Managerial

Economics End
Term Project

Economic Analysis of Renewable

Energy Sector

Group 2:
Aditya Bharadwaj (MBA19002)
Karlin Viju V (MBA19032)
Nikita Seth (MBA19047)
Avik Basu (MBA19260)
Rahul Kumar Jha (MBA19062)
 Table of Contents

1. Introduction……………………………….……………………………………………………….1

2. Market Size…………….…………………………………………………………………………..1

3. Investments/Developments.…………….…………………………………………………1

4. Government Initiatives…………………………………………………………................2

5. Advantage India……………………………………………………………………………………2

6. Product Analysis……………………………………………………………………………………3

7. Market Analysis……………………………………………………………...........................4

8. Demand Analysis…………………………………………………………………….................5

9. Supply Analysis……………………………………………………………………………………….6

10. Competitions in the Industry ………………………………………………………………….7

11. Renewable Energy Impact…………………………………………………………………….8

12. Conclusions……………………………………………………………………………………………10

13. References…………………………………………………………………………………………….11
Introduction
The Indian renewable energy sector is one of the growing and attractive renewable energy
market in the world. According to 2018 Climatescope report India ranked second among the
rising economies to guide to transition to clean energy.
The main focus of the government of India has shifted to clean energy after its legalization in
the Paris Agreement. With the support of the government and improved economics, the
arena has become enticing from investor’s perspective. Installed renewable power
generation capability has inflated at a quick pace over the past few years, posting a CAGR of
19.78% between FY14–18. As India appears to meet its energy demand on its own, that is
predicted to reach 25,820 TWh by 2040, renewable energy is ready to play a vital role.

Market Size
As of April 2019, total renewable power put in capability in the country stood at 78.35 GW.
Off-grid renewable power capability has conjointly increased. As of October 2018,
generation capacities for Waste to Energy, Biomass Gasifiers, SPV systems stood at a 175.28
MWeq, 163.37 MWeq and 767.51 MWeq, respectively.
With a possible capability of 363 GW and with policies targeted on the renewable energy
sector, Northern India is predicted to become the hub for renewable energy in India.

Investments/ Developments
According to information released by the Department for Promotion of trade and Internal
Trade (DPIIT), Foreign Direct Investment inflows in the Indian non-conventional energy
sector between April 2000 and March 2019 stood at USD 7.83 billion. Over USD 42 billion
has been endowed in India’s renewable energy sector since 2014. New investments in clean
energy in the country reached USD 11.1 billion in 2018.
Some major investments and developments within the Indian renewable energy sector
square measure as follows:

 Inter-state distribution of wind generation was started in August 2018.

 In the first two quarters of 2018, India installed 1 MW of solar capacity each hour.
 With 28 deals, clean energy created up 27% of USD 4.4 billion merger and acquisition
(M&A) deals that happened in India’s power sector in 2017.
 In March 2018, ReNew Power finalised a deal estimated at USD 1.55 billion to amass
Ostro Energy and build it the most important renewable energy company in India.
 World’s largest solar park named ‘Shakti Sthala’ was launched in Karnataka in March
2018 with associate investment of Rs 16,500 crore (USD 2.55 billion).
 Solar sector in India received investments of USD 9.8 billion in CY2018.
  Private Equity (PE) investments in India's wind and alternative energy have inflated
by 47% (in January 1, 2017 to September 25, 2017) to USD 920 million, across 9
deals, as compared to USD 630 million coming back from ten deals throughout the
corresponding amount in 2016.
 As of March 2019, Eversource Capital, a venture of Everstone and Lightsource plans
to invest USD 1 billion in renewable energy in India through its inexperienced
Growth Equity Fund.

Government initiatives
Some initiatives by the govt. of India to improve the Indian renewable energy sector are as
follows:

 A new Hydropower policy for 2018-28 has been formulated for the expansion of
hydro projects in the country.
 The Government of India has declared plans to implement a USD 238 million
National Mission on advanced ultra-supercritical technologies for cleaner coal use.
 The Indian Railways is taking inflated efforts through sustained energy efficient
measures and most use of clean fuel to chop down emission level by 33% by 2030.

Advantage India
1. Robust Demand
 India has relatively low electricity consumption and per capita energy. Per capita
electricity consumption in India reached 1,149 units in 2017-18.
 As the economy grows the electricity consumption is projected to reach 15,280
TWhin 2040 from the 4926 TWhin 2012. The major contribution of this demand
would come from the growth in the buildings, industry and transport sectors.
2. Increasing Investments
 Non-conventional energy received FDI inflow of USD 7.83 billion between April
2000 and March 2019.
 This sector has become quite attractive for both domestic and foreign investors
with government’s ambitious green energy targets.
 By 2028, India can see renewable energy investments worth USD 500 billion.
3. Competitive Advantage
 India is ranked 4th in wind power, 5th in solar power and 5th in renewable
power installed capacity as of 2018.
 India is ranked fourth in EY Renewable Energy Country Attractive Index 2018.
 According to Climatescope report of 2018, India ranked second among the
emerging economies to lead to transition to clean energy.
 India has one of the lowest capital costs per megawatt for photovoltaic plants.
 4. Policy Support
 Indian government is looking to achieve 175 GW of renewable energy by 2022.
 The aim of the government to achieve universal household electrification is also
a boon for the power sector. India clocked record 11,788 MW of renewable
energy capacity in 2017-18.
 Government plans to establish renewable energy capacity of 500 GW by 2030.

Product analysis
 Renewable energy technologies change the energy from different natural sources
such as sun, tides, wind and others, into its usable forms such as electricity.
 The major sources of renewable energy are Wind, Geothermal, Hydro, Solar, Bio.
 The top leading companies that produce renewable energy are :
 1.)Cypress Creek Renewables
 2.) NextEra Energy Resources. 
 3.) Invenergy LLC. 
 4.) EcoPlexus
 5.) Xcel Energy. ...
 6.) Geronimo Energy. ...
 7.) American Electric Power (AEP) ...
 8.) Duke Energy.
 Major products available are
 Solar panels, water heaters, air conditioners, lanterns etc
 Wind turbines
 As there are lots of firms involved in the industry, there is a heavy competition
among the firms to sell their products in the market. Recent trends prove that the
industry grows a lot due to its technological development. This contributes to the
reduction of the price in the installation of renewable energy materials.
 • To promote production, the government has taken several initiatives in the form of
offering subsidies, financial assistance, and incentives to manufacturers, power
producers and even customers.
• The diagram below explains how the government promote the production(increase
in demand) by giving subsidies. In this diagram the subsidy is P3-P2 and the new
quantity consumed is Q2. However, the price a customer pays does not fall by the
equal amount as that of the subsidy. The producers get some of the benefit in terms
of extra revenue that they can keep.
• The net gain to the consumer is P1-P2 or the area under the orange rectangle.
• The net gain to the producer is P3-P1 or the area under the green rectangle.

 By giving subsidy on production of these goods, the government is encouraging the

producers to produce more and thus the overall supply line changes and with that
the demand increases and net price also comes down to P2 from P1

Market Analysis
• The global renewable energy market was valued at $928.0 Billion in 2017, and is
expected to reach $1,512.3 Billion by 2025.
• The CAGR of renewable energy sector is 6.1% from 2018 to 2025.
• Asia-Pacific is expected to grow at the fastest rate in the coming years due to
increase in demand for energy due to rise in industrialization in developing countries
such as China, and India.
• Presence of such countries pushes up the renewable energy market due to factors
such as rise in population, rapid industrialization along with favorable policies by the
governments for the renewable energy sector.
 • The heavy competition among many firms leads the industry to monopolistic
competition.
• The diagram below shows how the monopolistically competitive markets function

Demand Analysis
Enablers

I. REACHING PRICE AND PERFORMANCE PARITY ON AND OFF THE GRID

 Solar and wind have reached grid price parity and are moving closer to performance
equality with conventional sources.
 Solar and wind price parity is also within sight worldwide as the cost gap widens
between these and other.
 Utility-scale solar and wind combined with storage are increasingly competitive,
providing grid performance parity in addition to price parity.
 Utility-scale grid parity is not the only factor, as distributed renewables such as
rooftop solar are reaching socket price and performance parity.

II. COST-EFFECTIVE AND RELIABLE GRID INTEGRATION

 The intermittency challenges of wind and solar may be overstated. 
 Wind and solar place downward pressure on electricity prices. 
 Growing shares of wind and solar pair with greater grid reliability and resilience. 
 Wind and solar can become important grid assets. 

III. TECHNOLOGY
 Automation is cutting time and costs for solar and wind production and operations
 AI dependable weather forecasting to optimize the use of renewable resources. 
 The case for cognitive block-chain is compelling for energy attribute certificates.
 Advanced materials and manufacturing processes like 3D printing will revolutionize
the wind and solar industries.
Demand Sectors
•Buildings: folllow of the Energy Conservation Building Code which seeks to set out the
minimum requirements of the energy efficient design and construction of the buildings, high
penetration of efficient appliances and technologies and better urban planning

•Transport:- There is a greater shift towards transient oriented development, enhanced use
of public transport, increased penetration of electric and hybrid vehicles which uses
renewable form of energy

•Agriculture:-a shift towards electric and solar pumps from diesel pumps
•Telecom:- There is a shift from diesel run telecom towers towards electricity based towers.
Moreover, there is an enhanced use of renewable sources such as solar and wind to fuel the
telecom towers

Supply Analysis
•Research and Development -energy supply is quite important in all stage because
technological transformation depends on type of primary energy used and reliability of
supply. Marginal cost and price has no interaction which means that the producer cannot
get costs balanced under the current energy price, so RE output in the energy market is 0.
The government has to provide a R&D encourages for new RE market.

•Government Subsidies-government takes a guaranteed feed-in tariff instrument price to

Feed in Tariff of price so producers give the help speedily the RE supply from QRF to QRF*
Competitors in this industry
The renewable energy industry consists of different sectors such as wind energy sector,
solar energy sector, hydroelectricity sector, biomass and biofuel. And there are different
companies competing in different sector.
Wind energy sector
Wind energy sector involves designing, manufacturing, constructing and maintenance of
wind turbine. India is the fourth largest wind power producer in the world with capacity of
36,686.82 MW. The main competitors in this sector is
ReNew Power
It is an independent largest renewable energy power producer. It was founded in 2012 and
started its first wind energy project with 25.5 MW capacity in Surat. It offers its power to
state electricity board and huge mechanical companies.
Today renew power has a wind power capacity of 2637 MW and according to the data
complied by International Energy Agency and CEEW, Renew Power is at the top in wind
power generation followed by Greenko, and Tata power.
Greenko energy holding
It is a leading company in India founded in 2004. It owns and operates in renewable energy
sector. It has a capacity of 2156 mv in wind energy sector.
Tata Power:
It is a part of Tata group, a electric utility based company whose core business is to
generate, transmit and distribute electricity. It has a wind power capacity of 1161 MW.
Solar Energy sector
Solar energy sector involves manufacturing of solar modules, solar cell, solar panels and
other solar products and generating electricity by these products. The main competitors in
solar sector are
Adani power
Adani group is an Indian multinational company founded in 1988. in solar power sector
Adani group with an operational capacity of 1970 MW is closely followed by Greenko energy
holding with a capacity of 1916 mw
Azure power
Azure power is leading solar power producer in India founded in 2008. It has an operational
capacity of 1561 MW in solar power sector.
Tata Power
Tata solar power is the leading solar power producer in India having a capacity of 1388 MW
in this sector. Tata power is engaged in manufacturing solar products such as solar module,
solar cell etc. Tata power is closely followed by Renew power with an operational solar
power capacity of 1241 MW.

RENEWABLE ENERGY IMPACT

Benefits: Various sources of energy produce diverse measure of heat-trapping gases.
Sustainable power sources will in general have much lower discharges than different
sources, for example, petroleum gas or coal. A portion of different advantages of
sustainable power source are:

Less Global Warming: Human activity is overloading the atmosphere with CO 2 and
other greenhouse gases. These gases act like a blanket for trapping heat. The
outcome is a trap of critical and unsafe effects, from more grounded, progressively
regular tempests, to drought, ocean level ascent, and eradication.

Improved Public Health: The air and water contamination discharged by coal and
gaseous petrol plants is connected with breathing issues, neurological harm,
respiratory failures, malignant growth, unexpected passing, and a large group of
different significant issues. The contamination influences everybody: one Harvard
University study assessed the existence cycle expenses and general wellbeing
impacts of coal to be an expected $74.6 billion consistently.
 Inexhaustible Energy: Solid breezes, bright skies, bounteous plant matter, heat from
the earth, and quick moving water can each give an immense and always renewed
inventory of vitality. A generally little portion of India power right now originates
from these sources, however that could change: ponders have over and over
demonstrated that sustainable power source can give a huge portion of future
power needs, even subsequent to representing potential limitations.

Jobs and Other Economic Benefits: Contrasted and petroleum derivative advances,
which are commonly motorized and capital serious, the sustainable power source
industry is more work escalated. Sun powered boards need people to introduce
them; wind ranches need professionals for maintenance. This implies that, by and
large, more occupations are made for every unit of power produced from
sustainable sources than from petroleum products.

Stable Energy Prices: Sustainable power source is giving reasonable power the
nation over the present moment, and can help balance out vitality costs later on.
Albeit inexhaustible offices require forthright speculations to manufacture, they
would then be able to work easily (for most clean vitality advances, the "fuel" is
free). Accordingly, sustainable power source costs can be truly steady after some
time.

Reliability and Resilience: Wind and sun powered are less inclined to huge scale
disappointment since they are disseminated and secluded. Conveyed frameworks
are spread out over a huge topographical zone, so an extreme climate occasion in
one area won't slice off capacity to a whole locale. Secluded frameworks are made
out of various individual breeze turbines or sun powered exhibits. Regardless of
whether a portion of the hardware in the framework is harmed, the rest can
regularly keep on working.
Disadvantages: Renewable energy has numerous advantages, however it's not constantly
radiant with regards to sustainable power source. Here are a few inconveniences to utilizing
renewables over conventional fuel sources:
Higher Upfront Cost: While we can save money by utilizing a sustainable power
sources, the advances are ordinarily more costly forthright than conventional vitality
generators. To battle this, there are regularly money related motivating forces, for
example, charge credits and refunds, accessible to help mitigate your underlying
expenses of inexhaustible innovation.
 Intermittency: In spite of the fact that renewable power source assets are accessible
around the globe, huge numbers of these assets aren't accessible all day, every day,
all year. A few days might be windier than others, the sun doesn't sparkle during the
evening, and dry seasons may happen for timeframes. There can be eccentric
climate occasions that disturb these advancements. Petroleum derivatives are not
discontinuous and can be turned on or off at some random time.

Storage Capabilities: In light of the discontinuity of some sustainable power sources,

there's an extreme requirement for vitality stockpiling. While there are capacity
innovations accessible today, they can be costly, particularly for enormous scale
sustainable power source plants. It's significant that vitality stockpiling limit is
developing as the innovation advances, and batteries are ending up progressively
moderate over the long haul.

Geographic Limitations: There are a few topographies that are more reasonable for
sustainable innovations than others. For instance, a huge homestead with open
space might be an incredible spot for a private breeze turbine or a sunlight-based
vitality framework, while a town home in a city shrouded in shade from taller
structures wouldn't have the option to receive the rewards of either innovation on
their property. In the event that your property isn't appropriate for an individual
sustainable power source innovation, there are different alternatives. In case you're
keen on sun oriented however don't have a radiant property, you can regularly still
profit by sustainable power source by obtaining green power or taking a crack at a
network sun based alternative.

When it comes to renewable energy, the positives exceed the negatives. Changing to
renewables on an individual, corporate, or legislative level won't just enable us to set
aside cash yet additionally advance a cleaner, more advantageous condition for
what's to come.

Key Observations:
Achievements In the Sector: Sun powered limit has expanded by multiple times
between FY14-18. India included record 11,788 MW of sustainable power source
limit in 2017-18.A aggregate of 47 sun based parks with age limit of 26,694 MW have
been endorsed in India up to November 2018, out of limit of 4,195 MW has been
charged.
 Road Ahead: The Ministry of New and Renewable Energy (MNRE) has set an aspiring
objective to set up sustainable power source abilities to the tune of 175 GW by 2022
of which around 100 GW is gotten ready for sunlight based, 60 for wind and other
for hydro, bio among other. Legislature of India is meaning to accomplish 225 GW of
sustainable power source limit by 2022, much in front of its objective of 175 GW
according to the Paris Agreement.
Conclusion: Solar Energy Centre set up for the improvement of sun oriented energy systems
and gadgets at Gurgaon in Haryana. Conclusions Energy security, monetary development
and condition protection are the national vitality strategy drivers of any nation of the world.
The need to support the endeavours for further advancement and promotion of sustainable
power sources has been felt world over in light of high costs of unrefined petroleum. A basic
piece of the arrangement will lie in advancing sustainable power source innovations as a
way to address worries about vitality security, financial development in the face of rising
vitality costs, intensity, wellbeing costs and environmental corruption. As per NAPCC
different sources, of renewable vitality would be advanced. Specific activity focuses that
have been referenced incorporate advancing sending, innovation and fundamental research
in sustainable power source advancements, settling the barriers to improvement and
business organization of biomass, hydropower, sun oriented and wind advances, advancing
straight(direct) biomass burning and biomass gasification technologies, advancing the
advancement and assembling of little wind-electric generators, and upgrading the
administrative/levy system in order to standard sustainable power sources in the national
power framework. As needs are, the expanded spotlight is being laid on the deployment of
sustainable power that is probably going to account for around 5% in the power blend by
2032. Substitute fuels, essentially bio-energizes, are proposed to be dynamically utilized for
blending with diesel and oil, for the most part for vehicle applications. Finally, sustainable
power source gives tremendous benefits and can contribute significantly in the national
vitality blend at least economic, natural and social expenses and it is normal that the portion
of sustainable power source in the all outage limit will increase in future
Administration of India has an aggressive arrangement of accomplishing 175 GW of
Renewable Energy by 2022 which incorporates 100 GW of sun oriented, 60 GW of wind, 10
GW of biomass and 5 GW of little hydro. The development of Renewable Energy will be
huge in the following couple of years as represented in the Considering the higher RE
targets, expanding portion of Renewable Energy in the complete power blend, local
centralization of RE and so forth., issue of matrix joining of sustainable power source will be
basic in a long time to come.
References:
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https://www.epa.gov/statelocalenergy/local-renewable-energy-benefits-and-resources

[2] news.energysage.com, Advantages and disadvantages of renewable energy. Retrieved on

September 18, from https://news.energysage.com/advantages-and-disadvantages-of-renewable-
energy

[3] https://en.wikipedia.org, renewable energy. Retrieved on September 19, from

https://en.wikipedia.org/wiki/Renewable_energy

[4] ETenergyworld.com, India’s largest renewable companies of India, Retrieved on September 15,
from https://energy.economictimes.indiatimes.com/news/renewable/indias-largest-renewable-
energy-companies-acme-adani-and-greenko-top-the-list/70429534