WindPower Wind Power India

February2009

ExecutiveSummary
EstimatedworthUSD2.5bnin2008 Installedcapacity9645MWwhilepotentialcapacity~45000MW StateofTamilNaduaccountsfor50%ofinstallations 80% of power generated is used for captive consumption 80%ofpowergeneratedisusedforcaptiveconsumption Drivers:StronggovernmentinitiativesatCentralandStatelevels,costcompetitivenessandglobal shiftinthemovementtowardsgenerationofcleanenergy Challenges: Variability in output levels due to climatic conditions shortfall in land available to Challenges:Variabilityinoutputlevelsduetoclimaticconditions,shortfallinlandavailableto developwindfarmsandlackofinfrastructureforgenerationandtransportationofpower

Market

Drivers& Challenges

Trends

Shift from captive consumption to independent power production Shiftfromcaptiveconsumptiontoindependentpowerproduction Shiftfromonshoretooffshorewindenergyduetohigherpotential Largeenergycompaniesenteringtheindustry

Suzlondominatesthemarket

Competition

Ithasinstalled58%ofIndiastotalcapacity Growing@43%p.a.

Other major players are Vestas Enercon and GE Wind OthermajorplayersareVestas,EnerconandGEWind

WINDPOWER INDIA.PPT

MarketOverview Drivers & Challenges Drivers&Challenges Trends Competition KeyDevelopments

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WindpoweristhefastestgrowingrenewableenergysourceinIndia andisvaluedatUSD2.5bn
Overview
Thewindpowerinstalledcapacityis9645MW(asof Feb09) Thepotentialcapacityofwindpoweris45195MW Windpowertechnologyisdominatedbyonshore installations(landbased)ofturbines Windpowerisusedforbothcaptiveconsumption andIndependentPowerProducer(IPP)model: dI d d tP P d (IPP) d l
Almost80%ofthepowergeneratedisusedforcaptive consumption

SizeandGrowth
InstalledCapacity(endingMarch) MW

10,000 5,000 0
2004 2005

+34%

3,000

4,430

6,320

7,845

9,645

2006

2007

2008

SegmentedStatewiseInstallations
Maharashtra Karnataka 12% Gujarat 14% 4% Others 44% TamilNadu T il N d 20% 6%
AsofSept.2008 100%=9521.80

SegmentedStatewisePotential
Gujarat 21%
100%=45,195MW

Karnataka 15% 2% Kerala

Rajasthan

AndhraPradesh 18% 12% MadhyaPradesh 1% 12% 4% 8% WestBengal 7% Maharashtra TamilNadu Tamil Nadu Rajasthan Orissa

WINDPOWER INDIA.PPT

MarketOverview Drivers & Challenges Drivers&Challenges Trends Competition KeyDevelopments

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Drivers&Challenges

Challenges
VariableOutput Variable Output Unavailabilityoflandforwindfarms

Drivers
Governmentinitiatives Costcompetitiveness Globalshifttocleanenergy Lackinginfrastructure

WINDPOWER INDIA.PPT

Positivegovernmentpolicytowardsreducingcostsforinvestorsisthe majordriverinthemarket
Centralgovernmentinitiatives
DirectTaxes
Benefitofaccelerateddepreciation,80%inthefirstyear p , y Additionaldepreciation@20%forprojectsbeingcommissionedafterMarch2005withnew plant&machinery 10yearincometaxexemptionforprofitsfromwindgeneration

Impact

Indirect Taxes IndirectTaxes

ExemptionofExciseDutyondevicessuchas
Windoperatedelectricitygenerator,itscomponentsandpartsthereof Waterpumpingwindmills,windaerogeneratorsandbatterychargers

Sales Tax SalesTax

Exemption/reductioninCentralSalesTaxandGeneralSalesTaxareavailableonsaleofrenewableenergy equipmentinvariousstates

GenerationBasedIncentive(GBI)schemeforgridconnectedprojects
Offeredtoindependentpowerproducerswhodonotavailofaccelerateddepreciation p p p p BenefitofRs.0.50perunit(kwh)foraperiodoftenyears

FinancialIncentive
Financingofupto70%ofeligibleprojectcost 100% FDI is permitted under automatic route 100%FDIispermittedunderautomaticroute

WINDPOWER INDIA.PPT

Stategovernmentshavealsoprovidedlocalizedincentivestoattract playerstoinvestintheirrespectiveStates
State
AndhraPradesh TamilNadu T il N d Karnataka

Wheeling
2%ofenergy,inadditionto veryhightransmission 5%ofenergy 5% f 5%ofenergy+1.15kwhas crosssubsidyfor3rdparty sale TobedecidedbySERC To be decided by SERC 4%ofenergy 2%ofenergy 2%ofenergy+Transmission chargesbySERC 2%ofenergy +5%T&Dloss 2%ofEnergy 2%ofenergy

Banking
12months 5%for12months 5% f 12 th 2%everymonth for12months 9months 9 months (JuneFeb) 6months 6months NotAllowed 2%for12months

Buyback
PresentlyINR3.37w.e.f01.04.2004 (frozenfor5years) INR2.90/kwh INR 2 90/k h INR3.40/kwhnoescalationfor10 years INR3.14/kwhfor20years INR 3.14/kwh for 20 years INR3.37/kwh Tobedecidedoncasetocasebasis withacapofINR4/kwh Present:INR3.97/kwh 5th 20thyear:INR3.30 INR3.50/kwhwithescalationofINR 0.15perunit/yearfor13yearsfrom DoCofproject f CurrentlyatINR3.32/kwh INR2.25/kwh(5%Esc.9596)

Thirdpartysales
Allowed;butsubjectto APERCRegulations NotAllowed N t All d AllowedtoHighTension industrialconsumers None NotAllowed NotAllowed Allowed Allowed

Kerala Gujarat WestBengal MadhyaPradesh Maharashtra

Rajasthan UttarPradesh

2%for12months 12months

Allowed Allowed

NOTES: Wheeling:Chargesimposedonentitiesusingpowerforcaptiveconsumptionattheirsitesroutedthroughthestategrid Wh li Ch i d ii i f i i h i i d h h h id Banking:StorageofpowergeneratedbyproducerswiththeStateElectricityBoardswhichcanbedrawnforfutureuse

NETSCRIBESBRTEMPLATEV4.PPT WINDPOWER INDIA.PPT

Lowcostofpowergenerationandfastrecoveryofinvestmentsmade aresomebenefitsinthemarket
Costcompetitiveness
Cost/kWhofgenerationiscomparabletoconventionalpowergeneration NorecurringcostInvestorbearonlyinitialcapitalcostsincewindisanaturalresourcethus zeroinputfuelcost Paybackinshorterdurationascomparedtootherenergysources Operationandequipmentmaintenancecostsarelow Lowgestationperiod Electricpowergenerationcanbeputonlineinaslowassixmonths

Impact

Technicaloperatingavailability98%
Higheroperatingavailability(theproportionofthetimeinwhichtheequipmentisavailable to operate) compared to other electricity generating technology tooperate)comparedtootherelectricitygeneratingtechnology
cents/kWh

LowerEstimate 11.1

cents/kWh

UpperEstimate

15 10

15 11 10
3.9 4.8 4.0 5.1 5.8

15 12

5 0

5 0

Gas

Coal

Wind (without incentives)

Hydro

Biomass

Nuclear

Gas

Coal

Wind (without incentives)

Hydro

Biomass

Nuclear

WINDPOWER INDIA.PPT

Theneedforcleanenergy,constantlydevelopingtechnologyandthe volatilityinfuelpricesisexpectedtoboostthisindustry
Globalshifttowardscleanenergy
Stronglobbyingbyinstitutionstowardscleanenergygenerationcoupledwith governmentactiontoreducelevelsofgreenhousegaseshasgivenaboostto thismarket thi k t Continualimprovementsarebeingmadeintheabilityofwindturbinesto capturewindenergy
Increaseinpowerandsizeofturbines,improvedpowerelectronics,betteruseof compositematerialsandtallertowers composite materials and taller towers Costofonshorewindpowerhasdecreasedbyabout80%duetotechnologicalgrowth

Impact

Recentvolatilityinthepricesofcrudeoilhasaffectedlevelsofdemand.Thiswill actasamajordriverinthemarketasplayersaremoreinclinedtowardsusing powergeneratedthroughalternativeinexhaustiblesourcesofenergywith power generated through alternative inexhaustible sources of energy with marginalfluctuationsinprice
USDperbarrel

150 100 50
Crudeoilprices

0 Dec Jan Mar May Jul Aug Sep Nov Dec Jan Feb Jul Sep Nov Dec Jan l b l 06 07 07 07 07 07 07 07 07 08 08 08 08 08 08 09
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Thecompletedependenceonclimaticconditionleadstovariabilityin powergenerationwhichactsasanobstacletorecovercosts
Variablesourceofpower
PeakwindsareobservedduringMaySeptnamelytheSouthwestMonsoon, P k i d b dd i M S t l th S th tM therebycreatingachallengeasanintermittentsourceofenergy

Impact

Suppliersfacehighfixedcosts asequipmentandsetup costislarge Recoveringcostisan impedimentasrequisitepower isgeneratedoveralimited periodinayear Lowvariablecostas maintenancechargesare relativelynegligible Furtherinvestmentisrequired topurchaseasystemtostore energyinordertocurtail fluctuationsinpoweroutput

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Unavailabilityofsuitableterrainandthelackofbasicinfrastructure aresomechallengesintheindustry
Lackoflandtosetupwindfarms
Highlysitespecific
WindfarmscanbesetupatMNESidentifiedpotentialsites(whereithasameanannual windpowerdensityof200W/m2 ormoreat50mabovegroundlevel)

Impact

Impactonwildlife
Governmentlandintheformofreserveforestsisnotavailableforsettingupwindfarms becauseofthepossibleadverseimpactonwildlife

Delayinlandallotmentandclearanceduetoinefficientgovernmentoperations

Lackofinfrastructure
Poortransportationinfrastructure
Thereexistconstraintintransportationandinstallationoflargeturbinestowindfarms locatedinruralareas

Inadequatepowerevacuationinfrastructure Inadequate power evacuation infrastructure

Inadequategridcapacitytotransmitthepowergeneratedleadingtoinefficienciesin powergeneration

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MarketOverview Drivers & Challenges Drivers&Challenges Trends Competition KeyDevelopments

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KeyTrends

Investorsaremovingfrom captiveconsumptionmodelto d l independentpowerproducing

Trends
Largeenergycompaniesare enteringthemarketcapitalizing onthecostbenefitsavailable th tb fit il bl andthelackofcompetition Offshorewindenergyis becomingmoreattractivethan g onshorewindenergy

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Existingopportunitiesforthesaleofpowercommerciallyisbeing realizedandashiftfromonshoretooffshoretechnologyisobserved
ShifttowardsIPPModel
TurbineManufacturers Players capitalizingon profitincentives Independentlyproducing powerandsupplyingittothe g governmenthence maximisingprofits

Previouslysoldwindfarms tocorporatehouseswho g generatedpower p Shiftdueto GBIscheme

Offshoretechnology
Growthinoffshoretechnology
Turbinesinstalledinseabedsexperiencestrongerwindsthanonshoreinstallation Lessobtrusivecomparedtoturbinesonland Strongprospects dueto technological advancements

Indiancoastlineoffersgoodoffshorewindpotential Indian coastline offers good offshore wind potential

Examplesare
RameshwaraminTamilNaduandMundraatGulfofKutchhavewindpowerdensityofabout350to500 watt/m2 OtherpotentiallocationsincludeWesterncoast,especiallytheGujaratcoastline p , p y j

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Energygiantsaremovingtowindpowergenerationduetothelarge scopeofgrowthavailableintheindustry
Largeenergycompaniesmovingtowindpower
Company
ONGC

ProposedInvestment
PlanningtoinvestUSD123mninGujarattowardsgenerating10002000mwof windenergy ItalsoplansoninvestingUSD61mninKarnatakatowardswindpowergeneration It Itproposestosetup4.5mwofwindpowerprojectinGujaratinvestingoverUSD t t 45 f i d j ti G j ti ti USD 5mn KarnatakaandMaharashtraarealsobeingconsideredaswindpowergeneration sitescancombinedinstalledcapacityof19mwisexpected Pl Planstodevelopa8.37MWwindfarmprojectatJogimatti,TalukaHiriyur,and t d l 8 37 MW i d f j t t J i tti T l k Hi i d DistrictChitradurgainKarnataka Thecompanyplanstoexpandtheirwindpowerproductioncapacityfrom 200MWto500MWby2011

Lackof competitionhas competition has attractedenergy giants

GAIL

Reliance R li Energy TataPower

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MarketOverview Drivers & Challenges Drivers&Challenges Trends Competition KeyDevelopments

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SuzlonEnergyisthedominantplayeramongthemanufacturers (1/5)
No.
1

Manufacturer
ABAN Kenetech

Rating kW
410 220

Detailsason31stMar2008 Nos.
231 2 328 3 16 17 79 184 94 2 12 9 284 10 8 14 1 51 12
2

MW
94.71 0.44 0 44 82 1.5 0.88 3.4 34 15.8 46 23.5 1.2 12 1.8 0.72 71 2.25 2 25 2 21 0.2 15.3 15 3 7.2

AMTL WindWorld

250 500

BHEL

55 200 200 250 250 600 150 80 250 225 250 1500 200

BHELNordex

5 6 7 8 9 10

CWEL DanishWindpower DasLagerwey JMPEcotecnia JMP Ecotecnia IndiaWindPower GEWindEnergy

11

Elecon

300 600

NOTE

1:Capacityofwindturbines p y manufactured 2:Totalnumberinstalled 18

WINDPOWER INDIA.PPT

(2/5)
No. Manufacturer Rating kW
230 12 Enercon 330 600 800 13 14 15 16 Himalaya KirloskarWEG Micon(Pearl) Mitsubishi 140 200 400 90 315 250 17 NedwindWindia 500 550 18 19 20 Pegasus PioneerAsia Pioneer Asia SangeethCarter 250 850 300 225 21 NEPCIndia 250 400 750
1

Detailsason31stMar2008
Nos. 452 40 719 1390 4 24 8 99 6 4 20 35 9 52 25 962 16 7 14
2

MW
103.96 13.2 13 2 431.4 1112 0.56 4.8 48 3.2 8.91 1.89 1 10 19.25 2.25 44.2 44 2 7.5 216.45 4 2.8 28 10.5

NOTE

1:Capacityofwindturbines p y manufactured 2:Totalnumberinstalled 19

WINDPOWER INDIA.PPT

(3/5)
No. Manufacturer Rating kW
55 110 200 22 NEPCMicon 225 250 400 600 110 23 PioneerWincon 250 755 55 24 REPL Bonus 100 320 25 26 RESAdvancedWindTurbine RES Advanced Wind Turbine SouthernWindfarm 250 225 250 27 Tacke 600 750 28 SIVA 250
1

Detailsason31stMar2008 Nos.
14 2 50 589 528 121 2 10 461 1 22 1 60 80 349 4 21 1 1
2

MW
0.77 0.22 0 22 10 132.53 132 48.4 48 4 1.2 1.1 115.25 0.755 0 755 1.21 0.1 19.2 20 78.525 1 12.6 0.75 0 75 0.25

NOTE

1:Capacityofwindturbines p y manufactured 2:Totalnumberinstalled 20

WINDPOWER INDIA.PPT

(4/5)
No. Manufacturer Rating kW
270 350 600 29 Suzlon 1000 1250 1500 2000 2100 30 TextoolNordtank 300 550 250 1350 55 90 100 32 Vestas RRB 200 225 500 600
1

Detailsason31stMar2008 Nos.
2 932 366 81 1836 523 1 1 65 5 351 1 31 21 5 56 772 609 488
2

MW
0.54 326.2 326 2 219.6 81 2295 784.5 784 5 2 2.1 19.5 2.75 2 75 87.75 1.35 1.71 1.89 1 89 0.5 11.2 173.7 304.5 304 5 292.8

31

TTG/ShriramEPC

NOTE

1:Capacityofwindturbines p y manufactured 2:Totalnumberinstalled 21

WINDPOWER INDIA.PPT

(5/5)
No. Manufacturer Rating kW
750 33 VestasWindTechnology Vestas Wind Technology 950 1650 34 35 36 WindMaster Windmatic WindPower Wind Power TOTAL 200 55 330
1

Detailsason31stMar2008 Nos.
772 57 291 1 30 29 14886
2

MW
579 54.15 54 15 480.15 0.2 1.65 9.57 9 57 8697.93

NOTE

1:Capacityofwindturbines p y manufactured 2:Totalnumberinstalled 22

WINDPOWER INDIA.PPT

MajorwindpowergenerationinstallationsinIndia(1/2)
PowerPlant
VankusawadeWindPark CapeComorim KayatharSubhash Ramakkalmedu MuppandalWind Muppandal Wind Gujdimangalam PuthlurRCI LamdaDanida ChennaiMohan JamgudraniMP JogmattiBSES PerungudiNewam KethanurWindFarm HyderabadAPSRTC pp MuppandalMadras PoolavadiChettinad

Owner
SuzlonEnergyLtd. AbanLloydChilesOffshoreLtd. SubhashLtd. SubhashLtd. MuppandalWindFarm Muppandal Wind Farm GujdimangalamWindFarm Wescare(India)Ltd. DanidaIndiaLtd. MohanBreweries&DistilleriesLtd. MPWindfarmsLtd. BSESLtd. NewamPowerCompanyLtd. KethanurWindFarm AndhraPradeshStateRapidTransit Corp. MadrasCementsLtd. ChettinadCementCorp.Ltd.

Location City
SataraDist. CapeComorim Kayathar Ramakkalmedu Muppandal Gujdimangalam Puthlur Lamda Chennai Dewas Chitradurga Perungudi Kethanur Hyderabad Muppandal pp Poolavadi

State
Maharashtra TamilNadu TamilNadu Kerala TamilNadu Tamil Nadu TamilNadu AndhraPradesh Gujarat TamilNadu MadhyaPradesh Karnataka TamilNadu TamilNadu AndhraPradesh TamilNadu TamilNadu

TotalCapacity (Mwe)
259 33 30 25 22 21 20 15 15 14 14 12 11 10 10 10

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MarketOverview Drivers & Challenges Drivers&Challenges Trends Competition KeyDevelopments

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KeyDevelopments
Date
29Jan09 10Jan09

Development
TheRailwaysisconsideringtoinvestUSD14mntowardssettingupofa10.5MWwindplantintheSaurashtraregionin Gujarat.Investmentsareexpectedtobescaledupinordertoachieveacapacityof100MW. GujaratgovernmentamendedwindpowerpolicybyhikingpurchaseratestoINR3.5/unitfromINR3.37/unitfixedlastyear. j g p p y y gp y ThisisinlieuofprojectamountingtoUSD4bnthatisexpected.Distributionlicenseemustpurchase10%ofpowerproduced fromwindinayearincomparisonto2%whichstoodpreviously.MajorplayersexpectetoexpandcapacityareSuzlonwhowill investUSD1bnexpandingcapacityby1500MW,EneronandAbelonexpandingcapacityby600MWand1000MW respectively. Suzlonconsolidatedtheirpositioninthemarketasitbought22.4%stakeinGermanwindturbinemanufacturerREpower Systems.Theynowown91%stakeinREpower.Thedealwasvaluedatapproximately65mnEuros. S t Th 91% t k i RE Th d l l d t i t l 65 E GeneralElectricCo.'s(GE)energyunitplanstobuildawindturbineassemblyplantwhichisexpectedtobecompletedby December2009.InitialinvestmentwillbebetweenUSD35mn JharkhandRenewableEnergyDevelopmentAgencyislookingatcompaniesintheindustrytosetupplantsintwopotential sitesnamelySakhuapaaniinGumlaandMatarmetainSimdega.MNREisexpectedtoprovidefundingfortheproject.The projectswillbeonturnkeybasiswitha10yearmaintenanceperiod. SuzlonhasinvestedUSD102mntowardsgeneratingpowerinWestBengal.The50MWwindfarm,expectedtobe operationalby2009,willbethelargestinstallationintheeasternregion. TataPowerhasinvestedUSD102mntowardswindpowerexpansionadding115MWofwindpowercapacity. DubaiGroup,aleadingfinancialservicescompany,acquired40%shareinIndiasChiranjjeeviWindEnergy(CWEL).Earlier, Dubai Group a leading financial services company acquired40% share in Indias Chiranjjeevi Wind Energy (CWEL) Earlier CWELreceivedanorderfromIndiaGlobalizationCapital,IncworthUSD25mntosetupa24MWwindfarminKarnataka whichwasfollowedbyadealtoinstall260MWinKarnatakaforwardedbytheKarnatakaThermalPowerCorporationLtd. CLPHoldingsofHonKongwasgrantedaloanamountingtoUSD113mnfromtheAsianDevelopmentBanktodeveloptwo windfarmshavingacombinedcapacityof183.2MW.ThisprojecthasatotalcostamountingtoUSD250mn.

17Dec08 26Nov08 14July08

1June08 29May08 28April08 28 April 08

21April08

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Thankyouforyourtime
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