SPV Power Technology in India Satyendra Kumar Lanco Solar, India satyen.kumar@lancogroup.com ASEAN-India Workshop on Cooperation in New and Renewable Energy 05-06 Nov., 2012 Vigyan Bhawan, New Delhi

Agenda Power Sector in India – Role Solar Can Play India’s Current Solar PV Installation Base SPV Technologies Lessons Learned Conclusions

India – Electricity Opportunity Source: World Bank, CEA Source: EIA, CEA India has a huge gap to fill in terms of capacity installations to cater to demand by 2020 India records very low levels of Energy per capita globally and this will change dramatically, very fast. Disposable Income / GDP is a good indicator to rise in energy demand Source: D&B Industrial Research Service India per capita Electricity Consumption is lagging well behind World Average and this would catch up fast owing to rising levels of Disposable Income An average of 16 GW of power generation capacity installations required each year till 2020 to meet fast growing demand for electricity power

India has huge potential for solar power deployment Solar Power Density in India Source *Potential (MW) Installed (MW) as on Jan’12 Wind Power 45,000 16,179 Biomass 16,000 1142 Small Hydro 15,000 3300 Cogeneration-Bagasse 3,500 1952 Waste to Energy 2,700 74 Solar Unlimited 481 Source: * MNRE - Development of Conceptual Framework for REC Mechanism Solar installed capacity – India India receives on an average 4-7kWh/m2 of solar energy daily with an average of 250-300 sunny days in a year Rajasthan and Gujarat receive maximum radiation in the range of 6–6.6 KWh per square meter Cumulative grid connected Installed solar power capacity is quite low in India Accounting for a negligible proportion of India’s power capacity Capacity additions in Indian solar industry have been miniscule as compared to the additions globally India yet to optimally utilize its solar potential Grid connected Solar Power (Cumulative Capacity) 1,035 MW Additions during last year (FY12) 446 MW Off-grid Solar PV plants 85 MW Solar Water Heating – Collector Area 5.63 Mn Sq. m Source: MNRE, Edelweiss Research (As at June30, 2012

India Poised to be a Major Global Contributor Global Solar Market Outlook India, USA rapidly advancing; EU slow and steady USA : Continues to grow rapidly with a 300 MW in Arizona receiving approvals. Expected to remain the largest solar market in world in near future India : Rapid growth seen in high potential solar states of Rajasthan and Gujarat. Gujarat launches Asia's largest solar park of 600 MW China : Many large-scale plants commissioned. Hit by oversupply in the international export market Italy, Spain, Germany : Affected by the sovereign debt crisis and a weak future economic outlook of the Euro Rank Country Installed capacity (GW) in 2011 Solar Power Target Clean Energy Target Key incentives 1 USA 4.6 2020 :~ 16 GW 17% Production / Investment tax credit 2 India 0.5 2022 : 22 GW 15.90% FiTs, REC, Capital subsidy 3 China 3.0 2015 : 9 GW 2020 : 50 GW 15% of primary energy Feed-in-Tariffs (FiTs), GBI for rooftop an biding installed PV, Tax incentive for PV 4 Italy 12.4 NA FiTs, REC, Tax incentive 5 Spain 5.3 2020 : 8-9 GW 20% REC, Tax incentive 6 Australia 1.3 20% of total consumption Generation Based Incentive (RBI), Renewable Energy Certificate (REC) 7 Japan 5.0 2020 : 28 GW 22% 8 Germany 25.0 2020 : 50-70 GW 35% (50% by 2030, 65% by 2040, 80% by 2050) Source : Industry Research, Ernst & Young Report on Renewable Energy Country Attractiveness indices E&Y Solar energy attractiveness Index : India ranked 2nd in the world – only behind USA

Strong National Policy Initiatives at the Centre (JNNSM) Jawaharlal Nehru National Solar Mission (JNNSM) Comprehensive framework for development of solar power in India Covers both solar power generation as well as manufacturing Incorporates specific fiscal / monetary incentives Objectives Installed solar power generation capacity of 20 GW by 2020; 100 GW by 2030 and 200 GW by 2050 To achieve grid parity by 2020 To achieve parity with coal-based thermal power generation by 2030 4-5 GW of installed solar manufacturing capacity by 2017 20 mn solar lighting systems for rural areas by 2022 Institutional Arrangement to support bundling of Solar Power State Government (Land, Water, Other Sanctions) Central Electricity Authority (Technical Support) CERC Determines Tariff Solar Power Developer 1 kWh Solar NTPC Vidyut Vyapar Nigam (NVVN) Buys → Bundles → Sells State Electricity Boards (Buyers of bundled power) National Thermal Power Corporation (NTPC) 4 kWh Thermal Bundled 5 kWh at INR 4.17/kWh Note : Rates for SPV and ST based on average bidding tariff. The above rates expected to be achieved on commissioning of all power plants by May 2013 6

Asia’s largest solar park Among the states, Gujarat – Leading the Way Gujarat First state to launch an independent solar policy in 2009. Policy operative till 2014. PPAs of 969 MW signed. The projects allocated through the MOU route with pre-qualification criteria Projects of 690 MW commissioned till 30th June, 2012. Asia’s largest Solar Park – The Charaanka Solar park in Patan district of Gujarat inaugurated in April, 2012 An energy surplus state. Does not need to allocate more projects to fulfill its RPO obligations Gujarat Energy Development Authority (GEDA) provides assistance in identification of suitable locations, facilitation in arranging Right of Way & recommending the project High investor confidence – More than 1000MW of projects have pre-registered for future allocations Applications worth 1715 MW received for allocation of 150MW Banaskantha Asia’s largest solar park Patan Surendra Nagar Tariffs PV project (Rs. /kWh) Thermal projects Projects commissioned before 31.12.10 15 (for first 12 years) 10 (for first 12 years) 5 (from 13th to 25th year) 3 (from 13th to 25th year) Projects commissioned after 31.12.14 12 (for first 12 years) 9 (for first 12 years)

…And other states following suit Particulars Karnataka Rajasthan Madhya Pradesh Tamilnadu Orissa Policy instrument Karnataka Solar Policy, 2011-16 Rajasthan Solar Energy policy, 2011-2017 MP Solar Energy Policy TN Solar Energy Policy 2012 Target Capacity 200 MW - DISCOMS upto 2015-16 (40 MW p.a.) 50 MW - Thermal 100 MW - REC mechanism 50 MW SPV; 50 MW ST DISCOMS Phase I (upto 2013) -200MW Phase II (2013 - 17) - 400MW 10 MW : MNRE 200 MW SPV announced 3000 MW by 2015, including rooftop 1500 MW utility scale by 205 50 MW SPV in 2012-13 announced Capacity Cap SPV : Min 3 MW, Max 10 MW ST : Min 5 MW SPV : Min 5 MW, Max 10 MW ST : Min 5 MW, Max - 50 MW SPV : Min 5 MW  NA  25 MW Sale of Energy under state policy Reverse bidding Ceiling tariff : SPV : INR 14.50 / kWh ST : INR 11.35 / kWh Ceiling Tariff : SPV : INR 10.12 / kWh Ceiling Tariff : SPV : INR 15.35 / kWh Lowest bidder offered entire 25 MW Operational : State Policy JNNSM, Phase I Batch I Migration scheme RPSSGP through IREDA 14 MW - 25 projects : 125 MW 8 projects : 37.5 MW 10 projects : 10 MW 1 project : 5 MW 7 projects : 7 MW Bids awarded under state policy / other schemes 80MW under State Policy 30 MW - 30 months of PPA; 50 MW - 18 months of PPA 817 MW - REC mechanism 100 MW - NTPC – Bundled Last date for submission of RfS for 200 MW postponed indefinitely 200 MW under State Policy Expected allocation of 1000MW in 2013 25 MW Source: MNRE, State Nodal Agencies, Research Reports

Electricity Consumption (Bn units) Solar RPOs Pushing the Frontiers Further The solar power purchase obligation for the States start with 0.25% in phase 1 (FY2011-2013) and go up to 3% by FY 2022 Installed solar capacity by FY 2022 estimated at 38 GW State Electricity Consumption (Bn units) Equivalent Solar Installation capacity (MW) RPPO 3% (FY 22E) FY13E FY 22E Andhra Pradesh 89.0 175.6 Chhattisgarh 21.8 45.1 Gujarat 85.4 156.8 Haryana 38.4 73.8 Jharkhand 23.4 51.7 Karnataka 53.5 107.5 Madhya Pradesh 49.3 99.0 Maharashtra 125.7 219.9 Orissa 27.2 63.1 Punjab 60.5 104.3 Rajasthan 48.9 96.4 Tamil Nadu 87.2 182.8 Uttar Pradesh 79.3 150.2 West Bengal 41.0 84.5 Total 968.7 1,914.5 38,290 MW

Total Grid Connected Installed Capacity Map – India as on Oct 2012 *Source: MNRE and Bridge to India: Solar Compass: Oct 2012

Solar Photovoltaics (SPV) Solar – Knowledge base and Technology Solar Resource Assessment (GHI, DNI) : Satellite Based Estimates & Ground Measurements Solar Photovoltaics (SPV) Technology PV production – whole value chain Equipment PV production – whole value chain Grid Connected Solar Farms – EPC, Inverters, Monitoring Systems Engineering Risk Assessment and Insurance Financing Grid Extension, Availability and Stability

What are various SPV technologies ? c-Si Thin Films Mono / Single-Crystal Multi / Poly Crystal Amorphous Silicon CdTe CIGS Organic a-Si (single Junction) Tandem / Micromorph/ Double Jn/ Triple Jn 18-23% 15-17.5% ~6-8% ~9-10% ~11% ~12% ~5% ?

Global Production: Technology Mix

GOVT OF INDIA – DOMESTIC SOLAR MFG ASPIRATIONS Upstream Mid Stream Down Stream Polysilicon Ingot/ Wafer Cells Modules System Integration Decentralised Application Sand Indian Solar Market demand is growing to be 1GW/yr by next year; and is set to increase further thereafter, due to Grid Parity achievement To cater to the Indian market demand following manufacturing capacities are required: Indian Solar PV Manufacturing NSM Goal : 2 GW / yr Domestic Mfg by 2020 Existing / Under Constr Indian Capacities Remarks Polysilicon 12,000 T/yr 1,800 T/yr (constr) Lanco Ingots & Wafers 2,300 MW/yr 300 MW/yr (constr) Lanco, Birla Surya Cells 2,200 MW/yr 1,010 MW/yr Indosolar, Jupiter, BHEL, Websol, Tata, Moserbaer, EuroMultivision, BEL, CEL, SolarSemi Modules 2,000 MW/yr 1,900 MW/yr More than 40 companies

PV Technology wise status (JNSM) c-Si cells and Module to be manufactured domestically c-Si Module to be manufactured domestically JNSM –Phase I (Batch-1): 150 MW Phase I (Batch-2): 350 MW (Anticipated) Cheaper Financing Options decide the technology options – Equipment comes with funding

Technology share in Gujarat & leading financiers Cheaper Financing Options decide the technology options – Equipment comes with funding

Technology Vision for the PV Future What technology is needed What is needed to develop that technology What challenges it would involve to get commercialized Who needs the PV technology For what? Where/When does one need it

Who needs Solar ?

Who needs Solar ? For What?

A Systems Approach Top-down Approach – Grid Centric Bottoms-up Approach – Off Grid, Needs Specific Solutions

Frugal Engineering – Tata Nano Photovoltaic Systems PV Panels: high efficiency at low cost ! Inverters: Long Life time ?, Higher efficiencies, Tropicalized, more intelligent Variability of Solar Resource - Storage solutions: Batteries, Ultracapacitors,…. Power electronics – Load Specific Transport of power – Availability and Stability of Grid Frugal Engineering – Tata Nano

Lessons Learned : Lack of reliable radiation data Challenges Faced currently Move towards building Solar Radiation Atlas Project developers have to rely on satellite information from sources like NASA, NREL, etc Uncertainty surrounding the generation potential at site. Different solar radiation database yield varying estimates. The returns of a solar project are highly sensitive to radiation levels. Lack of adequate ground-mounted monitoring stations to validate satellite based estimates Radiation variability could significantly affect projected cash flows MNRE has initiated a major project on Solar Radiation Resource Assessment (SRRA) Centre for Wind Energy Technology (C‐WET) has installed a network of 51 Automatic Solar Radiation Monitoring Stations in different states Solar Monitoring Stations 22

Lessons Learned : Scale of Projects Challenges faced due to size of Projects Steps taken to address the issue Government realising these challenges has considerably increased the size of solar PV projects allotted in phase I batch II of JNNSM From Batch I to Batch II , max capacity allotted to any developer has increased to 50 MW States following the cue, are also encouraging large scale development which would further bring in economies of scale. Solar projects are small compared to traditional power plants Lenders are reluctant to finance small transactions In cases where finance is available, transaction costs are higher Higher MW range of projects had to be promoted for using better evacuation infrastructure Maximum Cap allotted to a developer for Solar PV Particulars Max Cap JNNSM Batch I Phase I Max 5 MW JNNSM Batch II Phase I Max 50 MW for one developer; each project of max 20 MW Karnataka 10 MW Rajasthan MP No upper Limit Gujarat 25 MW Orissa Phase I & II 23

SPV Challenge: The Grid Parity SPV Challenge: The Grid Parity ? Or Grid Substitute / Support Socket Parity

Road to Grid Parity is Blocked by the High Cost of Financing in India Source: World Bank Mode of Solar Financing in India Prohibitive cost of financing in India in terms of prevailing interest rates Long-tenure loans not available (15 years and more) with Indian banks. Stretches cash-flows during debt service period * * * Includes Hedging Cost NCDs = Non-convertible Debentures ECAs= External Commercial Borrowings ECA=Export credit agency l 25

Roadmap to High Growth & Grid Parity Interest Subsidy / VGF for Solar Farm; Rs 15 L/ year/MW (for 5-years) Higher number of RECs for Older Plants World Class R&D Centre - High efficiency Solar cells; Reduction in BOS & Tracking system costs Capital Subsidy / Incentives for domestic PV Mfg projects – to offset interest & power costs Domestic Content & ADD support for 2-3 years Every MW of Solar Power Plant create direct / indirect jobs: Solar Mfg : 20 Solar Farm Project : 65 O&M : 15 During 2012-17 : Potential 1,00,000 jobs Grid Parity – Reliable & affordable power - Empowerment of rural population Rs.5 / unit

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