Wind Versus Solar JM Financials Good Article PDF

Subhadip Mitra
subhadip.mitra@jmfl.com
Tel: (91 22) 66303128
India Renewable Energy

Solar “Eclipsing” Wind
JM Financial Institutional Securities Limited 07 January 2016

India Renewable Energy 7 January 2016
Table of Contents
Contents Page No.
Summary of Findings 4
RoE Profile, Potential & Road-blocks 6
RE Cost Structure & Tariffs 10
Key Challenges for RE 13
India’s BIG Bang RE Plans 16
Policy Push 18
India Vs China 21
Annexure 1: Niti Ayog’s FY22 Case Scenario 23
Annexure 2: India Solar Mission 24
Annexure 3: Solar / Wind Regulations 26
Annexure 4: Global RE perspective in charts 29
Annexure 5: Solar Technology - How it Works? 32
Annexure 6: Wind Technology - How it Works? 34
Annexure 7: Company Section 35
JM Financial Institutional Securities Limited Page 2

7 January 2016
India | Utilities | Sector Update
India Renewable Energy

Subhadip Mitra
Solar “Eclipsing” Wind - Big Bang Potential; But who will win? Tel: (91 22) 66303128
Govt of India has set big targets for Renewable Energy (RE) capacity,
aiming 175GW by FY22 from 37GW in Aug’15. This implies major addition
in solar (96GW), wind (36GW) over the next 7 years (Annexure-2). In this RE capex targets
1,200
report, we analyse in great detail the prospects for solar and wind in India. RE Hydro 479
Our study included, in addition to secondary research, primary work in the 1,000
Nuclear Coal power
form of meeting with various solar/winds IPPs and equipment suppliers. 800
We also profile few emerging (unlisted) solar and wind IPPs. As per our Gas Power
600 175
analysis, wind delivers higher RoE, but depends on high feed-in-tariffs (FiT) 87
of > `5/kWh and on availability of high wind zones, which are in scarce 400
supply. Solar on the other hand has immense potential in India while tariff 200
17
bids (sub `5/kWh) are nearing coal fired power costs and within state
GW
-
Discom (SEB) purchasing power. Hence we find solar “eclipsing” wind in 2012 2022 2030 2047
near term investments/capacity addition even though both are viable
Source: MoEF, Niti Ayog
businesses. On the flip side, sharp fall in solar bids since FY15 without
commensurate cost reduction poses risk to RoEs given the prevailing high
cost of debt and weak SEB finances.
Wind, low potential, logistics and sites key hindrances: India’s wind
Solar nearing Coal power tariffs
potential is estimated at 302GW (100Mtr hub height) vs 23GW installed base.
Rs/kWh
Wind power is purchased at FiT of `4-5.5/kWh that are announced by each state 6.6
with added tax benefits of accelerated depreciation (AD) and incentives (GBI), 6.5
contributing 16-18% RoEs (Exhibit 5). However, wind demand is driven by SEBs, 5.8
5.0
based on renewable power obligations (RPO) of each state. Since wind rich 5.1 5.0
4.7
states have fulfilled their near term RPOs, new PPA signing is slow (18-24month 4.6
4.3
gap) with only states of Madhya Pradesh and Andhra Pradesh signing new PPAs. 4.1 4.1 3.6
Hence, raising RPO obligations/ensuring their fulfilment is critical for driving 3.6 4.2
3.1
the demand for renewables, primarily wind due to its lower potential. Moreover, 3.6
2.8
with falling solar tariffs and c.3x higher potential, SEB preference is shifting
FY13 FY14 FY15 FY16 Nov-15
from wind to cheaper solar.
Coal Imported
Coal Domestic
Solar module/power costs have been halving every 2 years since FY08, as Solar PV (lowest bids- yearly Avg)
China’s module manufacturing capacity expanded with module efficiency Wind
improvements (details on Pg21). This combined with competitive bidding for Source: JM Financial
Indian solar tariffs (unlike fixed FiT for Wind) led to aggressive bids, reducing
prices from `9-10/kWh in FY12 to `5.1-5.5/kWh in FY15. However most IPPs we
met, opined that solar tariffs <`5.2/kWh, would have suboptimal RoE. With
Nov’15 bids at `4.6, we fear falling solar tariffs could be at the cost of RoEs.
Who will win? While Wind is the more secure model delivering proven RoEs,
solar is ahead in the race, given a) mass availability of sites due to wide solar
irradiance - even desert/barren land vs only specific sites suitable for wind, b)
falling capital costs, c) day time solar generation matches peak demand vs
Wind’s night power (non-peak), and d) solar is easier to install while Wind’s JM Financial Research is also available
100Mtr tall towers/turbines face immense logistical challenges. Wind remains a on: Bloomberg - JMFR <GO>,
Thomson Publisher & Reuters,
mature model with higher RoEs, but with limited potential (Pg5/6), while Solar
S&P Capital IQ and FactSet.
is the “Future” with full Govt support. However recent trends of falling tariff
bids without commensurate capital costs correction raise concerns on Please see Appendix I at the end of this
sustainable RoEs (Exhibit 3&4). From an equipment side, India’s wind additions report for Important Disclosures and
may double to 4-5GW/year if targets are met, but even then it implies only 50% Disclaimers and Research Analyst
utilisation for India’s 10GW, WTG manufacturing capacity. Certification.
JM Financial Institutional Securities Limited

Chapter 1: Summary of Findings

A) RE Vs Conventional Power
Exhibit 1. RE vs Thermal Power - SWOT

RE Conventional Power
Wind Solar Hydro Coal Domestic Coal Imported Gas
Tariff /kWh (2016 `/
5 to 7
average) kWh 5.9 5.2 3.6 4.1 8.6
Tariff drops after 3-5
Flat for 25 Flat for 25
Tariff Volatility years as asset Volatility depending on Fuel cost
years years
depreciates
RoE % 18-20% 12-14% 15.5% 15.5% 15.5% 15.5%
Variable Cost - % of
% Nil Nil Nil 42% 49% 71%
total tariff
Coal India International

Solar International Gas
Key Dependency Wind Flow Water flow / Rainfall production / Rail Coal Prices /
Irradiance Prices / Forex
connectivity Forex
PLFs % 25% 18-20% 30-35% 80% plus 80% plus 80% plus
` mn /
Capital Cost 55 65 75-95 60 60 45
MW
Strength Green, near Grid Parity; Flat 25 year Tariffs Control on PLF /generation; Cheaper than RE,
No Control on PLF - dependence on nature; Relatively Volatility in Fuel Costs; Capital Cost inflation;
Weakness
costly Fossil Fuel led GHG emissions
Source: JM Financial
Conventional Thermal Power: Coal/Gas based power benefits from high

dependability and control on PLFs, which is helpful in keeping pace with power
demand and planning generation as per demand. Thus power flow can be Solar bids/kWh (`4.6-5) < Coal
calibrated to peak demand/lean demands hours/seasons. bids `5.4
However, these suffer from dependency on fuel availability & cost volatility Compared to Wind tariffs (CERC
along with GHG emissions. Thus tariffs keep rising every year due to inflating 2015) of `4-6/kWh
capital costs and fuel prices.
Thermal Power costs will escalate
in next 25 years Vs Flat
RE – Wind & Solar enjoy zero GHG emissions, while falling capital costs (in Wind/Solar prices.
solar) have made them competitive vis-à-vis conventional thermal power.
Furthermore RE costs are flat over life of the plant (25 years) and enjoy Zero
inflation, as there is no input (fuel) cost. But they have some weaknesses: On a discounted basis, RE is
 No control over PLFs which is dependent on natural factors of wind/water already Cheaper/ at par to
flow or solar irradiance. Hence generation cannot be planned to match thermal power.
power demand. Conversely RE power has to be consumed as and when
generated, and depending on demand the grid power (thermal generation)
has to make up for the balance. This concept is called “load balancing”
(details on Pg8).
 PLFs tend to be lower at 20-35% (vs 80-90% in thermal) due to dependency

on natural factors, hence limiting full capacity utilisation. Thus RE cannot
replace conventional thermal power but only supplement it. Even in
developed nations like Germany where RE generation met >30% of 2014
power demand, the grid power (thermal) continues to make for the balance
and stays as a backup.(Link)
 Thus India plans to accelerate RE capacity addition, while simultaneously

slow pacing thermal power capex. But the latter will remain the backbone
for the grid.

B) Wind Vs Solar
Exhibit 2. Wind Vs Solar

Wind Solar
Tariffs (` / kWh) 5.9 4.6-5.2
Competitive Bidding
Tariff determination Feed in Tariffs - as per Regulator
Tariff Trajectory CAGR FY11-

Growing by 6% CAGR Falling by -17% CAGR
16
18-20%
RoE 12-14%
Specialised products (90 -110 mtr tall wind mills) need expert
Installation & maintenance Relatively easy installation/ maintenance
engineering for installation and maintenance
Wide Solar Irradiance across India, No site

Site preference Highly site Specific - depends on wind flow restriction - Even Desert / Waste land
Relatively easy since equipment is modular

Logistics Difficult for large turbines (>90 Mtr hub height)
High solar irradiance across in India, hence more

Reliability Relatively low since wind velocity /flow is volatile reliable
Due to erratic wind flow & power generation, Transmission grid

requires more load balancing technology (Web Link: Power Ministers Comparatively uniform generation and hence more
Load Balancing
Interview explaining Wind Load Balancing issues see 50min onwards) reliable
Few States have good Wind sites which are mostly utlisied - more
Most States have Solar potential, Cheaper than
Discom preference costly than solar hence lower preference
wind - hence SEB preference is High
Unrestricted Site availability;

Established model;
Day time power matches peak demand;
Strength
Cheaper than wind;
High RoEs based on FiT
Easier to install & maintain
Capital costs escalation + Shortage of sites;
Relatively new model;
Logistical logjams for large equipment;
Weakness Bid prices are very aggressive (key concern);
Expensive vs Solar - dependency on FiTs;
Lower RoEs,
Power generated at night when demand is low
Wind: Is a more established model which has historically proven RoEs, based Wind enjoys better RoEs on
on regulated FiT. However, high FiTs But,
 It has high dependency on windy sites which are in short supply. Moreover,
the taller/bigger wind mills capable of utilising low wind sites have many Suffers Site shortage, logistic
logistical issues (See Pg7/8). challenges and expensive vs
 Wind capital costs have been escalating with time vs consistent fall in solar solar
panel costs (see Wind/Solar Capital Cost detail on Pg11).
Solar has ample sites, falling

Solar: Solar is the “sunrise” industry with immense potential, and no restriction costs and huge potential But,
on sites. India was wide irradiance and even barren/desert land can be used for
solar. Also it has relatively easy installation & low maintenance costs. However, Tariffs on aggressive
it is still an unproven business model given the highly aggressive tariff bids, competitive bidding raise RoE
which raise concerns on sustainable RoEs. concerns

Chapter 2: RoE Profile, Potential & Road-blocks

A) Solar: Current bids of 4.6-5.25 imply RoE band of 6-13% depending
on cost of debt. However, 15-16% RoEs are possible at `5 tariffs,
provided capex cost falls below `55mn/MW (currently `60mn/MW).
Our analysis of solar RoE sensitivities is based on CERC’s FY16 tariff guidelines
and `58mn capex/MW.
Exhibit 3. RoE Sensitivity to Tariff & Interest - @ `58mn capex/MW

Solar Tariff `/kWh
4.5 5 5.25 5.5
7% 8% 12% 14% 16% Recent Solar bids @ `4.6-
5.25/kWh
Interest rate
8% 7% 11% 13% 15%

9% 6% 10% 12% 14%
10% 6% 10% 12% 13% Imply
11% 5% 9% 11% 13%
12% 4% 8% 10% 12% 6% - 13% RoE range depending
on cost of debt
Source: CERC, JM Financial
Exhibit 4. RoE Sensitivity to Capex/MW & Interest - @ `5/kWh Tariff

` mn Capex /MW
15-16% RoEs possible Only If
50 55 60 65
7% 17% 14% 11% 9% Capex cost falls < `55mn/MW,
Interest rate
8% 16% 13% 10% 8%

10% 14% 11% 9% 7% at Tariffs of `5/kWh
11% 13% 10% 8% 6%
12% 12% 10% 7% 5%
Source: CERC, JM Financial,
B) Wind: Feed-in-tariffs imply 16-28% RoEs depending on wind zones.

Wind: 16-28% RoE range based
Exhibit 5. RoE sensitivity to PLFs & Feed-in-Tariffs on Wind Zone & Feed-in-tariffs
PLFs % (avg of States)
(`/kWh) 20% 22% 25% 30% 32%
Wind RoEs highly dependent on
4.3 (Zone-5) 7% 11% 16% 24% 28%
Wind Zone (PLFs) and tariffs
(Avg of States)
Feed-in-Tariffs
4.4 (Zone-4) 8% 11% 17% 26% 29%

4.6 (Zone-3) 9% 13% 19% 28% 31% Peak RoEs in high PLF Wind
5.1 (Zone-2) 13% 17% 23% 33% 37% Zones hence, Wind RoE is very
5.3 (Zone-1) 15% 19% 25% 36% 40% site specific.
Exhibit 6. Wind Tariffs Zone-wise (`/ kWh) / Wind Zone Map of India India has been classified into
Wind *Avg Tariffs ` geographic wind zones based on
Zone Density (W/m2) PLF /kWh
wind speeds.
1 (Upto 200) 20% 5.3
2 (201 - 250) 22% 5.1 High potential in green/yellow
3 (251 - 300) 25% 4.6 regions (Zone3/4/5) with > 25%
4 (301 - 400) 30% 4.4 PLF due to high wind speeds.
5 (Above 400) 32% 4.3
Key wind rich states include –
TN, AP, Raj, Guj, J&K, Karnataka,
Maharashtra & MP
Source: MNRE, SERC, JM Financial; *All tariff’s without AD benefit

Site Availability - Wind shortage vs Solar abundance

Exhibit 7. Wind Map Vs Solar Map
Wind Potential MAP
Solar Potential Map
Scanty
high Wind
sites
Vs
Wide
Solar
Irradiance
Source: NIWE, MNRE, NREL. Links: Wind Map / Solar Map
Above maps depict the Wind (LHS) and Solar (RHS) potential in India. Wind map
has red marked areas having high wind potential while low potential areas are
marked blue - clearly depicts high wind areas are few and far between. Solar
map on the other hand depicts high solar irradiation area in dark yellow which
covers almost 50% of India’s land mass. This clearly shows why wind assets
have to compete for the best sites, while land for Solar is freely available
including barren/desert land. Hence high RoE wind sites are in limited
supply.
Targets, Potential & Roadblocks

Potential: Of India’s 890GW RE potential, Solar captures the lions share at
750GW vs current installed 4GW. India is endowed with abundant solar energy,
which is capable of producing 5,000 trillion kilowatts of clean energy. The
country is blessed with c.300 sunny days/annum, with solar insolation of 4-
7kWh/Sq.mtr/day. Wind potential differs depending on *hub height - 49GW at
50mtr, 100GW at 80mtr and 302GW at 100mtr hub height as compared 24GW
current installed capacity. (*Hub Height” refers to the wind mill/tower height;
wind velocity increases with rise in height).
Exhibit 8. India’s RE Potential; Wind Power potential at 50/80/100 mtr hub height
890GW India's RE Potential MW Wind Potential at 50/80100mtr hub height
800 200
Potential Existing GW Potential
400
600 150 Existing
302GW
300
400 100 @100mtr
9GW
200
200 4GW 24 GW existing 50 103GW
existing existing 100 49GW @80mtr
0 - @50mtr
Solar Wind Power Others 0
30 40 50 60 70 80 90 100 110
Source: MNRE

Wind: Ground realities restrict potential

Of the 300GW maximum potential c.153GW is possible on waste land, while
rest is split between cultivable and forest land which are more difficult to
acquire and execute.
Exhibit 9. Wind Potential at 80/10mtr Hub Height

90.0
80.0 Existing Capacity
70.0
60.0
At 80Mtr
50.0
40.0
30.0 100 Mtr Un-utilised
20.0 Potential (Wasteland)
10.0
0.0
Despite 300GW potential at

100Mtr Hub Height, actual
Source: NIWE, MNRE, JM Financial
potential is lower
Exhibit 10. Wind Potential (GW) at 100mtr hub height – Key States
State (GW) Wasteland Cultivable Total
AP & Telangana 23 21 44
Gujarat 52 32 84
Karnataka 15 40 56
MP 2 8 10
Maharashtra 31 14 45
Rajasthan 15 3 19
TN 11 22 34
Total GW 153 146 302
Source: NIWE, MNRE, JM Financial
Govt targets only 60GW Wind capacity by FY22, despite 300GW Govt targets only 60GW Wind
potential: by FY22
The existing installed base of 24GW implies addition of 36GW in next 6 years Due to:
i.e. 5-6GW /annum. This lower target vs high headline potential is because of:
 Load Balancing constraints
a) Load-balancing constraints: Wind power tends to be generated mainly
at night when power demand is lower. It is also more volatile due to  Logistical Challenges
variance in wind velocity vis-à-vis solar power (uniform incidence across
India). Hence as and when wind generation falls, it creates a gap in  Slow progress on Repowering
power supply to SEBs. This needs to be balanced with alternate power
 Cheaper Solar power
supply from gas or pumped storage plants. Given India’s short supply
of such peaking plants, Power Ministry expects wind capacity to not
grow beyond 60GW, until such peaking power/load balancing issues
are solved. (Web link: Power Ministers Interview explaining Wind Load
Balancing issues see 50min onwards)
b) Logistical Challenges: 100 Mtr tall wind mill towers and their blades
require developed road infrastructure for transportation of such large
equipment. While windy sites tend to be spread out in remote/difficult
to access areas. Thus the logistical challenges restrict the development
of most sites. Although we hear of WTG manufacturers planning
modular towers/blades (transported in pieces and assembled at site),
these are still in development stage and will need to be tested on
ground.

c) Repowering is slow: The best wind sites are already taken, but sub-
optimally utilised by older/shorter wind mills of 50mtr hub height,
leading to inefficiencies. These can potentially be upgraded to higher
capacity machines (known as Repowering). As per IWTMA estimates a
potential 5GW of existing capacity is under utilised with only 12% PLFs
(vs 25% average) at hub-heights of 25-50mtrs (vs 90-100Mtrs today).
These can potentially be replaced with more efficient equipment at
100mtr hub height. However progress on these is slow since these
wind mill owners already enjoy the virtues of fully depreciated assets
with little inclination to invest in further capex.
d) Solar cheaper than Wind: India’s wind market has matured with 24GW
of installed capacity and feed in tariffs of `3.5- 5.9/kWh (across wind
zones/states). So cheaper wind power at FiTs of `3.5-4.5 has a ready
market, but these are restricted to the already utilized high wind sites.
Newer projects will have to bet on less optimal sites requiring higher
FiTs (`5-6), which now face competition from Solar where bid tariffs
have fallen to `4.6-5/kWh.
What this implies for WTG manufacturers?
MoP targets 60GW wind capacity by 2022, implying addition of

5GW/annum vis-à-vis India’s WTG manufacturing capacity of 10GW/annum.
While market size may not grow, WTG companies may still see a short term
spurt due to pent up demand, leading to better capacity ulitisation and
operating leverage. However this respite may be short lived, lasting only for
next 2-3 years.

Chapter 3: RE Cost Structure & Tariffs

Wind: Feed-in-Tariffs assure RoE, But low site availability
Exhibit 11. Wind FiT Region wise (Avg SERC FY15)

Wind FiTs Zone-wise (`/ kWh)
Wind Zones 1 2 3 4 5
PLF Potential 20% PLF 22% PLF 25% PLF 30% PLF 32% PLF
Andhra Pradesh 4.7 4.7 4.7 4.7 4.7 Wind tariffs vary with Wind
Chhattisgarh 6.4 5.8 5.1 4.2 4.0
Gujarat 4.2 4.2 4.2 4.2 4.2
Zones and respective PLF
Haryana 5.8 5.1 4.3 3.9 potential.
J&K 6.2 5.6 4.9 4.1 3.8
Karnataka 4.5 4.5 4.5 4.5 4.5
Maharashtra 5.7 5.0 4.2 3.9
Madhya Pradesh 5.9 5.9 5.9 5.9 5.9 States have different tariffs even
Rajasthan 6.0 5.7 for same wind Zones
Tamil Nadu 3.5 3.5 3.5 3.5 3.5
Uttarakhand 5.5 4.9 4.2 3.4 3.1
Orissa 5.4
Avg FiTs 5.3 5.1 4.6 4.4 4.3 Wind earns high RoEs (16-20%)
Source: MNRE, CERC, JM Financial only in
Exhibit 12. Wind RoEs 15-25% in High Wind Zones / High FiTs a) High Wind PLF areas (Zone
PLFs % 3,4,5) where tariffs are <
(`/kWh) 20% 22% 25% 30% 32% Rs4/kWh
4.3 (Zone-5) 7% 11% 16% 24% 28%
Avg FITs Or
(from 4.4 (Zone-4) 8% 11% 17% 26%
table 13%
4.6 (Zone-3) 9% 19% b) At High FiTs >5/kWh in Low
above)
5.1 (Zone-2) 13% 17% Wind PLF areas (Zone 1,2)
5.3 (Zone-1) 15%
Solar Bid Tariffs halved since FY12; but high RoEs are suspect
Exhibit 13. Solar Tariff Bid trajectory Solar has ample site availability
Rs/kWh
12.0 BUT Tariffs are competitively bid-
Wghtd Avg Bid (Rs/kWh) Min Bid (Rs/kWh)
10.0 9.1 No RoE Guarantee
8.0 6.1
7.9 5.7 Tariffs Halved between FY12 to
6.0
5.5 FY15 on cost reduction &
5.1 4.6
4.0 5.1 competition
Apr 12 Mar13 Jul14 Feb15 May15 Jun15 Jul15 Aug15 Jun15 Nov15
Ktka Ktka Ktka MP AP AP MP Tlgana Punjab AP
Exhibit 14. RoE Sensitivity to Tariff & Interest - @ `58mn capex/MW

Solar Tariff `/kWh
4.5 5 5.25 5.5
However RoEs are expected to be
suppressed at such low tariffs,
7% 8% 12% 14% 16%
8% 7% 11% 13% 15%

Interest rate
Unless capital costs correct

9% 6% 10% 12% 14% further
10% 6% 10% 12% 13%
11% 5% 9% 11% 13%

12% 4% 8% 10% 12%

Wind: Capital Cost

Exhibit 15. Wind Capital Cost `/MW Trend
Capital Cost (Rs mn/MW)

70 60.4
60 Wind Capex Costs rising at
50
40 CAGR of 3% (FY10-15)
30
20
10
0
FY10 FY11 FY12 FY13 FY14 FY15
Source: CERC, Sigma Insights, JM Financial,
Exhibit 16. Wind Capital Cost % 66% of Wind Mill cost from
WTG - Installation and Procurement
7% 8%
Land & Others WTG equipment
7% Civil and General works
0% Ground Mounting Structures
Power Conditioning Units
7%
Evacuation Costs - Cables and Transformers
5% 66% Preliminary and Pre Operative Costs
Solar Module Costs Halved since 2007

Exhibit 17. Solar PV Prices
12
10 Module Price（USD/Wp） System Price（USD/Wp）
10
8.3
8
6 5.8
6 5 Solar PV module prices have
4.2
4 3.2 2.9 fallen
2.2 1.7 1.5  from $6/Wp* in 2007
1.33 1.23
2 1.5
0.75 0.7 0.63 0.56  to $0.56/Wp* in 2015
0
(See Pg20 for details on China PV
2007 2008 2009 2010 2011 2012 2013 2014 2015 costs)
Source: ERI, NDRC: JM Financial
*Wp= Watt peak i.e. peak day time generation of solar PV in watts
Solar Capital costs fell in tandem

Exhibit 18. Capital Cost of Solar Power Plant (` per MW) with PV costs
200 169 Solar Capex Costs are down 20%
144.2 Capital Cost since FY14, But Not due to solar
150 module prices
97.8
100 80 69.1
50
0
FY11 FY12 FY13 FY14 FY15
Source: CERC, Sigma Insights, JM Financial

But PV module costs are flattish since FY14

Exhibit 19. Solar Capex Cost/MW
Rs mn/MW FY14 FY15 FY16
0 Degradation
10 Module prices Preliminary Exp + IDC
41% 53% 54% flattish since
20
FY14 Evacuation cost
30
Civil & Gen Works
40
50 Ground Mount Structure
60 Inverter
70
Land
80
90 Solar Modules
While PV Module prices fell between FY12 to FY14, they are flattish since Solar Capex Costs are down 20%
FY14 (see table below). However overall capital cost/MW still fell by CAGR of since FY14, But Not due to solar
26% from FY14-16 despite flat module prices due to fall in non-module costs: module prices
 Civil, Structures, Evacuation (transmission) and preliminary costs fell by a
CAGR of 27-30% between FY14-16;
 However Land Costs are up 22% (FY14-16 CAGR).
Exhibit 20. Solar Capital Cost (as per CERC orders)

(` Mn/MW) FY13 FY14 FY15 FY16 CAGR
PV Modules NA 32.6 36.6 32.7 0.2%
Land Cost NA 1.7 2.5 2.5 22.0% “Make in India” for Solar impacted
Civil & General Works NA 9.5 6.0 5.0 -27.3%
by WTO Restrictions
Mounting Structures NA 10.5 5.0 5.0 -31.0%
Power Conditioning Unit NA 6.0 5.0 4.5 -13.4%
Evacuation Cost NA 10.5 6.0 5.0 -31.0%
Preliminary Pre-Op Exp
NA 8.0 6.9 4.0 -29.3%
(includes IDC)
Total Capital Cost / MW 144.2 79.7 61.2 58.7 -25.9%
PV prices to remain soft: PV prices are expected to remain soft in the near
term as well given a) Low China demand on over-capacity, and b) US demand
slump on the back of antidumping ruling against Chinese & Taiwanese solar
cells/modules. Wafer prices have also been depressed due to low demand in Cost reduction mainly in Non
China and high inventories. (As per CERC analysis) PV components like:
Solar PV “Make in India” Hit by WTO ban: India had initially banned imports Civil, structures, transmission
of Chinese PV modules to promote manufacturing in India. However a World cost, IDC & other preliminary exp
Trade Organization panel in June’2015 ruled that “India's federal solar program
violates global trade rules by imposing local-purchase requirements for solar Leading to overall cost reduction
cells and modules. This has impacted push towards manufacturing of PV cells of 26% since FY13
in India. Hence solar manufacturing in India is limited to electrical balance of
plant (invertors, transformers etc). Hence most PV cells are imported and
assembled into modules in India.” (News links / WTO Link)

Chapter 4: Key Challenges for RE

RPO target & Implementation: Renewable Purchase Obligation (RPO)
mandates SEBs to purchase a fixed proportion of their energy requirement from
Renewable Energy sources. RPOs for states are mandated by respective State
Regulators (SERCs). However compliance and reporting of RPOs has not been
strictly enforced in the past, with sketchy data available on actual fulfillment of
RPOs.
Exhibit 21. Proposed RE mix in future Energy Generation

19%
20%
16%
17% RE Generation mix targeted at
14% 19% by FY22 (7% in FY15)
15% 12%
10%
10% 7% 7% 8% RE Consumption (RPO)
targeted at 15% by FY22 (5%
5%
in FY15)
0%
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Source: MNRE, JM Financial
It is noteworthy that historic RPOs are only 2-5% of overall power consumption.
However Govt proposes RPO targets to be gradually taken up to 15% by
FY22, which is a tall order. With the target of 15% RPO by 2021-22, demand for
RE would be 284bn kWh by FY22. Thus RE generation which accounts for only
7% of India’s electricity generation in FY15 is expected to grow to 19% by FY22.
While this has started reflecting in higher RPO targets announced by various
SERCs, they still fall short of Govt targets.
Exhibit 22. State wise RPO regulations for major states

STATE RE Technology 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2021-22
Non-Solar 4.8% 4.8% 4.8% 4.8% 4.8% 4.8% -
AP Solar 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% -
Total 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% -
Non-Solar 2.3% 3.5% 3.8% 4.0% 4.0% 4.0%
Bihar Solar 0.3% 0.3% 0.5% 0.8% 1.0% 1.3% 3.0%
Total 0.3% 2.5% 4.0% 4.5% 5.0% 5.3% 7.0%
Non-Solar 5.5% 5.5% 5.5% 6.3% 7.0% 7.8% -
Guj Solar 0.5% 1.0% 1.0% 1.3% 1.5% 1.8% -
Total 6.0% 6.5% 6.5% 7.5% 8.5% 9.5% -
Non-Solar 1.5% 2.0% 3.0% 3.0% -71.5% 2.8% 2.5%
Haryana Solar 0.0% 0.1% 0.1% 0.3% 75.0% 1.0% 3.0%
Total 1.5% 2.1% 3.0% 3.3% 3.5% 3.8% 5.5%
Non-Solar 8.5% 8.5% - - 8.5% 9.2% 12.0%
Ktaka Solar 0.3% 0.3% - - 0.3% 0.3% 1.5%
Total 8.8% 8.8% - - 8.8% 9.5% 13.5%
Non-Solar 2.1% 3.4% 4.7% 6.0% - - -
MP Solar 0.4% 0.6% 0.8% 1.0% - - -
Total 2.5% 4.0% 5.5% 7.0% - - -
Non-Solar 6.8% 7.8% 8.5% 8.5% 8.5% - -
Maha Solar 0.3% 0.3% 0.5% 0.5% 0.5% - -
Total 7.0% 8.0% 9.0% 9.0% 9.0% - -
Non-Solar 5.5% 6.4% 7.0% 7.5% 8.2% 8.9% -
Raj Solar 0.5% 0.8% 1.0% 1.5% 2.0% 2.5% -
Total 6.0% 7.1% 8.0% 9.0% 10.2% 11.4% -
Non-Solar 9.0% - - 9.0% 9.0% - -
TN Solar 0.1% - - 2.0% 2.0% - -
Total 9.0% - - 11.0% 11.0% - -
Non-Solar 4.5% 5.0% - - - - -
UP Solar 0.5% 1.0% - - - - -
Total 5.0% 6.0% - - - - -
Source: SERC, JM Financial

Above table summarizes the RPO obligations as announced by various SERCs. It

clearly depicts that even aggressive target setting has RPO set between 5.5-11%
by various States vis-à-vis 15% threshold as per GoI.
Notably RPO for Solar is affixed at 2-3% of total while the non-solar portion of
4-8% is fungible between hydro, wind and biomass. With many states having
hydro assets or procuring power from Central Govt owned hydro assets, the
scope for wind will be impacted.
Can SEBs afford higher RPO

India has been witnessing a strange demand supply scenario, wherein despite
abundant electricity demand at consumer level, power plants are stranded due
to low capacity utilisation (PLF). This is because the intermediaries i.e. power
distribution companies (SEBs), suffer financial losses and hence low purchasing
power. Thus SEBs engage in power cuts to stay within purchasing power,
driving consumers to resort to diesel generation, while base load plants (power
generators) languish with falling PLFs.
SEB losses
SEBs have historically been loss making due to lack of tariff hikes (given
political pressure) while costs kept escalating. As this compounded, funds
allotted for capex/efficiency improvement got diverted towards working capital
while technical/commercial losses widened. As time progressed these loans
snowballed to gigantic proportions (2.5% of India GDP), while interest cost of
this debt accounts for 50-60% of annual SEB losses (Exhibit 23).
Exhibit 23. Discom Losses Interest Cost as % of Loss
SEB debt has been precariously near default zone, as highlighted by RBI in its
June’2015 note on the `4trn (2.5-3% of India GDP) owed by SEBs to banks,
mostly of it funding losses. Most SEBs in the country have been loss making
with negative net worth, surviving only on implicit debt guarantee from the
State Govt (See our June15 Note: “What? Them Again!“).
However the Govt has breathed new life into this sector through its newly
announced UDAY scheme, targeted at SEB revival (See our Note: Dawn of
'UDAY' – meeting with the Power Minister). This scheme mandates State Govts
taking over 75% of respective SEB debt thus cutting SEB interest costs
immediately and enabling breakeven in the next 2-3 years. Banks on the other
hand will now have explicit State guarantee on this taken over debt.
However State balance sheets will get impacted due this additional debt
burden, while SEB balance sheets, though much lighter now, will still take 2-3
years to break even. Hence SEBs will continue to have more stringent financial
control while concentrating on T&D capex to reduce technical and commercial
losses. While States, now burdened with additional debt, will be unable to dole
out subsidy payments freely to Discoms.
In a nut shell, cash crunch and fiscal prudence on power purchase by SEBs will
continue. Thus SEB preference for cheaper power even for meeting RPO will
continue. Hence we foresee high preference for cheaper solar power by SEBs. A
key example of this can been seen below.
RE tariff bids pressurising FiTs (NTPC vs APERC Case): In a recent APERC

case: NTPC was asked to explore reduction of its solar tariffs, despite being
quoted as per CERC norms at `6/kWh. The State regulator insisted that since
competitively bid solar tariffs have been quoted at less than `5/kWh, NTPC
should review its costing. (News Link)
Other Challenges:
 Land acquisition: Solar and wind power plant installations demand large
amounts of land. While wind requires only pockets of individual spots
specific to wind velocity, solar requires contiguous land. Each has its own
share of issues, as land acquisition is increasingly difficult especially in
agricultural areas. Although wind requires only pockets of land, if the
specific high wind spot cannot be acquired the project becomes unviable.
Alternatively for solar, large pieces of land are required although there is
flexibility on location.
 Evacuation power supply: RE plants are at times situated far away from
each other and electricity generation is also disparate. This leads to power
evacuation (transmission) problems. Furthermore sporadic and uncertain
power generation (especially in wind) requires more investment in grid
balancing and stability (see “load balancing issues” on Pg8).
 Access to site and logistics: Invariably solar or wind power plants are
located in places which are not easily accessible. Developers face major
logistical challenges especially in wind, where size of equipment is large.
 Seasonal nature & low plant load factors: PLF has a direct impact on the
cash flows and DSCR. Seasonality and weather conditions directly impact the
financial viability of the project.
 Risk of Technology Obsolescence: R&D investments are high. Technology

is evolving at a rapid rate. Hence there is risk of technology obsolescence.

Chapter 5: India’s BIG Bang RE Plans

1. Why India’s thrust on RE?
 India’s electricity demand will grow 154% by 2030, as estimated by
NITI AYOG (erstwhile Planning commission), implying need for 300%
increase in power capacity and hence equivalent growth in implied
fossil fuel consumption.
 India’s most abundant fossil fuel (coal) will extinguish in next 50-60
years at current consumption rate. Hence at 300% the consumption
rate in FY30, coal life is much shortened, with the addition of implied
GHG emission worries. (See Pg23: NITI AYOG’s FY22 Scenario in
Annexure-1).
 Solar nearing Grid Parity: Coal based electricity rates (Case1, levelised
tariffs) over a 25 years period have ranged between `4-5/kWh, with
rising trajectory. Solar tariff bids as recent as Nov15 have been at
`4.6/kWh (lowest bid) and `5/kwh (weighted average) which matches
the levelised coal tariffs. Solar wins over thermal power since its
tariffs have Zero escalation in next 25 years, while coal levelised bids
are only indicative and actual costs will move in tandem with fuel cost
escalations.
Exhibit 24. Solar Tariff Bid trajectory – nearing Gird Parity Solar nearing Coal power tariffs
Solar bids/kWh (Rs4.6-5) cheaper

than Coal bids Rs5.4 (Kerala
Case1)
Exhibit 25. Levelised Tariff Bids (Case1) – Coal based thermal Power
5.9
5.2(UP) 5.4 (Kerela) Vs Wind tariffs (CERC 2015) of
5.5
5.0 Rs4-6/kWh
4.6 4.2 (UP)
4.1
3.4 (Guj)
3.7 2.9(Guj)
3.2 2.7 (Mah) 3.2 (Raj) Thermal Power costs will escalate
2.8
3.1(Mah) in next 25 years Vs Flat
2.3
Wind/Solar prices.
Dec/07
Dec/06
Dec/08
Dec/09
Dec/10
Dec/11
Dec/12
Dec/13
Dec/14
Jun/07
Jun/08
Jun/09
Jun/10
Jun/11
Jun/12
Jun/13
Jun/14
On a discounted basis RE is
Source: JM Financial already cheaper/at par with
thermal power.

2. India RE – Potential & Targets
In the recent UN Climate Submission, India vowed to reduce its carbon footprint
substantially by 33-35% below its 2005 levels by 2030 (emission per unit of
GDP). This requires India’s RE capacity to be 22% by 2022 & 40% of total
installed power capacity by 2030.
India has 895 GW of RE potential which includes 750GW of solar, 100GW of

wind (at 80mtr hub height), 20GW of small hydro potential and 25GW of
biomass potential. A recent MNRE release further upgrades Wind potential to
300GW at 100mtr hub height taking India’s RE potential to 1,095GW.
Exhibit 26. India's RE Potential at 890GW

Others
44
Wind Power
103
Solar
749
India 175GW RE Target: The Government of India has set ambitious

targets to reach 175 GW of Renewable Energy by 2022. This target is
divided into solar (100GW), wind (60GW), biomass (10GW) and small
hydro (5GW). Details of the build up to 100GW solar capacity by FY22
are included in the National Solar Mission (see Pg24 - Annexure 2).
Exhibit 27. RE Capacity Growth Planned (GW)

200
3
150 28
100 89
175
50 10 3
8 55
34
0
As on Solar Wind Others Target Solar Wind Others 2022
Mar '15 12th plan Target
2017
Exhibit 28. Solar FY22 Target mix
20GW
40GW
10GW
20GW
Solar Park Unemployed Graduate State/Private Solar Rooftop


Chapter 6: Policy Push
1. Wind Vs Solar Policy Summary
Exhibit 29. RE Policy – Wind Vs Solar

Policy Wind Solar
Tariffs on Competitive Bidding
(No RoE assurance)
Feed in Tariffs: based on CERC /SERC regulations with fixed
PPA Tariffs
RoEs
OR Feed in Tariffs as per CERC
a) PPA with individual States

a) PPA with AD (No GBI*) OR
Sales Options OR b) PPA with Nodal Agency (like NTPC) which will
b) PPA without AD but with GBI* bundle power
10 Year Income Tax Holiday Available Available

Accelerated Depreciation (AD) Available (If Not taking GBI benefit) -80% in 1 year
st
Available
RPO Part of Non-solar 4-8% of consumption by FY22. But

RPO Obligations of States 2-3% of total consumption by FY22
fungible between hydro, wind and biomass.
RECs / CDMs Eligible for RECs, but REC market will take off once RPO obligations are strictly followed
Wheeling Charges Discounted / zero wheeling charges being proposed for RE by Power Ministry
Source: MNRE, JM Financial; * GBI – details below
See Annexure 2 & 3 for more details on India Solar Mission & CERC/SERC
regulations
* GBI (Generation Based Incentives) is an incentive paid over and above the
FiT for every kWh of power generated by wind IPPs. This is applicable only if
power is sold to Discoms under SERC governed PPAs and where AD benefit is
NOT taken. GBI is paid to wind electricity producers at ` 0.50/kWh supplied to
Discoms. The facility is available for a period not less than 4 years and a
maximum period of 10 years with a cap of ` 10mn /MW. The annual
disbursement also capped at `2.5mn/MW during first 4 years. The GBI scheme
is currently applicable for wind projects targeted between April’12 to Mar’17.
2. Proposed “National Renewable Energy Act”
Till date all RE capex in India has been implemented under the Electricity Act of
2003, which was formulated at a time when RE was not in focus. The proposed
RE Act (expected to be passed in 2016) is aimed at elevating renewable energy
to the same level and focus as conventional power and provide level playing
field to players in both sectors. Key features as below:
 Supervisory powers of RE policy in hands of Central Govt: It proposes

that the Centre will be responsible for formulating/implementing RE plans
and policies. It will also monitor funds, set up facilitating bodies (National
RE committee/advisory group) and supervise state level RE policies. Notably
Central Govt will be responsible for RPO compliance and reporting as
opposed to conventional electricity being a concurrent subject.
 States responsible for RE plans: This includes formulation/

implementation of state level RE plans/policies, monitor state green funds,
establish state level nodal agencies, affix RE targets and deployment of
transmission infrastructure.

 Introduces ‘deemed generation’ benefit where power will be considered

sold with charges being payable to the generator even if evacuation is not
possible due to unavailability of the grid. This has been a major pain point
in TN where winds IPPs have suffered revenue loss due to either
unavailability of transmission capacity or inability of the grid to handle
unpredictable wind flow.
 Introduces Renewable Generation Obligation – which will mandate

thermal power IPPS to have 5% of their total installed capacity through
renewable energy. It can result into M&A activity with thermal power plants
acquiring renewable power plants.
 Stringent RPO implementation: Under the RPO principle, SEBs are

mandated to procure a fixed portion of their energy needs from RE.
However implementation in this area has been lax. The Act proposes to
impose stringent penalties for non-achievement of RPO targets.
 Penalties for RPO Non-compliance is proposed at `100,000 per day with a

cap of `10mn.
 Authorities under the act are

a) National Renewable Energy Advisory Group: to suggest amendments
to law/policy matters, keep updated with global developments and
suggest optimal usage of national RE Fund.
b) National Renewable Energy Committee (NREC): to support
implementation of policies, advise GoI, develop regulatory and policy
initiatives.
c) National Renewable Energy Corporation of India to support project
development.
Dollar Denominated Tariffs: (read more)
The MNRE is mulling the introduction of dollar-denominated tariff for solar

power at grid parity. Under dollar-denominated tariff bidding, distribution
utilities quote their price in dollars for 25-year contracts, but the end consumer
will be sold the electricity in rupees.
To make this transaction financially viable the ministry may consider imposing
a ‘hedging cost’ premium. This premium will be put in an escrow account to
cover for the depreciation of the rupee. Various options are being evaluated to
delink the forex risk from the tariff ad to effectively manage the hedging risk.
However, it is in a proposal/brain-storming stage with a final decision awaited.
Exhibit 30. $ denominated tariffs vs others in ` terms

7 6
Rs/kWh
4.5 4.7
5 4
3
Normal $ - Denominated Coal Oil & Gas
Source: Cleantechnica, Media Articles

Offshore Wind Energy:

On October 1st 2015, GoI released the National Offshore Wind Energy Policy for
facilitation of offshore wind farms upto 200 nautical miles off the coast of India.
Suzlon has already started working on a 600 MW offshore wind plant off the
coast in Gujarat. Furthermore, the GoI through FOWIND (Facilitating Offshore
Wind in India) is working towards setting up offshore wind plants across the
states of Gujarat and Tamil Nadu.
FOWIND is an EU supported project led by Global Wind Energy Council (GWEC)

and MNRE. According to Bloomberg, the government has a target of 1GW of
offshore wind energy by 2020. Furthermore, it predicts that by 2018 the cost of
generation for Offshore wind electricity will equal that of Onshore projects.
Offshore potential stands at a meagre 7 GW compared to 369 GW of installed
capacity for wind farms. This is a testament to the operational and financial
complexity of setting up of offshore wind projects.
Typically wind turbine contributes the major proportion (30-50%) in the capital
costs of offshore wind power plant.
Exhibit 31. Cost Breakdown: Wind power plant

Cost Component % share for offshore
Wind Turbine 30-50%
Grid Connection 15-30%
Construction 15-25%
Other capital costs 8-30%
Source: irena.org
National Clean Energy Fund:

The NCEF was established in 2010-11 as an instrument to fund research and
innovative projects in the area of clean energy. Upto 40% of the project cost can
be funded under this scheme in the form of a loan or through VGF. In June
2014, the MNRE projects were also brought under the purview of NCEF. In the
budget of 2014-15, the cess on coal was doubled from ` 50 to ` 100/tonne.

Chapter 7: India Vs China:

Exhibit 32. India Vs China – Wind & Solar
Data as on India Data as on China
Total Capacity (GW) 2015 263.66 2014 1359
Total Renewable (GW) 2015 34.35 2014 444.04
Solar (GW) 2014 3.3 2014 28.2
Wind (GW) 2014 22.6 2014 114.6
Target (GW) 2022 175 2020 700
Target % Mix of RE 2022 18.9 2020 15
Cost of Wind Installation 2014 USD 1,370/kW 2014 USD 1,310/kW
PLF for Solar 2014 21% 2014 22%
FiT for Wind 2015 USD 0.05-0.1/Kwh 2015 USD 0.08-0.10 /kWh
FiT for Solar 2015 USD 0.125/kWh 2015 USD .152/Kwh
Source:MNRE, climateactiontracker.org, IRENA Power Costs 2014, NDRC, JM Financial
China’s overall power capacity is 5x that of India, at 1,359GW in FY14 while its
RE capacity at 444GW is 13x India’s capacity. China’s FY20 target for RE
installed capacity is c.700GW, contributing 15% to its generation capacity mix.
This compares with India’s 175GW FY22 target which is expected to meet 19%
of total power consumption mix of the country. RE costs in both countries are
comparable, although Chinese costs are lower than that of India. According to
IRENA’s 2014 cost report, India and China have the lowest RE costs in the world
beating developed countries by 35-45%. This is contributed by low cost
manufacturing from cheaper raw material/labour.
China World Leader in PV

China is the world leader (64% market share) in solar PV manufacturing capacity
at 28GW as of FY14 end. It produced 26GW of PV modules in 2013 of 40GW
world production. Given its large scale of production and economies of scale,
China has been able to bring down PV costs. However, Chinese PV
manufacturing industry was mainly driven by International market.
The domestic solar PV market in China has picked up only since 2013. China
targets its domestic Solar PV capacity to be 100 GW by 2020, implying annual
additions of 12 GW. Additionally it is eyeing a cumulative capacity built up of
around 1,000 GW in wind energy by 2050.
Exhibit 33. Annual Solar PV addition China vs India PV module production China Vs World
Year China India PV Module production 2013 (MW) Share (%)
2013 9.50 GW 1.2 GW China 25,610 64.05

2014 10.64 GW 1.5 GW World 39,987 100.00
Source: ERI, NDRC
Exhibit 34. Annual PV module production vs. Solar PV market in China

50,000 In FY14 China produced 35GW PV
PV Production (MW) Dem. PV Market (MW) modules
Vs
Its domestic demand of only

0
10.6GW
2007 2008 2009 2010 2011 2012 2013 2014
Source: ERI, NDRC

China module costs & FiTs have fallen in tandem
China’s solar PV module manufacturing costs have fallen drastically over the
years. Accordingly Solar FiT rates have reduced from 4.0yuan/kWh in 2007 to
0.9-1.0 yuan/kWh in 2014. However it is yet to reach grid parity of
0.465yuan/kWh of conventional power tariffs.
Exhibit 35. China FiT trend follows PV Module Costs

Year 2007 2008 2009 2010 2011 2012 2013 2014
Feed-In Tariff of PV
4 Set through Bidding 1.15 1 0.9-1.0 0.9-1.0 Solar FiTs in China have fallen
(Yuan/kWh)
to
12
10 Module Price（USD/Wp） System Price（USD/Wp） 0.9-1 yuan/kWh in 2014
10
8.3
from 4 yuan/kWh in 2007
8
6 5.8
6 5
4.2
4 3.2 2.9 1.7 In line with Module cost
2.2 1.5
2 1.5 1.33 1.2 reduction
0.75 0.7 0.63 0.56
0 from $6/Wp to $0.56/Wp
2007 2008 2009 2010 2011 2012 2013 2014 2015
between FY07 to FY15
Source: ERI, NDRC, JM Financial
China Renewable Policies (China RE Map 2030 / IRENA) :
1. RE Energy Law, 2006: paved the way for setting RE targets and
mandatory connection quotas and FiT systems.
2. Notice 1204 “Make in China“: This law required 70% of China’s wind
turbine installations be manufactured within the country.
3. Action Plan for Air Pollution Prevention and Control, 2013, targets to
reduce coal consumption by 65% by 2017.
4. Mandatory Market Share mandates RE mix as a percentage of total
energy demand within by certain time frames.
5. Tariff based support: Tariffs are set by two approaches -- Government
Guided Pricing (auctions) and FiTs.
6. Financial Subsidies: Various subsidies are doled out to the players in
the solar industry like the Golden Sun Demonstration Programme which
provides 50% of the total cost for on grid systems.

Annexure 1: Niti Ayog’s FY22 Case Scenario:

 Life without RE: NITI AYOG’s (erstwhile Indian Planning Commission) report
on India’s Energy Mix 2030 provides some very interesting insights. The
report analyses a scenario without factoring the current push on RE, wherein
coal remains the dominant source of power generation at least till FY22.
Exhibit 36. Electricity demand in Different Demand Sectors TWh

TWh 2012 2022 2030 2047
Industry 336 494 703 1,366 Electricity demand to grow 300%
Residential 175 480 842 1,840
Commercial 86 142 238 771 by FY30 & 600% by FY47 on FY12
Agriculture 136 245 336 501 base
Total 762 1,432 2,240 4,711
Growth over FY12 base 188% 294% 618%
Source: Niti Ayog, *GDP growth assumed at 7.4% CAGR from 2012-2047
 Financial Impact: At 800mn Indian coal production in FY20 (1bnT target),

250mnT of Coal import requirement is estimated, resulting in an Import bill
of `1trn. But RE growth can potentially cut this bill by 60%.
 Carbon Emissions: Per capita Carbon Emissions would Double to 3.7T in

2030 and Triple to 5.8T/capita by 2047 from 1.7 T/capita in 2012. Hence
by 2030/2047, India would be close to EU/China per capita emissions
(2012 levels). Notably this FY22 Scenario already factors 74GW of Solar &
Wind capacity. Hence 175GW RE target by FY22 is more than warranted.
Exhibit 37. How India ranks in Global CO2 emissions (2012 data)
Country CO2 /yr (bn T) % of Global CO2 per capita (T/person)
Emissions
Japan 1.3 4% 10.4
India 2.0 6% 1.6
EU 3.7 11% 7.4
US 5.2 15% 16.4
China 9.9 29% 7.1
World 34.5 100% 4.9

Annexure 2: India Solar Mission

Government of India introduced the Jawaharlal Nehru National Solar Mission
(JNNSM) initially with a 20GW solar target by FY22
Exhibit 38.
Application Phase I (2010-13) Phase II (2013-17) Phase III (2017-22)
Utility grid power, including roof top 1,100 MW 4,000-10,000 MW 20,000 MW
Off Grid Solar Applications 200MW 1,000MW 2,000MW
Solar Collectors 7 million sqm 15 million sqm 20 million sqm
The Govt in March 2015 revised this solar power target upwards to 100GW
(from 20GW) by FY22 at an estimated cost of `6trn. This is split into
a) 40GW of Rooftop Solar projects – to be developed by individuals atop
homes/buildings and
b) 60GW of large/medium scale ground based solar power generators.
Exhibit 39. 40GW Solar Rooftop Target by FY22 / 60GW Solar Ground Mounted Target by FY22
The break up of the two is as per the below table
Exhibit 40. 60GW Solar Ground Mounted break up

Category I Proposed Category Proposed
Capacity II Capacity
(MW) (MW)
Scheme for Decentralized Generation of Solar Energy Of 60GW ground

10,000
Projects by Unemployed Youths & Farmers mounted Solar
PSUs 10,000
Rooftop 10GW planned by PSUs
40,000 Large Private Sector/IPPs 5,000
Solar
SECI 5,000
5GW by Pvt Sector /IPPs
Under State Policies 20,000
Ongoing programmes incl. past achievements 10,000 20GW by States

Total 40,000 60,000

Exhibit 41. 40GW Solar Rooftop Mounted break up

Rooftop Solar
Ministry Potential (MW)
Ministry of Agriculture 12
Ministry of Chemicals and Fertilizers 401
Ministry of Civil Aviation 620
Ministry of Coal 53
Ministry of Commerce and Industry 2
Ministry of Consumer Affairs, Food and Public Distribution 2,314
Ministry of Culture 2
Ministry of Defence 281
Ministry of Food Processing Industries 22

Ministry of Health and Family Welfare 45
Ministry of Heavy Industries and Public Enterprises 271
Ministry of Housing and Urban Poverty Alleviation 2
Ministry of Human Resource Development 497
Ministry of Micro, Small and Medium Enterprises 4
Ministry of Petroleum and Natural Gas 1,009 Of 40GW roof top solar
Ministry of Railways 1,369
Ministry of Road Transport and Highways 0.4 ~7.2GW is planned atop
Ministry of Shipping 51 various ministries offices
Ministry of Steel 224
Ministry of Textiles 5
Ministry of Tourism 6
Ministry of Youth Affairs and Sports 6
Total 7,196
Competitively Bid Solar Tariffs
The JNNSM scheme included award of solar projects based on competitive

bidding. These were Case1 type bids wherein NTPC through its trading arm
NVVN was responsible to purchase 1GW of solar power from solar IPPs at the
winning bid prices. This power was then bundled with the unallocated power
available from the NTPC coal-based stations and then sell this “bundled” power
to the State Utilities. This mechanism ensured ‘expensive’ solar power when
blended with cheaper conventional power made solar power affordable for SEBs.
An equal amount of power from the unallocated bunch was assigned to the
bundled solar power of an equivalent capacity.
For eg: 1MW of the cheaper power was allocated for 1MW of solar power
Exhibit 42. JNNSM Central Schemes JNNSM State Schemes
JNNSM Scheme through Centre Phase Capacity Allotted (MW)
JNNSM State Target (MW) By
NVVN I 1,054
Tamil Nadu 3,000 2015
RPSSGP I 98
Others I 24 Andhra Pradesh 1,000 2017
Batch-I (PV) with VGF – 750 MW II 750 Rajasthan 2,500 2017

Batch-II (PV) Bundling Mechanism II 3,000 Chhattisgarh 500-1,000 2017
Batch-III (PV) with VGF II 1,000 Karnataka 2,000 2021
Batch-IV (PV) Defense II 1,000
Madhya Pradesh 800 2016
Pilot Projects (CSP) II 100 Uttar Pradesh 1,000 2017
Kerala 500 2017
Punjab 500 2022

Annexure 3: Solar / Wind Regulations

Exhibit 43. Summary of Central / State Policies on Wind & Solar
Technology
Wind Solar
 12th Plan, Generation Based Incentive (GBI)  Jawaharlal Nehru National Solar Mission
extension for Wind Power
 "Scheme for Grid Interactive RE in 12th Plan  Jawaharlal Nehru National Solar Mission-Phase II
(Wind Power Projects)
 15GW Solar bundling through NTPC Ltd. / NVVN under NSM
 Guidelines for Wind Resource Assessment
 3GW State Bundling Scheme for Solar PV
 Solar Parks / Ultra Mega Solar Project Scheme
 1GW CPSU Scheme for Grid-Connected Solar PV

Central
 Rooftop/Small Solar Power Plants Programme
 Solar Cities Programme FY14 & 12th Plan
 Guidelines for Rooftop Solar Programme
 750 MW Solar PV under JNNSM with VGF from National Clean

Energy Fund
 Final Guidelines 750MW Solar PV under batch-I, Phase -II of

JNNSM under VGF
Andhra Pradesh Wind policy,2015 Andhra Pradesh Solar Power Policy- 2015
Andhra Pradesh
Net metering Policy for solar roof-top and small SPV
Chhattisgarh Wind Power Policy Chhattisgarh State Solar Energy Policy 2012
Gujarat Wind Power Policy 2013 Solar Power Policy 2009
Haryana Haryana Solar Power Policy, 2014
Jammu and Kashmir Solar Power Policy for Jammu & Kashmir
Karnataka Karnataka Solar Policy 2014-2021
Guidelines for Wind Power on Government Lands under
Kerala Kerala Solar Energy Policy 2013
CPP through Private Developers
Madhya Pradesh Wind Power Project Policy 2012 Madhya Pradesh Solar Policy 2012
Rajasthan Policy for Promoting Generation of Electricity from Wind Rajasthan Solar Energy Policy 2014
N.A Tamil Nadu Solar Energy Policy 2012
Tamil Nadu
Chief Minister’s Solar Rooftop Capital Incentive Scheme
N.A Solar Power Policy Uttar Pradesh (UP) 2013
Uttar Pradesh
Uttar Pradesh Rooftop Solar Photovoltaic Power Plant Policy, 2014
Source: MNRE, IREDA, JM Financial

Solar CERC Regulations:
Exhibit 44. CERC Regulations: Solar

Solar PV CERC (FY13-14) CERC (FY14-15)
Control period FY 2012-16 (3 yrs) FY15
Tariff (`/kWh) Lev - 8.75 / After AD - 7.87 Lev – 7.72 / After AD – 6.95
Capital Cost (` mn/MW) 80.0 (FY 2013-14) 69.1 (FY 2013-14)
Capacity Utilisation Factor (%) 19% 19%
Useful life (yrs) 25 25
Subsidy and incentive by Central /State Factored in the tariff/kWh derived on levelised
Factored in the tariff/kWh derived on levelised basis
Govt basis
Tariff exclusive of taxes and duties, pass through allowed Tariff exclusive of taxes and duties, pass
Taxes and Duties
on actual basis through allowed on actual basis
Source: CERC
Solar State-wise regulations
Exhibit 45. State Wise regulations: Solar

Control
STATE Capacity Useful
Period Capital Cost Subsidy/incentive by Taxes and
(with Source Tariff (`/kWh) Utilisation life
(latest (` mn/MW) Central/State Govt Duties
Links) Factor (%) (yrs)
regulations)
Andhra 17.91 (Without AD),
FY11 & FY12 25
Pradesh 14.95
For MW Scale Plants:
FY15: 8.97 (Without AD), 18% with 1%
Jan, 2012 to
Gujarat 8.03 (With AD) 100 annual 25
March 2015
degradation
70.5 (SPV-C)
7.45 (SPV Crystalline)
Haryana FY15 19% 25
7.2 (SPV Thin film)
68.1 (SPV-TF)
8.40 (SPV)
Karnataka FY14 - FY18 83.0 19% 25
19% with 1%
102.5 ( >2MW),
Madhya Aug12 – 10.44 ( >2 MW), annual deration
105.0 (upto 2 25
Pradesh Mar14 10.70 (upto 2 MW) from 3rd yr
MW)
onwards
7.95 (without AD) Factored in the Tariff ex taxes,

Maharashtra 6.79(with AD) 69.1) 19% 25 tariff/kWh derived on pass through on
levelised basis actual basis
FY15
20% with Any subsidy, AD or GBI, Tax not a pass

7.50 (Without AD)
Rajasthan 67.3 deration of 0.5% 25 to be passed on to through; ROE on
FY15 6.63 (with AD)
PA after 2nd year utilities. pre-tax basis
7.01(Without AD) AD benefit shall be
Tamil Nadu FY14 70.0 19% 25
6.28 (With AD) factored in the tariff
Exempt from all

Uttar
FY15-09 7.06 taxes by
Pradesh
State/Centre.
Source: MNRE, IREDA,

Wind CERC regulations:
Exhibit 46. CERC Regulations: Wind

Wind CERC (FY13-14) CERC (FY14-15)
Control period FY 2012-16 (3 yrs) FY15
<200 = 6.27, 5.78(with A.D) <200 = 6.34, 6.00(with A.D)
200-250 = 5.70, 5.25(with A.D) 200-250 = 5.76, 5.45(with A.D)
Tariff (`/kWh) 250-300 = 5.02, 4.63(with A.D) 250-300 = 5.07, 4.79(with A.D)
300-400 = 4.18, 3.85(with A.D) 300-400 = 4.23, 4.005(with A.D)
>400 = 3.92 , 3.61(with A.D) >400 = 3.96 , 3.74(with A.D)
Capital Cost (` mn/MW) 595.99 (FY 2013-14) 60.39 (FY 2013-14)
Wind power density CUF Wind power density CUF
<200 = 20% <200 = 20%
200-250 = 22% 200-250 = 22%
Capacity Utilisation Factor (%)
250-300 = 25% 250-300 = 25%
300-400 = 30% 300-400 = 30%
>400 = 32% >400 = 32%
Useful life (yrs) 25 25
Shall be factored in the tariff on per unit benefit Shall be factored in the tariff on per unit
Subsidy and incentive by Central /State Govt
derived on levellised basis benefit derived on levellised basis
Tariff exclusive of taxes and duties, pass through Tariff exclusive of taxes and duties, pass
Taxes and Duties
allowed on actual basis through allowed on actual basis
1.25% per month if payment delayed beyond
Late Payment surcharge 1.25% per month if payment delayed beyond 60 days
60 days
Source: CERC
Wind State-wise regulations
Exhibit 47. State wise regulations: Wind

Control
STATE Useful
Period Capital Cost Subsidy and Taxes and
with Source Tariff (`/kWh) CUF (%) life
(latest (` mn/MW) incentive Duties
Links (yrs)
regulations)
Nov 2012 to
Andhra Pradesh 4.70 57.5 23% 25 N.A N.A
Mar 2015
Aug 2012 to ` 4.15/kWh; AD benefit =
Gujarat 60.6 25% 25 Factors AD N.A
Mar 2016 ` 0.37/kWh
200-250 W/m2: 5.81 200-250 W/m2: 20%
250-300 W/m2: 5.06 250-300 W/m2: 23%
FY15 considered in
Haryana 300-400 W/m2: 4.31 56.2 300-400 W/m2: 27% 25 Pass through
tariff
>400 W/m2: 3.88 >400 W/m2: 30%
Oct13-Oct18 considered in
Karnataka 4.5 60.0 26% 25 Pass through
tariff
M.P. Upto FY16 5.92 59.6 20% 25 NA Pass through
Wind density/Tariff
200-250 =22%
200-250 / 5.70 (AD 0.36)
250-300 =25% Factors AD but Pass through on
Maharashtra FY15 250-300 /5.01 (AD 0.32) 58.5 25
300-400 =30% NO GBI actual basis
300-400 / 4.18 (AD 0.27)
>400 =32%
>400 / 3.92 (AD 0.25)
5.64 (without AD); 5.31

(with AD) in Jaisalmer, 21% (Jodhpur, Any subsidy, AD
Jodhpur & Barmer Jaisalmer, Barmer) ; or GBI, to be
Rajasthan 56.5 25 Not Pass Through
FY14-19 passed on to
Others: 5.93 (No AD); 20% Others utilities.
5.57 (with AD)
Tamil Nadu Aug 2012 3.51 `/kWh 57.5 27.15% 20

onwards
Oct 2009 – 3.21 escalating @5.72% NA NA NA NA

Uttar Pradesh Mar 2014 NA
p.a.
Source: MNRE, IREDA

Annexure 4: Global RE perspective in charts

Exhibit 48. Share of Renewable Energy in 2014 (Estimated)
Renewable
Energy
23%
Fossil Fuels and RE accounted for only 23% of

Nuclear Global installed capacity in FY14
77%
Source: Renewables 2015 Global Status Report, REN21
Exhibit 49. Installed Capacity of Renewables 2014

Of this Hydro formed the largest
1200 Hydropower
piece with 1,000GW;
1,055 GW
1000
Wind followed with 370 GW &
800
600 Wind power Solar 3rd at 181.4 GW
Solar Power 370 GW
400 Others
181.4 GW
200 106.3 GW
0
Others Solar Power Wind power Hydropower
Source: Renewables 2015 Global Status Report, REN21
Exhibit 50. World RE* Capacities (GW)

800 657
600
400 India was ranked 7th globally in RE
153 105 86 installed capacity in FY14
200 32 32 31 31
0
China US Germany Italy Spain Japan India World
Total
* Excludes hydropower Renewables
Source: 2015 Global Status Report, REN21, JM Financial

Exhibit 51. World Investments (Bn USD)

300
279 270 RE investments globally on an
250 256 upswing since FY05
237 232
200
182 179
150 154 But Developed Nations’
112 investments stagnated post 2011,
100
73
50 45 while
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Developing Nations’ investments
jumped to almost match
Developed Countries Developing Countries World Total Developed Nations in FY14
Source: JM Financial, Renewables 2015 Global Status Report, REN21
Exhibit 52. Re Investment (US$ Bn)

15 12.7
10
10 9 7.4
7.4
6.3 5.6 6.4
4.9 4.3
5
0 World RE Investments expected to

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E be US$10bn in 2015 (Bloomberg
estimates)
Source: JM Financial, Renewables 2015 Global Status Report, REN21, Bloomberg New Energy Finance
Exhibit 53. Global Outlook for Wind

400
Cumulative Added 36
45
40
200 39
38 369.6
27 Global wind capacity estimated to
20
8 11 15 reach 666GW by 2019,
0 48
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Implying
Source: JM Financial, GWEC, Global Wind Report, Annual Market Update 2014
>55 GW additions p.a. from 2015.

Exhibit 54. Global Projections
1000
Cumulative Added
66.5
62.5
500 55.5 58.5
53.5
666.1
369.6
0
2014 2015F 2016F 2017F 2018F 2019F
Source: JM Financial, GWEC, Global Wind Report, Annual Market Update 2014

Exhibit 55. World PV Market

2013（GW） 2014（GW） YoY Growth World Solar PV market at 43GW in
60 100% FY14 has grown 11% from FY13
76%
36% 50%
33%
40 25% 7% 11%
22%
12% 23% 0%
20 -36%
-53% -50%
0 -100%
China Jap US UK Ger Ind Ita Fra Kor Other Total
Source: JM Financial, ERI, NDRC
Exhibit 56. Global Solar Capacity (GW)

600 FY14 Global Solar capacity was
500 177GW,
400
363
300 540 and
200
38
100 177 30 30 Projected to grow at 25% CAGR
2 7 7 17 between FY14 to FY19
0 0 1.4 1.9
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2019
Total Total
Source: JM Financial, REN21 Global Status Report 2015, Solar Power Europe

Annexure 5: Solar Technology - How it Works?

Solar Energy can be used mainly in three ways
 Direct conversion of sunlight into electricity through photo-voltaic (PV)
cells. Crystalline Silicon (c-Si) is the oldest technology for solar PV
modules. C-Si modules are subdivided into i) single crystalline (SC-Si) and
ii) multi-crystalline (mc-Si). This is the most widely used technology
today.
 Thin Film is a newer technology in comparison to the crystalline silicon. It

is subdivided into i) amorphous (a-Si) and micro morph silicon (a-Si/µc-Si),
ii) Cadmium-Telluride (CdTe), and iii) Copper-Indium-Diselenide (CIS) and
iv) Copper-Indium-Gallium-Diselenide (CIGS). These have entered the
market only through niche applications till date.
 Concentrating solar power (CSP) use an optical concentrator system

which focuses solar radiation onto a small high-efficiency cell. CSP
technology has been tested in pilot applications till date.
How it works?
Solar PV: works by allowing photons (light particles) to knock electrons free
from atoms, generating a flow of electricity. Solar panels comprise many,
smaller units called photovoltaic cells. Each photovoltaic cell is a sandwich of 2
slices of semi-conducting material (silicon). To work, photovoltaic cells need to
establish an electric field. Much like a magnetic field, which occurs due to
opposite poles, an electric field occurs when opposite charges are separated. To
get this field, manufacturers seed silicon with other materials, giving each slice
of the sandwich a positive or negative electrical charge. They seed phosphorous
into the top layer, which adds extra electrons (negative charge) to that layer.
Meanwhile, the bottom layer gets a dose of boron, results in fewer electrons
(positive charge). This all adds up to an electric field at the junction between the
silicon layers. Thus, when a photon of sunlight knocks an electron free, the
electric field will push that electron out of the silicon junction. Metal conductive
plates on the sides of the cell collect the electrons and transfer them to wires.
At that point, the electrons can flow like any other source of electricity. (Source)
PV Module Components: (Source)
 Glass/PV back-sheet Layer - is the rigid outer layer that protects PV cells/
electronics from the environment while allowing light energy to pass
through. The back-sheet is made of laminates providing insulation/
weather-ability to the back of the solar panel.
 EVA layer - is a thermoplastic containing ethylene vinyl acetate, used to
encapsulate the photovoltaic cells.
 Photovoltaic Cells - or solar cells is the device that converts light energy into
electricity.
 Bus Ribbons - The bus ribbons act as an external current path and carry the
electric power generated by the PV cells.
 EPE Insulation - The EPE insulation is a laminate similar to the PV back sheet.
Other Components Include

- Solar Mounting Structure on which the panel are mounted.
- Solar Inverters convert solar power generated in DC into AC which can be
fed into the grid (Read More).
- Trackers are devices that orient the solar panels toward the sun as per
movement of the sun during the day.

Exhibit 57. Solar Photovoltaic (solar PV) Technology

Types of solar cells
Crystalline (Uses silicon wafers which is a light Thin Film (less expensive substitutes for crystalline
absorbing material) technology)
Cadmiu Copper
Copper
m Indium
amorphous Indium
Mono crystalline Poly crystalline Tellurid Gallium
silicon (a-Si) Diselenide
e Diselenide
(CIS)
(CdTe) (CIGS)
Technology
Mono-crystalline
technology uses thin A polycrystalline cell is
The material used is deposited in thin layers a
wafers sliced from a cut from a multifaceted
stainless steel sheet, glass or some flexible substrate
single, pure crystal silicon crystal which
silicon ingot
Conversion
Efficiency 14-18% 13-16% 6-9% 9-11% 10-12% 10-12%
(CUF)
Source: EAI
Capital cost breakup for Solar PV power plant:
Photovoltaic modules are the major cost contributors to the capital cost of Solar
PV power plant. Around 55% of the total costs come from purchase of
photovoltaic modules.
Exhibit 58. Cost Breakdown: Solar PV power plant

Cost component % share in the total cost
PV modules 55%
Grid Connection 23%
Construction 19%
Other capital costs 4%
Source: GERC
How it works?
Solar thermal Technology: Solar energy is used as heat source for heating
purposes for direct use and to generate steam for generating electricity through
turbines. Different technologies for solar thermal power plants making use of
concentrating solar energy systems area: a) Parabolic Trough System, b) Power
Tower System, and c) Parabolic dish system.
Exhibit 59. Solar Thermal Technology

Solar Thermal
These systems convert solar radiations into thermal energy which is then used to produce
electricity
Parabolic Trough Power Tower
Parabolic dish system
System System
Heliostats which
A linear Parabolic A parabolic dish
track the movement
Technology concentrator having a shaped mirror is used
of sun are used to
mirrored surface used to concentrate
orient mirrors to
to concentrate radiations onto a
target sunlight onto
radiations on absorber receiver at a focal
target mounted on
pipe. point
a tower
Conversion Efficiency
25-28% 55% 25-28%
(CUF)
Source: EAI

Annexure 6: Wind Technology - How it Works?

Wind Technology (Source – Energy.Gov / Read More)
Wind turbines use wind to make electricity. The wind turns the blades, which
spin a shaft that connects to a generator and makes electricity. Wind is a form
of solar energy and is a result of the uneven heating of the atmosphere by the
sun, the irregularities of the earth's surface, and the rotation of the earth.
Wind power plants can be classified as stall regulated and pitch regulated based
on the type of turbine it uses.
Exhibit 60. Wind Technology

Wind Power Plants
Stall Regulated Pitch Regulated
Turbines have adjustable rotor blades that can change angle depending on
Technology Turbines have rotor blades fixed
wind speed
Hub Heights <200m 200-250m 250-300m 300-400m >400m
Conversion Efficiency 20% 22% 25% 30% 32%
Sources: CERC & irena.org

7 January 2016
India | Power | Sector Update

Price: `141
BUY
NTPC 12M Target: `140
Subhadip Mitra
10GW Solar Plans Tel: (91 22) 66303128
NTPC is the largest power utility in India, owning & operating 40GW on
assured regulated RoE based norms. It accounts for 16% of India’s total
Key Data
installed capacity and 25% of all India generation as on 31.03.2015. However Market cap (bn) ` 1172.9 / US$ 17.6
its share in RE has been limited in the past. However NTPC plans to correct Shares in issue (mn) 8,245.5
this with a target of 10GW RE capacity addition by FY22. Diluted share (mn) 8,245.5
3-mon avg daily val (mn) ` 585.0/US$ 8.8
 RE Milestones achieved so far: Current RE capacity stands at 910MW, 52-week range ` 164.8/107.1
including 800MW Koldam hydro project and a 110 MW Solar PV capacity. Sensex/Nifty 25,580/7,785
Additionally 250MW solar PV is under construction, and another 510MW `/US$ 66.6
under bidding process. In hydro another 819 MW is under construction. Daily Performance
 Solar Endeavour: 250MW of solar PV is under construction at Anantpur in AP NTPC

180 10%
with `43.5bn capex planned in FY17 for additional 1,260MW. It plans to 160 5%
0%
140
eventually ramp up to 10GW solar capacity by FY22. In FY17, NTPC also plans 120
-5%
-10%
to bundle its own solar power with cheap thermal generation from its 100 -15%
-20%
80
depreciated 2GW Singrauli plant, at an economical blended tariff of 60 -25%
-30%
40
`3.12/kWh. However these PPAs for bundled power are yet to signed with 20
-35%
-40%
SEBs. 0 -45%
Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15
 Solar Bundling: NTPC’s trading arm NVVN is the nodal agency for purchasing
NTPC Relative to Sensex (RHS)
solar power from (non-NTPC) IPPs and bundling it with cheaper thermal power
% 1M 3M 12M
(from NTPC plants) for sale to SEBs, thus reducing the weighted average cost
Absolute 9.1 11.4 -1.2
of power to SEBs. Under NSM NTPC has the responsibility of bundling 15GW Relative 9.3 15.9 6.9
solar capacity over a the new few years.
* To the BSE Sensex
Shareholding Pattern (%)

Investment Rationale S ep - 15 S ep - 14
 High earning visibility: Although growth triggers are back ended (FY17-18), Promoters 75.0 75.0
NTPC has high earnings visibility since it earns minimum 15.5% returns on FII 9.2 10.4
equity invested in power business under CERC norms. The FY14/15 actual DII 13.5 11.8
Public / Others 2.3 2.8
earnings were at 16.5-17% on regulated equity due to incentive earnings.
Most utilities are currently suffering from low capacity utilization (PLF) due to
low power demand, NTPC will continue to earn minimum 15.5% RoE as long Valuation Sensitivity to TP
as it plants are available to produce power. CMP implies only 13% core RoE vs Core RoE
minimum 15.5% mandated RoE as per CERC norms. 16.0% 18.0% 19.0% 20.0%
Growth (g)
 Large Capex pipeline to peak by FY17-18: NTPC currently has 23.5GW under 4.0% 125 138 145 151
construction of which it plans to capitalise 15.5GW (35% of existing 40GW 5.0% 127 142 149 156
base) between FY16 to FY18. Once executed this can potentially add 75% to
6.0% 130 147 155 163
regulated equity by FY19. Solar capex is an additional 10GW targeted in next
7 years of which 250MW in AP has been ordered. Management has been 7.0% 134 153 163 172
guiding for a revival in RoEs as company adjusts operations to more stringent 8.0% 140 162 173 185
norms to earn efficiency gains. If capex jumps back to 4-5GW annually, EPS Source: Company, JM Research
CAGR for FY17-22 can be 8% from 5% under current estimates of 2GW.
JM Financial Research is also available
 Maintain BUY: We find the stock attractive at CMP, trading at c.1x FY18 BV. on: Bloomberg - JMFR <GO>,
We factor core RoEs at 17% and 3GW annual capacity addition in FY16-19.
S&P Capital IQ and FactSet
However, the 6MFY16 core-RoEs have been closer to 19%. Hence at higher
RoEs coupled with FY18-19 capacity spike on bunched capitalisation upside Please see Appendix I at the end of this
can be higher. report for Important Disclosures and
Disclaimers and Research Analyst
Certification.

Financial Tables (Standalone)

Profit & Loss Statement (` mn) Balance Sheet (` mn)
Y / E Ma rc h FY 14 A FY 15 A FY 16 E FY 17 E FY 18 E Y / E Ma rc h FY 14 A FY 15 A FY 16 E FY 17 E FY 18 E
Ne t sa le s (Ne t of e xc ise ) 7 , 16 , 0 2 6 7,26,378 8,05,074 9,26,932 11, 4 0 , 14 6 Share capital 82,455 82,455 82,455 82,455 82,455
Growth (%) 11.3 1.4 10.8 15.1 23.0 Other capital 0 0 0 0 0
Other operational income 0 0 0 0 0 Reserves and surplus 7,75,699 7,34,119 7,98,080 8,70,344 9,67,105
Raw material (or COGS) 4,58,297 4,88,452 5,35,311 6,21,273 7,67,056 Networth 8,58,153 8,16,574 8,80,535 9,52,799 10,49,560
Personnel cost 38,680 36,856 44,308 52,408 67,121 Total loans 6,87,801 7,99,265 9,08,089 9,96,748 10,23,943
Other expenses (or SG&A) 45,567 46,455 49,872 57,475 71,720 Minority interest 0 0 0 0 0
EBITDA 1, 7 3 , 4 8 2 1, 5 4 , 6 15 1, 7 5 , 5 8 4 1, 9 5 , 7 7 6 2,34,249 S ourc e s of funds 15 , 4 5 , 9 5 4 16 , 15 , 8 3 8 17 , 8 8 , 6 2 4 19 , 4 9 , 5 4 7 20,73,503
EBITDA (%) 24.2 21.3 21.8 21.1 20.5 Intangible assets 0 0 0 0 0
Growth (%) 10.1 - 10.9 13.6 11.5 19.7 Fixed assets 11,68,575 12,83,237 13,75,589 15,83,382 20,07,279
Other non- op. income 31,052 27,405 26,021 27,893 36,969 Less: Depn. and amort. 4,47,447 4,94,746 5,47,397 6,08,002 6,84,832
Depreciation and amort. 41,422 49,117 52,651 60,605 76,830 Net block 7,21,128 7,88,491 8,28,192 9,75,380 13,22,448
EBIT 1,63,112 1,32,903 1,48,954 1,63,064 1,94,388 Capital WIP 4,48,867 5,64,935 7,07,527 6,79,267 2,97,759
Add: Net interest income - 24,066 - 27,436 - 31,238 - 34,336 - 35,286 Investments 97,579 90,321 73,145 55,969 38,793
Pre tax profit 1,39,047 1,05,467 1,17,716 1,28,728 1,59,103 Def tax assets/- liability - 10,516 - 9,791 - 9,791 - 9,791 - 9,791
Taxes 29,299 2,558 28,967 31,677 39,151 Current assets 5,27,968 5,27,100 5,40,480 6,10,128 8,03,468
Add: Extraordinary items 0 0 0 0 0 Inventories 53,734 74,530 82,605 95,108 1,16,985
Less: Minority interest 0 0 0 0 0 Sundry debtors 52,201 76,044 84,282 97,040 1,19,361
Reported net profit 1,09,747 1,02,909 88,749 97,052 1,19,952 Cash & bank balances 1,53,114 1,28,788 1,25,854 1,70,242 3,19,384
Adjuste d ne t profit 1, 0 5 , 6 9 4 82,428 88,749 97,052 1, 19 , 9 5 2 Other current assets 1,09,987 68,384 68,384 68,384 68,384
Margin (%) 14.8 11.3 11.0 10.5 10.5 Loans & advances 1,58,933 1,79,355 1,79,355 1,79,355 1,79,355
Diluted share cap. (mn) 8,245 8,245 8,245 8,245 8,245 Current liabilities & prov. 2,39,072 3,45,218 3,50,929 3,61,406 3,79,174
Dilute d EP S ( ` ) 12 . 8 10 . 0 10 . 8 11. 8 14 . 5 Current liabilities 1,57,252 2,56,474 2,62,185 2,72,662 2,90,429
Growth (%) 10.6 - 22.0 7.7 9.4 23.6 Provisions and others 81,820 88,745 88,745 88,745 88,745
Total Dividend + Tax 55,459 24,788 24,788 24,788 23,190 Net current assets 2,88,896 1,81,882 1,89,551 2,48,722 4,24,294
Source: Company, JM Financial Others (net) 0 0 0 0 0
Applic a tion of funds 15 , 4 5 , 9 5 4 16 , 15 , 8 3 8 17 , 8 8 , 6 2 4 19 , 4 9 , 5 4 7 20,73,503
Source: Company, JM Financial
Cash flow statement (` mn) Key Ratios

Y / E Ma rc h FY 14 A FY 15 A FY 16 E FY 17 E FY 18 E Y / E Ma rc h FY 14 A FY 15 A FY 16 E FY 17 E FY 18 E
Reported net profit 1,09,747 1,02,909 88,749 97,052 1,19,952 BV/Share (` ) 104.1 99.0 106.8 115.6 127.3
Depreciation and amort. 50,371 47,299 52,651 60,605 76,830 ROIC (%) 9.5 7.6 7.1 7.1 8.3
- Inc/dec in working cap. 18,754 54,582 - 10,602 - 14,784 - 26,430 ROE (%) 12.7 9.8 10.5 10.6 12.0
Others 0 0 0 0 0 Net Debt/equity ratio (x) 0.5 0.7 0.8 0.8 0.6
Ca sh from ope ra tions (a ) 1, 7 8 , 8 7 3 2,04,789 1, 3 0 , 7 9 8 1, 4 2 , 8 7 3 1, 7 0 , 3 5 1 V a lua tion ra tios (x)
- Inc/dec in investments 10,022 7,257 17,176 17,176 17,176 PER 11.1 14.2 13.2 12.1 9.8
Capex - 2,19,911 - 2,30,729 - 2,34,944 - 1,79,533 - 42,390 PBV 1.4 1.4 1.3 1.2 1.1
Others - 35,668 28,107 0 0 0 EV/EBITDA 9.3 11.3 10.7 9.9 7.8
Ca sh flow from inv. (b) - 2,45,557 - 1, 9 5 , 3 6 5 - 2 , 17 , 7 6 8 - 1, 6 2 , 3 5 7 - 2 5 , 2 14 EV/Sales 2.2 2.4 2.3 2.1 1.6
Inc/- dec in capital - 10 - 1,19,701 0 0 0 Turnove r ra tios (no. )
Dividend+Tax thereon - 55,459 - 24,788 - 24,788 - 24,788 - 23,190 Debtor days 27 38 38 38 38
Inc/- dec in loans 93,899 1,11,464 1,08,824 88,659 27,195 Inventory days 27 37 37 37 37
Others 12,691 - 725 0 0 0 Creditor days 125 192 179 160 138
Fina nc ia l c a sh flow ( c ) 5 1, 12 1 - 33,749 84,037 63,871 4,005 Source: Company, JM Financial
Inc/- dec in cash (a+b+c) - 15,563 - 24,326 - 2,934 44,387 1,49,142
Opening cash balance 1,68,677 1,53,114 1,28,788 1,25,854 1,70,242
Closing cash balance 1,53,114 1,28,788 1,25,854 1,70,242 3,19,384
Source: Company, JM Financial

7 January 2016
India | Power | Sector Update Unlisted
ReNew Power
Subhadip Mitra
E 1.
Doubling RE capacities; shift from Wind to Solar Tel: (91 22) 66303128
ReNew Power Ventures (ReNew), set up by Mr. Sumant Sinha, is an

Independent Power Producer (IPP) company that commenced its India
operations in 2011. Presently, it owns and operates c.700 MW of wind/solar
projects across states spanning Maharashtra, Rajasthan, Karnataka, MP and
Gujarat. Moreover, it has a pipeline of 600-700MW solar projects in MP, AP,
Telangana & Karnataka. While they have already executed 2,300kWp rooftop
Equity Investment in ReNew Power
grid-connected solar PV projects with another 3MW in the pipeline at Delhi,
Karnataka and Andhra Pradesh. ReNew has also successfully commissioned Date Investor (US$ Mn)
1st of its kind 120m hub height lattice/tubular tower combination wind Sep-11 Goldman Sachs 250
project as part of 100.8 MW wind farm in Rajasthan (c.12.6 MW Jun-13 Goldman Sachs 135
commissioned). As a wholesale power generator, ReNew sells output to SEBs Asian Development
Jul-14 50
& large industrial companies. Bank
Global Environment
Jul-14 20
 Backed by marquee investors: The business has attracted interest from Fund
globally renowned investors like Goldman Sachs, Abu Dhabi Investment Jul-14 Goldman Sachs 70
Authority, Asian Development Bank and Global Environment Fund. With total Oct-15
Abhu Dhabi
200
Investment Authority
equity funding of $790 million, this is one of the largest investments in
India’s renewable energy sector. Recently, it also launched India’s 1 st ever Oct-15 Goldman Sachs 50
Global Environment
infrastructure bond issuance credit enhanced by IIFCL to raise `4.5bn for its Oct-15 15
Fund
wind energy subsidiary replacing existing debt.
Source: Company Data
 Benefits from Strategic International Alliance: ReNew has entered into an
agreement with China based Hareon Solar, one of the largest crystallized
silicon solar cell producers, to develop 72 MW solar power project in Andhra No. of Capacity
State
Projects (MW)
Pradesh. The generated power will be sold under 25-year PPA to Southern
Wind 628
Distribution Co. of Andhra Pradesh.
Gujarat 1 25
They have also set up JV with South Korea based Hanwha Q CELLS, flagship Karnataka 2 68
company of Hanwha Group, to develop two solar projects, having combined Rajasthan 5 161
capacity of 148.8MWp, in Telangana. Hanwha Q CELLS will supply & install Maharashtra 9 359
German engineered solar modules to these projects, scheduled to be MP 1 14
completed by 2016. Power generated will be sold under PPA to Southern Solar 50
Power Distribution Co. of Telangana state. MP 1 50
 Robust Project Pipeline: Within a short span of time, ReNew has built strong
solar projects pipeline with combined capacity of 700 MWp across India. 4
key projects are currently under development. The company seeks to invest in
capacity expansion, adding 600-700 MWp over next 3-5 years.
Solar PV Project under Development

State Capacity (MWp)
Madhya Pradesh 57.6
Andhra Pradesh 72.0
Telangana 148.8
JM Financial Research is also available
Karnataka 60.0
on: Bloomberg - JMFR <GO>,
Total 338.4 Thomson Publisher & Reuters,
Please see Appendix I at the end of this

report for Important Disclosures and
Certification.

7 January 2016
Hero Future Energies
From 260MW to 2GW in Wind by FY20 Subhadip Mitra

Tel: (91 22) 66303128
Hero Future Energies (HFE), part of the Hero Group, is an Independent Power
Producer established in 2012 with focus on futuristic & clean energy. In a
very short span of time, HFE has established presence in 10 Indian states
with a high quality operating asset base of ~260 MW in wind, solar PV (grid-
connected) & rooftop plants. The company has a pipeline of ~1.1GW in Wind
by FY19 and plans to secure >500 MW solar projects under state/central
bidding by FY16. In rooftop solar, it plans to implement 100–200 MW by
FY19. It targets a portfolio of 2GW by FY20.
 About Hero Group: The Hero Group is a US$5.6 billion and one of the most
respected industrial conglomerates of India, since 1950s. The group has
established presence in the automotive manufacturing, services businesses
and Auto-Ancillary businesses. The group further diversified into renewable
energy, education and electronics. Group companies include Hero MotoCorp
Ltd., Hero Corporate Service Ltd, Rockman Industries Ltd., Hero Fin Corp Ltd.
 HFE has 3 divisions: for a) wind b) utility-scale solar projects, and c)

designing and executing rooftop projects. The company is looking to adopt
an aggressive expansion strategy for its utility-scale plants division to raise
commissioned capacity by 4x from c.30MW to 120 MW. Furthermore,
company plans to focus on solar-wind hybrid technology.
Year of
Location Capacity (MW) Tariff
Commissioning
Wind Power - Operational 240.3
Devgarh, Rajasthan 37.5 2013 -
Tirupur, Tamil Nadu 16.8 2013 -
South Budh, Maharshtra 36 2014 -
Kavital, Karnataka 50 2014 -
Dangri, Rajasthan 50 2014 -
Kavital, Karnataka 50 2014 -
Under Construction 150
Badnawar, Madhya Pradesh 100 2016 -
Zahirabad, Telangana 50 2016 -
Solar Power - Operational 40
Dhar, Madhya Pradesh 30 2015 ` 5.45/ Unit
Hiriyur, Karnataka 10 2015 ` 7.47/ Unit
Under Construction 90
Madhya Pradesh 50 Under Construction -
Telangana 40 Under Construction -
 HFE has won multiple Solar Project bids: HFE has won Solar PV project of 38
MW, out of 300 MW solar bids floated by the MP state government, at tariff of
`5.64/unit. The difference in tariff quoted by HFE and lowest tariff was about
`0.59. In addition, they have won bids for rooftop solar projects across 5 JM Financial Research is also available
states namely, Haryana, Punjab, Tamil Nadu, Maharashtra, Karnataka under on: Bloomberg - JMFR <GO>,
the erstwhile Solar Energy Corporation of India Scheme. Thomson Publisher & Reuters,

Certification.

7 January 2016
Welspun Renewables
Subhadip Mitra
Largest Solar IPP subhadip.mitra@jmfl.com
Tel: (91 22) 66303128
Welspun Renewables Energy Pvt. Ltd., part of Welspun Group, is a leading
wind & solar Independent Power Producer in India with operational energy
capacity of c680 MW. The company targets setting up 5GW capacities in the
next few years, of which 1GW is expected by FY16-17. Welspun Group, a US$
3billion conglomerate growing at a CAGR of 30% over last decade. It’s a fully
integrated player in Pipes, Plates and Coils and Home Textiles sector with
presence across 50 countries.
 Strong EPC Capabilities: The Company has built strong EPC capabilities
(offering end-to-end project implementation support to both in-house & third
party customers) with over 1,300 years of unparalleled manpower experience.
They have filed 6 patents for solar plant designs & performance improvement.
Moreover, the company has established strong partnerships with leading
global manufacturers like – iPLON Gmbh of Germany for solar PV automation
systems; Solar Frontier for CIS thin film solar modules.
 Accreditations & Ratings: The company has developed highly efficient grid-
connected wind & solar power plants, with track record of delivering ahead of
schedule. It has received ISO 9001:2008 certificate and been registered with
United Nations Framework Convention on Climate Change (UNFCCC) as Clean
Development Mechanism (CDM). Care Credit Ratings has awarded A+ rating,
with credit health being ‘stable’.
 Interests of Global Investors: The business seen funding from global

institutions like General Electric Energy Financial Services (US$24mn) and by
Asian Development Bank ($50 million) in 2014. In October 2015, Welspun
successfully raised $617 million through a mix of debt ($405 million), equity
($165 million) and additional line of credit $47 million from promoters,
existing investors & new investors.
 Robust Project Pipeline: On the back of `340bn worth of investments, the

company plans to create 5,000MW renewable capacities over next few years,
out of which 1,000 MW is to be commissioned within current financial year.
Projects Locaton Type MW CoD

Neemuch MP Solar 151 Aug 2013
Phalodi Rajasthan Solar 55 Jan 2013
Baramati Maharashtra Solar 52
Chitradurga Karnataka Solar 19
Punjab Punjab Solar 34
Anjar Gujarat Solar 15 Oct-Nov 2011
Anjar- II Gujarat Solar 5
Solapur Maharashtra Solar 22
Pulivendula Andra Pradesh Solar 6 Dec 2012
Trichy Tamil Nadu Solar 330
Total Solar 689
Pratapgarh Rajasthan Wind 126 Dec 2015 JM Financial Research is also available
Jaiselmer Rajasthan Wind 20 on: Bloomberg - JMFR <GO>,
Total Wind 146 Thomson Publisher & Reuters,

Certification.

7 January 2016
India | Utilities | Company Update
Unlisted
Azure Power
Subhadip Mitra
Big Solar Plans Tel: (91 22) 66303128
Azure Power is one of India’s leading independent solar power producers,

established in 2007 by Mr. Inderpreet Wadhwa. The Delhi based company
has an installed solar base of 236MW, and another 233MW under
construction. The company has recently filed for an Initial Public Offer in the
US to raise $100mn. Azure Power targets to raise operating capacity to
520MW by Dec 2016, 1 GW by Dec2017 and to 5GW by 2020. In 2014, the
company entered in MoU with Govt. of Rajasthan to develop 1GW of MW
solar projects.
 The 1st private company to implement a MW scale grid connected solar PV

power plant in India. Having established presence in 14 Indian states, Azure
has several projects operating under various policies for grid connected,
rooftops and off-grid systems in the country and has invested significant
capital in its operating facilities in India.
 Holistic service model: The company manages entire project process for its
customers, enabling greater certainty on construction costs/timelines,
thereby, reducing electricity generating costs and providing predictable
pricing. It designs, finance, execute, operate and maintain high quality solar
plants. It also offers other services including: a) design EPC of grid integrated
solar plants, b) off grid solar installations for remote areas, c) turnkey solar
roof tops, and d) Operation & maintenance of solar installations.
Service Provided Customers Optional Service

Design and Engineering Agree to long-term PPA (20-30 years) Project Development
Construction Facilitate site for power plant Incentive monetization
Financing Provide necessary access clearances Carbon Credits
Commissioning Manage distribution and consumption Renewable energy certificates
Operation and Maintenance - -
Source: Company
 Low leveled cost of energy: The company through continuous research and
development has outperformed the market and brought down cost of energy
by as much as 54% during 2010-12 and 69% in 2009-15.On rooftop projects,
also they have delivered below cost of their customers’ alternative power
source. Additionally, its in-house EPC and O&M capabilities lower system
costs by proprietary designs and a global equipment procurement process.
 Strong Project Portfolio: As on 30th September 2015, Azure had a portfolio

of 17 operational utility scale projects and several commercial rooftop
projects with combined capacity of 242 MW. At the same time, it was
constructing 11 projects with combined rated capacity of 244 MW and had an
additional 179 MW of projects committed. It has been awarded 151 MW at JM Financial Research is also available
auctions, PPAs for which are pending. on: Bloomberg - JMFR <GO>,

Certification.

Year of Commercial Tariff (` Per Duration of PPA

Project Capacity (MW) Offtaker
Operation kWh) in years
UP 2015 10.0 8.99 UPPCL 12
Chhattisgarh 2015 10.0 6.44 State Power Distribution Co. Ltd. 25
Karnataka 2015 10.0 7.47 BESCL 25
Rajasthan 2015 100.0 5.45 Solar Energy Corporation of India 25
Rajasthan 2013 35.0 8.21 NTPC Vidyut Vyapar Nigam Ltd. 25
Rajasthan 2011 5.0 11.94 NTPC Vidyut Vyapar Nigam Ltd. 25
Gujarat 2011 10.0 15 Gujarat Urja Vikas Nigam 25
Punjab 2014 4.0 8.28 State Power Corp. Ltd. 25
Punjab 2009 2.0 17.91 NTPC Vidyut Vyapar Nigam Ltd. 25
Sub-Total 236.0
Under Construction
Karnataka 2015 10.0 6.66 BESCL 25
Karnataka 2016 50.0 6.89 Chamundeshwari Electric Supply 25
Karnataka 2016 40.0 6.93 Hubli Electricity Supply Corporation 25
Karnataka 2016 40.0 6.96 Gulbarga Electricity Supply Corporation 25
Andhra Pradesh 2016 50.0 5.89 SPDCAPL 25
Rajasthan 2015 5.0 5.45 Solar Energy Corporation of India 25
Bihar 2016 10.0 8.39 North Bihar & South Bihar Power Distribution
Sub-Total 233.0
Committed
MP 2017 25.0 6.59 BSES Rajdhani & BSES Yamuna 25
Delhi 2015 3.0 5.43 Solar Energy Corporation of India 25
Sub-Total 178.0
Commissioned Commercial Rooftop
Gujarat 2013 2.5 Torrent Power 25
DLF 2013-15 1.8 DLF Ltd. 25
Indosolar 2015 0.6 Indosolar Ltd. 25
Gymkhana 2015 0.1 Delhi Gymkhana 25
Taj Sats 2015 0.2 Taj Sats Air Catering 20
Punjab 2015 1.0 JCBL Ltd. 25
Sub-Total 6.1
Under Construction
Oberoi 2016 1.0 Oberoi Group 15
Punjab 2016 10.0 State Power Corp. Ltd. 25
Sub-Total 11.0
Committed
Indraprastha 2015 1.0 IPGCL 25
Sub-Total 1.0
Total 665.2

7 January 2016
India | Utilities | Company Update
Unlisted in India
Greenko
Subhadip Mitra
Leader in small hydro and wind Tel: (91 22) 66303128
 Greenko, part of UK based Greenko Group Plc. (listed on London Stock

Exchange’s Alternative Investment Market) is amongst the leading owners and
operators of clean energy projects in India. The Group has a diversified
portfolio of 235MW spread across 19 projects in wind, small hydropower,
natural gas and biomass assets within India. Greenko is one of the largest
operators of small hydro projects (235MW) with additional 772MW under
construction. Its wind portfolio includes 400MW of operational capacity with
another 1GW under construction. The company selectively chooses projects
with potential for development within a cluster, thereby increasing
developmental and operational synergies.
 The company, backed by founder Anil Kumar Chalamalasetty, intends to

develop 500MW of solar power projects within next 12-18 months with focus
on Solar PV projects. The Company's medium term goal is to reach 1GW
operational capacity in 2015 and 5GW by 2020.
 The company generates and sells electricity to state utilities, captive

consumers, private customers and trading companies through a mix of
long/short term PPAs and spot energy exchange sales.
 In 2014, the company had raised $125 million from Washington based EIG
Global Energy Partners to refinance debt of its RE projects. In 2015, Greenko
has in 2015 signed a non-binding agreement sell its India assets to GIC,
sovereign wealth fund of Singapore by selling all of its shares in holding
company Greenko Mauritius for $252-255mn.
Project Portfolio
Hydro Power Projects Capacity (MW)
Operational
Budhil Hydro 70.0
Netravathi River Basin Cluster 49.6
Ravi River Basin Cluster 32.0
Beas River Basin Cluster 25.0
Hemavathy MHS 24.0
Sumez SHP 14.0
Jasper MHS 10.5
Sai Spurthi MHS 10.3
Sub-Total 235.4
Under Construction
Yargyap Chu River Bhasin Cluster 320.0
Dikchu HEP 96.0
Harsar HEP 70.0
Kumaradhara River Basin 60.0
Cauvery Hydro cluster 55.0
Sikkim Hydro 50.0 JM Financial Research is also available
Bharmour HEP 45.0 on: Bloomberg - JMFR <GO>,
Bhima River 32.0 Thomson Publisher & Reuters,
Paudital Lassa HEP 24.0
Netravathi River Basin 10.0
Jeori HEP 9.6
Sub-Total 771.6
Total 1007.0
Certification.

Wind Power Projects Capacity (MW)

Operational
Rayala Wind Farm 169.2
Fortune Five Wind Farm 131.2
Ratnagiri Wind Farm 101.6
Sub-Total 402.0
Under Construction
Rayalaseema Wind Farm 128.0
Kanur Wind Farm 120.0
Tanot Wind Farm 120.0
Vyshali Wind Farm 100.0
Belum Wind Farm 100.0
Palakonda Wind Farm 80.0
Rayala Wind Farm 72.0
Animala Wind Far, 60.0
Niggadi Wind Farm 55.0
Yerraguppi Wind Farm 50.0
Chitradurga Wind Farm 49.5
Fortune Five Wind Farm 48.8
Vayuputra Wind Farm 20.0
Sub-Total 1003.3
Total 1405.3
Biomass Power Capacity (MW)

Ecofren Power 8.0
ISA Power 8.0
Ravikiran Power 7.5
Balaji Power 6.0
KMS Power 6.0
Roshni Power 6.0
Total 41.5
Natural Gas Capacity (MW)

LVS Power 36.8
Greenko Godavari 58.4
Total 95.2
Grand Total 2549.0
Source: Company


 Notes


 Notes


 Notes

APPENDIX I

(Formerly known as JM Financial Institutional Securities Private Limited)
Corporate Identity Number: U65192MH1995PLC092522
Member of BSE Ltd. and National Stock Exchange of India Ltd. and MCX Stock Exchange Ltd.
SEBI Registration Nos.: BSE - INZ010012532, NSE - INZ230012536 and MCX-SX - INZ260012539
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Compliance Officer: Mr. Sunny Shah | Tel: +91 22 6630 3383 | Email: sunny.shah@jmfl.com
Definition of ratings
Rating Meaning
Buy Total expected returns of more than 15%. Total expected return includes dividend yields.
Hold Price expected to move in the range of 10% downside to 15% upside from the current market price.
Sell Price expected to move downwards by more than 10%
Research Analyst(s) Certification
The Research Analyst(s), with respect to each issuer and its securities covered by them in this research report, certify that:
All of the views expressed in this research report accurately reflect his or her or their personal views about all of the issuers and their
securities; and
No part of his or her or their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed
in this research report.
Important Disclosures
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information about the company(ies) and sector(s), if any, covered in the report and may be distributed by it and/or its associates solely for the
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JM Financial Institutional Securities is registered with the Securities and Exchange Board of India (SEBI) as a Merchant Banker and a Stock
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No material disciplinary action has been taken by SEBI against JM Financial Institutional Securities in the past two financial years which may
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Subhadip Mitra

India Renewable Energy

JM Financial Institutional Securities Limited 07 January 2016

Contents Page No.

RoE Profile, Potential & Road-blocks 6

RE Cost Structure & Tariffs 10

Key Challenges for RE 13

India’s BIG Bang RE Plans 16

Annexure 1: Niti Ayog’s FY22 Case Scenario 23

Annexure 2: India Solar Mission 24

Annexure 3: Solar / Wind Regulations 26

Annexure 4: Global RE perspective in charts 29

Annexure 5: Solar Technology - How it Works? 32

Annexure 6: Wind Technology - How it Works? 34

Annexure 7: Company Section 35

JM Financial Institutional Securities Limited Page 2

India | Utilities | Sector Update

India Renewable Energy

JM Financial Institutional Securities Limited

Chapter 1: Summary of Findings

Exhibit 1. RE vs Thermal Power - SWOT

Coal India International

Conventional Thermal Power: Coal/Gas based power benefits from high

 PLFs tend to be lower at 20-35% (vs 80-90% in thermal) due to dependency

 Thus India plans to accelerate RE capacity addition, while simultaneously

JM Financial Institutional Securities Limited Page 4

Exhibit 2. Wind Vs Solar

Tariffs (` / kWh) 5.9 4.6-5.2

Tariff Trajectory CAGR FY11-

Wide Solar Irradiance across India, No site

Relatively easy since equipment is modular

High solar irradiance across in India, hence more

Due to erratic wind flow & power generation, Transmission grid

Unrestricted Site availability;

Solar has ample sites, falling

JM Financial Institutional Securities Limited Page 5

Chapter 2: RoE Profile, Potential & Road-blocks

Exhibit 3. RoE Sensitivity to Tariff & Interest - @ `58mn capex/MW

8% 7% 11% 13% 15%

Exhibit 4. RoE Sensitivity to Capex/MW & Interest - @ `5/kWh Tariff

8% 16% 13% 10% 8%

Source: CERC, JM Financial,

B) Wind: Feed-in-tariffs imply 16-28% RoEs depending on wind zones.

4.4 (Zone-4) 8% 11% 17% 26% 29%

JM Financial Institutional Securities Limited Page 6

Site Availability - Wind shortage vs Solar abundance

Source: NIWE, MNRE, NREL. Links: Wind Map / Solar Map

Targets, Potential & Roadblocks

JM Financial Institutional Securities Limited Page 7

Wind: Ground realities restrict potential

Exhibit 9. Wind Potential at 80/10mtr Hub Height

Despite 300GW potential at

Source: NIWE, MNRE, JM Financial

JM Financial Institutional Securities Limited Page 8

What this implies for WTG manufacturers?

MoP targets 60GW wind capacity by 2022, implying addition of

JM Financial Institutional Securities Limited Page 9

Chapter 3: RE Cost Structure & Tariffs

Exhibit 11. Wind FiT Region wise (Avg SERC FY15)

Exhibit 14. RoE Sensitivity to Tariff & Interest - @ `58mn capex/MW

8% 7% 11% 13% 15%

Unless capital costs correct