Market Research India - Wind Power Market in India 2009

Wind Power ‐
Wind Power India
February 2009

Executive Summary

 Estimated worth USD 2.5 bn in 2008
 Installed capacity 9645 MW while potential capacity ~45000MW
Market
 State of Tamil Nadu accounts for 50% of installations
 80% of power generated is used for captive consumption
80% of power generated is used for captive consumption

 Drivers: Strong government initiatives at Central and State levels, cost competitiveness and global
Drivers & shift in the movement towards generation of clean energy
Challenges  Challenges: Variability in output levels due to climatic conditions shortfall in land available to
Challenges: Variability in output levels due to climatic conditions, shortfall in land available to
develop wind farms and lack of infrastructure for generation and transportation of power

 Shift from captive consumption to independent power production
Shift from captive consumption to independent power production
Trends  Shift from onshore to offshore wind energy due to higher potential
 Large energy companies entering the industry

 Suzlon dominates the market
– It has installed 58% of India’s total capacity
Competition – Growing @ 43% p.a.
 Other major players are Vestas Enercon and GE Wind
Other major players are Vestas, Enercon and GE Wind

WIND POWER – INDIA.PPT 2

•Market Overview
•Drivers & Challenges
Drivers & Challenges
•Trends
•Competition
•Key Developments


Wind power is the fastest growing renewable energy source in India
and is valued at USD 2.5bn
Overview Size and Growth
• The wind power installed capacity is 9645 MW ( as of Installed Capacity (ending March)
Feb ’09)
MW
• The potential capacity of wind power is 45195 MW
+34% 9,645
• Wind power technology is dominated by onshore 10,000
7,845
installations (land based) of turbines 6,320
5,000 4,430
• Wind power is used for both captive consumption 3,000
and Independent Power Producer (IPP) model:
dI d d tP P d (IPP) d l
 Almost 80% of the power generated is used for captive 0
consumption 2004 2005 2006 2007 2008
Segmented State‐wise Installations Segmented State‐wise Potential
As of Sept. 2008 100% = 45,195 MW
Maharashtra 100% = 9521.80 Gujarat
Karnataka Karnataka
20% 21%
12% Rajasthan 15%
6%
2% Kerala
Gujarat 14% Andhra Pradesh 18%
12% Madhya Pradesh
4% 1% 12%
Others 44% West Bengal 7% 4% 8%
Tamil Nadu
Tamil Nadu Maharashtra
Tamil Nadu
T il N d
Rajasthan Orissa


•Market Overview
•Trends
•Competition
•Key Developments



Challenges

Variable Output
Variable Output

Unavailability of land for wind farms
Drivers
Lacking infrastructure
Government initiatives

Cost competitiveness

Global shift to clean energy


Positive government policy towards reducing costs for investors is the
major driver in the market
Central government initiatives Impact
•Direct Taxes
 Benefit of accelerated depreciation, 80% in the first year
p , y
 Additional depreciation @ 20% for projects being commissioned after March 2005 with new
plant & machinery
 10 year income tax exemption for profits from wind generation
•Indirect Taxes
Indirect Taxes
 Exemption of Excise Duty on devices such as
– Wind operated electricity generator, its components and parts thereof
– Water pumping wind mills, wind aero‐generators and battery chargers
 Sales Tax
Sales Tax
– Exemption/reduction in Central Sales Tax and General Sales Tax are available on sale of renewable energy
equipment in various states
•Generation‐Based Incentive (GBI) scheme for grid connected projects
 Offered to independent power producers who do not avail of accelerated depreciation
p p p p
 Benefit of Rs.0.50 per unit (kwh) for a period of ten years
•Financial Incentive
 Financing of up to 70% of eligible project cost
 100% FDI is permitted under automatic route
100% FDI is permitted under automatic route


State governments have also provided localized incentives to attract
players to invest in their respective States
State Wheeling Banking Buy‐back Third party‐sales
Andhra Pradesh 2% of energy, in addition to 12 months Presently INR 3.37 w.e.f 01.04.2004 Allowed; but subject to
very high transmission (frozen for 5 years) APERC Regulations
Tamil Nadu
T il N d 5% of energy
5% f 5% for 12 months
5% f 12 th INR 2.90/kwh
INR 2 90/k h Not Allowed
N t All d
Karnataka 5% of energy + 1.15kwh as 2% every month INR 3.40 / kwh no escalation for 10 Allowed to High Tension
cross‐subsidy for 3rd party for 12 months years industrial consumers
sale
Kerala To be decided by SERC
To be decided by SERC 9 months
9 months INR 3.14/kwh for 20 years
INR 3.14/kwh for 20 years None
(June‐Feb)
Gujarat 4% of energy 6 months INR 3.37/kwh Not Allowed
West Bengal 2% of energy 6 months To be decided on case to case basis Not Allowed
with a cap of INR 4/kwh
Madhya Pradesh 2% of energy + Transmission Not Allowed Present: INR 3.97/kwh Allowed
charges by SERC 5th ‐ 20th year: INR 3.30
Maharashtra 2% of energy 2% for 12 months INR 3.50/kwh with escalation of INR Allowed
+5% T&D loss 0.15 per unit/year for 13 years from
DoC of project
f
Rajasthan 2% of Energy 2% for 12 months Currently at  INR3.32/kwh Allowed
Uttar Pradesh 2% of energy 12 months INR 2.25/kwh ( 5% Esc. 95‐96 ) Allowed
NOTES:
Wheeling: Charges imposed on entities using power  for captive consumption at their sites routed through the state grid
Wh li Ch i d ii i f i i h i i d h h h id
Banking:  Storage of power generated by producers with the State Electricity Boards which can be drawn for future use

NETSCRIBES BR TEMPLATE V4.PPT

Low cost of power generation and fast recovery of investments made
are some benefits in the market
Cost competitiveness Impact
• Cost / kWh of generation is comparable to conventional power generation
• No recurring cost ‐Investor bear only initial capital cost since wind is a natural resource thus
zero input fuel cost
• Pay back in shorter duration as compared to other energy sources
• Operation and equipment maintenance costs are low
• Low gestation period
 Electric power generation can be put on line in as low as six months
•Technical operating availability 98%
 Higher operating availability (the proportion of the time in which the equipment is available
to operate) compared to other electricity generating technology
to operate) compared to other electricity generating technology
cents/kWh cents/kWh
Lower Estimate Upper Estimate
15 15 15
11.1 11 12
10 10
5.1 5.8 6 6
3.9 4.8 4.0 4
5 5

0 0
Gas Coal Wind Hydro Biomass Nuclear Gas Coal Wind Hydro Biomass Nuclear
(without (without
incentives) incentives)


The need for clean energy, constantly developing technology and the
volatility in fuel prices is expected to boost this industry
Global shift towards clean energy Impact
•Strong lobbying by institutions towards clean energy generation coupled with
government action to reduce levels of greenhouse gases has given a boost to
this market
thi k t
•Continual improvements are being made in the ability of wind turbines to
capture wind energy
 Increase in power and size of turbines, improved power electronics, better use of
composite materials and taller towers
composite materials and taller towers
 Cost of onshore wind power has decreased by about 80% due to technological growth
•Recent volatility in the prices of crude oil has affected levels of demand. This will
act as a major driver in the market as players are more inclined towards using
power generated through alternative inexhaustible sources of energy with
power generated through alternative inexhaustible sources of energy with
marginal fluctuations in price
USD per barrel
150

100
50 Crude oil prices
0
Dec‐ Jan‐ Mar‐ May‐ Jul‐ Aug‐ Sep‐ Nov‐ Dec‐ Jan‐ Feb‐ Jul‐ Sep‐ Nov‐ Dec‐ Jan‐
l b l
06 07 07 07 07 07 07 07 07 08 08 08 08 08 08 09


The complete dependence on climatic condition leads to variability in
power generation which acts as an obstacle to recover costs
Variable source of power Impact

Peak winds are observed during May‐Sept  namely the  Southwest Monsoon,
P k i d b dd i M S t l th S th tM
thereby creating a challenge as an intermittent source of energy

Suppliers face high fixed costs
as equipment and set‐up
cost is large
Recovering cost is an Further investment is required
impediment as requisite power   to purchase a system to store
is generated over a limited energy  in order to curtail
period in a year fluctuations in power output

Low variable cost as
maintenance charges are
relatively negligible


Unavailability of suitable terrain and the lack of basic infrastructure
are some challenges in the industry
Lack of land to set up wind farms Impact
•Highly site specific
 Wind farms can be set up at MNES identified potential sites (where it has a mean annual
wind power density of 200 W/m2 or more at 50 m above ground level)
•Impact on wild life
 Government land in the form of reserve forests is not available for setting up wind farms
because of the possible adverse impact on wild life
•Delay in land allotment and clearance due to inefficient government operations

Lack of infrastructure
•Poor transportation infrastructure
 There exist constraint in transportation and installation of large turbines to wind farms
located in rural areas
•Inadequate power evacuation infrastructure
•Inadequate power evacuation infrastructure
 Inadequate grid capacity to transmit the power generated leading to inefficiencies in
power generation


•Market Overview
•Trends
•Competition
•Key Developments


Key Trends

Investors are moving from
captive consumption model to
d l
independent power producing

Trends
Large energy companies are
Offshore wind energy is
entering the market capitalizing
becoming more attractive than
g
on the cost benefits available
th tb fit il bl
on shore wind energy
and the lack of competition


Existing opportunities for the sale of power commercially is being
realized  and a shift from onshore to offshore technology is observed
Shift towards IPP Model

Turbine Manufacturers Players
capitalizing on
profit incentives
Previously sold wind farms Independently producing
to corporate houses who power and supplying it to the
g
generated power
p g
government  hence
maximising profits
Shift due to
GBI scheme

Offshore technology
•Growth in offshore technology
Strong prospects
 Turbines installed in sea beds experience stronger winds than onshore installation due to
 Less obtrusive compared to turbines on land technological
•Indian coastline offers  good offshore wind potential
•Indian coastline offers good offshore wind potential advancements
 Examples are
– Rameshwaram in Tamil Nadu and Mundra at Gulf of Kutch have wind power density of about 350 to 500
watt/m2
– Other potential locations include Western coast, especially the Gujarat coastline
p , p y j


Energy giants are moving to wind power generation due to the large
scope of growth available in the industry
Large energy companies moving to wind power

Company Proposed Investment Lack of
competition has
competition has
ONGC • Planning to invest USD 123 mn in Gujarat towards generating 1000‐2000 mw of
attracted energy
wind energy
giants
• It also plans on investing USD 61 mn in Karnataka towards wind power generation

GAIL • It
It proposes to set up 4.5 mw of wind power project in Gujarat investing over USD
t t 45 f i d j ti G j ti ti USD
5 mn
• Karnataka and Maharashtra are also being considered as wind power generation
sites can combined installed capacity of 19 mw is expected
Reliance
R li • Pl
Plans to develop a 8.37 MW wind farm project at Jogimatti, Taluka Hiriyur, and
t d l 8 37 MW i d f j t t J i tti T l k Hi i d
Energy District Chitradurga in Karnataka

Tata Power • The company plans to expand their wind power production capacity from
200MW to 500MW by 2011


•Market Overview
•Trends
•Competition
•Key Developments


Suzlon Energy is the dominant player among the manufacturers
(1/5)
1
Rating Details as on 31st Mar‐2008
No. Manufacturer 2
kW Nos. MW
1 ABAN ‐ Kenetech 410 231 94.71
220 2 0.44
0 44
2 AMTL‐ Wind World 250 328 82
500 3 1.5
55 16 0.88
3 BHEL
200 17 3.4
34
200 79 15.8
4 BHEL Nordex
250 184 46
250 94 23.5
5 C‐WEL
600 2 1.2
12
6 Danish Windpower 150 12 1.8
80 9 0.72
7 Das Lagerwey
250 284 71
8 JMP‐Ecotecnia
JMP Ecotecnia 225 10 2.25
2 25
9 India Wind Power 250 8 2
10 GE Wind Energy 1500 14 21
200 1 0.2
11 Elecon 300 51 15.3
15 3 NOTE 1: Capacity of wind turbines
p y
manufactured
600 12 7.2
2: Total number installed


(2/5)
1
No. Manufacturer 2
kW Nos. MW
230 452 103.96
330 40 13.2
13 2
12 Enercon
600 719 431.4
800 1390 1112
140 4 0.56
13 Himalaya
200 24 4.8
48
14 Kirloskar ‐WEG 400 8 3.2
15 Micon (Pearl) 90 99 8.91
16 Mitsubishi 315 6 1.89
250 4 1
17 Nedwind‐Windia 500 20 10
550 35 19.25
18 Pegasus 250 9 2.25
19 Pioneer Asia
Pioneer Asia 850 52 44.2
44 2
20 Sangeeth Carter 300 25 7.5
225 962 216.45
250 16 4
21 NEPC India
400 7 2.8
28 NOTE 1: Capacity of wind turbines
p y
manufactured
750 14 10.5


(3/5)
1
No. Manufacturer 2
kW Nos. MW
55 14 0.77
110 2 0.22
0 22
200 50 10
22 NEPC‐Micon 225 589 132.53
250 528 132
400 121 48.4
48 4
600 2 1.2
110 10 1.1
23 Pioneer Wincon 250 461 115.25
755 1 0.755
0 755
55 22 1.21
24 REPL‐ Bonus 100 1 0.1
320 60 19.2
25 RES‐Advanced Wind Turbine
RES Advanced Wind Turbine 250 80 20
26 Southern Windfarm 225 349 78.525
250 4 1
27 Tacke 600 21 12.6
750 1 0.75
p y
manufactured
28 SIVA 250 1 0.25


(4/5)
1
No. Manufacturer 2
kW Nos. MW
270 2 0.54
350 932 326.2
326 2
600 366 219.6
1000 81 81
29 Suzlon
1250 1836 2295
1500 523 784.5
784 5
2000 1 2
2100 1 2.1
300 65 19.5
30 Textool‐Nordtank
550 5 2.75
2 75
250 351 87.75
31 TTG /Shriram EPC
1350 1 1.35
55 31 1.71
90 21 1.89
1 89
100 5 0.5
32 Vestas ‐ RRB 200 56 11.2
225 772 173.7
500 609 304.5
p y
manufactured
600 488 292.8


(5/5)
1
No. Manufacturer 2
kW Nos. MW
750 772 579
33 Vestas Wind Technology
Vestas Wind Technology 950 57 54.15
54 15
1650 291 480.15
34 Wind Master 200 1 0.2
35 Windmatic 55 30 1.65
36 Wind Power
Wind Power 330 29 9.57
9 57
TOTAL 14886 8697.93

NOTE 1: Capacity of wind turbines
p y
manufactured


Major wind power generation installations in India (1/2)

Location Total Capacity
Power Plant Owner
City State (Mwe)
Vankusawade Wind Park Suzlon Energy Ltd. Satara Dist. Maharashtra 259
Cape Comorim Aban Lloyd Chiles Offshore Ltd. Cape Comorim Tamil Nadu 33
Kayathar Subhash Subhash Ltd. Kayathar Tamil Nadu 30
Ramakkalmedu Subhash Ltd. Ramakkalmedu Kerala 25
Muppandal Wind
Muppandal Wind Muppandal Wind Farm
Muppandal Wind Farm Muppandal Tamil Nadu
Tamil Nadu 22
Gujdimangalam Gujdimangalam Wind Farm Gujdimangalam Tamil Nadu 21
Puthlur RCI Wescare (India) Ltd. Puthlur Andhra Pradesh 20
Lamda Danida Danida India Ltd. Lamda Gujarat 15
Chennai Mohan Mohan Breweries & Distilleries Ltd. Chennai Tamil Nadu 15
Jamgudrani MP MP Windfarms Ltd. Dewas Madhya Pradesh 14
Jogmatti BSES BSES Ltd. Chitradurga Karnataka 14
Perungudi Newam Newam Power Company Ltd. Perungudi Tamil Nadu 12
Kethanur Wind Farm Kethanur Wind Farm Kethanur Tamil Nadu 11
Hyderabad APSRTC Andhra Pradesh State Rapid Transit Hyderabad Andhra Pradesh 10
Corp.
pp
Muppandal Madras Madras Cements Ltd. Muppandal
pp Tamil Nadu 10
Poolavadi Chettinad Chettinad Cement Corp. Ltd. Poolavadi Tamil Nadu 10


•Market Overview
•Trends
•Competition
•Key Developments


Key Developments

Date Development
29‐Jan‐09 The Railways is considering to invest USD 14 mn towards setting up of a 10.5MW wind plant in the Saurashtra region in
Gujarat. Investments are expected to be scaled up in order to achieve a capacity of 100MW.
10‐Jan‐09 Gujarat government amended wind power policy by hiking purchase rates to INR 3.5/unit from INR 3.37/unit fixed last year.
j g p p y y gp y
This is in lieu of project amounting to USD 4 bn that is expected. Distribution licensee must purchase 10% of power produced
from wind in a year in comparison to 2% which stood previously. Major players expecte to expand capacity are Suzlon who will
invest USD 1bn expanding capacity by 1500 MW, Eneron and Abelon expanding capacity by 600MW and 1000MW
respectively.
17‐Dec‐08 Suzlon consolidated their position in the market as it bought 22.4% stake in German wind turbine manufacturer REpower
Systems. They now own 91% stake in RE power . The deal was valued at approximately 65mn Euros.
S t Th 91% t k i RE Th d l l d t i t l 65 E
26‐Nov‐08 General Electric Co.'s (GE) energy unit plans to build a wind turbine assembly plant which is expected to be completed by
December 2009. Initial investment will be between USD 3‐5 mn
14‐July‐08 Jharkhand Renewable Energy Development Agency is looking at companies in the industry to set‐up plants in two potential
sites namely Sakhuapaani in Gumla and Matarmeta in Simdega. MNRE is expected to provide funding for the project. The
projects will be on turnkey basis with a 10‐year maintenance period.
1‐June‐08 Suzlon has invested USD 102 mn towards generating power in West Bengal. The 50 MW wind farm, expected to be
operational by 2009, will be the largest installation in the eastern region.
29‐May‐08 Tata Power has invested USD 102 mn towards wind power expansion adding 115MW of wind power capacity.
28‐April‐08
28 April 08 Dubai Group, a leading financial services company, acquired40% share in India’s Chiranjjeevi Wind Energy (CWEL). Earlier,
Dubai Group a leading financial services company acquired40% share in India’s Chiranjjeevi Wind Energy (CWEL) Earlier
CWEL received an order from India Globalization Capital, Inc worth USD 25 mn to set up a 24MW wind farm in Karnataka
which was followed by a deal to install 260 MW in Karnataka forwarded by the Karnataka Thermal Power Corporation Ltd.
21‐April‐08 CLP Holdings of Hon Kong was granted a loan amounting to USD 113 mn from the Asian Development Bank to develop two
wind farms having a combined capacity of 183.2 MW. This project has a total cost amounting to USD 250mn.


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