Welspun Group | Welspun Energy Limited
Renewable Energy – policies and challenges-Developers perspective
-Raghunath Mahapatra
Welspun Group | Welspun Energy Limited
CSE - Annual South Asian Media Briefing on Climate Change, 201318 September 2013
Welspun Group | Welspun Energy Limited
• 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 Group | Welspun Energy
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
Welspun Group | Welspun Energy
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
Welspun Group | Welspun Energy
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
Welspun Group | Welspun Energy
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
Welspun Group | Welspun Energy
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
Welspun Group | Welspun Energy
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
Welspun Group | Welspun Energy
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
Welspun Group | Welspun Energy
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
Welspun Group | Welspun Energy
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
Welspun Group | Welspun Energy Limited
THANK YOU
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