Wind Energy in India : Realisable Option for Power Generation Harish Mehta Director SUZLON Group of Companies

Disclaimer Except for the historical information contained herein, statements in this presentation, which contain words or phrases such as "will", "would", "expect", "believe", and similar expressions or variations of such expressions may constitute "forward-looking statements". These forward-looking statements involve a number of risks, uncertainties and other factors that could cause Suzlon Energy Limited's (the "Company's") actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various international markets, the performance of the wind power industry in India and world-wide, competition, the Company's ability to successfully implement its strategy, the Company's future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, the Company's market preferences and its exposure to market risks, as well as other risks. The Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof. This presentation and any information presented herein are not, and are not intended to be, offers to sell nor solicitations of offers to buy the Company's equity shares or any of its other securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful The Company's equity shares have not been and will not be registered under the U.S. Securities Act 1933, as amended (the “Securities Act”), or any state securities laws in the United States and, as such, may not be offered or sold in the United States or to, or for the benefit of, U.S. persons (as such term is defined in Regulation S under the Securities Act) absent registration or an exemption from the registration requirements of the Securities Act and applicable state laws. Any offering of the equity shares to be made in the United States (or to U.S. persons) was made by means of a prospectus and private placement memorandum that may be obtained from the Company. Such prospectus and private placement memorandum will contain detailed information about the Company and its management, as well as financial statements.

Sustainable Development : Energy and Environment convergence  Energy World is running out of fossil fuel The last two years has seen highest Demand for energy is outstripping the growth in generation capacity  Environmental problems Air – Emissions (SOx, NOx, CO, SPM), ozone depletion, global warming Water-Acid precipitation, degradation, loss of bio-diversity  Sustainable development of “Energy + Ecology + Economy”  Harnessing renewable energy holds the key

Renewable Energy: Global Scenario  3,850,000 MW worldwide  190,000 MW is grid connected RE (5%) 59,000 MW of wind energy installations  25,000 MW added last calender year  About 48 % through wind energy alone 11,407 MW in 2005 Wind Installations world over – Dec’05

RE no longer a fringe player  Global RE market was valued more than US $25 billion in the 2005 calendar year  Approximately 45% attributed to wind energy alone  Several estimates put the Global RE market to grow to US$100 billion by the year 2010  Growth in the last 5 years was about 30%, the same is likely to continue in the coming years  Generation from renewable energy surpassed 17,000 million units in FY , which is more than generation from nuclear energy in India

Global Wind Energy: On a Strong Growth Path  Global wind energy sector expected to grow to 117,412 MW between 2004 and 2009E  Region-wise capacity growth expected at  38% for Australia  25% for Asia  23% for America  17% for Europe  India, China, Australia and US are expected to be key growth markets Key Markets Wind Power Status 2004 vs. 2009E : Cumulative Installed Capacity (MW) 0 CAGR (2004 – 2009E) 23%32%38%23% Source : BTM Consult ApS Report

Key Growth Drivers for Wind Energy Cost Competitiveness Cost per Kwh of wind generation decreased from US$ 0.38 in early 80s to present US$ , at excellent wind sites (1) Rising Oil &Gas prices makes Wind Energy cost competitive Cost per Kwh of wind generation decreased from US$ 0.38 in early 80s to present US$ , at excellent wind sites (1) Rising Oil &Gas prices makes Wind Energy cost competitive Environmental Awareness/ Government Initiatives Environmental Awareness/ Government Initiatives Kyoto Protocol Implementation - Carbon-dioxide emission to reduce by 5.2% of 1990s levels, by 2012 Implementation of Renewable Portfolio Standard requires minimum percentage of power generation from Renewable Energy Kyoto Protocol Implementation - Carbon-dioxide emission to reduce by 5.2% of 1990s levels, by 2012 Implementation of Renewable Portfolio Standard requires minimum percentage of power generation from Renewable Energy Energy Security Price volatility of Oil &Gas have increased focus on Renewable Energy Increased Electricity Demand Increased Electricity Demand Global Electricity Consumption expected to double between 2002 & 2030 (2) – higher growth in India and China Wind Energy’s contribution expected to increase from 0.2% in 2002 to 3% in 2030 (3) Global Electricity Consumption expected to double between 2002 & 2030 (2) – higher growth in India and China Wind Energy’s contribution expected to increase from 0.2% in 2002 to 3% in 2030 (3) Source : (1)American Wind Energy Association (2)World Energy Outlook 2004, IEA (3)World Energy Outlook 2004, IEA

Renewable targets & policies  Renewables require support  Many governments through public policy have fixed targets/goals  EU – 20% by 2020  India – 10% by 2012  China – 10% by 2020  Various governments have implemented incentive schemes to stimulate the market to achieve these targets  Feed-in tariffs Simplistic, transparent, popular & most successful  Fiscal incentives  Investment subsidies  Tendering & procurement  Market based mechanisms

Comparision of regulatory & policy frameworks CountryFeed-in tariffsInvestment subsidy Quota/ Certificates Fiscal measures Germany√√ Spain√√ Denmark√√ Italy√√√ UK√√√ US√√√√ India√?√ Australia√√√ China√√√

 India has been characterized by energy shortages  Installed capacity of 115,544 MW, as of March 2005  Demand exceeded supply by 7.3% with peak shortage at 11.7% (1)  Strong growth potential for electricity consumption in India  One of the lowest electricity consumption levels globally  Per capita electricity consumption of 355 kWh compared to 827 kWh in China, 1,878 kWh in Brazil and 12,331 kWh in the United States (2)  “Power for All by 2012” vision by Indian Government to increase installed capacity to 200,000 MW  Electricity Act 2003 stipulates minimum percentage of power generation from renewable energy  Government of India expects alternative energy sources such as wind energy to play an important role in bridging electricity deficit Indian Energy Environment Potential for Growth in Energy Consumption Source (1)CEA (2)United Nations

EA 2003 & grid connected RE  Section 61(h) : The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the following, namely:- (h) the promotion of co-generation and generation of electricity from renewable sources of energy;  Section 86(i)e: The State Commission shall discharge the following functions, namely:  (e) promote cogeneration and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee; Various State Commissions have put significant emphasis on the last part of this important clause while developing regulations for Distribution Licensees under their jurisdiction

Status of section 86(i)e in India StateStatus of RPS RegulationMinimum Quantum MPFinal Regulation0.5% Wind KarnatakaFinal Regulation5-10% OrissaFinal Regulation3% (Wind+Hydro) GujaratFinal Regulation2% RajasthanOrder issued6% UPOrder issued7.5% APFinal Regulation5% Tamil NaduOrder issued10% KeralaFinal Regulation5% MaharashtraDraft Regulation6%

Wind energy in India : Perspective  Initiated by Government of India in mid-80’s  Private sector investments started in early ’90s  Resource potential of 65,000 MW +  Installation >5,200 MW by March, 2006  Fourth in the world  1700 MW + in the FY 2006  High growth in the past 5 years

Impact of fiscal benefits  There is a gradual move from “tax driven” market to “energy driven” market in India

Sum-up  Wind energy can go a long way to establish the energy security in India  More than 1,700 MW added in the last financial year – 98% by private sector  Wind energy can easily meet 5% of total energy generation in India on the shorter run  Countries like Germany & Denmark have increased this share to as high as 20%  Instruments like production tax credit would commercialise this source of energy in the near future

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