Renewable Energy policies and challenges change(1).pdf · Welspun Energy Limited (WEL) has been...

Welspun Group | Welspun Energy Limited

Renewable Energy – policies and challenges-Developers perspective

-Raghunath Mahapatra


CSE - Annual South Asian Media Briefing on Climate Change, 201318 September 2013


• One of the fastest emerging Indian conglomerates with revenues of

over $3.5 billion

• Diversified business interests with leadership position in each business

• Welspun Corp, the flagship company of the group is the world’s largest

steel pipe producer

• Key Markets

80% export to US, Europe, Latin America, Middle East

• International Setup

Christy, UK

Sorema, Portugal

Textile facility in Mexico

Office in Manhattan-NY, Huston-US

Pipe facility in Arkansas, US

Pipe Facility in Saudi Arabia

WELSPUN GROUP

Welspun Group

Pipes

Textile

InfraEnergy

Steel

Welspun Group | Welspun Energy

Only business group in India to win largest capacities in both JNNSM – I & II

• Has won maximum capacity allocation…• …at low tariff – demonstrates its ability to beat

competition and continue to realize growth

50

3530

20

0

10

20

30

40

50

60

Welspun Azure Kiran Energy Mahindra Solar

(MW

)

• Pioneer in Renewable energy space• Won “The most innovative power producers in Asia”

award for the 15 MW solar power project at Anjar

110

30 25

80

137 130

50

15

0

50

100

150

Welspun Lanco Kiran Energy Moser Baer

MW

Operational Construction

Welspun Energy Limited (WEL) has been recognized as oneof the most innovative power producers in Asia for its 15MW solar power project at Anjar (Gujarat)

8.058.95

7.49

9.39

0.0

2.0

4.0

6.0

8.0

10.0

Welspun Median tariff Minimum tariff Maximum tariff

(INR

KW

h)

WELSPUN RENEWABLE ENERGY - AMONG TOP RENEWABLE ENERGY IPPS IN INDIA


Welspun Renewables : Solar

• Large Business Conglomerates with substantial Renewable Energy Plans

• Proven track record in timely project execution

• Focus on Solar and wind energy

• Strong in-house technical and engineering team

Operational Capacity (131 MW)

• Gujarat 15 MW

• Gujarat 5 MW

• Gujarat 30 MW

• Andhra Pradesh 5 MW

• Rajasthan 5 MW

• Rajasthan 50 MW

• Rajasthan 20 MW Wind

Anjar : 15+5 MW Neemuch: 130 MW

S’Nagar : 30 MW

Phalodi : 5 MW

Phalodi : 50 MW

Kadappa: 5 MWKarnataka: 17 MW

Capacity under construction (265 MW)

• 130 MW in MP

• Maharashtra 20 MW

• 17 MW in Karnataka

• 32 MW in Punjab

• 66 MW in Tamilnadu

Solar: Operational

Solar: Under Implementation

OUR PROJECTS

Mangalwedha: 20 MW

Wind: Under Implementation

Rajasthan: 20 MW

TN: 66 MW

Punjab: 32 MW


Punctuality

Faster project execution• 15 MW Gujarat – 6 months• 5 MW Andhra Pradesh - 4 months• 5 MW Gujarat –3 months• 5 MW Rajasthan - 2.5 months

No Cost Overruns Project implemented within budgeted costs without any cost overrun

Team Experience Excellent engineering, procurement and project management

Capacity Utilization

All existing plants are operating at CUF around 20%

PROVEN RECORD – FASTER EXECUTION


6

All operational projects performing better than estimated and designed generation

Best daily generation for our operational projects

Gujarat 5 MW Project : 26.44% Rajasthan 5 MW : 26.64% Gujarat 30 MW : 24.72% Rajasthan 50 MW : 22.60%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Gujarat 15 MW Gujarat 5 MW Rajasthan 5 MW AP 5 MW

CU

F

Cumulative generation for the projects

Cum Generation Estimated

PROVEN RECORD – PERFORMANCE EXCELLENCE


JNNSM taking Solar power toward Grid parity

17.35

10.96

7.49 7.94 7.97

0

2

4

6

8

10

12

14

16

18

20

2010 JNNSM Batch 1 (12/10) JNNSM Batch 2 (12/11) Karnataka (4/12) Madhya Pradesh (5/12) Odisha (2/12)

TRENDS IN TARIFF

SOLAR TARIFF – TRENDS IN INDIA


POLICY ENABLERS

Robust policy – JNNSM, State policies

Financial incentives

Tariff policies etc.

Structural framework

Dedicated ministries

Dedicated nodal bodies at center and state

Structured and integrated process


POLICY CHALLENGES

Allow SEBs to claim RECs for the purchase of RE power beyond the RPO limit

• RPO target – 15% from RE projects by 2022

• Solar RPO – 0.25% in 2012-13; to be increased by 3% per annum

Strict enforcement of RPO obligations by states

Promote REC bilateral trading

Resourceful states should be allowed to take REC beyond the RPO target

Restriction on Solar plant CUF

• With evolving solar technology, CUF restriction in the PPAs is an obstacle

Restriction on upper CUF to be taken off

Reverse bidding – location agnostic

Local content requirement

Accelerated depreciation


10

Very short project duration (PPA to COD)

Front loaded expenses

Rapid growth needs

Locking in equipment supplies

Higher fund velocity

Reduced FC duration (PPA to FC)

Sector nascence

Experience

Expertise

Reality check yet to be done

FINANCING RENEWABLE – INDUSTRY IMPERATIVES


11

Common sector definition i.e. thermal = renewables

Sector exposure limits

Risk perception and analysis

Developer, project, vendor and contract, asset, off-taker

Payment security

Understanding of the sector (nascence)

Experience of wind

Tenure mismatch – takeout finance enabling

Gearing (70:30 or ?)

Policy and regulatory

Lenders

FINANCING RENEWABLE – CHALLENGES FACED


12

Capacity 130 MW AC, 150 MW DC

State policy – aligned with JNNSM

Land – free allocation by government

Collateral – leasing

Financing

Risk appetite

Multiple lenders (Risk appetite, sectoral cap)

Evacuation

Forest

ROW

Documentation

A CASE STUDY – NEEMUCH, MP


THANK YOU

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