Renewable Energy in India: Current Status, Outlook & Investment Opportunities www.pwc.com Ministry of New & Renewable Energy & ITP & ES Division, Ministry of External Affairs Draft

Renewable Energy: Globally and India’s position – Renewable Energy: Globally and India’s position Global RE installed capacity of 942 GW Global Wind: 370 GW and India 5th with 23.44 GW Global Solar: 179 GW and India 11th with 4 GW *As on Jan 2015, IRENA RE status report 2015 and Global Wind Energy Council Current Status, Outlook & Investment Opportunities in RE Sector • MNRE 2

Present Power Scenario of India 19 April, 2018 – Present Power Scenario of India Overview India’s installed capacity is 284 GW (As on December 2015). India has RE capacity of 38,821 MW (as on Dec 2015) which accounts for 13.4% of the installed power capacity Current share of renewable energy (in energy produced) is 7% Wind contributes to 64% of the installed Renewable Capacity Current Status, Outlook & Investment Opportunities in RE Sector • MNRE *Source: MNRE, GoI ; CEA Statistics 3

RE in India: Status and Revised targets – RE in India: Status and Revised targets 38821 MW 9389MW % IN BAR chart on final pillar Total renewable capacity (Only small hydro) 164.1 Capacities in MW Source Installed capacity by end of 11th Plan (March 2012) Current installed Capacity (Jan 2016) Target as per 12th Plan (March 2017) Revised Targets till 2022 Solar Power 941 4879 10,941 1,00,000 Wind power 17,352 25088 32,352 60,000 Biomass Power 3,225 4550 6,125 10,000 Small Hydro 3,395 4177 5,495 5,000 TOTAL 24,914 37010 54,914 1,75,000 Current Status, Outlook & Investment Opportunities in RE Sector • MNRE 4

Support Mechanism for Renewable Power In India – Support Mechanism for Renewable Power In India Introduced by almost all states for RE technologies Feed in Tariffs States have formulated RE policies and have added significant capacities Key instrument for success of wind Also exists for of solar, biomass projects Accelerated Depreciation (AD) State RE Policies Support for RE Renewable Purchase Obligation (RPO) RPOs mandated by the Electricity Act 2003 and National Tariff Policy Renewable Energy Certificate (REC) mechanism launched to fulfil RPOs High demand supply energy gap Power shortage prevails and Energy gap is expected to increase Exemptions and other incentives Excise & Custom duty exemptions for most of the Equipment, Machinery etc. 10 year tax holiday Current Status, Outlook & Investment Opportunities in RE Sector • MNRE 5

FDI: Foreign Direct Investment – Key incentives Incentive Details Income tax Holiday 100% for 10 consecutive years - MAT @ 20% to apply Accelerated depreciation Accelerated depreciation @ 80% on solar assets Additional depreciation @ 20% on new plant/machinery in the 1st year Deemed export benefits Available to specified goods manufactured and not actually exported Advance authorization from Directorate General of Foreign Trade Deemed export drawbacks Exemption/return of Terminal Excise Duty Service tax exemption Certain services are exempted from service tax Customs and Excise Laws Various duty concessions and exemptions to RE Sector Reduced VAT Certain States allow reduced VAT rates (5%) on RE projects Tax-free Grants Grants received from the holding company engaged in generation, distribution or transmission of power FDI: Foreign Direct Investment 100% FDI under the Automatic Route Does not require approval from the Government of India The Indian Company receiving FDI is required to: Report to the Reserve Bank of India the receipt of FDI within 30 days File form FC-GPR within 30 days of issue of shares JV: Joint Venture Automatic approval for up to 74% foreign equity participation in a JV Liberalized foreign investment approval regime 100% foreign investment as equity is permissible with the approval of Foreign Investment Promotion Board (FIPB) Various chambers of commerce and industry associations offer guidance on partners Current Status, Outlook & Investment Opportunities in RE Sector • MNRE 6

Wind energy across states – Wind energy across states Current Installed capacity of 25088 MW According to CWET, the wind power potential in India at 50 m hub-height is estimated to be 49,130 MW and at 80 m hub-height is estimated to be 1,02,788 MW 3053 MW 3582 MW 568 MW 4370 MW Growth path 60000 MW 913 MW 17352 MW 2011-12 2014-15 2016-17 2021-22 22645 MW 32352 MW 2549 MW 35 MW 7394 MW Current Status, Outlook & Investment Opportunities in RE Sector • MNRE 7

Solar Energy across states – Solar Energy across states Solar Resource Solar: 5130 MW (January 2016) 200 MW 12 MW 0.3 MW 13 MW 1264 MW 140 MW 10 MW 1024 MW 16 MW 679 MW 12 MW 5 MW 73 MW 379 MW 67 MW 342 MW 357 MW 104 MW 12 MW 419 MW India has potential for 748 GW (considering deployment on 3% of wastelands) Current Status, Outlook & Investment Opportunities in RE Sector • MNRE 8

Plummeting cost of power from solar – Plummeting cost of power from solar Bidding tariffs for solar projects have been declining due to drop in capital costs and competitive bidding Lowest tariff quoted in Rajasthan: Rs. 4.34/KWh ($ cent 6.45) for 70 MW from Fortum Lowest tariff quoted in Andhra Pradesh: Rs. 4.63/KWh ($ cent 7.02) for 500 MW from SunEdison Rs. 4.63/KWh ($ cent 7.02) for 350 MW from SB Group Lowest tariff quoted in Madhya Pradesh: Rs. 5.05/KWh ($ cent 7.65) for 50 MW from Sky Power Lowest tariff quoted in Punjab: Rs. 5.17/KWh ($ cent 7.71) for 50 MW from Today Homes Current Status, Outlook & Investment Opportunities in RE Sector • MNRE 9

– 20 GW Solar park 26 Parks (20 states) with capacity 17,418 MW approved. Subsidy of 30% provided for infrastructure Current Status, Outlook & Investment Opportunities in RE Sector • MNRE 10

Rooftop: Target to achieve 40 GW grid tied rooftop – Rooftop: Target to achieve 40 GW grid tied rooftop Status 122 MW Installed capacity 1720 MW Projects approved (in Principal [Potential for 124 GW exists] Target 40 GW by 2022 of which 10 GW during 2015- 16 to 2017-18. Current support Subsidy of 30% of capital cost (except for private, Industrial & commercial) Promotional measures: 14 States have rooftop provisions in their Solar Policy and 20 States/UTs have notified regulations Rooftop included under Integrated Power Development Scheme and guidelines issued Guidelines issued to include rooftop under housing loan and banks have issued instructions Central Electricity Authority (CEA) has notified technical standards for connectivity and metering A grant of INR 50 Billion ($ 757 Million) has been approved to support 4200 MW rooftop projects $ 2 billion line of credit through KFW, WB and ADB for rooftop projects Current Status, Outlook & Investment Opportunities in RE Sector • MNRE 11

Opportunities for global players – Opportunities for global players Project Developer Opportunities for global players to develop portfolio in India Target to install 175 GW RE by 2022 Fixed feed-in-tariff for wind and competitive bidding in solar Manufacturing Current Module manufacturing: 3000 MW Current Cell manufacturing: 1500 MW Push for “Make in India” MOUs signed between global manufacturers and Indian developers 1 2 3 4 Opportunities in solar in India Financing Investment to the tune of $ 135 billion required in RE sector and $ 75 billion in solar by 2022 Govt. of India keen to work on new mechanism like green bonds, innovative hedging, Infra bonds, etc. EPC A lot of new entrants in Market, requiring EPC Many Govt. companies have signed Green energy commitments and need EPCs Current Status, Outlook & Investment Opportunities in RE Sector • MNRE 12

– Financing 175 GW RE plan entails investment of Approx. $ 140 billion (Rs. 8,50,000 Crore) Debt (70%) $ 98 Billion (Rs. 6,00,000 Crore) Equity (30%) $ 42 Billion (Rs. 2,50,000 Crore) Multilateral and Bilateral NBFCs Commercial banks MNRE discussing innovative financial instruments to reduce cost of debt Green bonds and infrastructure debt funds (IDFs) Dollar denominated tariffs Pension funds, crowd funding, yield companies Hedging risk fund to allow cheaper financing MNRE in touch with various multilateral/bilateral FIs like JICA, KFW, ADB, World Bank, EIB, AFD, US EXIM, etc. to avail line of credit Current Status, Outlook & Investment Opportunities in RE Sector • MNRE 13

Proposed Dedicated Renewable Energy Fund For India – Proposed Dedicated Renewable Energy Fund For India Govt. of India (through IREDA) proposes to set up USD 1 to 1.5 bn fund for renewable energy Govt. owned entities such as PFC, REC, NTPC and IREDA have in principle agreed to invest USD 315 million into the fund as Anchor Investors Fund will be managed by a reputed international fund manager whose selection is being undertaken through an ICB process Received prima facie interest from following large fund managers to act as Investment Manager (GP) for proposed fund: Brookfield Macquarie Blackrock KKR Current Status, Outlook & Investment Opportunities in RE Sector • MNRE 14

Proposed Structure of the Fund To be setup as a ‘Category I’ Alternative Investment Fund (AIF) under SEBI (Alternative Investment Funds) Regulations, 2012. Independent trustee company will be trustee. Anchor Investors and Other Investors would be LPs in the fund and would have role on Limited Partner Advisory Committee (LPAC). LPAC would not be decision making body and all investment decisions would be made by Investment Manager.

Renewable Investment globally vis-à-vis India – Renewable Investment globally vis-à-vis India Investment in Europe decline and stay constant in US, Asia & South America witness highest growth Investment in India’s renewable industry increased more than 22% in 2015 to reach $10.9bn Rise largely attributed to scale, where investment reached $5.6bn, up 80% from $3.1bn last year Current Status, Outlook & Investment Opportunities in RE Sector • MNRE 15

India as an Investment destination – India as an Investment destination 387 investors submitted “Green Energy Commitment” to develop 272 GW 30 Banks and Financial Institutions have given commitments to finance projects aggregating to 70 GW MNRE Target Commitment made during RE-Invest 175 GW 272 GW $150 Billion $ 57 billion to support approx. 72 GW Global In second quarter of 2015, Global investment in clean energy was $73.5bn , down0.2% on Q2 2014. For the first half of 2015, Global investment in clean energy was $127.9bn, down 3% on H1 2014. India India invested $2.2bn, up 75% on the same quarter last year. India remains on track to cross $10 billion in 2015 Interest in India from domestic and foreign investors has grown in the last six months India intends to reduce the emissions intensity of its GDP by 33 - 35% by 2030 below its 2005 level In the January-June period, India has surpassed US and China as the biggest FDI destination in the world , garnering $31 billion. Current Status, Outlook & Investment Opportunities in RE Sector • MNRE 16

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