Green Power Market Development Group - India. Tara Parthasarathy, Ashok Thanikonda Progress Review - Collaborative Rooftop PV Purchase Sept 30, 2013

Transcription

1 Green Power Market Development Group - India Tara Parthasarathy, Ashok Thanikonda Progress Review - Collaborative Rooftop PV Purchase Sept 30, 2013

2 Overview Renewable Energy is expensive, unreliable and difficult to buy. It is not our core business, we don t need to think about it. Banks don t want to fund RE projects. Government policy is confusing and constantly changing. These are some of the challenges faced by corporates willing to procure Renewable Energy in India. How do we change the way renewable energy is procured in India? How do we make renewable energy a mainstream option for the Private Sector? 2

3 Overview. Most of the work being done in the RE space in India is bring driven by the supply side Need first movers to invest heavily in RE to negate reliability and cost concerns Need innovative procurement strategies to overcome some of the challenges peculiar to the Indian market (Regulations, Availability of financing, Availability of Bankable Data, etc.) Demand side needs to speak out about their needs and concerns, and the barriers they face while trying to procure RE; need to interface with government agencies and regulators 3

4 The Imperative for Private Investment RE Capacity in GW The 12 th Plan targets total installed renewable capacity of 55 GW 0 Existing 12th Plan Goal This requires total investment of INR 32 lakh Cr. State / Central governments have committed INR 38,000 Cr. 88% of this investment is expected from other sources. Private Investment is crucial. Rest 88% Central Government 10% State Government 2%

5 Green Power Market Development Group (USA) Initially in US many large leading companies; over 1000 MW of generation capacity 5

6 Green Power Market Development Group (USA) First ever Solar PPA signed - Agreement between Sun Edison and Staples Better pricing than what the companies could get by themselves Provided important support for new renewable energy projects and the market Provided a platform for companies to engage effectively on policy 6

7 Green Power Market Development Group (USA) Group achieved 1000MW early Group has supported a range of renewable technologies Projects developed across the US Provided leadership by sharing experiences widely LIHI 48.8 MW Biomass MW Fuel Cells 35.2 MW Solar 17.9 MW LFG MW Wind MW 7

8 Green Power Market Development Group - India CII is the project partner in India. WRI leads content and technical support, while CII leads convening and outreach. GPMDG - India will: Engage with Policymakers and Regulators on specific issues Develop workable Demand Aggregation Strategies Create a community of buyers - Learn from each other Help make purchasing decisions technical support, access to expertise Network with other actors (Buyers, Sellers, Technology Providers, Policy Makers, Regulators) 8

9 Bangalore GPMDG India was launched in Jan 2013 in Bangalore. Infosys, Wipro, Cognizant, IBM, Accenture, ACC Cement and others are the participants. Great interest in policy advocacy and demand aggregation. Action items for 2013: Collaborative Procurement of Rooftop Solar Implement and test one successful Collaborative procurement process Regulatory barriers to procurement of RE by corporates Advocacy / engagement with regulators to address specific issues with the Open Access market Long term Procurement Opportunities Identify and help companies test a few long term procurement strategies for Wind / Solar/ Biomass / Others 9

10 Insights Engage progressive large energy consumers in dialogue with regulators In India strong business case for RE due to demand-supply gap Working Pilots act as a laboratory to identify major issues in policy / regulatory space Private sector interest in driving states towards low carbon development, as it intersects with business Easily replicable across state boundaries; WRI doesn t need to act as replicator if companies are motivated 10

11 Progress CollabSolar: 300,000 Sq. feet rooftop space (~3MW) aggregated from Infosys, Phillips, Cognizant, Bangalore International Exhibition Center and Coca Cola are involved. RFQ was released on 29 th July. Final tender (RFP) will be released in Oct. Contracts will be signed with developers by the end of December.

12 Progress Steering committee: With good representation from industry and government is formed to guide the project. The first meeting was organized during 31 st July, 2013 Mr Sreenivasa Murthy, Chairman of KERC participated Policy recommendations: Working on a report with CII, to suggest policy recommendations about Cross-subsidy surcharge to have maximum systemic impacts on Karnataka s power sector. Planning to launch the report during a national GPMDG conference in December.

13 Collaborative Solar PV project (Bengaluru): Progress & next steps

14 Overview of sites

15 Overview of sites

16 RFQ deadlines & responses Milestone/Action Item Date Request for Information released 29 th Jul, 2013 Last date for initial queries and clarifications on RFQ 9 th Aug, 2013 RFQ Responses due 26 th Aug, 2013 Respondents: Azure power Sun Edison Kiran Energy Emmvee Solar

17 Questions (price related) asked in RFQ Would an aggregation model create efficiencies for installation and maintenance? If so, what factors would affect the magnitude of the efficiency gains? Are there potential benefits to having multiple Issuer roofs in close proximity? Could aggregating roof space across multiple facilities in a single RFP create economies of scale for solar modules, inverters, racking, and balance of system equipment? Assuming the Issuers keep ownership of Renewable Energy Credits (REC), approximately how much capacity would be needed to bring solar power costs below 7 rupees per unit?

18 1. Would an aggregation model create efficiencies for installation and maintenance? If so, what factors would affect the magnitude of the efficiency gains? 2. Are there potential benefits to having multiple Issuer roofs in close proximity? Material storage, management & handling Azure Power Sun Edison Kiran Energy Installation time (in case of pooled labor deployment) Monitoring during construction Aggregation results in efficiencies in off-site open Detect and resolve problems quickly to give maximum access projects. uptime (of 99.99%) Cleaning schedule In roof-top projects, each roof Central monitoring with less hardware, spares management, being bigger is beneficial than security and monthly billing having many small roofs. Water usage or RO system construction Further they have to be in the same vicinity to realize these Economies of scale at a single point benefits. Transmission losses (Point of consumption is close to point of generation) Inverter size & as a result cost of the system Aggregation results in cost reductions <100kWp systems (~ roof-top size) will use multiple string inverters as against single central inverters resulting in high cost Emmvee

19 3. Could aggregating roof space across multiple facilities in a single RFP create economies of scale for solar modules, inverters, racking, and balance of system equipment? Azure Power Sun Edison Kiran Energy Emmvee Modules Inverters Possible if projects are awarded to limited number of developers (for >100kWp systems) Racking Balance of System (BoS) Soft cost Logistics costs Warehousing costs Winning developers should get projects of decent size (bundle)

20 4. Assuming the Issuers keep ownership of Renewable Energy Credits (REC), approximately how much capacity would be needed to bring solar power costs below 7 rupees per unit? Azure Power Sun Edison Kiran Energy Emmvee RECs are still not bankable Single large roof-tops that support at least 1MW installations can crosssubsidize smaller rooftops. Current projects cannot claim RECs Can be achieved with 10MW installations RECs are not applicable. System sales and PPA modes are preferred.

21 RFQ responses: Bundling & Pricing implications Two bundles according to the preference of participant companies and the capabilities of developers System sales: Infosys (1.2MW) Power Purchase Agreement (PPA): Coca Cola BIEC Cognizant Philips 1.5MW 0.2MW 0.11MW 0.04MW Cost reductions are expected as a result of bundling. The larger the size of the bundle, the greater impact on pricing

22 RFP terms Bundles: Developer can bid for a single bundle or both of them. But they have to bid for all the sites under each bundle. Pricing: For each site in the bundle, developer has to quote a market price (system sale and O&M / PPA for 5,7,10,15 years), a discount as a result of the aggregation and a final price after discount. Performance guarantees: At the end of every 3 year period during which the energy delivered is less than 95% of the predicted power, the developer shall pay the positive difference of replacement price and the base contract price for kwh shortfall. Buyer will have the option of choosing to buy any generation in excess of 110% of the predicted generation.

23 RFP terms. Warranties: PV Modules warranty against degradation of rated output by more than 10% in the first 10 years and against degradation of more than 25% in the first 25 years Inverters Min 10 years for PPA and 20 years for system sales Mounting systems 20 years Meters Min. 5 years. For inverter-integrated models warranty should match that of inverters Balance of System Acc. To industry standards Transfer of environmental attributes: Developer transfers all the direct and indirect environmental attributes to buyers at the base cost, during the term of PPA or life time of project in case of system sale.

24 RFP terms. Awarding of projects: Qualification and experience 20 points Technical proposal 20 points Financial proposal 40 points Implementation plan and schedule 15 points Contract terms and conditions 5 points

25 Interested in the Collaborative Solar PV project (Bengaluru)? Follow the steps in the next slide to participate.

26 Next steps and project timeline Mail us about your interest in the project with the following details: Site data Name and address of the building(s) Shade free roof area per building Business model preference Capital purchase of the system (System sales) / Power Purchase Agreement (PPA) Please let us know by the 4 th of October, so that we can delay the current tender process and include you in the project. On receipt of your interest, we will: - send you detailed questionnaires, - arrange for site visits by the developers and - provide you with information that helps in decision making