Karnataka Renewable Energy Development Limited – Karnataka Renewable Energy Development Limited

Introduction. 1 Karnataka - Supporting Renewable Initiatives • 2015 1

Karnataka, a state with significant potential for all forms of energy. Section 1 – Introduction. Karnataka, a state with significant potential for all forms of energy. The total installed capacity of the state ~ 14.2GW (Nov 2014). Thermal and hydro have been the main sources of electricity in the state. Renewable energy accounts for ~31% of installed capacity. Renewable energy potential is estimated in excess of 30.2 GW. Government has allotted projects of 13 GW wind and 782MW solar. KREDL, established in 1996 by the Government of Karnataka as the state nodal agency has added ~4.7 GW of renewable based capacities since incorporation and plays an active role. Karnataka - Supporting Renewable Initiatives • 2015 2

Section 1 – Introduction. Why Karnataka for renewables? Capacity addition planned across all forms of renewables. One of the fastest growing states and a leading investment destination has a total installed power generation capacity of 14.2 GW. Karnataka is one of the top 4 states with installed renewable energy generation capacity. Coal based power generation contributes the maximum with its share around 41%. The state with 3.5GW has the 2nd largest Hydel capacity in the country. Share of renewable energy in the overall capacity mix today in MW terms in Karnataka stands at an impressive 31%. Opportunity for capacity addition across all forms of renewables Renewable Energy Source Capacity Potential (MW) Capacity commissioned (MW ) Wind 13983 2614 Small Hydro 3000 785 Cogeneration 2000 1144 Biomass 1000 113 Solar PV 10,000 84 Municipal Solid Waste 135 -  Total 30118 4741 25 GW state RE potential to harness Karnataka - Supporting Renewable Initiatives • 2015 3

One State, many investment opportunity. 2 “With access to natural resources like coal and gas being a challenge, a naturally preferred and reliable option is renewable energy” Karnataka - Supporting Renewable Initiatives • 2015 4

Section 2 – One State, many investment opportunity. 1. Solar power. Karnataka receives global solar radiation in the range of 5.1 - 6.4 kWh/m2 (summer), 3.5 - 5.3 kWh/m2 (monsoon), and 3.8 – 5.9 kWh/m2 (winter), making solar energy generation across all seasons. KREDL estimates a potential of over 5GW. Large amount of area available in urban areas in the form of roof tops can be used for solar energy generation. Capacity allocation – A transparent competitive price discovery model on regulator determined tariff. Industry friendly policy and regulations. No Cross subsidy surcharge (3rd party); No transmission and wheeling charge and 100% banking for open access projects. State is promoting Utility scale on-grid projects; roof top projects with net metering policy; decentralized on-grid projects through “farmers category” and other off –grid projects. Karnataka - Supporting Renewable Initiatives • 2015 5

Section 2 – One State, many investment opportunity. Solar power - Karnataka Solar Policy 2014-21 In support of the national and state targets, with over 700MW in development. Key initiatives. GoK encourages energy-efficient design standards for energy generation, maximizing natural light entry, options that provide heat insulation including grid tied building integrated PV (BIPV) Amendments t0 building bye laws in respect of FAR (Floor Area Ratio) to exempt FAR in respect of additional floor area created under solar PV panels. Policy supports deployment of solar powered irrigation pump sets. Solar parks. Development of solar parks helps to utilize uneven waste land for power generation. GoK contemplates to create private land banks owned by farmers or associations for development of solar projects on long term lease up-to 30 years at lease rates. Grid tied canal corridor projects. Grid connected “solar with other renewable hybrid projects”. To maximise existing project infrastructure. Hybrid projects having minimum 25% of overall generation coming from respective generation sources shall be promoted through this policy. Government of Karnataka (GoK) on 22nd May 2014 revised its existing state solar power policy 2000 MW (in phased manner) by 2021 i.e. 3% of solar energy out of total projected consumption. Grid connected projects - 1600 MW. Projects by land owning farmers - 300 MW. Projects under REC mechanism, captive/group captive, IPPs – No limit. Projects under bundled power Projects selected by competitive bidding (capacity > 3 MWp) Grid connected rooftop projects – 400 MW by 2018. Rooftop solar to be promoted; net-metering provisions included. Karnataka - Supporting Renewable Initiatives • 2015 6

Incentives & support to solar power projects. (1) Section 2 – One State, many investment opportunity. Incentives & support to solar power projects. (1) Time bound permissions to acquire land under section 109 of land reforms act and deemed conversion of lands acquired. Time bound clearance for evacuation approval from KPTCL. Reduction of supervision charges by KPTCL/ESCOMs from 10% to 5%. Exempted for obtaining clearance from state pollution control Board. Fiscal incentives Developers can avail tax concessions in respect of Entry Tax, Stamp Duty and Registration as per industrial policy of GoK. Measures to exempt VAT: The Value Added Tax applicable on various Renewable Energy Equipment's, Instruments & inputs required for establishment of Solar Power Project shall be considered for applicable VAT reimbursement. Government of India incentives: Concessional Excise Duty & Customs Duty exemptions are allowed to project developer by Ministry of New & Renewable Energy. Karnataka - Supporting Renewable Initiatives • 2015 7

Incentives & support to solar power projects. (2) Section 2 – One State, many investment opportunity. Incentives & support to solar power projects. (2) Solar roof top PV systems and net metering . Solar Roof Top PV systems can be installed on residential /commercial / industrial buildings in the state. Excess Generated energy can be fed to the grid with net metering Attractive Tariff for roof top solar: Rs. 9.56/ - Without Subsidy Rs . 7.20/ - With Subsidy Surya Raitha Scheme for Promoting Solar Irrigation Pumpset. To promote adoption of Solar PV pumpset by farmers, GoK has announced Surya Raitha scheme for Solar PV irrigation pumpset. This scheme is applicable for IP sets to the extent of 10HP capacity. Net-metering concept for rooftop solar power as per KERC order is being adopted for this scheme. For investment farmer can avail soft loan from banks and subsidy from MNRE. Karnataka - Supporting Renewable Initiatives • 2015 8

Incentives & support to solar power projects. (3) Section 2 – One State, many investment opportunity. Incentives & support to solar power projects. (3) Solar Parks The Solar Parks are to be developed in private dry lands/waste lands which will provide plug and play facility for developers. A MoU has been signed on 07.01.2015 between SECI and KREDL for development of 2 solar parks of 800 MW each in Karnataka. 11,000 acres of land has been identified at Pavagada Taluk in Tumkur District. Land Document verification is under process. Land lease rate will be finalised after negotiation. Promotion of distributed generation through small solar parks (Min 100 acre) Promotion of integrated solar parks. Karnataka supports the development of solar parks and provides incentives/ concessions to developers as per MNRE / SECI guidelines. 2 x 800 MW solar park for development. Karnataka - Supporting Renewable Initiatives • 2015 9

Section 2 – One State, many investment opportunity. 2. Wind power Karnataka is one of the wind-rich states in India and has a potential around 14 GW. Currently a capacity of 2.6 GW has been installed in the state. The capacity addition in state has been quite stable of around +250 MW/annum in the last 3 years. During the Financial year 2014-15, it was targeted to achieve 350 MW Wind Power Project in the State, of which 250 MW has been commissioned. Karnataka introduced preferential tariff framework in 2004, a key enabler with a tariff of Rs 4.20/kWh the state is one of the preferred destination for wind power projects in the country. Karnataka - Supporting Renewable Initiatives • 2015 10

WPD > 200 W/m2 at 100 and 120 mtr hub height Section 2 – One State, many investment opportunity. A 30GW* estimate at 100mtr hub height, opens up strong investment opportunity in wind power projects. WPD > 200 W/m2 at 100 and 120 mtr hub height Independent study, identifies various wind rich locations in the state (Bellary, Chitradurga, Chamrajnagar, parts of Kolar, Chikballapur, Hassan, Haveri, Gadag, Koppal and Bijapur), estimating over 30GW potential. With the simplification of land acquisition and conversion process, expedition of forest clearances, industrial status to wind power projects. Source: C-STEP * C-STEP estimate Karnataka - Supporting Renewable Initiatives • 2015 11

Section 2 – One State, many investment opportunity. 3. Small Hydro projects Karnataka state has high development and dependency on Hydel power which contributes to around 28% of state generation. Karnataka state is endowed with small hydro power potential estimated to be about 3000MW, of which only 25% has been harnessed so far. A tariff of Rs 4.16/kWh is one of the best in the country for a high PLF region. With the simplification of land acquisition and conversion process, expedition of forest clearances, industrial status to SHP projects, Land lease for 30 yrs+ (forest and Govt. land), MNRE subsidy up to Rs. 1 Cr / MW (for SHP). Karnataka - Supporting Renewable Initiatives • 2015 12

4. Biomass and Cogen power Section 2 – One State, many investment opportunity. 4. Biomass and Cogen power Simplified land acquisition and conversion process, industrial status, and tariff of Rs 4.83/kWh for Cogen and Rs 5.15/kWh for biomass based projects is one of the best in the country. GoI and GoK offer various exemptions and incentives like Central excise duty exemptions, Tax holiday, Customs Duty exemption, and VAT reimbursement up to 50%. Karnataka - Supporting Renewable Initiatives • 2015 13

Summary … Investor friendly state for renewable energy projects Section 2 – One State, many investment opportunity. Summary … Investor friendly state for renewable energy projects Amendments to “Renewable energy policy” to attract investments in SHP, Wind, Biomass and Co-generation projects, to accelerate the capacity addition plans in the state. Industry status to RE projects, simple land conversion and forest clearance, attractive Feed-in-Tariffs promote wind , SHP, Biomass & Co-gen power projects. Attractive tariff for Net metering & roof top solar; Amendments to building bye laws for Floor Area Ratio (FAR) exemptions driving the growth of roof top solar PV project investments. Open bid process & competitive tariff for solar PV projects; Industrial friendly regulations support open access projects with waiver of open access charges , loss & 100% banking for solar projects. Central excise duty exemptions, Tax holiday, Customs Duty exemption, and upto 50% VAT reimbursement. Karnataka - Supporting Renewable Initiatives • 2015 14

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