Renewable energy 2012 wind conference innovative trends to increase project profitability per kwh
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Renewable Energy 2012 Wind Conference Innovative trends to increase project profitability per kwh. May 2012. REC, GBI and CDM can lead to significant upsides. Equity IRR Impact of REC, GBI and CDM. Tariff Impact of REC, GBI and CDM. Key Assumptions:

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Renewable Energy 2012 Wind Conference

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Renewable Energy 2012 Wind Conference

Innovative trends to increase project profitability per kwh

May 2012

REC, GBI and CDM can lead to significant upsides

Equity IRR Impact of REC, GBI and CDM

Tariff Impact of REC, GBI and CDM

  • Key Assumptions:

  • REC : Rs. 1.5 /u till FY17 and Rs. 1/u post FY17

  • CDM : 3.5 euro/CER is sale price; revenues from second year

REC market stabilizing (Non-solar), but limited government utilities participation


  • REC Sale Price stabilised over second half of FY12

  • Buy bids peaked in Jan-2012; modest decline in Feb & Mar 2012

  • For FY12, the closing balance of REC inventory was 38545 RECs against annual redemption volume of 1 million RECs

  • Most State Government owned utilities have not even opened trading account

RECs: An upside

  • REC option for power sale has its own risk, but might turn out to be more profitable than Feed-in tariff (FIT)

    • It might be possible that REC market may be the only option for selling Renewable and FIT is not available or vice-versa

  • Key Risk of REC is liquidity and if Discoms don’t participate and RE Generator’s RECs increases , without a market maker, it will become difficult to sell

GBI : IPP’s taking over AD investors

  • Growth was largely on account of accelerated depreciation linked tax benefit market

  • Growth in last two years is driven by Independent Power Producers (IPPs)





  • AD in FY12 might be approximately 1500 MW out of 3000 MW

  • The pace at which IPP segment is growing might replace atleast 1000 MW out of 1500 MW of AD, making FY13 end at 2500 MW

Source : MNRE

GBI: An upside

  • We understand that MNRE has been supporting GBI extension and decision is pending with Ministry of Finance

    • Current GBI benefit might get extended to 4000 MW

  • Key risks are some of the SERCs are asking for GBI benefits to be reimbursed to the Utilities (e.g. RERC latest order)

    • This completely negates the objectives of MNRE to incentivize renewable

CDM: An upside

  • Inspite of lower CER prices, it is a significant upside

    • CER Prices are expected to go up with recovery of demand in European Unions

  • Key issues in CER

    • One should target to get the CDM registration done by end of 2012, asEU, has extended certain regulation to bar applicability of CERs generating from project registered beyond 2012 from +5 nations in compliance of emission reduction targets, increases the risk of commercialization of such projects

    • Huge back lock at MoEF for Host Country Approval


  • Irrespective of key risk and uncertainty associated with each of the options, growth of Wind Industry is dependent on these upsides

    • In Karnataka REC or TPS/Group Captive is the only viable option to invest, with FIT so low

    • In Gujarat REC is the only option, unless GERC revises FIT tariff to a comfortable level

    • In Rajasthan, with recent uncertainties on signing PPA, many investors are looking at RECs

  • Currently FIT in most of the States other than Maharashtra, Orissa and to some extent Rajasthan are so low that it is impossible for making a project viable at FIT and hence one has to depend on one of these upsides or try for Group Captive or Third Party Sale structure


Parag Sharma

Chief Operating Officer

ReNew Wind Power

M: 9810052210;

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