1. Astonfield Renewable Resources Ltd. An Astonfield Group Company Note: The information contained here-in is proprietary and confidential. Any unauthorized reproduction or distribution is forbidden. Astonfield Renewable Resources, Ltd. Developer’s perspective on an enabling framework for renewable energy November 2009 Ravi Raina

2. 2 INDIA’S POWER SECTOR : POINTS TO PONDER  Current power mix is fossil fuel dependent and has following negatives  Price volatility/ subsidy dependent  Energy security  Impact on environment  Long gestation period  Utility scale “carbon-less” SOLAR POWER, with NIL environment impact is need of the day to support  Sustainable rural development (electricity in rural areas)  Use existing T&D network  Decentralized power generation at remote locations across the country  Replacement for existing DG sets being used for irrigation where subsidised cost is Rs 15 /kwh Utility scale solar power addresses India’s growing energy needs India’s Installed Generating Capacity Total = 147,716MW

3. 3 Solar power will be a significant source of global energy mix in future, with critical mass building after reaching grid parity Oil Coal Gas Nuclear Power Hydroelectricity Biomass (traditional) Biomass (advanced) Wind Solar power (photovoltaics and solar thermal generation) Solar thermal (heat only) Other renewables Geothermal 200 400 600 800 1,000 1,200 1,400 1,600 0 2000201020202030204020502100 Primary Energy Use (EJ/a) Source: Climate Change Solar subsidies required Solar hits grid parity Solar cheaper than conventional energy

4. 4 Key issues impeding the growth of solar program Affordability of power (Outlook on grid parity) Industry players (across the value chain) Government Policy environment (subsidy) Regulatory Framework (RPPO, tariff orders) Ground level issues (land, permitting) Open access to consumers Central / State government need to support the solar program by way of feed in tariff subsidy and regulatory framework till grid parity is achieved

5. 5 Holistic lifetime cost comparison of solar versus conventional energy (Rs. / kWh) for 1,000MW Base Thermal Tariff Healthcare (12.5 L people impacted) Fuel Escalation Component Transmission & Wheeling Charges Peak power premium O&M Escalation Component Water Cost 3.50 22.56 Conventional Tariff Solar Tariff 17.00 12.40 4.60 Rural jobs created (2.5 L jobs) Effective solar tariff 5.00 0.68 3.58 0.84 0.03 8.93 PEAK POWER Source: Astonfield analysis / Public data

6. 6 With government support starting in 2009, solar can achieve Peak Grid Parity as early as 2013-15 Source: Stephen O’Rourke/Deutsche Bank / Astonfield Analysis 7% 6% PHASE I (Govt Policy very important) PHASE II (Post- Govt Policy) 5% 4% India – Estimated price of peak electricity today: Rs. 6.50/KWh Convergence / Peak Grid Parity  Post 2013, India can substitute expensive sources such as diesel with solar to meet growing peak power demand  Astonfield estimates that base load grid parity can be achieved by 2020-23 - beyond that point, abundantly available domestic solar power will be cheaper than imported coal, positioning India to be energy independent * * Assumes that conventional power tariff escalates at roughly 5-7% per annum

7. 7 While Solar tariffs are more incentivized in Europe, large scale program can bring economies of scale to support low tariffs in India 15 -17 Rupees 22-24 Rupees 28-35 Rupees 2.5MW grid connected solar capacity in all of India 50MW experimental solar program announced by Government of India; more than 1500MW of applications Two States have now established independently funded programs of 500MW and 50MW respectively In addition, Government of India expected to announce landmark 20,000MW solar program in 2009 Comparison of Feed-in Tariffs Globally (INR per kWh)Scale of India’s Solar Program (MW)

8. 8 CERC tariff determination guidelines is a step in the right direction… SERCs needs to keep the above factors into account, while adopting the CERC guidelines at State level Project VariableCERC AssumptionObservation Capital ExpenseRs 1700 L / MWFeasible in tandem with a large solar program Net Capacity Utilization Factor19.0%Needs to be in accordance with insolation levels of each state. Interest RateSBI PLR + 150 bps (~ 13.5%) Long term cost of capital will decline once the initial few projects are in successful operation O&M expenseRs 9 L / MW ; 5.72% annual escalation Insurance expenses need to be provided for separately ROEPre tax rate : 19% (year 1- 10); 24% (year 11 onwards) CERC assumptions consistent with investor expectations Annual Output degradationNilIndustry data indicates panel degradation of ~ 0.5-0.8% p.a. Useful life25 yearsProvides long term certainty to developers

9. 9 CUF needs to be customized for each state Varying solar insolation levels across the country (4-7 kwh / sqm/day) affects the project economics, hence CUF needs to be in accordance with insolation levels of each state India’s Solar Radiation Map Indicative levels of Solar Insolation level (kwh /sqm/day) CUFStates 6.0 & above18.97% & above Rajasthan, parts of J&K (Leh) 5.7518.18 %Parts of Gujarat, M.P. 5.5017.39%Parts of A.P., Tamil Nadu, Karnataka, West Bengal, Bihar 5.25 & less16.60% & less Rest of India

10. 10 Solar RPPOs: Critical to Ensure Visibility of Solar Sector Growth to Attract Up-Front Investment CERC can play a critical role in guiding the SERCs to declare solar-specific RPPO targets The rationale for Solar RPPO  Demand is generated by State DISCOMs – in the absence of solar energy procurement targets, they will tend to opt for cheaper renewable power sources  In addition to targets, there must also be penalties on DISCOMs that fail to achieve these targets  Path to Grid Parity is dependent on creating visibility through RPPO to build manufacturer and developer confidence in economies of scale Indian Experience Gujarat : Solar specific RPPO ( 1.5% in 2009, increasing to 2.5% by 2011) Maharashtra : 0.5% Available Benchmarks Global Experience EU : 20/20/20 (20% cut in emission norms, 20% renewable energy portfolio, 20% cut in energy consumption by 2020) Germany : solar accounts for 4% of renewable portfolio

11. 11 To realize potential of solar power, India should have capabilities across PV Value chain Crystalline Value Chain 7% 8%13%30% (%) = relative weight of cost structure 35% PolysiliconIngotWaferCellModule Balance of System PV Raw MaterialsPV Deposition & Module IntegrationModule Encapsulation Schematic diagram of a CdTe module Thin-Film manufacturing line where deposition and integration take place Glass that is used as substrate Thin film Value Chain India can be a global solar PV manufacturer then presence across the value chain is imperative

12. 12 Successful solar sector begins with robust solar policy and right regulatory framework stimulating demand for solar power generation GENERATION MANUFACTURING TECH 1.Stimulating generation creates domestic demand for solar manufacturing and fulfills nation’s electricity needs 15-20 GW of demand stimulation to attract large scale cost efficient manufacturing 2. As demand is created, a vibrant manufacturing base opens up, creating domestic jobs and fueling overseas exports Drive manufacturing of all solar technologies and create export base market 3. With an established downstream demand, investment in R&D and talent flow into the sector, helping India become a global solar technology hub Growth of the value chain begins downstream Stimulating generation lays the foundation for long-term viability of the sector

13. 13 To realize the potential of the large scale solar program, a robust regulatory framework is a must at state level based on CERC notified norms Solar Program Development Required: Why this is necessary:  In the absence of an RPPO mandate for PV solar, states will steer towards cheaper renewable energy sources and subsidies will be compromised  Gives developers and manufacturers line of sight to standardized project return expectations across States and facilitates early installations Accelerate Adoption of CERC Guidelines at State Level Renewable Power Purchase Obligations  Development delays are costly barriers for developers - land assistance, permits should be granted through a single window clearance Ensure Administratively Simple Processes  Given fast implementation cycle for solar, serious developers can accelerate new capacity addition if subsidy process is streamlined Streamline Central Subsidy Application and Payment Process

14. 14 Each State ERC can ensure strong foundations for solar sector rollout even as details of National Solar Mission become more understood 1.Initiate study to confirm CERC solar tariff guidelines (with adoption of specific CUF assumption for each state) 2.Declare a tariff for Solar PV (framework can be declared contingent on National Solar Mission subsidies) 3.Pursue allocation approach rather than competitive bidding in early years of the program (incubation is still required) 4.Declare an RPPO with solar-specific carve out 5.Work with Discoms to standardize bankable PPAs for solar projects <25MW The states that have already gone through this process or that can complete it by 1Q10 will establish early leadership of solar sector

15. 15 India has a small window of opportunity to capture global attention on solar sector development UNITED STATES Still questions on budget /capital availability for solar rollout EUROPE Spain has already cut back program Germany should be a steady market but no more than 15% global manufacturing offtake Italy potentially to re-evaluate feed-in-tariff in next 18 months CHINA Has declared target of rolling out 20GW of solar by 2020 but specifics on incentives and budget are still largely unclear Global manufacturers are looking for a secure long-term market at the moment and will sacrifice margin for scale

16. 16 West Bengal 2x 5MW Solar 10MW Biomass Rajasthan 5MW Solar Gujarat 200MW Solar Haryana 3MW Solar Bihar 100MW Biomass Karnataka 10MW Solar Karnataka Phase 2 Solar Uttar Pradesh Phase I Solar / Biomass West Bengal Phase 2 WTE / Biomass ► Total of 338MW solar project currently in the MOU/Allocation stage ► Close to 1000 MW of pre-MOU opportunities currently in the public sector pipeline ► Of that pipeline, at least 500MW expected to convert into formal concession by 1Q10 with remainder by 1Q11 ► In addition Astonfield is in process of finalizing 400MW in pipeline from four leading industrialists in India under co- development structure Rajasthan Phase 2 Solar Astonfield has become the largest diversified renewable energy company in India MOU/ Allocation Pipeline Initial Dialogue Madhya Pradesh Phase I Solar Orissa Tamil Nadu Andhra Pradesh Jammu & Kashmir Phase I Solar Bihar Phase I solar

17. 17 THANKS FOR YOUR ATTENTION