
24 Increasing Renewable Energy Investments in INDIA - Realising Synergies
Section III:
Factor for RE utilization
RE as a resource can pave the way for self reliance, which in turn will be important for the Make in India
initiative too once the synergies have been realized.
In India the Sanskrit word for Industry is Shilpa; and interestingly Shilpa also means Art. One nuance of this
is – that the non-agricultural production sector has always been innovative; capable of utilizing local
resources efficiently and this is precisely what is needed. India is capable of making its own Feldheims (Refer
Case study 3.1) (Feldheim - a village in Germany with 100 per cent RE as a source for energy).
Storage Systems, Storage Solutions and Smart Grids
Various sources of storage systems available (CEEW, 2013) point out that technologies for storage from micro
to larger are available and have been tested internationally. These technologies can be adopted based on the
need of our grid and home solution. The critical thing however is the technical expertise which is required to
adopt these technologies to the local conditions.
Table 3.1: Various energy storage technologies
Energy Storage System
Typical Application
Scale / Example
Pumped Storage Hydro (PSH)
Large energy storage from gridconnected sources at times of low demand
1MW - 1000 MW (Bath County Pumped
Storage Station, USA - 3000 MW)
Compressed Air Energy Storage (CAES)
Large energy storage from grid-connected
sources
1mw - 300MW (Gaines, TX, USA- 2MW)
Superconducting Magnetic Energy
Storage (SMES)
Grid stabilisation and frequency
control
1MWH - 200 MWh
Flywheels
Grid energy storage, motive power, large
scale UPS services (labs, etc)
3kWh - 5MWh
Capacitors and Super Capacitors
UPS for short intemuptions in
conjunction with other batteries
Increasing Renewable Energy Investments in INDIA - Realising Synergies 25
Energy Storage System
Typical Application
Scale / Example
Batteries
Lead Acid
Automobiles, household backup,
industrial backup and grid storage
Varying sizes with the possibility to
increase voltage supplied (2 V cells)
Nickel-cadmium
Portable electronics, power tools,
emergency lighting grid energy, storage
Varying sizes with the possibility to
increase voltage supplied (2 V cells)
Sodium -sulphur
RE stabilization, ancillary services
250kWh - 300MWh (Rokkasho,
Japan -34MW)1
Lithium-ion
Portable devices, power tools, electric
vehicles
Varying sizes with the possibility to
increase voltage supplied (2V cells)
Flow Batteries
UPS, peak shaving, load balancing
1 kWh - 10 MWh
• Zinc-bromide
• Vanadium redox batteries
Source: CEEW, 2013
An IESA (2013) report estimates that by 2020, the energy storage systems in renewable energy applications
will have a market potential of 6000 MW, with more than 2000 MW in the off-grid renewable energy market.
The above estimate was basis 20 GW Solar and 30 GW wind capacity which will grow multifold with the new
targets of total 160 GW RE(Solar & Wind). A major part of the above requirement will come from the
smoothening requirements of the in-firm sources like wind and solar at the generation points.
Sudden variation in sunshine, wind speed or water flow makes batteries used with renewable energy systems
to charge in an unpredictable manner. This makes batteries to work on partial charge for few days at a
stretch, leading to frequent deep discharge or lack of charge. Therefore, choosing the appropriate storage
technology for a renewable project requires a balance of desirable attributes associated with an efficient
storage system.
Policy dimensions in Storage Systems, Storage Solutions and Smart Grids
Storage systems and smart grids are an essential part of the proposed mix of power generation heavily
inclined towards in-firm sources like Solar and Wind. In fact, international case studies affirm the fact that
RE with correct technology to even out production from various sources of power and storage may not require
the baseload to come from very firm sources like coal and nuclear (Edelweiss, 2014). These cases suggest that
working with the ecosystem is important along with the generation side of RE.
26 Increasing Renewable Energy Investments in INDIA - Realising Synergies
The same is reflected from the National Action Plan for Climate Change (NAPCC) subsidy schemes where Solar
with storage commands higher capital subsidies (additional INR 60 - 80 / Wp) (MNRE circular, 2014). While
this will motivate the home and institutional rooftop buyers to go for storage supported projects, it will in
turn reduce demand volatility at the grid for grid connected consumers. The storage systems are also
important from off-grid installations perspective where consumers can become self sufficient in power
without the grid. The scheme should however encourage specific better storage technologies which are
better not only from a cost perspective but also from other considerations like long life and environment
consciousness.
The Government has also initiated research and development of newer storage technologies at IIT Bombay
under National Center for Photovoltaic Research and Education (NCPRE) center. The energy storage theme has
specific objective to develop Lithium-ion batteries for integrated application for solar cells. However, the
research has to be pushed with product development and commercialization in line with the national mission
to push effective development of the RE ecosystem.
The Power Grid Corporation of India has already started a pilot project on smart grids in Puducherry and plans
to expand the application of such technologies across India in 12th and 13th plan. It has also evolved a plan to
integrate upcoming renewable capacity through knowledge initiatives like the 'green Energy Corridor
Report'. It plans to invest a total of INR 1 Lakh Crore of capital investment during the 12th plan. However,
there is an urgent need to go smart on all grids possible and will require a much larger investment. Alignment
to existing programs and drawing synergies will be the key not only to pool resources but also to proceed in a
coherent manner.
Table 3.2 : Key Policy initiatives
Initiatives
Objective
Weblinks
Smart Grids
India Smart Grid Task
Force
To provide policy direction towards adoption
of Smart Grid technologies in India
http://indiasmartgrid.org/e
n/isgtf/Pages/AboutUs.aspx
India Smart Grid
Knowledge Portal
To create repository of knowledge resources
http://indiasmartgrid.org/e
n/Pages/Index.aspx
India Smart Grid Forum
To create pilots on smart Grids
Already 14 pilots under consideration
http://indiasmartgrid.org/e
n/Pages/Index.aspx
Restructured Accelerated
Power Development &
Reforms Programme (R APDRP)
To create basic infrastructure of grids and
converting existing grids into smart grids
http://www.apdrp.gov.in/
Increasing Renewable Energy Investments in INDIA - Realising Synergies 27
Initiatives
Objective
Weblinks
Smart Grids
Green Energy Corridor
To study renewable energy grid integration
for RE excess states
http://www.powergridindia.
com/_layouts/PowerGrid/Us
er/PressRelease.aspx?PRId=
2&LangID=&PId=277
Storage Solutions
National Solar Mission
Additional INR 60-80 / Wp subsidy for panels
with storage
http://www.mnre.gov.in/sol
ar- mission/jnnsm/
introduction-2/
India Energy Storage
Association
To provide policy direction towards adoption
of storage technologies in India
http://indiaesa.info/
National Center for
Photovoltaic Research
and Education (NCPRE)
Research and development of new storage
technologies
http://www.ncpre.iitb.ac.in
/pages/goals_solar_pv_syst
ems_modules.html
Source: GOI websites, YBL Analysis
Rooftop solar model integrated with storage systems, solutions and smart homes
The solar solutions for household and rooftop can range from micro emergency lamps which can be charged
during the day and used by the night to small companies which provide basic electricity to complete villages.
What enables these solutions is the storage systems which can charge and discharge with the available solar
cycles and complement the availability of light during the night. The various case studies of inclusion (MNRE,
2012) of RE to provide power have been most effective at locations where grid power is not available or is only
available few hours a day. The households are paying heavy per unit costs for the convenience of power and
generating business benefits like study of children, extra working hours for revenue generating activities
(pulse grinding, sewing etc) as well as mobile phone charging. Some of these models have also been making
the mobile towers in remote locations diesel free. Some of these solutions also have a micro smart grid
installed which has enabled them to manage different power sources and sinks providing power all round the
year. However, on a grid connected system the storage at grid levels form the most important conduit to
store peak power availability and use the same during demand peaks.
Rooftop installations form one of the most important component (40 GW) of India's target under the
National Solar Mission. These installations will need to be connected to either a storage system or a smart
grid to be effectively utilized. Therefore the need of the hour is the business models which can be used by the
local entrepreneurs to align with the Government incentives and public need for power to get economic
benefit. The Gandhinagar model (refer case study 2.1) depends a lot on Government incentives for buying
power from the companies. The same can be refined and utilized for standalone off-grid models as well. In
the California model (refer case study 4.1), the grid / electricity distributer itself draws excess power from
rooftops and pays the household for the excess power after net metering. Another example that has been
discussed is the third party solar installers who take benefit of the scale, RECs and industrial benefits from
the Government to provide power to households using their own rooftops.
28 Increasing Renewable Energy Investments in INDIA - Realising Synergies
The completely off-grid solutions can be a better starting point as business benefits generated are higher.
Therefore, the community is more conducive to payments of such services leading to business returns
from the establishments as discussed in the various case studies compiled by MNRE. However, for the grid
connected solutions to work, it is essential to have grid parity or below for a business case for the renewable
power generation from the rooftop.
Case studies on a Viable Decentralized Model and an Off Grid Model
A case study on decentralized model
Case Study 3.1: Case on Feldheim, a village in Germany
100% Renewable Energy Goal Achieved: 100% Renewable Electricity and Heat with Local Resources
Location: Community of Feldheim in the City of Treuenbrietzen, Germany
Summary: The village of Feldheim, located in the town of Treuinbrietzen in eastern Germany's state of
Brandenburg, supplies power and heat for its 145 inhabitants with entirely local renewable resources.
Electricity is produced by modern wind farms and a photovoltaic solar energy park built on a former
military base. A next generation accumulator is planned for a next stage of development to help balance
the fluctuating wind supply. Heat is made by a biogas plant fueled by wood chips.
Financing of the Renewable Energy for Feldheim came from a pooled effort by the local energy
consumers, the municipality, the local utility and additional support by regional Government and EU
funds. The effort has paid off. The town has zero unemployment, compared to 30% unemployment in
other villages in the area, with most residents working for the town's renewable energy sector. Feldheim
cites energy security, a positive image, stable energy prices, and protecting future generations from
environmental damage as other positives that they are gaining from their 100% renewable energy
choices.
Feldheim has zero unemployment compared with roughly 30 percent in other villages in the
economically depressed state of Brandenburg, which views investments in renewables as a ticket for
a brighter future
Source: http://www.huffingtonpost.com/2011/12/29/feldheim-germany-renewable_n_1173992.html?ir=India
A Case study on Off-Grid RE
An off-grid case using renewable energy for energy access solutions in rural India a business model is
depicted below.
Case Study 3.2:
Off-grid energy access business models using solar energy
As said before Financial Gradients is a method to study various sources of finance. It can be noticed that
sustainability projects including RE projects have sources of finance other than debt and equity. While the
interaction of debt and equity is well researched in corporate finance, the interaction of other sources like
pure public finance and grants and their interaction with other forms of finance were not well researched.
Increasing Renewable Energy Investments in INDIA - Realising Synergies 29
Given that financial gradients address the relationship between public and private (or, investment grade and
non-investment grade), this will be a good tool to structure public–private partnerships which have become
integral to develop infrastructure, especially for sustainability.
Table 3.3: Financial Gradients matrix, adapted from Bose (2011), Bose et al. (2012)
Category
Definition
Accountability
Monitoring
cost
Motivation
Pure grant
Funds given as a part of philanthropic activity or partly
with an intention to claim tax exemption
Negligible
Highest
Philanthropy
Research
grant
Funds given with a research objective and a tangible
outcome is expected (a report a product etc.: in certain
instances this can be considered as seed financing or
equity as well)
Low
High
Innovation
Public
finance
Government funds with fiscal objectives
Medium
High
Social
dividend
Loans
Funds provided by a bank with a ToR similar to retail
lending
High
Low
Long-term
Equity
User/community / entrepreneur contribution towards the
project hardware cost
Highest
Lowest
Efficiency
The above table gives a snap shot of the nature and sources of finance available for projects related to
sustainability. As discussed earlier, given the kind of uncertainties that prevail in sustainability,
including RE projects, a diffused financial mechanism which is dynamic, and multiple sources of finance
would offer a good mechanism to mitigate risks, and offer flexibility that is required.
The importance of the financial ratios/gradients method is that the financial risk adjustment is dynamic
and not static; this aspect is particularly important from a sustainability/RE project management point
of view and the other problems like duration, performance linked payments can be better addressed if
the nature of legal contract was made more dynamic and Financial Gradients addresses that need.
Analysis of Financial Flows
The pie charts help us understand the financial trends observed in the nature of funds received by an
energy access program using solar energy.
(source: Bose 2011)
From the pie charts it can be seen that there is a movement from a pure grant based method of financing
into a more community or private equity based method of financing. This equity driven model will get
further impetus when there are more lines of business, like provisions charging for mobile telephony in
addition to charging solar lanterns, are attached to the core model. There are various possibilities of
increasing lines of businesses; however the charts below for the first three years are purely for solar
lanterns as the only line of business.
30 Increasing Renewable Energy Investments in INDIA - Realising Synergies
Grant 91%
Year 2008-09
Service
revenue 2%
Year 2009-10
Grant: 91 %
Research Grant: 7%
Service Revenue: 2%
Research
grant7%
2008 - 09
Grant: 81%
Research Grant: 4%
Subsidy: 14%
Equity: 1 %
Service Revenue: 0%
Grant: 81%
Service
Revenue: 0%
Subsidy: 14%
Research
Grant: 4%
Equity: 1 %
200 - 10
Year 2010-11
Grant: 66 %
Research Grant: 11%
Equity: 6%
Subsidy: 9%
Public expenditure: 7%
Service Revenue: 1%
Grant: 66 %
Service
Revenue: 1%
Public
expenditure: 7%
Subsidy: 9%
Research Grant: 11%
Equity: 6%
200 - 10
It can be seen from the above diagrams, that in the first year of the program, there was no equity
component. it rises to 1% in the second year and then to 7% in the third year. We also see that the pure
grant component is decreasing rapidly from an ominous 91% in the first year to 84% in the second and a
far more viable 65% in the third year. Now if we add the research grant to pure equity, we find that the
equity component is doing very well, from a 7% in the first year to 16% in the second year and finally a
very promising 27% in the third year. Overall the non-grant finances have risen fast from 9% to 16% and
then to 35% in the final year. We should remember that this strong performance in building a
sustainable financial model was built with only one line of business; the charging stations have the
potential to stand alone as a viable business without any grant component in the future when more lines
of businesses are included.
The above is a simple manifestation of how financial ratio/gradient analysis can track the health of
these new 'niche' projects, thus increasing the pace of the required energy transition to renewable
sources.
Section IV:
Business models from different countries
32 Increasing Renewable Energy Investments in INDIA - Realising Synergies
Section IV:
Business models from different countries
This section will have cases from Germany and USA; the collaborations India has with these countries to create synergies in
knowledge, technology and human capital.
Germany and India: A Constructive Collaboration
Like India, Germany needs RE for energy security, reducing dependency on energy imports, increasing
opportunities in green economy and green employment, fighting climate change, strengthening local
economies, and finally providing social justice.
Germany can help India in providing insights on policy frameworks for energy transitions and RE technology.
Exhibit 4.1: Learning from a household electricity bill from Germany
Acknowledgement: Ms. Annika Styczynski (Freie Universität Berlin) for sharing an actual electricity bill for
households in Germany, and highlighting insights on its implications.
Strommix der E.ON Energie Deutschland GmbH auf Basis der Daten von 2012
Der Strom wurde aus diesen Energiequllen erzeugt:
Von E.ON Energie Deutschland fur
die Kundenbelieferung beschafft
Zum Vergleich der Durchschnitt in Deutschland
Erneuerbare Energien (Renewable energy), 27.6%
gefördert nach dem EEG
Sonstige Erneuerbare Energien 5,5%
Erdgas 6,9%
Ernuerbare Energien (Renewable energy), 20,8%
gefördert nach dem EEG
Sonstige Erneuerbare Energien 3.5%
Erdgas 9,8%
Kohle 32,5%
Sonstige fossile Energieträger 6,3%
Kernenergie 21,2%
Kohle 45,6%
Sonstige fossile Energieträger 3,2%
Kernenergic 17,1%
Mit diesem Strommix werden unsere Kunden beliefert:
Increasing Renewable Energy Investments in INDIA - Realising Synergies 33
E.ON-Oköstromproudukte*
Übrige E.ON-Produkte (Residualmix)
Erneuerbare Energien, 29,4%
gefördert nach dem EEG
Sosntige Erneuerbare Energien 1.8%
Erdgas 7,1%
Erneuerbare Energien , 29,4%
gefördert nach dem EEG
Sonstige Erneuerbare Energien 70,6%
Kohle 33,4%
Sonstige fossile Energietrager 6,5%
Kernenergie 21,8%
*Wird die vertraglich vereinbarte Strommenge nur anteiling aus emeuerbaren Energiequellen erzeugt und in das Stromntez
der allgemeinen Versorgung eingespeist, so besteht dieser Anteil zu 100% aus dem Strommix unserer OkoStrom-Produkte; für
diesen Anteil entstehen weder CO2-Emissionen noch radioaktiver Abfall.
Aus der Stromerzerugung ergeben sich diese Umweltauswirkungen
CO2-Emmissionen
Radioaktive Abfall
E.ON Energie Deutschland GmbH
489 g/kWh
E.ON Energie Deutschland Gmbh
0,0006 g/kWh
Durchschnitt Deutschland
522 g/kWh
Durchschnitt Deutschland
0,0005 g/kWh
E.ON Okostromprodukte
o g/kWh
E.ON okostromprodukte*
o g/kWh
Ubrige E.ON-Produkte (Residualmix)
504 g/kWh
Ubrige E.ON-Produkte (Residulmix)
0,000 g/kWh6
Implications: In Germany (something which is on the anvil in India) consumers can choose their
electricity supplier; in this case the consumer has chosen a supplier who supplies power out of RE sources
more than the legally required mandate. In Germany, people choose such suppliers on priority. The
snapshots of the electricity bill show the sources of power in percentages in the pie chart. The legal
requirement for RE in the energy mix is roughly 20%, however this company sources around 27% of its
power from RE sources.
This shows when the grids are smart, consumers can proactively make sustainable choices. In this
case the consumer has chosen a company which supplies power from RE sources much more than
what is legally required.
With its 'Energiewende' (German for energy transition), Germany has become the model country in the
renewable energy space. Germany has created more than 380,000 new jobs, built up the world's leading
g r e e n t e c h n o l o g y s e c t o r, a n d h a s r e d u c e d i t s d e p e n d e n c y o n f o s s i l f u e l i m p o r t s .
(http://energytransition.de/)
This year India is the partner country at the 'Hannover Messe' in Germany, considered as one of the most
important industry trade fairs in the world, showing the growing relevance of India and the co-operation that
exists between Germany and India not only at policy levels but also at industry levels.
"India is an emerging economic giant which is going to open up enormous sales potential for our
German and international exhibitors at HANNOVER MESSE"
Dr. Jochen Köckler, member of the Deutsche Messe Managing Board (2015).
On the official front, the one noteworthy feature is the Indo-German Energy Forum (IGEF). The IGEF is a highlevel bilateral dialogue between decision-makers in Government and Industry under the leadership of the
German Federal Ministry of Economic Affairs and Energy (BMWi) and the Indian Ministry of Power (MoP)
which meets yearly at the secretary level.
34 Increasing Renewable Energy Investments in INDIA - Realising Synergies
On a working level on RE, Germany's Federal Ministry of Environment (BMBU) and India's Ministry of New and
Renewable Energy (MNRE) meet regularly. Due to the importance of the Green Energy Corridors a specific
subgroup has been established to deal with particular issues of large scale renewable energy integration into
the Indian grid.
A Forum secretariat, under the name of IGEF Support Office, is jointly operated by GIZ, KFW and Indias
Bureau of Energy Efficiency BEE. The Support Office, operational in New Delhi and Berlin, provides liaison
services for all stakeholders.
Possible Areas of collaboration given below for Renewable Energy:
ü
Storage technologies; Hydrogen and fuel cells
ü
Smart grids/grid management; Cable technology/management
ü
Power supply/UPS systems/switching systems
ü
Energy management/capacitors
ü
Environmental engineering & resource efficiency
ü
Transformers and electric filters
ü
Switching systems/technology; Casings; Testing and measuring equipment
ü
Power/signal converters; Power electronics, relays
ü
Decentralized energy supply; Smart Grids; Super Conducting solutions
USA and India: An Affirmative Collaboration
The United States and India have pledged to enhance our cooperation in the area of climate and energy. The
United States has welcomed India's intention to increase the share of renewable energy in electricity
generation, consistent with its intended goal to increase India's solar capacity to 100 GW by 2022. The two
countries already have a robust program of cooperation, including the U.S.-India Partnership to Advance
Clean Energy (PACE) umbrella program, expansion of policy dialogues and technical work on clean energy and
low greenhouse gas emissions technologies is on the anvil.
Case study 4.1: Go Solar California
The California Solar Initiative took the plunge to go all out solar for rooftops by providing various
incentives to home owners in 2007. The initiative saw many firsts with a total target for California state
set at 1,949 MW by 2016. It today boasts of total of 245,000+ projects and 2,300 MW + of capacity
installed. The project also created 36,000 jobs by 2010. The key takeaways from the scheme were clear
procedures and the support personnel created locally to take the procedures for the home owners
literally making it a turnkey for them. And the net-metering system to feed in extra energy created by
the household back to the grid. This enabling environment actually saw the projects grow steadily
quarter over quarter.
However the case has actually seen business models develop around the incentives provided by the
program and offer a lot to learn from them
1. The net metering is actually allowing the households to become net producers of power enabling
truly decentralized production. The state added 258.3 megawatts of residential and commercial
Increasing Renewable Energy Investments in INDIA - Realising Synergies 35
rooftops during the first half of 2013, and 57.2 megawatts of those didn't receive incentives from
the California Solar Initiative. This, in turn, has seen installations being taken up without any
subsidies making the business case of solar installation at the granular level (Forbes, 2013).
Although, net-metering is having its toll on the grid, making it financially unviable to sustain, a
new system is being conceptualized towards a gross metering concept.
2. The falling prices of solar equipment and different incentives given to the business to install solar
has actually changed the mix of roof top owners towards non homeowners.
Residential solar PV capacity installed in California Solar Initiative program
nameplate capacity (megawattsDC)
60
Installed Capacity (MW)
owned by homeowner:
50
Yes
NO
40
30
20
10
2007
2008
2009
2011
2012
Qtr2
Qtr1
Qtr4
Qtr3
Qtr1
Qtr2
Qtr4
Qtr3
Qtr2
Qtr1
Qtr3
2010
Qtr4
Qtr2
Qtr1
Qtr4
Qtr3
Qtr2
Qtr1
Qtr4
Qtr3
Qtr2
Qtr1
Qtr4
Qtr3
Qtr1
Qtr2
0
2013
Third party ownership models are taking the center stage and home owners are essentially leasing
out their roofs to these third party owners who in turn subsidize the electricity being consumed by
the household. The homeowner comfortably enjoys low cost electricity without paying for cost and
maintenance for the PV. The solar leasing company also receives long term returns from the
installation in form of the electricity consumption and can achieve the various RECs and scale
benefits which individual house owners could not get (EIA, 2013).
36 Increasing Renewable Energy Investments in INDIA - Realising Synergies
Conclusion
The narrative of RE has a multitude of dimensions. To give insights to these dimensions this report has
included snapshots of an actual electricity bill from Germany – and how it promotes better RE utilization; it
also tells us about the role of finance in previous energy transitions and its implications for India; or how a
village in Germany has become 100% RE for power generation; or how villages in India are finding investment
grade solutions to finance solar power.
For RE to be utilized effectively and attain its objectives – the RE ecosystem and more importantly the
interdependency amongst the stakeholders has to be understood by all: firms and industries, investors,
financial institutions, policymakers, civil society, engineers and researchers. There is also a need to build the
pieces together with the support of the society and give access to power for the most deprived section of the
society. Viable business models and debt financing will have to take the driver's seat to achieve the India's
RE dreams.
This report also tells us that India - with its engineers, Information Technology professionals, scientists,
quick thinking managers - has the social, cultural and human capital to make the transition to RE possible.
And make India an ideal place to invest in RE.
Increasing Renewable Energy Investments in INDIA - Realising Synergies 37
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(All websites and web-links accessed in January 2015)
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38 Increasing Renewable Energy Investments in INDIA - Realising Synergies
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Weblinks:
For Gujarat case:
http://www.egujarat.net/gg/gandhinagar_solar_rooftop.html
http://www.pace-d.com/wp-content/uploads/2014/07/20140709-1-Case-Study-Gandhinagar-PV-RooftopProgramme.pdf
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http://www.hannovermesse.de/en/exhibition/partner-country/
http://www.india.diplo.de/Vertretung/indien/en/12__Climate__Development__Cooperation/Energy/Energ
y__Cooperation.html
For cases and exhibits from USA:
http://www.whitehouse.gov/the-press-office/2015/01/25/fact-sheet-us-and-india-climate-and-cleanenergy-cooperation
http://www.gosolarcalifornia.ca.gov/csi/
http://www.gosolarcalifornia.ca.gov/
Increasing Renewable Energy Investments in INDIA - Realising Synergies 39
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TITLE
Increasing Renewable Energy Investments in INDIA - Realising Synergies
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February, 2015
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