Final Report

A REPORT ON
MARKET DEVELOPMENT OF WIND POWER PROJECT

Submitted By: Rishi Agarwal ID: 20111045 Submitted To: Mr. Prashant Baxi Project Mentor (SEL) Dr. Akash Patel Project Mentor (SPM )
School of Petroleum Management Pandit Deendayal Petroleum University, Gandhinagar
School of Petroleum Management

Pandit Deendayal Petroleum University Raisan, Gandhinagar (Gujarat)
CERTIFICATE
This is to certify that the Project entitled Market Development of Wind Power Project at Suzlon Energy Limited, Ahmedabad is being submitted by Mr. Rishi Agarwal in partial fulfillment of the requirement for the degree of Master of Business Administration from School of Petroleum Management, Pandit Deendayal Petroleum University, Gandhinagar, embodies work carried by him under the supervision of Mr. Prashant Baxi , SIP Mentor, Suzlon Energy Limited, Ahmedabad and Dr. Akash Patel, SIP Mentor, School of Petroleum Management, Pandit Deendayal Petroleum University, Gandhinagar, India w.e.f. April 16, 2012 to June 9, 2012. During the period of this project at the university, he was found to be sincere, hardworking and well-behaved person. June 2011 --------------------------------SIP Mentor
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ACKNOWLEDGEMENT
Doing a task in a better manner is never a one mans effort. It is often the result of the invaluable contributions of number of individuals in a direct or indirect manner. I would like to take this opportunity to thank Mr. Prashant Baxi, DGM Marketing, Suzlon Energy Limited (SEL), for giving me an opportunity to pursue my Summer Internship at SEL, Ahmedabad. I am also thankful to Mr. Alok Das, Mrs. Minati Patel, Mrs. Madhuri, Mr. Viral Mehta and the whole marketing team at SEL for easing my transition into the training and also in helping me as and when required. Their help went a long way in enabling me to do the training without too many glitches. I would also like to take this opportunity to thank my project guide at SPM, Dr. Akash Patel, for giving me valuable tips and also replying to my weekly status mails with the relevant inputs. I am also extremely thankful to Ms Remya Rajan and the Student Placement Cell for giving me the opportunity to pursue my Summer Internship at SEL. I am also thankful to all my classmates at School of Petroleum
Management, Gandhinagar for their motivation and support in the completion of this project. Their constant inputs and questioning were very useful. Last but not the least, I would like to thank MY PARENTS for supporting and taking me to this stage in life, it was their blessings which always gave me courage to face all challenges and made my path easier.
Rishi Agarwal 20111045
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Executive Summary
The core objective of the project was to analyze the untapped market segment for Wind Power Projects. It also aimed at understanding the buyer behavior with respect to pricing, brand awareness, rate of return expectation, etc. Upon conducting a research based on quantitative analysis, certain trends were identified with relation to buyer behavior. The variables of utmost importance for the customers were the initial investment and the payback period. It was found that awareness of certain policies related to Third Party Sale of Power, Group Captive and Renewable Purchase Obligation was very less among the potential buyers. It finally recommends spreading awareness with regards to these various aspects.
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Table of Contents
Chapter 1 Introduction .............................................................................................................. 1 1.1 Energy Sector ................................................................................................................... 1 1.2 World Energy Scenario .................................................................................................. 1 1.3 Indian Energy scenario .................................................................................................. 3 Chapter 2 Renewable Energy .................................................................................................. 5 2.1 Introduction....................................................................................................................... 5 2.2 World Scenario ................................................................................................................. 6 2.3 Indian Scenario ................................................................................................................ 7 Chapter 3 Wind Power Scenario ........................................................................................... 11 3.1 Global Scenario .............................................................................................................. 11 3.2 Indian Scenario .............................................................................................................. 12 3.2.1 Estimated Wind Power ......................................................................................... 14 3.2.2 Wind Energy Development in India ................................................................. 16 3.2.3 Wind Energy Market.............................................................................................. 17 3.2.4 Wind Energy Industry SWOT Analysis ............................................................ 21 Chapter 4 Regulatory Framework of Renewable Energy Resources in India ......... 24 4.1 Introduction..................................................................................................................... 24 4.2 A brief History of Regulatory Bodies ....................................................................... 24 4.2.1 The ERC Act 1998 .................................................................................................. 27 4.2.2 Electricity Act 2003 ............................................................................................... 28 4.2.3 National Electricity Policy .................................................................................... 30 4.2.4 National Tariff Policy ............................................................................................. 31 4.2.5 Rural Electrification Policy 2006 ........................................................................ 34 4.2.6 Renewable Portfolio Standard (RPS)/Renewable Purchase Obligation (RPO) .................................................................................................................................... 35 4.2.7 Renewable Energy Certificate (REC)................................................................ 36 4.2.8 APPC Non preferential tariff and REC .......................................................... 39 4.2.9 Feed-in Tariff (FIT) ................................................................................................ 39 4.2.10 Government of India Incentives for Wind Power Policies ....................... 39 4.2.11 State Level Renewable Energy Preferential Tariff ..................................... 40 4.2.12 Accelerated Depreciation .................................................................................. 41 4.2.13 Indirect Tax Benefit ............................................................................................ 41
4.2.14 Central-level Generation Based Incentive (GBI) ....................................... 41 Chapter 5 Suzlon Energy Limited ........................................................................................ 43 5.1 Introduction..................................................................................................................... 43 5.2 History............................................................................................................................... 43 5.3 Vision ................................................................................................................................. 47 5.4 Philosophy........................................................................................................................ 48 5.5 Product Development and Supply ............................................................................ 48 5.6 Turnkey Solutions ......................................................................................................... 50 5.7 Project Services ............................................................................................................. 51 5.7.1 Land Sourcing and Permitting............................................................................ 51 5.7.2 Wind Sources Assessment .................................................................................. 52 5.7.3 Infrastructure Development ............................................................................... 52 5.7.4 Erection and Commissioning .............................................................................. 52 5.8 Operation and Maintenance ....................................................................................... 53 5.9 Vertical Integration at SEL ......................................................................................... 53 5.10 Technology .................................................................................................................... 57 5.10.1 Suzlons Blade Technology ............................................................................... 57 5.10.2 Asynchronous Generator................................................................................... 57 5.10.3 Induction machines ............................................................................................ 57 5.10.4 Braking System .................................................................................................... 58 5.10.5 Grid Management ................................................................................................ 58 5.10.6 Tower Technology ............................................................................................... 58 5.10.7 Drive System ........................................................................................................ 59 5.10.8 Annular Generator............................................................................................... 59 5.10.9 Grid System .......................................................................................................... 61 5.10.10 Research and Development ........................................................................... 62 5.11 Products offered .......................................................................................................... 63 Chapter 6 Marketing and Market Research ...................................................................... 65 6.1 Marketing ......................................................................................................................... 65 6.2 Market Research ............................................................................................................ 65 6.2.1 Theoretical Framework for Research ............................................................... 66 Chapter 7 Project ...................................................................................................................... 69 7.1 Phase I .............................................................................................................................. 69 vi
7.2 Phase II ............................................................................................................................ 71 7.2.1 Findings..................................................................................................................... 73 Chapter 8 Conclusion............................................................................................................... 85 Chapter 9 Recommendations ................................................................................................ 86 Annexure ..................................................................................................................................... 87 Annexure 1 Product Brochures ......................................................................................... 87 Annexure 2 Policy Comparison ......................................................................................... 88 Annexure 3 Financial Model ............................................................................................... 89 Annexure 4 Questionnaire .................................................................................................. 90 Annexure 5 Abbreviations .................................................................................................. 95 References .................................................................................................................................. 97
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List of Figures
Figure 1-1 GDP and Energy Consumption Growth .............................................................................. 2 Figure 1-2 World incremental growth in electricity generation, 2000-2011 ........................................ 2 Figure 1-3 Indian Power Deficit Scenario ........................................................................................... 4 Figure 2-1 Global Renewable Energy Potential (TW) .......................................................................... 5 Figure 2-2 3 Fold benefit of Renewable Energy .................................................................................. 6 Figure 2-3 Share of Global Electricity from Renewable Energy, 2011 .................................................. 7 Figure 2-4 Break-up of installed Power Capacity (MW) in India as on 31.1.2011................................. 8 Figure 3-1 Global Wind Power Cumulative Capacity......................................................................... 11 Figure 3-2 India Wind Power Density Map ....................................................................................... 15 Figure 3-3 Schematic Wind Power Wheeling for Captive Users ........................................................ 23 Figure 4-1 Growth of renewable energy sector with changing policies ............................................. 34 Figure 4-2 Obligation under Section 86(1)(e) ................................................................................... 36 Figure 4-3 REC Price for FY-12 .......................................................................................................... 37 Figure 4-4 Flow diagram for various processes involved in the REC mechanism ............................... 38 Figure 4-5 Eligibility for REC trading ................................................................................................. 38 Figure 4-6 Snapshot of state-wise policy framework ........................................................................ 42 Figure 5-1 Values at SEL ................................................................................................................... 48 Figure 5-2 Facility Location of SEL .................................................................................................... 50 Figure 5-3 SEL End to End Solutions ................................................................................................. 51 Figure 5-4 Business Model of SEL ..................................................................................................... 54 Figure 5-5 Revenue/Incentive Options ............................................................................................. 55 Figure 5-6 Market Share of SEL ........................................................................................................ 56 Figure 5-7 Components of a Wind Mill ............................................................................................. 64 Figure 6-1 Customer Orientation ..................................................................................................... 65 Figure 6-2 Importance of Marketing Research ................................................................................. 66 Figure 6-3 Stages of Purchase .......................................................................................................... 67 Figure 7-1 Analysis 1 ........................................................................................................................ 73 Figure 7-2 Analysis 2 ........................................................................................................................ 74 Figure 7-3 Analysis 3 ........................................................................................................................ 75 Figure 7-4 Analysis 4 ........................................................................................................................ 76 Figure 7-5 Analysis 5 ........................................................................................................................ 77 Figure 7-6 Analysis 6 ........................................................................................................................ 78 Figure 7-7 Analysis 7 ........................................................................................................................ 79 Figure 7-8 Analysis 8 ........................................................................................................................ 80 Figure 7-9 Analysis 9 ........................................................................................................................ 80 Figure 7-10 Analysis 10 .................................................................................................................... 81 Figure 7-11 Analysis 11 .................................................................................................................... 82 Figure 7-12 Analysis 12 .................................................................................................................... 82 Figure 7-13 Analysis 13 .................................................................................................................... 83 Figure 7-14 Analysis 14 .................................................................................................................... 84
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List of Tables
Table 2-1 Plan-period-wise capacity addition in grid connected renewable energy based power generation installed capacity ............................................................................................................. 8 Table 2-2 Power from Renewable .................................................................................................... 10
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Chapter 1 Introduction
1.1 Energy Sector

Three years after fossil fuel prices hit an all time high and the world plunged into its deepest recession since the Great Depression, geopolitical events are driving prices steadily higher. The shortterm risks to political stability and economic activity posed by the worlds dependence on fossil fuels are again as manifest as its longterm threat to environmental sustainability. To break this dependency, the world needs a clean energy revolution; a revolution, which can enhance global energy security, promote enduring economic growth and tackle environmental challenges such as anthropogenic climate change; a revolution, which break the longstanding link between economic growth and carbon dioxide (CO2) emissions once and for all. Such a sweeping revolution requires unprecedented investments in research, development, demonstration and deployment (RDD&D) of clean, lowcarbon technologies of all sorts for decades to come. However, these investments can provide equally unprecedented benefits. According to an estimate by IEA, IRR on the investment of a bit more than 10% per year from the fuel savings alone is achievable. The enormous benefits to political and economic stability, as well as to environmental quality and human wellbeing, that we also expect may add immeasurably to this financial return.
1.2 World Energy Scenario

The world is growing, looking forward at infinite growth; and fuel for growth is energy. This is a stark paradox because the fuel, on which the world is dependent, is limited. Graph below clearly shows relationship between growth and energy consumption.
SIP(SEL), School of Petroleum Management | Introduction
Figure 1-1 GDP and Energy Consumption Growth
From 2000 to 2011, world electricity generation rose by 4718 TWH. Share of gas and coal were 32.85 percent and 47.16 percent respectively. The graph below depicts the fact.
Figure 1-2 World incremental growth in electricity generation, 2000-2011
Besides, oil resources are estimated to last for 45 years and it is concentrated in the Middle East region, which is politically unstable. Unrest in the region is continually driving oil prices up. Historically, OPEC countries have controlled oil production so as to maintain oil prices. Besides the age of easy oil is over and now, production of oil is much costlier and complex than before. Hence, it is unlikely that oil prices will reduce significantly in future. Coal is the cheapest of all fossil fuels, but it is the most polluting one. Coal is likely to last little over 200 years, but its use has to be restricted to contain pollution within safe limits.
To sustain growth trajectory of the world, it is imperative to shift our attention from fossil fuels to renewable energy sources, which are also our biggest saviors in our mission Save Earth.
1.3 Indian Energy scenario

Indias substantial and sustained economic growth is placing enormous demand on its energy resources. The demand and supply imbalance in energy sources is pervasive requiring serious efforts by Government of India (GOI) to augment energy supplies. India imports about 80% of its oil. There is a threat of these increasing further, creating serious problems for Indias future energy security. There is also a significant risk of lesser thermal capacity being installed on account of lack of indigenous coal in the coming years because of both production and logistic constraints, and increased dependence on imported coal. Significant accretion of gas reserves and production in recent years is likely to mitigate power needs only to a limited extent. Difficulties of large hydro are increasing and nuclear power is also beset with problems. The country thus faces possibilities of severe energy supply constraints. Economic growth, increasing prosperity and urbanization, rise in per capita consumption, and spread of energy access are the factors likely to substantially increase the total demand for electricity. In the last six decades, in-spite of substantial increase in installed electricity capacity in India, demand has outstripped supply. Thus, there is an emerging energy supply-demand imbalance. Already, in the electricity sector, official peak deficit are of the order of 12.7 percent, which could increase over the long term. Indias electricity mix is shown in the graph below, In view of electricity supply shortages, huge quantities of diesel and furnace oil are being used by all sectors industrial, commercial, institutional or residential. Lack of rural lighting is leading to large-scale use of kerosene. This usage needs to be reduced, as it is leading to enormous costs in form of subsidies and increasing the countrys import dependence. At the same time, a very large proportion of the citizens continue to live with no access to electricity and other forms of commercial energy. More than 50 percent of the population has little or no commercial energy access for their living and livelihood . Others with access often have to cope with poor and erratic availability of electricity and other fuels. SIP(SEL), School of Petroleum Management | Introduction 3
With constraints faced in resource availability and in delivery mechanisms, traditional means of energy supply are falling short.
Figure 1-3 Indian Power Deficit Scenario
As per CRISIL Research, India has been facing huge power deficit. To mollify erratic power supply, renewable energy source have a big role to play. The quality of the current electricity supply is impeding Indias economic growth. Issues such as voltage fluctuation, frequency variation, spikes, black-outs, brown-outs, and other disruptions impact industrial, commercial, and residential consumers. The addition of grid- tied renewable power can help address these issues. The gap between the demand of customers connected to the grid and the available electricity supply reported by the Central Electricity Authority for 2010 2011 was almost 84 TWH, which is 10% of the total requirement. The peak demand deficit was more than 15 GW, corresponding to a shortage of 12.7%. Closing this gap will be critical for India to achieve its growth targets, and renewable energy has the potential to improve energy security and reduce dependence on imported fuels and electricity while striving to meet those goals.
Chapter 2 Renewable Energy
2.1 Introduction
Renewable Energy is generated from resources which are renewable or which may last forever like sunlight, wind, rain, tide, geothermal heat etc. Small hydro generation also falls under the Renewable Energy. World is abundant with the various sources of renewable energy, but at present technology, only very small portion is recoverable. The graph below indicates potential of renewable energy in the world,
Figure 2-1 Global Renewable Energy Potential (TW)
The volume of the cubes represents the amount of available geothermal, hydropower, wind and solar energy in TW, although only a small portion is recoverable. consumption. The small red cube shows the proportional global energy
SIP(SEL), School of Petroleum Management | Renewable Energy
Economics -Profitable investments and Sustainble Returns
Environment
-Reducing Carbon footprint to mitigate global warming
Energy -Reducing dependency on imported expensive fossil fuel to achieve the 'Energy Security in long term'
Figure 2-2 3 Fold benefit of Renewable Energy
2.2 World Scenario

Given recent geopolitical events, discussions about alternative sources of energy have gained additional traction. Investment in clean energy is no longer only a means to addressing the issue of climate change, but in a time of increasing price volatility of traditional sources of energy and heightened concerns related to nuclear energy, clean energy sources are becoming a vital component to sustained economic growth. The leading clean energy technologies reached record capacity additions in 2011, with annual wind capacity increasing by nearly 41 GW. Total worldwide SIP(SEL), School of Petroleum Management | Renewable Energy 6
clean energy generating capacity has almost doubled in the past three years in response to strong policies and incentives, as well as declining cost structure. Following graph provides glance of worldwide installed capacity: In 2010, global renewable power capacity reached an estimated 1320 GW (including large hydropower), up 7.3 percent from 2009. In 2010, renewable energy (including large hydropower) supplied nearly 18 percent of global electricity production. Excluding large hydropower, renewable energy supplied 3 percent of global electricity demand.
Figure 2-3 Share of Global Electricity from Renewable Energy, 2011
2.3 Indian Scenario

Renewable energy in India is a sector that is still underdeveloped. India was the first country in the world to set up a ministry of non-conventional energy resources, in early 1980s. However its success has been very spotty. In recent years India has been lagging behind other nations in the use of renewable energy (RE). The share of RE in the energy sector, as on March 2011, is 10.63% of total generation capacity of India. Renewable energy in India comes under the purview of the Ministry of New and Renewable Energy.
Table 2-1 Plan-period-wise capacity addition in grid connected renewable energy based power generation installed capacity
Figure 2-4 Break-up of installed Power Capacity (MW) in India as on 31.1.2011
Apart from the grid interactive renewable power, MNRE has ambitious programs for deployment of off-grid/distribute renewable power and decentralized renewable energy systems for rural applications.
I. POWER FROM RENEWABLES:
A. GRID-INTERACTIVE POWER
(CAPACITIES IN MW)
Wind Power
2500
36.65
36.65
17389.31
Small Hydro Power
350
5.75
5.75
3401.06
Biomass Power
455
16.00
16.00
1166.10
Bagasse Cogeneration
7.50
7.50
1992.73
Waste to Power
-Urban 20
89.68
-Industrial
Solar Power (SPV)
800
37.72
37.72
979.00
Total
4125.00
103.62
103.62
25017.88
B.
OFF-GRID/ CAPTIVE POWER
(CAPACITIES IN MWEQ)
Waste to Energy -Industrial
-Urban
20.00
1.20
1.20
102.95
Biomass(non-bagasse) Cogeneration
60.00
2.50
2.50
385.00
Biomass Gasifiers Industrial
-Rural-
1.50
16.12
10.00 Aero-Generators/Hybrid systems 0.50
134.09 1.64
SPV Systems (>1kW)
30.00
85.21
Water mills/micro hydel
2.00(500 Nos.)
-.
1877 Nos.
Total
126.00
3.70
3.70
725.01
II. REMOTE VILLAGE ELECTRIFICATION
No. of Remote Village/Hamlets provided with RE Systems
III. OTHER RENEWABLE ENERGY SYSTEMS
Family Biogas Plants (No. in lakhs)
1.25
45.09
Solar Water Heating - Coll. Areas (Million m2)

Source:- MNRE Website
0.60
5.46
Table 2-2 Power from Renewable
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Chapter 3 Wind Power Scenario
3.1 Global Scenario

Wind power is the conversion of wind energy into useful form of energy, such as using wind turbines to make electricity. At the end of 2011, worldwide nameplate capacity of wind-powered generators was 238 GW. Energy production in 2010 was 430 TWH, which is 2.5 percent of worldwide electricity usage, and has doubled in the past three years. Several countries have achieved relatively high levels of wind power generation, such as 21 percent of stationary electricity production in Denmark, 18 percent in Portugal, 16 percent in Spain, 14 percent in Ireland and 9 percent in Germany. As of Feb 2012, 75 countries worldwide now have commercial wind power installations in place, with 22 of them having already passed 1GW level. Large scale wind farms are connected to the electric power transmission network; smaller facilities are used to provide electricity to isolated locations. Utility companies increasingly buy back surplus electricity produced by small domestic turbines.
Figure 3-1 Global Wind Power Cumulative Capacity
In last 10 years, global wind power installed capacity has increased almost 10 times. SIP(SEL), School of Petroleum Management | Wind Power Scenario 11
Worldwide there are now many thousands of wind turbines operating, with a total nameplate capacity of 239,000 MW. Europe accounted for 42 percent of the total in 2011. World wind generation capacity more than quadrupled between 2000 and 2006, doubling about every three years. By February 2012, Top wind power countries are as mentioned below,
3.2 Indian Scenario

Wind energy dominates Indias renewable energy industry, accounting for 70 percent (17,353 MW) of installed potential. The sector has received more support than any other renewable energy sector to date. Wind will continue to be the biggest renewable energy sector in India, in terms of both current installed capacities. India is 5th largest consumer of energy in the world, and by estimates it will climb to 3rd by 2030. As per Reuters, to support its growth and strong energy demand, India plans to add 17,000 MW of RE capacities in 12th plan. This will require Rs. 1.5 trillion ($ 33.6 billion) of investment. India has 24,503 MW of installed capacity of RE, which is 12.15 percent of the installed capacity. Renewable energy sources include small hydro power (SHP), biomass gas (BG), biomass power (BP), urban & industrial waste power (U&I) and wind energy. If large hydro power is also included, then renewable energy sources comprise of 31.48 percent of the installed capacity of India.
The wind industry has achieved the greatest success in India with an installed capacity of 17,353 MW at the end of April 2012. India has also installed 3,123 MW of small hydro plants (with sizes of less than 25 MW each). India now has the 7th greatest amount of installed clean energy capacity
in the world at 24.5 GW. Indias electricity mix is indicated as below, The Indian market grew by almost 68% on a year-on-year basis with 3,163 MW of new capacity installed between January and December 2011. This made India the third largest annual market after China and the USA for 2011. With more than 17.3 GW of total installed capacity at the end of April 2012, India ranks fifth in the world in terms of cumulative installed capacity. The IEA projects that had 327 GW of power generation capacity will be needed in India by 2020, which would imply a yearly Addition of about 16 GW. This is reflected in the stated SIP(SEL), School of Petroleum Management | Wind Power Scenario 12
target for new capacity addition by the Indian government under its 11th Five Year Plan. The plan envisages an addition of 78.7 GW by 2012 from traditional sources (coal, nuclear and large hydro) and an additional 9 GW by 2012 (revised from 10.5 GW) from new wind generation capacity. During the first three years of the 11th Plan period ending March 2010, India added 4.6 GW of wind power capacity. With over a year to go before the current plan period is over it is very likely that Indian wind power installations will meet and exceed the 11th planperiod target, which will be a record of sorts as historically the targets have never been met through conventional thermal and hydro projects within a plan period. The GWEO advanced scenarios show that wind power development in India could go much further depending upon adequate regulatory support and political will. By 2020 India could have 65 GW of wind power in operation, employing 170,000 people and saving 173 million tons of CO2 emissions each year. Investment by then would be to the tune of $10.4 billion per year. The World Institute for Sustainable Energy (WISE) estimates deploying just the current generation of wind turbines could yield a potential onshore wind power capacity of 65 GW100 GW. The Ministry of New and Renewable Energy (MNRE) has so far underplayed the potential of renewable energy (RE) sources in India. WISE did a revised estimate of the true potential of grid-connected RE in India. WISE sees its own numbers as a conservative estimation. With the present level of momentum established in Indias wind sector, the ten years between 2020 and 2030 could see spectacular growth if some of the systemic barriers are addressed in a timely manner. With the political will geared towards fully exploiting the countrys wind resource and reaping the accompanying economic, environmental and energy security benefits, the Advanced scenario could be reached, which would see substantial wind power growth in many regions of the country. Wind power would then be instrumental in achieving a genuine energy revolution, putting India on the path to a sustainable energy future. India is now at a crossroads for making these decisions, which will determine the future of her energy system as well as, to a great extent the future of the planet.
SIP(SEL), School of Petroleum Management | Wind Power Scenario
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3.2.1 Estimated Wind Power The Centre for Wind Energy Technology16 (C-WET) published the Indian Wind Atlas in 2010, showing large areas with annual average wind power densities of more than 200 Watts/m2 at 50 meter above ground level (MAGL). This is considered to be a benchmark criterion for establishing wind farms in India as per CWET and the MNRE17. The potential sites have been classified according to annual mean wind power density ranging from 200 W/m2 to 500 W/m2. Most of the potential assessed sites have an annual mean wind power density between 200-250 W/m2 at 50 MAGL. The Wind Atlas has projected Indian wind power installable potential (name plate rating) as 49,130 MW at 2% land availability18. This is seen as a conservative estimate of wind power potential in India. Scientific and research work carried out by Indian wind industry experts has inspired scientists at Lawrence Berkley National Laboratory (LBNL) to challenge assessments of the Chennai based government agency, Center for Wind Energy Technology (CWET), on the potential for wind farms in India. Paper published in the international renewable energy journal Renewable Energy, presented the findings on the assessment for potential for wind farms using Geographical Information System Platform (GIS Platform). In the paper, the potential for wind energy utilization with the prevalent technologies is far in excess of the potential claimed to have been assessed by CWET (initially at 49'000 MW and later at 102'000 MW). Experts assessed the potential at around 2000 GW, which has now been confirmed by the LBNL study which sees the total onshore wind potential of India between 2000 and 3000 GW.
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Figure 3-2 India Wind Power Density Map
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3.2.2 Wind Energy Development in India
Significant tax incentivesoffering 100 percent (and later 80 percent and now 15 percent) accelerated depreciation in the first yearhave induced substantial investments by corporations and high net worth individuals in wind energy projects. State-level actions, such as preferential tariffs and special directives for wind, have also accelerated the development of the industry. Investments by the MNRE in the Wind Resource Assessment Program and establishment of the Centre for Wind Energy Technology, which serves as a focal point for the MNREs research and development work in the wind energy sector, have also helped develop new wind projects. As a result, many strong private integrated technology and project development firms have emerged in the sector. India needs to step up the development of its renewable energyrich but underdeveloped states. Although national policies enable renewable energy, the pace of development depends largely on each states policy and regulatory support. State-level renewable energy policies, specific feed-in tariff and RPO programs from state energy regulatory commissions (SERCs), utility evacuation programs, clearance mechanisms, open access policies, and capacity of state nodal agencies all have significant influence on the pace of renewable energy development. A three-fold strategy has been pursued by the government for promotion of RE sources through private sector involvement. These include: Providing budgetary resources by government for demonstration projects. Extending institutional Agency finance (IREDA) from and the other Indian Renewable Energy for Development financial institutions
commercially viable projects, with private sector participation; and external assistance from international and bilateral agencies. Promoting private investment through fiscal incentives, tax holidays, depreciation allowance, and facilities for wheeling and banking of power for the grid and the remunerative returns for the power provided to the grid.
16
The current policy environment has been instrumental in creating one of the largest and most diverse renewable energy programs in the world, with a broad technological base and large human capacity. 3.2.3 Wind Energy Market For renewable energy to enter the electricity sector, there has to be competition in the electricity market because high level of concentration and existence of vertically integrated utilities (generation units-transmission units-distribution units) will make it difficult for new firms to enter the market and especially when the costs of generation is relatively higher than that generated from conventional sources of energy. But these barriers pose challenges for the easy entry of renewable resources in electricity generation. The promotional strategies thus come to use here. But completion issues are involved there too. For e.g. in RPO: The States based on their endowment of renewable resources are mandated to produce electricity from a certain proportion of renewable resources. Each state has a different RPO (Renewable Purchase Obligation) that they have to abide by. The generating station can sell the power at a prespecified tariff which is called feed-in-tariff. Feed-in-tariffs are seen to be higher than average power purchase cost and hence the distribution licensee (obligated entity) does not have an incentive to procure renewable electricity more than what they are bound to. These tariffs are different for different renewable energy depending upon the cost of technology and geographical area(endowment of resources). This creates competition issues among the companies involved in generation of different states. For example, a company in Tamil Nadu (resource rich) has a higher RPO to fulfill than a company in Delhi. This is unfair for companies in Tamil Nadu because of the following reasons: 1. They have to abide by a higher RPO 2. The tariffs are presumably higher in Delhi because of not-so-advanced technology for harnessing renewable energy leading to higher costs of generation. Since feed-in-tariffs are cost based, it invariably benefits the resource-deficit states because the return is higher even though they have to comply to lower RPOs. This also discourages innovation in technology (which leads to low costs) SIP(SEL), School of Petroleum Management | Wind Power Scenario 17
because then (cost + fixed premium) falls with lower cost of advanced technology. This creates anti-competitive environment as there will be no incentive to go for better technology and lower costs of generating electricity. This causes a major hindrance to the flow of investment in this sector. Because of this, companies in resource rich states would not find any incentive to enter into electricity contracts or involve themselves in the bidding process. If, however, REC mechanism is followed and the pricing of RECs is done on power exchange with a floor and ceiling level of prices as stipulated by CERC then it offers a choice to the RE generator to either go for FIT scheme or REC scheme. Some states would find REC more lucrative than FIT scheme because of higher floor and ceiling prices given by CERC. In other States, FIT scheme would be more profitable. The inelasticity of demand and supply of RECs lends volatility in REC mechanism and so a floor and ceiling price is decided by CERC. A higher level for both prices would benefit Generators in REC scheme. Tariffs are the most appropriate instruments to ensure efficient choices by producers in choice of technology and appropriate renewable energy source. A higher floor price for REC would not provide incentive for cost reductions and improvement in technology. The prescribed levels of floor and ceiling price provide a room for windfall gain for investors in RES in some states. If the floor price is higher than FIT, then it would increase the compliance cost of obligated entities in the REC scheme and that would burden the consumers. Other than costs, it is the non-variability of electricity supply that impedes investments in this sector. The intermittent nature of renewable leads to less actualization per unit of investment as compared to conventional sources. If electricity were to trade in a completely competitive environment where there is no regulation by governments and markets are deregulated, the variability factor of renewable energy sources would not let the sector grow. The variability or lack of controllability for most renewable energy generation units is an important issue in a market that sets ex ante prices and has a balancing market. Wind power generation is variable, relying on changes in the wind, which can be forecast to a degree but with diminishing accuracy the further ahead one looks. Hydro generation, without storage, is dependent on SIP(SEL), School of Petroleum Management | Wind Power Scenario 18
river flow rate, which in turn relies on rainfall. Reservoir storage will help to mitigate fluctuations, but a prolonged drought will cause generation output to cease. Biomass generation, though controllable, is dependent on the biomass feedstock, which may be seasonally dependent. Photovoltaic power can be reasonably predictable in a warm climate with little cloud, but the movement of clouds can cause significant fluctuations in output. Wave power generation is reliant on wind to create waves. Changes in the energy in waves tend to be smoother than changes in wind energy as the waves tend to integrate the energy that the wind imparts. Tidal power relies on the relative phases of the moon and sun and as such is very changeable on a daily basis but is reasonably predictable. Changes in wind speed/direction and pressure can modify the expected tidal range. This implies all renewable energy sources have issues relating to variability to varying degrees and on different timescales. The ability to forecast changes also varies from one renewable energy generation source to another. If an intermittent renewable energy generator contracts bilaterally for a given amount of energy with another party, e.g. a supplier, any difference between what the generators is contracted to supply and what the generator actually supplies will be cashed-out at prices emerging from a balancing market. These prices are generally unfavorable compared with average bilateral prices. In this type of market, renewable generators that cannot accurately predict their output are disadvantaged. Since the supply of electricity coming from renewable sources is variable and not fixed, complete dependence on such sources for electricity might not be a good idea. This is another factor leading to renewable energy being non-competitive with other sources of energy in a deregulated framework (modern electricity market) If, however, the renewable generator were trading in a market with ex post pricing, it would not be exposed to unfavorable imbalance prices. This procedure spreads the cost of balancing on the entire system on all participants. The ex post prices are less volatile than balancing market prices, as all power must be traded through it, so the price penalty to intermittent renewable generator is less.
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These challenges are insurmountable because of the very nature of renewable resources so renewable energy generators will have a hard time dealing with these constraints in a deregulated market system. Deregulation in Indian Electricity Markets is proposed in the Electricity Act 2003 but complete deregulation is impossible. Liberalization is a choice variable and its extent in the electricity system is restricted. We can have policies favoring liberalization in the liberalization and regulation power mix but not complete deregulation. Liberalization of power markets will bring with it the efficiency gains in generation but with regulation one can expect stability in the retail prices. Like in electricity generated from conventional sources of energy, unbundling of vertically integrated firms and open access provision applies to renewably generated electricity as well. Any violation of this would lead to violation of Section 3 and 4 of the Competition Act. It relates to anti-competitive agreements and abuse of dominance demonstrated by firms, one of which is in generation and the other one in transmission of electricity. They have preferential treatment with each other (for mutual security) and prevent the entry of new firms because of the dominance they create in the market. This discourages new firms from entering the market and competition is reduced and hence the working of market to produce efficient outcomes is stalled. One such case is presented before Competition Commission of India (CCI). It is related to bio-fuels generation by firms and archaic government policy favoring oil companies such that the producers of bio-fuels electricity are affected adversely. It is still yet to be investigated if anti-competitive policies are being followed by government and oil companies to prevent the growth of bio-fuels renewable energy electricity. The newspaper article, dated 28thDecember 2011 in The Economic Times said that the Ministry of Petroleum allowed bio-fuels producers to supply bio-fuels as a transport fuel only to oil companies and also set the price too low for them which was not viable for more investment. Sections 3, 4 and 26 of the Competition Act allow the regulator to probe further, including government enterprises and ministries. The case is still under investigation and the verdict is yet to come. This implies that there could be more cases as such where the governments or private firms have vested interests and indulge in anti-competitive trade SIP(SEL), School of Petroleum Management | Wind Power Scenario 20
practices, thereby, reducing the scope of competition and efficiency in the market. The commission should look for possible anti-competitive agreements between generators and suppliers and encourage more competition in this sector. This will invite investment and help the sector grow. Another case relating to the switching of supplier of electricity by consumer in Maharashtra came before CCI and was solved earlier this December, 2012. The request for change of supplier was not accepted by the new supplier as the former supplier had exclusive jurisdiction in that particular area. This was termed anti-competitive by the informant. The DGs report comes to the conclusion regarding violation of the Act in terms of unfair and discriminatory practices with regard to 1. Condition in purchase or sale of goods or services 2. Price in purchase or sale of goods or services 3. Abuse of dominance by indulging in practices or practices resulting in denial of market access. This case was actually the violation of Section 4 of the Competition Act. A lesson can be learnt from this case and see that no such practices are adopted in case of renewable energy electricity as well. Another case involving Coal India Limited in which Explosives Manufacturers Association of India (EMAI) wrote a complaint to CCI that CIL was procuring 2022 per cent of its requirement from IOCL-BP without inviting bids, which is killing competition in the market. However, after investigations and subsequent hearing of both parties, the Competition Commission of India (CCI) decided that even when Coal India has decided to source part of explosives from IOC-IBP to ensure continued supplies without disruptions, overall competition in the market. 3.2.4 Wind Energy Industry SWOT Analysis Strengths: Technologically proven over past 30 years No fuel inputs and therefore no fuel costs SIP(SEL), School of Petroleum Management | Wind Power Scenario 21
Clean, renewable, zero-emission source of electricity and therefore not subject to potential price on carbon The price for wind energy sold to the grid is declining and has met, or is approaching, grid parity in many markets a trend we expect to continue Scalable Can be installed on land or at sea Lowest cost renewable resource (LCOE) Opportunities: Larger, more efficient turbines to generate larger amounts of wind at lower cost Direct drive wind turbines that could potentially reduce O&M costs Offshore wind Expansion into China, Latin America, Eastern Europe, and other emerging markets Pairing with natural gas to address intermittency issue Unique storage techniques and technologies A national clean energy standard could be in the making in the United States that would provide increased investor confidence in wind projects Weaknesses: Intermittent resource (difficult to predict when wind will blow) Less efficient than fossil fuels Integration into the grid at scale requires institutional change among utilities and grid operators (and, in many cases, these organizations are not accommodating) Higher cost than fossil fuels in most markets Market is driven in large part by policy, making it subject to sudden political changes Scale-up of wind means increased Not-in-my back yard (NIMBY) issues that need to be dealt with on a case-by-case basis Lack of long-term policy in the United States for spurring investor confidence
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Threats: Policy shifts (primarily in the United States) that make wind less economically competitive with fossil fuels could stop the industry dead in its tracks Double-dip recession and/or return of credit freeze prevents projects from being developed Offshore wind deemed too difficult or too expensive Rare earth metals required for direct drive turbines become even more scarce as technology gains acceptance and hits scale, causing delays and driving up costs Raw material prices soar as economies come out of recession Natural gas prices stay at historic lows Public loses concern about carbon emissions, making it more difficult to maintain supportive policies and incentives
(Source: Pike Research)
Figure 3-3 Schematic Wind Power Wheeling for Captive Users
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Chapter 4 Regulatory Framework of Renewable Energy Resources in India
4.1 Introduction
The dwindling investment scenario is one of the prime reasons behind the need for enactment of policies to support renewable energy projects. The barriers to investment in renewable energy sector bring down its competitiveness relative to the conventional sources. Taking into account the cost factor, the investors find it costly and risky to enter into renewable energy projects. The higher initial capital costs imply that installed capacity per unit of initial investment is less than that in conventional sources. Also, because of the intermittent character of renewable resources, the value of the power is not fully actualized when it is fed into electric power grids. Apart from the initial higher investment, transaction costs on resource assessment, developing project proposals, assembling financial packages, negotiating power purchase contracts are also higher than when using conventional sources. Also the environmental costs (negative externalities) of using conventional fossil fuels are often not taken into consideration while making output decisions thereby making the use of conventional sources appear more advantageous.
4.2 A brief History of Regulatory Bodies

India is home to a vast supply of renewable energy resources and boasts one of the largest programs for deploying renewable energy products and systems in the world. In fact, India was the worlds first country to have an exclusive ministry for renewable energy development, the Ministry of New and Renewable Energy Sources. India initiated its renewable energy program in 1981 with the establishment of the Commission for Additional Sources of Energy, which was later converted into the Ministry of Non-Conventional Energy Sources (MNES) in 1992 and renamed the Ministry of New and Renewable Energy (MNRE) in 2006. MNREs role is to facilitate research, design, and development of new and renewable energy that can be deployed in the rural, urban, industrial, and SIP(SEL), School of Petroleum Management | Regulatory Framework of Renewable Energy Resources in India 24
commercial sectors. MNRE undertakes policymaking, planning, and promotion of renewable energy including financial incentives, creation of industrial capacity, technology research and development, intellectual property rights, human resource development, and international relations. MNREs mission is to reduce India's dependence on imported oil, thereby improving the country's energy security supply; to increase clean power's share of the national energy mix; to increase the existing energy supply with a focus on improving access to clean energy; and to help new and renewable energy technologies to be cost-competitive. The ministry supports both on- and off-grid power generation from renewable sources including small hydro, wind, solar, biomass, and industrial/urban wastes. MNRE also has programs focused on rural areas, some of which supply electricity to remote villages and some promote and expand solar energy applications. MNRE has established research, design, and demonstration projects in new areas such as geothermal, hydrogen energy, and fuel cells. Moreover, MNRE supervises national institutions such as the Solar Energy Centre (SEC), the Centre for Wind Energy Technology (C-WET), and IREDA. IREDA, established in 1987 as a Public Limited Government Company, extends financial assistance for renewable energy and energy efficiency projects. IREDA is registered as a non-banking financial company and arranges its resources through market borrowing and lines of credit from bilateral and multilateral lending agencies such as the Asian Development Bank (ADB), World Bank, the Nordic Investment Bank, Japan International Cooperation Agency, the French development agency AFD, and the German development bank. IREDA provides term financing for renewable energy and energy efficiency projects including hydro energy, wind energy, bio-energy (biomass, bio-fuels, and waste-toenergy) and solar energy. A number of incentive schemes of MNRE are administered through IREDA. There are a number of government institutions whose competence extends into the renewable energy sector. The MoP (Ministry of Power) deals with the planning of power supply, provision of political guidelines, investment decisions for government projects, training of experts, administration of laws for power generation from conventional sources, and power transmission and guidelines. SIP(SEL), School of Petroleum Management | Regulatory Framework of Renewable Energy Resources in India 25
Ministry of Power is responsible for the implementation of the Electricity Act 2003, the Energy Conservation Act of 2001, and JNNSM. Important government units like the CEA, the Central Electricity Regulatory Commission (CERC), the Power Finance Corporation (PFC), the PTC India Ltd., and the Rural Electrification Corporation fall under the purview of Ministry of Power. CEAs task is to develop a suitable energy policy for India and conduct planning and coordination tasks. It also completes the preliminary analysis for Ministry of Power on technical and economic issues. CERC was established in 1998 under the Electricity Regulation Act as an independent, central regulation authority. It defines the tariffs for the public sector power producers and advises the government in matters of tariff and competition policy. The State Electricity Regulatory Commissions (SERCs), established at the level of the federal states, control the generation and distribution markets in their respective states. They monitor the quality of the services, tariffs, and fees. PFC is responsible for tapping new sources of finance for investments in power projects in the public and private sectors. PTC India Ltd., formerly called Power Trading Corporation of India Limited, was established in 1999 with a mandate to optimally utilize the existing resources to develop a full-fledged, efficient, and competitive power market to attract private investment in the Indian power sector and to encourage the trade of power with neighboring countries. The Rural Electrification Corporation Ltd, established in 1969, is responsible for the financial support of all rural electrification programs including the large-scale Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), which aims to extend electricity to all rural households and households below the poverty line. The central governments renewable energy goals are included in several planning and policy documents. For example, the Planning Commission, established in 1950, is responsible for formulating five-year plans that prioritize the development and use of national resources The report of the sub-group for wind power development appointed by the Ministry of New and Renewable Energy (MNRE) to develop the approach paper SIP(SEL), School of Petroleum Management | Regulatory Framework of Renewable Energy Resources in India 26
for the 12th Plan Period (April 2012 to March 2017) has fixed a reference target of 15,000 MW and an inspirational target of 25,000 MW for the next five year period. Importantly the report recommends the continuation of the Generation Based Incentive scheme during the 12th Plan Period. The report has prioritized the issue of transmission which was a weak link in the value chain until now. This is being dealt with by a joint working group of the MNRE, the Ministry of Power, the Central Electricity Authority and the Power Grid Corporation of India. Under the latest budget proposal of March 20126, the limit for tax-free bonds for the power sector has been doubled to INR 10,000 crores [EUR 1.5 billion/ USD 2 billion]. The 80 percent accelerated depreciation tax benefit for wind projects is likely to continue till March 2013. The budget proposes an additional depreciation of 20 percent in the initial year to be extended to new assets acquired by power generation companies. These proposals come against the backdrop of severe conventional fuel shortage as well as financing issues hurting the power sector, which is expected to see a capacity addition of over 80,000 MW in the 12th Plan (2012-17). 4.2.1 The ERC Act 1998 Prior to the Electricity Act 2003, the power sector in India was governed by three important legislations viz. The Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commission (ERC) Act, 1998. Prior to the enactment of the ERC Act, 1998, the regulatory function at the central level was performed by the Central Electricity Authority (CEA) / Government of India and at the state level was performed by the SEBs / state government. The authority of the CEA was exercised through the process of grant of techno-economic clearance and the stipulation of various norms. Government of India was responsible for the tariff setting of central generating stations. At the state level, the state governments and the SEBs were responsible for the regulatory function of the sector. The key features of the ERC Act, which is relevant in the context of pricing of renewable energy based power generation, are as follows: The ERC Act, 1998 Provision for setting up of Central Electricity Regulatory Commission SIP(SEL), School of Petroleum Management | Regulatory Framework of Renewable Energy Resources in India 27
(CERC) / State Electricity Regulatory Commission (SERC) with powers to determine tariffs; Constitution of SERC optional for states; and Distancing of government from tariff setting process. Rationale for change in legislative framework The key reasons for devising a new legislation governing power sector were: Requirement for harmonizing and rationalizing provisions in the existing laws to create a competitive environment which would result in enhancing quality and reliability of supply to consumers; Distance regulatory responsibilities of the government. Obviate the need for individual states to enact their own reform laws. Introduce newer concepts like power trading, open access, Appellate Tribunal etc.
Providing special provisions for rural areas.

4.2.2 Electricity Act 2003 In order to formulate a comprehensive legislation imparting renewed thrust to coordinated development of the power sector in the country, the Electricity Act, 2003 (EA 03) has been enacted. The EA 03 provides a comprehensive yet flexible legislative framework for power development and envisions a sector characterized by a competitive market in power where the regulators and the power utilities play increasingly significant role. The important objectives of the EA 03 are as follows: I. To consolidate the laws relating to generation, transmission, distribution, trading and use of electricity and generally for taking measures conducive to development of the entire electricity industry. II. III. IV. V. VI. Promoting competition in the industry. Protecting the interest of consumers and supply of electricity to all areas. Rationalization of electricity tariff. Ensuring transparent policies regarding subsidies. Promotion of efficient and environmentally benign policies SIP(SEL), School of Petroleum Management | Regulatory Framework of Renewable Energy Resources in India 28
VII.
Constitution of CEA, Regulatory Commissions and establishment of an Appellate Tribunal.
VIII. For other related matter
The EA 03 also had its impact on the renewable power sector and recognized the role of renewable energy technologies in the National Electricity Policy and in stand-alone systems. There is quite a mention about renewable resources in the Electricity Act 2003 and National Electricity Policy 2005 at various places under different sections. A glance at those particular sections will enhance our understanding about the legislative framework in which the electricity sector operates.
ELECTRICITY ACT 2003 Section 3 (1) The Central Government shall from time to time, prepare the National Electricity Policy and tariff policy, in consultation with the State Governments and the Authority for development of the power system based on optimal utilization of resources such as coal, natural gas, nuclear substances or materials, hydro and renewable sources of energy. Section 4 The Central Government shall, after consultation with State Governments, prepare and notify a national policy, permitting stand alone systems (including those based on renewable sources of energy and other non-conventional sources of energy) for rural areas. The state electricity regulatory commissions (SERCs) are now crucial players in the context of state level policies for renewable. Section 61 (h) The Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the promotion of co-generation and generation of electricity from renewable sources of energy. SIP(SEL), School of Petroleum Management | Regulatory Framework of Renewable Energy Resources in India 29
Further the EA 03 has made it mandatory for SERCs Section 86 (1) (e) to promote cogeneration and generation of electricity through renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any persons, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee. 4.2.3 National Electricity Policy In pursuance of the provisions of the Act, the Government of India has notified the National Electricity Policy. National Electricity Policy also stresses the need for the promotion of Non-Conventional Energy Sources. The extract from NEP 2005 which relates to Non-conventional resources is given below: Cogeneration and Non-Conventional Energy Sources Non-conventional sources of energy being the most environment friendly there is an urgent need to promote generation of electricity based on such sources of energy. For this purpose, efforts need to be made to reduce the capital cost of projects based on nonconventional and renewable sources of energy. Cost of energy can also be reduced by promoting competition within such projects. At the same time, adequate promotional measures would also have to be taken for development of technologies and a sustained growth of these sources. The Electricity Act 2003 provides that co-generation and generation of electricity from non-conventional sources would be promoted by the SERCs by providing suitable measures for connectivity with grid and sale of electricity to any person and also by specifying, for purchase of electricity from such sources a percentage of the total consumption of electricity in the area of a distribution licensee. Such percentage for purchase of power from nonconventional sources should be made applicable for the tariffs to be determined by the SERCs at the earliest. Progressively the share of electricity from non-conventional sources would need to be increased as prescribed by State Electricity Regulatory Commissions. Such purchase by distribution companies shall be through competitive bidding process. Considering the fact that it will take some time before non-conventional technologies compete, in terms of cost, 30 with SIP(SEL), School of Petroleum Management | Regulatory Framework of Renewable Energy Resources in India
conventional sources, the Commission may determine an appropriate differential in prices to promote these technologies. Industries in which both process heat and electricity are needed are well suited for cogeneration of electricity. A significant potential for cogeneration exists in the country, particularly in the sugar industry. SERCs may promote arrangements between the co-generators and the concerned distribution licensee, for the purchase of surplus power from such plants. Cogeneration system also needs to be encouraged in the overall interest of energy efficiency and also grid stability. 4.2.4 National Tariff Policy In compliance with Section 3 of the EA 03, the Central Government notified the Tariff Policy in continuation with the National Electricity Policy. Some of the important provisions with regard to nonconventional energy generation are highlighted below Section 6.4 (1) Pursuant to provisions of section 86(1)(e) of the Act, the Appropriate Commission shall fix a minimum percentage for purchase of energy from nonconventional sources taking into account availability of such resources in the region and its impact on retail tariffs. Such percentage for purchase of energy should be made applicable for the tariffs to be determined by the SERCs latest by April 1, 2006. It will take some time before non-conventional technologies can compete with conventional sources in terms of cost of electricity. Therefore, procurement by distribution companies shall be done at preferential tariffs determined by the Appropriate Commission.
(2)
Such procurement by Distribution Licensees for future requirements shall
be done, as far as possible, through competitive bidding process under Section 63 of the Act within suppliers offering energy from same type of nonconventional sources. In the long-term, these technologies would need to compete with other sources in terms of full costs. (3) The Central Commission should lay down guidelines within three months SIP(SEL), School of Petroleum Management | Regulatory Framework of Renewable Energy Resources in India 31
for pricing non-firm power, especially from nonconventional sources, to be followed in cases where such procurement is not through competitive bidding. Implementation of Section 86 (1) (e) of the EA 03 and Section 6.4 (1) of the National Tariff Policy are underway and different SERCs are in the process of issuing tariff orders for renewable energy based electricity generation and specifying quota/share for power from renewable energy. A need was felt to draft an Integrated Energy Policy linked primarily with sustainable development goals of the country. The Prime Minister and the Deputy Chairman, Planning Commission, Government of India, took the decision for an effective and comprehensive energy policy as an urgent imperative in the year 2004. The draft of integrated energy policy was circulated in December 2005 and the final policy was notified in August 2006. The broad vision behind the energy policy is to reliably meet the demand for energy services of all sectors including the lifeline energy needs of vulnerable households, in all parts of the country, with safe and convenient energy at the least cost in a technically efficient, economically viable and environmentally sustainable manner. The integrated energy policy has outlined some ambitious tenets. These are summarized below. Renewable energy may need special policies to encourage them. This should be done for a well-defined period or up to a well-defined limit and should be done in a way that encourages outcomes and not just outlays. Phase out capital subsidies, which only encourage investment without ensuing outcome, by the end of the 10th Plan linked to creation of renewable grid power capacity. Power regulators must seek alternative incentive structures that
encourage utilities to integrate wind, small hydro, cogeneration, etc., into their systems. All incentives must be linked to energy generated as opposed to capacity created. SIP(SEL), School of Petroleum Management | Regulatory Framework of Renewable Energy Resources in India 32
Respective power regulators should mandate feed-in laws for renewable energy, where appropriate, as provided under the Electricity Act and as are mandated in many countries. The following specific policies to promote various renewable have been recommended in the policy: Mini Hydro: A detailed survey should be carried out to identify potential sites. Identified sites should be auctioned. For plants which are not connected to grid bid for lowest tariff with a pre-specified premium in the form of Tradable Tax Rebate Certificates (TTRC) should be invited. For village level plants, the entrepreneurs should be encouraged to supply power to meet other requirements such as agro processing and milling. If the plant can feed into a grid, the grid should be required to accept power at the Government of India time of day tariff, and the plant site should be auctioned off for minimum premium in the form of TTRC linked to output. The responsibility for investments for connecting to the grid should be fixed in advance before the bidding. Wind Power: For wind power, site selection is freer than hydro-power and wind plants can be set-up on private land. Thus there may be need to auction only sites on public property. The same two types of auctions may be followed as described above for hydro-power plants. Fuel-wood Plantation: Cooperatives should be encouraged and facilitated to grow tree plantations in villages. Cooperatives which are open to all members of the community and which are non-discriminatory should be given government land on long-term lease. Women should be encouraged to set-up and manage such plantations so that the time they now spend in gathering fuel can be spent productively in a way that empowers them. They should also be provided finance. If organized and managed properly, such plantations are economic and successful. Field based NGOs could also be involved in this activity. To encourage large-scale plantations, contract farming should be facilitated. Electricity from Wood Gasification: This can provide electricity based on gasification of wood and can be very useful especially in remote villages. The same set of policies, indicated for micro hydel and wind power plants should be followed here. SIP(SEL), School of Petroleum Management | Regulatory Framework of Renewable Energy Resources in India 33
Bio Gas Plants: The real potential of bio gas is in community level plants. To encourage private or community entrepreneurs to set these up, they need to be provided land and finance. Also to have the willing participation of all the cattle owners in the community requires an appropriate operating strategy. The essential policy required is provision of land and finance.
Source: PwC analysis for World Bank Figure 4-1 Growth of renewable energy sector with changing policies
4.2.5 Rural Electrification Policy 2006 Also, in compliance with Sections 4 and 5 of the Electricity Act, 2003, the central Government prepared the rural electrification policy (REP) published in August 2006. The policy under its Section 3 (3.3) for the first time provided policy framework for decentralized distributed generation of electricity based on either conventional or non-conventional resources or methods of generation. Thereby providing the relevant regulatory direction for off-grid/ stand-alone small-scale wind farms. The following is an excerpt of the relevant portions of EA 2003 and REP, as applicable to decentralized generation. Section 2 (63) Stand alone system means the electricity system set up to generate power and distribute electricity in a specified area without connection to the grid;
SIP(SEL), School of Petroleum Management | Regulatory Framework of Renewable Energy Resources in India
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Section 3.3 Decentralized distributed generation facilities together with local distribution network may be based either on conventional or non-conventional methods of electricity generation, whichever is more suitable and economical. Non-conventional sources of energy could be utilized even where grid connectivity exists provided it is found to be cost effective. Section 4 The central government shall, after consultation with state
governments, prepare and notify a national policy, permitting stand-alone system (including those based on renewable sources of energy and nonconventional sources of energy) for rural areas. Section 5 The central government shall also formulate a national policy, in consultation with the state governments and the state commissions, for rural electrification and for bulk purchase of power and management of local distribution in rural areas through panchayat institutions, users associations, cooperative societies, non-governmental organizations or franchisees. 4.2.6 Renewable Portfolio Standard (RPS)/Renewable Purchase
Obligation (RPO) While pricing laws establish the price and let the market determine capacity and generation, quotas (or mandated targets) work in reverse the government sets a target and lets the market determine the price. Typically governments mandate a minimum share of capacity or generation of electricity, or a share of fuel, to come from renewable sources. The share required often increases gradually over time, with a specific final target and end-date. The mandate can be placed on producers or distributors. Section 86(1)(e) of the Electricity Act 2003 requires that the state commissions specify RPOs for the obligated entities. It says, The State Commission shall discharge the following functions, namely: promote cogeneration and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution license. In pursuance of this policy, the National Tariff Policy mandates that each SERC specify RPOs by distribution licensees in a time-bound manner. As of April 2010, SIP(SEL), School of Petroleum Management | Regulatory Framework of Renewable Energy Resources in India 35
18 states have established RPOs or have draft regulations under consideration with RPO requirements ranging from 1% to 15% of total electricity generation.
Source: Conceptual and Regulatory Framework of REC in India, ABPS Infra Pvt. Ltd., 2009
Figure 4-2 Obligation under Section 86(1)(e)
4.2.7 Renewable Energy Certificate (REC) Naturally, the availability of renewable energy sources differs across India. In some states, such as Delhi, the potential for harnessing renewable energy compared to the demand for energy is very small. In other states, such as Tamil Nadu for wind, Rajasthan for solar, or Himachal Pradesh for hydro, it is very high. This offers opportunities for inter-state trading in the form of RECs. Such trade allows for more economically efficient development of renewable energy throughout the country as distribution licensees in states with limited resources can purchase RECs associated with renewable generation in other states where it is less expensive to develop renewable energy projects. In this way, each states RPO can be met in the most economically efficient manner. In January 2010, CERC announced the terms and conditions for a tradable REC program as follows: SIP(SEL), School of Petroleum Management | Regulatory Framework of Renewable Energy Resources in India 36
There will be a central agency, to be designated by CERC, for registering RE generators participating in the scheme.
The renewable energy generators will have two options: either sell the renewable energy at a preferential tariff fixed by the concerned Electricity Regulatory Commission, or sell the electricity generation and environmental attributes associated with RE generation separately.
On choosing the second option, the environmental attributes can be exchanged in the form of REC. Price of the electricity component would be equivalent to the weighted renewable power purchase cost. average power purchase cost to the distribution company, including short-term power purchase but excluding
The central agency will issue the REC to renewable energy generators. The value of one REC will be equivalent to 1 MWH of electricity delivered to the grid from renewable energy sources.
The REC will be exchanged only in the power exchanges approved by CERC within the band of a floor price and a forbearance price to be determined by CERC from time to time
Figure 4-3 REC Price for FY-12
CERC issued an amendment to the terms in September 2010 clarifying participation of captive generation plants and restricting participation of any generator terminating an existing PPA to sell power under the REC scheme.
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Figure 4-4 Flow diagram for various processes involved in the REC mechanism
Figure 4-5 Eligibility for REC trading
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4.2.8 APPC Non preferential tariff and REC CERC stipulates that for a project to be eligible under the REC mechanism, the power producer has to sign a PPA with the state utilities at a price equal to the APPC price. The APPC price for a state for a particular time period is determined by the State Electricity Regulatory Commissions (SERC). Looking at the current APPC prices in various states, a combination of REC and a PPA signed at APPC rates seems comparable with the preferential PPAs signed with the state utilities. 4.2.9 Feed-in Tariff (FIT) Feed-in tariffs are a commonly used policy instrument for the promotion of renewable electricity production. The term feed-in tariff can be used either in the context of a minimum guaranteed price per unit of produced electricity as approved by the regulator, to be paid to the producer, or as a premium in addition to market electricity prices. Regulatory measures are usually applied to impose an obligation on electricity utilities to pay the (independent) renewable energy power producer a price as specified by the government. The level of the tariff is commonly set for a number of years to give investors security on income for a substantial part of the project lifetime. Many different adaptations of the instrument are applied. However, the level of the tariff need not have any direct relation with either cost or price, but can be chosen at a level to motivate investors for green power production. FITs provide investors with returns that are clear and stable. Typically, these programs involve specified renewable energy projects (e.g. solar and/or wind) with long-term power purchase agreements at an agreed price. The costs of FITs are usually spread throughout the utility rate base, on the theory that all consumers benefit from the security, environmental and other benefits associated with deployment of renewable energy. 4.2.10 Government of India Incentives for Wind Power Policies One provision of the Electricity Act of 2003 allowed turbine manufacturers to provide complete build-operate-manage wind solutions. As manufacturers, their primary interest was in installing as many new wind projects as possible to maximize turbine sales rather than in maximizing electricity generation of SIP(SEL), School of Petroleum Management | Regulatory Framework of Renewable Energy Resources in India 39
individual wind plants. Many other investors made similar decisions, choosing to install as much capacity as possible to profit from tax- depreciation benefits with little regard to how well their wind plants would perform over the long term. Newer policies, such as GBIs and RPOs, encourage independent power producers and private investors to establish large-scale, commercial wind plants that enable wind to be a more significant part of the power mix. Based on experiences in other countries, both GBIs and RPOs are generally considered to be positive steps towards encouraging the development of wind power. These can lead to developer investment in more comprehensive resource assessments at the project site and a more optimized plant design. More independent power producers may enter India's wind market, turbine sizes and tower heights are increasing, and turbine technology is continuing to improve, all of which may contribute to higher capacity factors for future wind plants in India. However, until there is a long-term guarantee for GBIs beyond 2012 and an enforcement of the RPO targets, there is unlikely to be real movement in the market. A project developer can currently choose between the central governments accelerated depreciation or the GBIs; the preference cannot be changed once the choice has been made. 4.2.11 State Level Renewable Energy Preferential Tariff In 2003, SERCs were given the right to set preferential renewable energy tariffs based on guidelines stipulated by CERC. Although several states have followed through, these tariffs are insufficient to drive further development in wind. However, the state-level GBIs can be used in conjunction with the central-level incentives (either accelerated depreciation or GBIs) to make projects more financially attractive to developers. For 20092010, CERC established a preferential tariff band for wind energy projects ranging from INR 3.75/kWh (USD 0.68/kWh) to INR 4.6/kWh (USD 1.01/kWh), depending on the project size. State wind energy preferential tariffs range from INR 3.14/kWh (USD 0.57/kWh) in Kerala to INR 4.08/kWh (USD 0.73/kWh) in Haryana. Other states that have established feed-in tariffs include Maharashtra, Andhra Pradesh, Madhya Pradesh, Karnataka, Tamil Nadu, and West Bengal; all states have caps ranging from 50 MW to 500 MW. The tariff SIP(SEL), School of Petroleum Management | Regulatory Framework of Renewable Energy Resources in India 40
conditions vary by state as well; some are fixed for a set number of years while the tariffs in other states are reduced or escalated during those years. 4.2.12 Accelerated Depreciation In the past, the main incentive for developing wind power projects was accelerated depreciation. This tax benefit allowed projects to deduct up to 80% of the value of wind power equipment during the first year of the projects operation but from April12 it has been reduced to 15%. Investors are then given tax exemption status for up to 10 years. Wind power producers receiving accelerated depreciation benefits must register with and provide generation data to IREDA and are not eligible to receive the more recent GBIs. Also from FY12 GBI has been abolished for wind power plants. 4.2.13 Indirect Tax Benefit Indirect tax benefits included exemptions or concessions on the excise duty and a reduction in customs duty for certain wind power equipment. Wind-powered electricity generators and components, as well as water-pumping wind mills, wind aero-generators, and battery chargers, are exempt from excise duties. Indirect tax benefits for manufacturers of specific wind energy parts vary from 5%25% depending on the component. 4.2.14 Central-level Generation Based Incentive (GBI) Offered by the central government since June 2008 and administered by IREDA, the GBI for wind was available for independent power producers with a minimum installed capacity of 5 MW. As of December 2009, the GBI is set at INR 0.50/kWh (USD 0.01/kWh) of grid- connected electricity for a minimum of 4 years and a maximum of 10 years, up to a maximum of INR 6.2 million (USD 140,000) per MW. The scheme will deploy a total of INR 3.8 billion (USD 81 million) until 2012 and aims to incentivize capacity additions of 4,000 MW. Wind power producers receiving a GBI must register with and provide generation data to IREDA. The GBI is offered in addition to SERCs state preferential renewable energy tariffs. However, IPPs using GBIs cannot also take advantage of accelerated depreciation benefits. As of October 2010, 30 projects had been registered under this scheme with over 200 MW commissioned.
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Figure 4-6 Snapshot of state-wise policy framework
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Chapter 5 Suzlon Energy Limited
5.1 Introduction
The Suzlon Group is ranked as the worlds fifth largest wind turbine supplier, interms of cumulative installed capacity, at the end of 2011. The companys global spread extends across Asia, Australia, Europe, Africa and North and South America approaching 20,000 MW of wind energy capacity installed in 28 countries, operations in 33 countries and a workforce of over 13,000. The Group offers one of the most comprehensive product portfolios ranging from sub-megawatt on-shore turbines at 600 Kilowatts (KW), to the worlds largest commercial 6.15 MW offshore turbine built on a vertically integrated, low-cost, manufacturing base. The Group headquartered at Suzlon One Earth in Pune, India comprises Suzlon Energy Limited and its subsidiaries, including REpower Systems SE, a leader in offshore wind technology.
5.2 History
The history of Suzlon Group is rooted in Saurashtra where the first seeds of its inception in 1984 were sown. It is a family run business under the visionary statesmanship of its Chairman Shri Tulsi R Tanti. Suzlon made its initial foray in the textile sector under the brand name Suzlon Fibers. In the year 1995 Suzlon Fibers decided to diversify in the field of Wind Energy, which led to the formation of Suzlon Energy Limited. This bold entrepreneurial step was a watershed in the history of Suzlon and soon Suzlon was poised to catapult in a big way. However, many in the industry were initially skeptical of Suzlons entry as the contemporary wind energy industry was dominated chiefly by European based companies. This did not deter Suzlon as it was head strong in making India self reliant in this nascent sector. Suzlon Energy Limited installed its first ever Wind turbine in Gujarat state for Indian Petrochemicals Corporation Ltd. (IPCL) and since then it has never looked back.
SIP(SEL), School of Petroleum Management | Suzlon Energy Limited
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Today Suzlon Energy Limited is a large multinational & the flagship company of the Suzlon Group .It is a name to reckon with, in the Global Wind Energy Industry. It is also having its operations in USA, Germany, China, Holland and Australia which includes subsidiaries in Germany & Netherlands exclusively for R&D in technology development & Rotor blade molding and tooling respectively. In Oct 2002 Suzlon flagged its first exports to the U.S thereby reversing the technology flow from a developing country to a developed country. This was truly a feat par excellence especially in light of Western dominance of this sector. The start of this millennium saw SUZLON capture the largest market share in the growing Asian markets and featured amongst the top ten in the world (Source BTM). Suzlon was also honored with the prestigious World Wind Energy Award for disseminating wind energy worldwide at Cape Town (South Africa). On the domestic front Suzlon has been a market leader for the past consecutive Six years with installations in Andhra Pradesh, Karnataka, Tamil Nadu, Maharashtra, Gujarat & Rajasthan. These are spread over some twenty odd sites having dedicated Infrastructure & O&M backup. SUZLON pioneered the concept of large wind parks in Asia, and has developed number of wind parks in Asia including the world's largest wind park - one of its kinds with capacity of over 200 MW. It is also the first company in India to launch the Megawatt class turbines in India and has installed 316 Megawatt class turbines as of today .The preceding financial year saw Suzlon adding 219.85 MW capacity taking its cumulative total for the year ending Mar 2004 to approx 600 MW. This reaffirms SUZLONs unflinching zeal to be the Numero Uno in the wind industry. Suzlons clientele includes top business houses such as Bajaj Auto Limited , Bajaj Electricals Limited, Tata Finance Limited , Tata Power Co Ltd , Manikchand Group, Ghodawat Group, Madras Cements, IPCL, MSPL etc., to name a few. Key Historical Facts Year of Formation Initial JV collaborator :10-Apr-1995 :Sudwind GmbH Windkrafttanlagen
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Chief Promoter of the Company Prior Business Corporate Facts Key Suzlon Group Companies
:Mr. Tulsi R. Tanti
:Textiles
:Energy Limited, REpower Systems AG, SE Forge
Core Business Area :Wind Turbine Manufacturing & Turnkey wind power solutions provider Corporate Headquarters Registered Office Corporate Philosophy Core Values :One Earth Campus, Pune ( Maharashtra ) India :Ahmedabad ( Gujarat ) - India :"To pursue social, economic and ecological sustainable development for our planet" :Agility, Creativity, Adding Value, Committed Integrity Total Employees Group Order Book**** Global Footprint Geographical Presence Key Markets :Asia Pacific (India, China, Australia, Japan, :33 countries on 6 continents :over 13000 :~5.7GW / ~$7.5Bn
(Installed presence) Sri Lanka, Korea) :Americas (USA, Canada, Brazil, Nicaragua) :Europe (UK, France, Germany, Spain, Portugal, Italy, Belgium, Romania, Poland, SIP(SEL), School of Petroleum Management | Suzlon Energy Limited 45
Turkey, Hungary, Austria, Bulgaria, Greece, Sweden, Netherlands, Russia, Sweden) Emerging Markets focus :MENA Region, South Africa, South Asian countries, Argentina, Chile, Mexico Manufacturing and R&D Process Number of Production Facilities Location of Global Production Facilities Key R&D Centers : Germany (Hamburg, Osnabriick, Osterrnfeld, Rostock, Berlin), India (Pune & Vadodara), Denmark (Aarhus), Netherlands (Hengelo), China (Shanghai & Tianjin) Key Components Manufactured : Generator, Rotor Blades, Control Systems, Towers, Nacelle Assy, Hub Castings, Transformers Product and Technology Product applications Product Classes : Offshore & Onshore : Sub Megawatt Class, Megawatt Class & Multi Megawatt Current Product offerings - Suzlon Current Product offerings - REpower New Product : 600kW, 1250kW, 1500kW, 2100kW, 2250kW : 2000/2050 kW, 3300/3370 kW, 5000/5075 kW, 6150 kW MM 100 - 1800kW (REpower) & S95/97 : India, Germany, China, Portugal, US : 30
offerings for low wind 2100kW DFIG series(Suzlon)
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regimes Projects and Installation (Global)* Total Installed Global :19176 MW or 19.17 GW operational MW Total number of turbines installed globally Number of project installed countries Global Market share (2011)*** CSR & Sustainable Development** CSR - No. of Villages :~ 841 villages in India covered CSR - No. of families :~71466 families in India directly benefitting CO2 emissions offset :~13.05 million tonnes by Suzlon WTGs p.a. Coal offset by Suzlon :~11.97 million tonnes WTGs p.a.
Source: *These statistics are as of 31 Mar 2012, ** India Specific statistics, *** BTM Consulting, ****Investor presentation data 03 FY 12
:12776 Wind Turbine Generators
:30
:7.6% (Ranked 5th)
5.3 Vision
To be the technology leader in the wind Sector. To be in the top three wind companies in all the key markets of the world. To be the global leader in providing profitable, end-to-end wind power solution. To be the company of choice for stakeholders. SIP(SEL), School of Petroleum Management | Suzlon Energy Limited 47
Figure 5-1 Values at SEL
5.4 Philosophy
To pursue social, economic and ecological sustainable development for our planet.
5.5 Product Development and Supply

Their approach to technology is one of constant research, development and innovation. To create products that deliver high performance and reliability in varied operating environments, they employ the best in every field of development in the wind energy industry. With world-class design, R&D teams, and state-of-the-art facilities in Belgium, Germany, India and The Netherlands, their R&D team is a combination of the finest of global experience and in-depth expertise. Suzlon, in joint venture partnership with REpower, has established the Renewable Energy Technology Center (RETC) in Hamburg. RETC provides crossindustrial and interdisciplinary expertise in the areas of Research, Technology development, Testing, Validation and Consulting in cooperation with an international network. The 500-strong Technology Group, led from its R&D Headquarters in Hamburg, derives its technological success from a close collaboration between the development teams in Germany, Netherlands, Denmark and India, key technological partners and research centres experienced in Wind energy such as Ris in Denmark, ECN and TU Delft in the Netherlands and Fraunhofer Gesellschaft and the University of Kiel in Germany. Composite wind turbine technology in Germany and Denmark Aerodynamic development in Netherlands, Denmark and India Engineering in India SIP(SEL), School of Petroleum Management | Suzlon Energy Limited 48
Gearbox technology in Belgium Suzlon is one of the worlds most highly integrated wind turbine makers. Anticipating the constricted component supply environment that exists today, the company moved to establish technology and manufacturing capability for all critical components. Suzlons supply chain spans the entire wind technology value chain, and is projected to have 5,700 MW of manufacturing capacity by the end of FY2009. Across 3 countries - China, India and USA - Suzlon has 13 manufacturing facilities. These units make a wide range of rotor blades, nacelles, nacelle covers, control panels and hubs, tubular towers and generators, covering all key components of wind turbines. REpower manufactures medium to high capacity WTG (1.5 to 6 MW) and has employee strength of 1,150.
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Figure 5-2 Facility Location of SEL
5.6 Turnkey Solutions

Suzlons turnkey services range from complex front-end engineering design, construction, installation and commissioning to long-term operations and maintenance as well as the length, breadth and depth of customer requirements across the wind energy value chain. Their key differentiator is having both strong front-end engineering and the benefit of local experience, interface management and construction know how. Key benefits they offer clients range from development, to construction to operations. Manufacturing-driven supply chain strengths and global expertise help offer customers the best in quality services. Suzlon is well placed to assist clients in overall wind power project delivery. The major sections of the delivery SIP(SEL), School of Petroleum Management | Suzlon Energy Limited 50
process where Suzlon can add value are Micro-siting, Grid Connection, HV/ Substation creation, Electrical (Reticulation), Laying Roads and Foundations and Project Scheduling. Suzlon also offers end-to-end solutions in select geographies whenever required. In India Suzlons end-to-end solutions start at wind mapping and land sourcing, and extend right across the entire value chain.
Figure 5-3 SEL End to End Solutions
5.7 Project Services

Suzlon focuses on providing a complete range of efficient, cost effective wind energy solutions. Using the support and talent of our multi-cultural, multi-ethnic global workforce, they have successfully constructed and managed customized wind farms in varied geographic areas and climatic conditions. Four wind farms of a total capacity of 400 MW, in the Pacific Northwest of the U.S., stretch across 50 miles of rugged terrain above one of the country's largest river gorges, and robustly power U.S. homes. These wind farms were built in less than six months and feature over 200 units of S88-2.1 MW. 5.7.1 Land Sourcing and Permitting A key service at the beginning of the wind project life cycle is attaining land resources. In India, and select geographies, on request, Suzlon provides SIP(SEL), School of Petroleum Management | Suzlon Energy Limited 51
(through our associates) assistance in identifying and acquiring land, and obtaining clearances and permissions from regulators. Factors such as wind consistency, environmental impact, zone restrictions and aesthetics are some of the factors that are taken into consideration to plan a wind farm that will generate energy for years to come. 5.7.2 Wind Sources Assessment In India, and select geographies on request, Suzlon provides assistance in identifying sites with high wind potential, and micrositing the science of assessing wind patterns to determine their optimally best positions. The locations topographical influence also helps yield optimum wind power. At Suzlon, we incorporate micrositing to our advantage of minimizing risks. For wind resource assessment, it is highly crucial to assess the wind flow direction, the land type, temperature and wind speed. Optimum power is generated with a wind speed of 12m/sec. Setting up a 200 meters long turbine with a blade span of 80 meters is ideal for wind power generation. Suzlons expertise and experience ensures that wind turbine generators are set up in the appropriate wind conditions and the required checks are carried out. 5.7.3 Infrastructure Development Windy sites are often in remote areas, far from existing power infrastructure. In India and select geographies on request, a key part of Suzlons expertise lies in creating local infrastructure for the wind farm ranging from the foundation for wind turbines to erecting buildings to house maintenance and operations facilities. In association with its distribution network, Suzlon also develops the associated power infrastructure, including laying down cables and establishing substations. 5.7.4 Erection and Commissioning With expertise acquired through the implementation of several turnkey projects, Suzlon has built up extensive experience in erecting and commissioning wind turbine projects, installing over 8,000 MW across various geographies. Structures and components of wind turbines need to sufficiently accomplish their intended purposes during later operation for which Suzlon ensures that quality management measures are adequately implemented during the erection of a SIP(SEL), School of Petroleum Management | Suzlon Energy Limited 52
wind turbine. Critical inspections are undertaken at every stage to ensure compliance with the different location-oriented requirements of setting up a wind project.
5.8 Operation and Maintenance

Alongside project development expertise, Suzlon goes to the very last mile with its customers in providing operations and maintenance for projects for any site, ranging from a year to the full 20 year life cycle of wind turbine projects.
5.9 Vertical Integration at SEL

Suzlons vertical integration has been its success driver. Foresight of the current economic challenge and adopting a visionary strategy has set us forth to become the most vertically integrated wind turbine maker in the world. We embarked on a journey to develop leading edge technology and build manufacturing capability for all key components in the wind power domain. The Wind Industrys supply chain experiences the critical bottleneck of a long production lead time for key components such as Bearings, Gearboxes, Forging materials etc. However, Suzlon has gained the critical competitive advantage with: Better control over time, cost & quality Long-term service support to customers Turbine technology integration Faster product rollout
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Figure 5-4 Business Model of SEL
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Figure 5-5 Revenue/Incentive Options
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Figure 5-6 Market Share of SEL
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5.10 Technology
Suzlons multi-dimensional approach to value engineering and cost reduction provides better margins and a competitive advantage to its customers. Their aim: To create market-defining products To enable entry into new markets with new applications To implement robust back-end processes To leverage our workforce competency The Wind Electricity Generators (WEGs) are broadly divided into three parts: Tower - supports the Nacelle and Rotor Nacelle - contains the key components of the wind turbine Rotor - converts kinetic energy into electrical energy 5.10.1 Suzlons Blade Technology Delivers blade and production definitions, knowledge and support to make customers the preferred supplier for the end-users Focuses on technology leadership to deliver high performance and cost efficient blades for wind turbines To achieve the above: They use Advanced Project Management, with a clear focus on voice-of the-customer Newly developed blades are tested at independent externals (e.g. WMC); using international accepted standards (e.g. GL) before the blade is handed over to the customer State-of-the-art our employees 5.10.2 Asynchronous Generator Suzlon uses asynchronous generators (induction machines) in all models of wind turbines. 5.10.3 Induction machines SIP(SEL), School of Petroleum Management | Suzlon Energy Limited 57 knowledge is made available in the fields of aerodynamics, materials, processes, tooling and product development for
Are most compact Operate as induction motors or generators Draw electrical power Deliver mechanical power 5.10.4 Braking System Aerodynamic Braking is: Used to stop the Wind Turbine Generator Locked with hydraulic brakes, ensuring personnel safety The Brake Pad has the following properties: Utilization for dynamic braking in dry environment Stable friction coefficient High-wear resistance Low-wear melting material 5.10.5 Grid Management Suzlon generators are grid-friendly in their operations, with the generation voltage at 690V. They can also be stepped up to the local grid voltage. The inrush currents remain at safe limits and the wind turbines are provided with protection schemes. The generators feature: Vacuum / air circuit breakers Lightening arrestors Earth fault protections Under / over voltage protections Under / over frequency protections Over load protections 5.10.6 Tower Technology There are two types of Suzlon towers: Free standing lattice towers Circular tower SIP(SEL), School of Petroleum Management | Suzlon Energy Limited 58
The towers: Are constructed of structural/ alloy steel and surface Are protected to withstand extreme operating conditions according to EN standards House the WTG at heights decided for power generation Remain sustainable under extreme wind load conditions Provide stability for the WTG at operating loads Provide ease during turbine maintenance and operation Feature standard internals/ accessories and a safe access system Are optimized to provide the best cost/ kWh and modular design 5.10.7 Drive System Rotor Blade Concept: All new concepts are developed on the basis of customer specific requirements We focus on the use of composites for the production of blades We mainly concentrate on wind class 2 and 3 rotor blades for on-shore purposes Direct Drive: Rotor Shaft One end of the Rotor Shaft is connected to the Rotor and the other end is fixed to the Gearbox Input/ Low Speed Shaft. The Rotor transfers the mechanical energy to drive the Gearbox, which in-turn steps up the speed to run the Generator. Main Bearing Made of Self Aligning Spherical Roller Bearings, it helps absorb the radial and axial forces in the Rotor shaft. It supports the Rotor Shaft at one end and the other end of the Shaft is mounted on the Gearbox Low Speed Shaft. 5.10.8 Annular Generator Suzlons Annular Generators are of the following types: SIP(SEL), School of Petroleum Management | Suzlon Energy Limited 59
General The Generators are class H insulated and conform to the relevant IS/IEC standards. The 600 kW is: o A 4 pole 1500 rpm (synchronous speed) squirrel induction generator o Designed with an inherent high slip of 2.5% at its full load rating
The 1500 kW and 2100 kW generators are: o Designed for 4 pole, 50 Hz, 1500 rpm (synchronous speed) with wound rotors o Stator The stator windings of Cage and Slip Ring Induction Generators are similar o It is wound for the four pole/ six pole, three phase configurations as per design requirements o Special silicon steel laminations are used in the stator stacks to minimize the losses of the generator o Adequate cooling ducts are provided in the stator stack, to achieve the allowable temperature o Rotor The rotors are of Squirrel Cage or Wound Rotor types. In case of squirrel cage rotor construction: o o o The copper bars are used in the rotor slots They are circuited at the ends by short circuit rings They can be used for dual speed operation The rotor is wound similar to stator windings The windings are brought out to terminals through slip rings They are balanced to get reduced vibration levels of the generator Windings are fitted with Resistance Temperature Detectors (RTDs) of PT - 100 type Called slip ring generators
In the case of wound rotor construction: o o o
Suzlon Control System SIP(SEL), School of Petroleum Management | Suzlon Energy Limited 60
The Suzlon Control System (SCS) has been developed in close association with world leaders in the field, who have rich experience of setting up over 5000 wind turbines worldwide. Built from scratch, SCS has been designed to perform in tough environmental conditions. As such, it can withstand shock, vibration and temperatures ranging from arctic cold to hot and tropically humid. Features: o It uses robust and industrial grade hardware and the latest software and development tools o o It uses carefully chosen and harmonized hardware and software It is easy to fine tune the control system to its highest performance at the lowest cost o It provides excellent safety and reliability, while generating optimal energy output o It consists of a high performance PLC, which is modular and provides high degree of customization o It consists of various modules for interfacing different types of signals o It is scalable in nature with standard interface options and a webenabled communication option 5.10.9 Grid System Grid Connection System The Suzlon generators are grid friendly in their operations. The generation voltage is 690 V and is stepped up to the local grid voltage (which is normally of 11 to 33 kV levels) through a Wind Turbine transformer. The inrush currents during the starting of the wind turbines are limited to safer limits by means of soft starters. The wind turbines are provided with protection schemes to isolate the wind turbines in the event of any faults. They are provided with vacuum circuit breakers/air circuit breakers, lightening arrestors, earth fault protections, under/over voltage protections, under/over frequency protections, over load protections etc. to enable tripping of the wind turbine in case of any abnormalities, thus safe guarding the grids from the wind turbines. The effects of wind fluctuations/gusts on power outputs are damped SIP(SEL), School of Petroleum Management | Suzlon Energy Limited 61
by means
of
high
slip
arrangements
provided
in
the
respective
wind
turbine generators/systems. 5.10.10 Research and Development Technology is the key enabler for a company be a market leader. Suzlons sophisticated R&D capabilities in the wind energy space have led to the development of a comprehensive product portfolio, ranging from 600 kW to 2.1 MW wind turbines.Though the dynamic increase in wind turbines ratings has slowed since 2006 wind turbine technology as such continues to be a dynamic field of research with the focus more on reliability, ease of operation and loads reduction which will enable weight and cost reductions of wind turbines. There is a strong focus on increasing the energy yield of wind turbines at a given rating by improving aerodynamics and applying larger rotors. The 500-strong Technology Group, led from its R&D Headquarters in Hamburg, derives its technological success from a close collaboration between the development teams in Germany, Netherlands, Denmark and India, key technological partners and research centers experienced in Wind energy such as Ris in Denmark, ECN and TU Delft in the Netherlands and Fraunhofer Gesellschaft and the University of Kiel in Germany. Composite wind turbine technology in Germany and Denmark Germany and Denmark is together without doubt the headquarters of pioneering engineering knowledge and application for wind technology. Active co-operation of wind energy experts, newest scientific innovations, high-end technology usage and highly qualified human resources for selection of materials and production processes make them the destination of choice for Suzlons R&D endeavors and accomplishments. For example Suzlon has an R&D centre in Rostock with over 1oo employees that develops all key systems incorporated in the wind turbine nacelle, hub and tower covering electrical and mechanical systems. The controls and SCADA systems are developed in a cross-border team of Danes, Germans and Indians. Aerodynamic development in the Netherlands, Denmark and India
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Well-developed fundamental and applied research on aerodynamics, fiber reinforced plastics (FRP) and wind turbine blade structures with support from universities, consultants, research & certifying agencies direct Suzlons R&D in Netherlands towards creating reliable products that achieve economically optimized power performance. Additionally Suzlon opened a new cutting-edge blade test facility in Baroda in 2008 that is capable of fully validating multiple blades up to 65m length to standards that far surpass prior practice and are probably now the most stringent in the industry. Engineering in India Suzlon drives its turbine development effort at different centers across the globe and fine tunes process engineering in India to produce some of the most efficient, robust and reliable wind turbines available in todays wind energy market. The Indian team is also responsible for supporting the operations of the global fleet through collecting data from the field 24/7, 365 days a year from a fleet of over 4000 turbines worldwide, analysing it by experts and triggering the essential development programs. To support this initiative a modern 24/7 monitoring centre is being established in Pune.
5.11 Products offered

1. S9X Suite - 2.1 MW (S95 and S97) Details in Annexure I 2. S88 - 2.1 MW Details in Annexure I 3. S88 Mark II DFIG - 2.25 MW Details in Annexure I 4. S82 - 1.5 MW Details in Annexure I 5. S66 - 1.25 MW Details in Annexure I 6. S64 1.25 MW Details in Annexure I 7. S52 - 600 KW Details in Annexure I 8. S111 2.1 MW (The Latest Product) SIP(SEL), School of Petroleum Management | Suzlon Energy Limited 63
Figure 5-7 Components of a Wind Mill
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Chapter 6 Marketing and Market Research
6.1 Marketing
Marketing is "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
Figure 6-1 Customer Orientation
6.2 Market Research

Market research is any organized effort to gather information about markets or customers. It is a very important component of business strategy. The term is commonly interchanged with marketing research; however, expert practitioners may wish to draw a distinction, in that marketing research is concerned
SIP(SEL), School of Petroleum Management | Marketing and Market Research
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specifically about marketing processes, while market research is concerned specifically with markets. Market research is a key factor to get advantage over competitors. Market research provides important information to identify and analyze the market need, market size and competition.
Figure 6-2 Importance of Marketing Research
Market research includes social and opinion research and it is the systematic gathering and interpretation of information about individuals or organizations using statistical and analytical methods and techniques of the applied social sciences to gain insight or support decision making. 6.2.1 Theoretical Framework for Research The buyer decision process consists of five stages: need recognition, information search, evaluation of alternatives, purchase decision, and post purchase behaviour. The figure suggests that consumers pass through all five stages with every purchase. But in more routine purchases, consumers often skip or reverse some of these stages. However, we use the model in figure because it shows all
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the considerations that arise when a consumer faces a new and complex purchase situation.
Figure 6-3 Stages of Purchase
NEED RECOGNITION: The first stage of the buyer decision process, in which the consumer recognizes a problem or need. INFORMATION SEARCH: The stage of the buyer decision process in which the consumer is aroused to search for more information; the consumer may simply have heightened attention or may go into active information search. Sources of information can be Personal sources: family, friends, neighbours etc. Commercial sources: advertising; salespeople; retailers; dealers; packaging; point-of-sale displays
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Public sources: newspapers, radio, television, consumer organizations; specialist magazines Experiential sources: handling, examining, using the product EVALUATION OF ALTERNATIVES: The stage of the buyer decision process in which the consumer uses information to evaluate alternative brands in the choice set. PURCHASE DECISION: The buyers decision about which brand to purchase. POST PURCHASE BEHAVIOR: The stage of the buyer decision process in which the consumers takes further action after purchase, based on their satisfaction or dissatisfaction.
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Chapter 7 Project
7.1 Phase I
To carry out a research it is necessary to learn the basics of the industry, product and company about which you are going to study. The first week was all about gaining more knowledge about the company. Without gaining appropriate knowledge about the company we cannot do a research for a product or service of that company. For doing a research on wind energy, proper knowledge about that sector is crucial. The things we need to know are: 1. What is Energy all about? 2. What is Renewable Energy? 3. What is Wind Energy? These things should be looked at keeping in mind both the World and the Indian scenario. All the knowledge which was necessary for the project was gained by different websites, individuals in and outside the company. All these points have been talked about in Chapter 1, Chapter 2 and Chapter 3 of the report. The business model of the company also plays a vital role. Without appropriate knowledge of this it is very difficult to conduct a survey. The technical advancements of the companys products, the services offered by the company, etc. are indeed very important to understand. A company which sets up a wind power project for its client needs to provide a Turnkey Solution to them. SEL follows a Project Selling Concept. It manufactures the wind turbines and then sells the project. It also provides services to its clients with the help of Key Account Managers. All the details about the company are covered in Chapter 5 of the report. For generating power, it is necessary to gain knowledge about the different government policies and abide by the government norms. There are various policies that need to be taken into consideration for setting up a power plant. A power plant can be set up for Captive Usage, Investment purpose, Sale to Third Party or to become an Independent Power Producer. A power generator can sell electricity to Transmission Companies which gives this power to Distribution SIP(SEL), School of Petroleum Management | Project 69
Companies. There are various Subsidies given to power generators by the GoI, so that renewable energy power generation is enhanced. People need to take care of the policies very carefully before and after investing in wind energy. For all this we need to know the policies very well. The important policies which were required for the project have been discussed in Chapter 4. Different states follow different policies for generation of power from any source. Our main focus of study was Ahmedabad and Gandhinagar region. Still, to understand the differences in policies of different states, a comparative study was done on the policies of 6 different states along with the policy of the Central regulatory body. The states which were covered are Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Tamil Nadu and Karnataka. The policy comparison sheet is given in Annexure 2. When a customer buys something, the first thing that comes to his mind is Investment and the second thing is the Return on Investment. After that all the other things such as policies, location, transmission etc come into the customers mind. For giving him a clear idea about the finances SEL needs to prepare a Financial Model. To understand any financial model one needs to know the sources of revenues and the cost factors in setting up a Wind Power Project. The different plans in WPP require different Financial Models. One can take up APPC & REC as a option, or Preferential Tariff or for Captive usage either Individual or Group. There are many products of Suzlon and so different financial models need to be prepared for different products, taking into consideration the different plans. This gives us, many financial Models to study. Some of the financial models we studied are given in Annexure 3. The first page of the financial model gives the summary of the Investment, Internal Rate of Return, Total estimated Revenues & Costs. The second sheet shows the descriptive revenues, costs and all the calculations required to come out with the IRR. Basic knowledge of the sheet is necessary so that it becomes easy to sell the product to the customer or go on a survey for customer expectations.
SIP(SEL), School of Petroleum Management | Project
70
7.2 Phase II
Phase II began in the 4th week. In phase II the part where research needed to be done came. For research the first and the foremost thing that needs to be done is identify the problem. Problem: The problem in this case was that there was still scope to develop new market for Wind Power Projects. There was a large quantity of untapped market and it needed to be identified. It attempts to model the decision process of an individual or segment in a particular context which may also be used to estimate non-market environmental benefits and cost, to predict with great accuracy how individuals would react in a particular situation. Unlike a poll or a survey, predictions are able to be made over large numbers of scenarios within a context, to the order of many of possible scenarios. Research Design: A research design provides the framework to be used as a guide in collecting and analysing data. The research designs for this market research are: Mainly Quantitative Research Descriptive Research for market intelligence and finding the characteristic of target market. Research Method: Primary Research Data: Primary Data Sample: 41 Companies in Ahmedabad & Gandhinagar Region Method of Data Collection: Questionnaire Type of Primary Data: Mainly Quantitative Field Work Plan: Three weeks of training on Wind energy industries and its policies. This was followed by regular visit to companies in Ahmedabad & Gandhinagar region collecting information through questionnaire. While doing the research I was supposed to be companys representative, so my job was also SIP(SEL), School of Petroleum Management | Project 71
to promote the companys product and find prospective customers of the company and report to the DGM of marketing about the prospective customers. This will help company to reach to new market segments and customers who are interested in doing business with the company. The scope of the research was among firms operating in Ahmedabad and Gandhinagar region. The research was carried out for sales and marketing division of the Suzlon Energy Limited. The parameters identified were most important to increase the sales of the company. The research was limited to heavy industries of the market. The timeframe for the research was limited and data collection from firms was very difficult as sometimes firms were not willing to disclose important information. The questionnaire was prepared accordingly to gain knowledge about the buying behavior of the customers. It was also designed to know the awareness levels of different concepts and policies among the potential buyers. The questionnaire consisted of company profile and 17 research questions which can be seen in Annexure 4 of this document. Before going into the market one has to identify the potential respondents and for that STP of marketing plays an important role.STP has been discussed in the preceeding chapter. The market was segmented, a target segment was identified and the research was started in that segment. The market research started in the 5 th week of the internship and continued in the 6th week also. A total of 41 companies in the area of Ahmedabad and Gandhinagar were visited. These firms were generally Heavy metal indusries, textile mills, etc. The main aim was to know what the potential customers feel about Wind energy. 7th week of the internship consisted of analysis of the research which has been provided in the next section.
72
7.2.1 Findings
Figure 7-1 Analysis 1
The first question which was asked from the potential customers was aimed at knowing the general information about the Distribution Company which provides them with electricity. A general outcome which came was Torrent and so it was seen that most of the industrial areas have Torrent as their Distribution Company. This would tell us that how many people are satisfied with Torrent.
73
The 3rd and the 4th question were aimed at knowing the satisfaction level of customers regarding their energy bills and their average energy cost in their complete production cost. If this cost seems to be more to the customer then probably he might want to change something about it. The respondents felt that they were being overcharged for electricity and something could be done to reduce the energy tariffs. The energy cost contribution in the total energy cost was at most 15% in various firms. Where, 55% respondents felt that the energy cost contributed around 10% to 15% of the total production cost.
74
The 5th question was aimed at gaining information about the mindset of people regarding the escalation in energy charges. If people think that there will be an escalation in the energy charges then they would probably shift towards other sources of energy. Almost everyone felt that there will be an escalation in the energy tariff and seemed worried about the prospect. Most of them thought that the rise would be somewhere around 1% to 5%.
75
The 6th question aimed at knowing how people plan to reduce their energy charges and do they think on investing a huge amount for this. The findings showed that around 40% of the people planned to reduce it by buying newer technology machines which are energy efficient. Another 35% felt that they could setup a Captive power plant, out of which almost 85% felt that they could go in for renewable power plant. This was the crux for Wind Power Plants. These 30% respondents could be the potential buyers of Wind Power Project. Another 25% felt that they could wheel energy through a renewable source, which brings in the concept of Third Party sale of Power.
76
The 7th question aimed at knowing the awareness levels of Renewable Purchase Obligation among the potential customers. This concept is particularly for Distribution Companies, but can be applied to the purchasers of power in the near future. Around 83% respondents were not aware of the obligation. This was expected as the obligation till now is only for the Distribution Companies.
77
The 8th question was aimed at knowing the awareness levels of respondents about the concept of Group Captive Power Plants. The findings showed that many people were aware about the Group captive concept and they had a feeling that it reduces the capital expenditure of the investor.
78
The 9th question was aimed at knowing the awareness levels of the respondents with respect to the concept of Third Party Sale of Power. Third party sale of power does not necessarily require you to be the captive user. If you are producing power you are not obliged to use it for your own consumption or if you want power then you can choose the generator you want. The general finding shows that people were not aware about this concept.
79
People have moved into a very modern age and have knowledge about concept of Wind Power Projects which is very good for companies which are into manufacturing and services of this industry.
80
The 11th question aimed at knowing the reach of different Wind Power Project Services Company including Suzlon Energy Limited. Around 45% of the companies were not by any service providers. Suzlon had already approached 45% of the customers and this showed that the approach needed to be changed in some or the other way. Suzlon needs to target more and more potential customers.
The respondents were well aware of the 5th largest service provider for Wind Power Projects. The general respondents knew about Suzlon from one or the other source.
81
Maximum people thought that Suzlon Energy Limited was an average company or an above average company. Very few had a negative impact of SEL in their mindsets. Suzlon could build on this fact and do the marketing subsequently.
82
The 16th question aimed at knowing the expectation of the potential customers with regards to the Return on Investment. Every person who invests wants to get a good ROI. Same was the case with the respondents in our case. People expected somewhere around 10% to 15% ROI. WPP can give a good ROI and so people could be pushed for investments in this sector.
Question 14 and 15 aimed at knowing what people think about the growth prospects of their industry.
83
Generally firms who were running from a long time had a notion that the industrys future is bright. The firms which were comparatively new were still finding out about the future of the industry. If a firm believes that that the industry will prosper then one can invest hugely in it.
People were asked whether they want to diversify their business or even expand it. If they want to diversify then will they go in for WPP as an option? The general response was that 60% people planned to either expand or diversify their business. A total of 40% felt that they could invest in WPP. 20% people did not want to invest in WPP but they could expand or diversify. Suzlon needs to build on these 40% respondents.
84
Chapter 8 Conclusion
The final week of the internship was to analyse the survey and look for potential customers of Suzlon Energy Limited. The analysis showed that there was a good opportunity to target this untapped market. There were about 40% of the respondents who were willing to know about the product or we can say that they were interested in the concept. The next big thing was to approach these potential customers and explain to them that how Wind Energy can give a boom to their business. This was done by the companys marketing professionals and I got a chance to accompany them. This took me to another level of understanding of the concept on Project Selling. Theory is much more different than the practical things. Wind Power projects have still got a huge scope in India. New areas need to be explored to set up wind power projects and new customers need to be targeted so that they invest in this industry. Till now the main investors in Wind Industry were companies with huge turn over. Now, the scenario can change with the introduction of policies like Group Captive and Third Party Sale of Power.
SIP(SEL), School of Petroleum Management | Conclusion
85
Chapter 9 Recommendations
SIP(SEL), School of Petroleum Management | Recommendations
86
Annexure
Annexure 1 Product Brochures
SEL Product Brochures
S9X Suite
S88
S88 Mark II
S82
S66
S64
S52
SIP(SEL), School of Petroleum Management | Annexure
87
Annexure 2 Policy Comparison
Policy Comparision.xlsx
88
Annexure 3 Financial Model
GJ S-66 1.25 MW Captive.xls
GJ S-66 1.25 MW Inv.xls
GJ S-66 1.25 MW REC.xls
89
Annexure 4 Questionnaire
Company Information
Name of the Company Year of Establishment Type of Business Industrial/Commercial
Address
Name and Designation of the Contact Person Contact No. Email ID Scale of the company Sector Products/Services Offered Presence of Company Small/Medium/Large Private/Public/Joint Venture
Date: _________________
SIP(SEL), School of Petroleum Management | Annexure 90
Questionnaire
Disclaimer: The researcher is undergoing this research for Summer Internship as a part of his MBA curriculum. The information revealed here will be kept strictly confidential and will be used for academic purpose only. Q1. Name of your DISCOM Torrent UGVCL
Q2. How much is your average energy consumption per month? (Please provide a bill) Units Total Cost ________________ _________________
Q3. What percentage of total production cost contributes to energy charges? Less than 10% 10% to15% 15% to 20% More than 20%
Q4. Do you feel that you are being overcharged for electricity consumption? Strongly Agree Agree Indifferent Disagree Strongly Disagree Q5. Do you think that there will be an escalation in electricity tariff in time to come? YES NO
If yes, then by how much? Less than 1% 1% to 5% 5% to 10% More than 10%
Q6. What are your plans for sustainable energy option? SIP(SEL), School of Petroleum Management | Annexure 91
By setting up a captive power plant New Energy Efficient Machines/Technology Wheeling through Renewable energy Others, please specify: ________________________ Q6. (a) Which energy do you prefer? Conventional I prefer it because __________________________________________________________ Q6. (b) Expense for adapting new machinery/technology. <6 Cr. 6Cr.-10Cr. 10Cr.-15Cr. >15Cr. Non-Conventional
Q7. Are you aware of any RPO obligation? YES NO
Q8. Are you aware of Group Captive Projects in Power Sector? YES NO
If yes, which one do you prefer Group or individual with reason: ___________________________________ Q9. Are you aware about the concept of Third party Sale in Power Sector? YES NO
If yes, please give your views on it: ______________________________________________ Q10. Do you know about Wind Power Plants? YES NO
If yes, please mention the few: ______________________________________________
92
Q11. Have you been approached by any Wind Turbine manufacturers/service providers? YES NO
If yes, please mention the few: 1. ____________________ 2. ____________________ 3. ____________________ Q12. Have you heard about Suzlon Energy Ltd.? YES NO
If yes, what is the image of it in your mind? Excellent Above Average Average Below Average Extremely Poor Q13. What is your annual Turn Over? Less than 10Cr. 10Cr. to 30Cr. 30Cr. to 50Cr. More than 50Cr.
Q14. Since how long is your factory under operation? <10 Yrs. 10 Yrs. - 15 Yrs. 15 Yrs. - 20 Yrs. >20 Yrs.
Q15. What are the growth prospects in your existing business? ___________________________ Q16. Looking at the current market scenario, what are your expectations on annual return in long term investment? <10% 10% - 12% 12% - 15% 15% - 18% 93
Q17. Do you plan to diversify/expand your business in the near future? YES NO
If yes, will you be interested in the wind power projects? YES NO
94
Annexure 5 Abbreviations
APPC BEE CAGR CASE CEA CERC CHP CSP C-WET DNES DNI DSM DST EA 2003 ESCO FIT FOR GBI GDP GEF GHG GOI IEA IEGC IEPR IPP IREDA IRR JNNSM MNRE MoEF MoP MoRD MT MW MWh M&V NAPCC NEP NCEF NRSE OA PA PMD PPA RE REC RES RESCO Average Pooled Power Cost Bureau of Energy Efficiency Compound Annual Average Growth Rate Commission of Additional sources of Energy Central Electricity Authority Central Electricity Regulatory Commission Combined Heat and Power Concentrated Solar Power Centre for Wind Energy Technology Department of Non-conventional Energy Sources Direct Natural Irradiation Demand Side Management Department of Science and Technology Electricity Act 2003 Energy Services Companies Feed in Tariff Forum of Regulators Generation Based Incentive Gross Domestic Product Global Environmental Fund Green House Gases Government of India International Energy Agency Indian Electricity Grid Code Integrated Energy Policy Report Independent Power Producer Indian Renewable Energy Development Agency Internal Rate of Return Jawaharlal Nehru National Solar Mission Ministry of New and Renewable Energy Ministry of Environment and Forest Ministry of Power Ministry of Rural Development Million Tonnes Mega Watts Mega Watt Hour Monitoring and Verification National Action Plan for Climate Change National Electricity Plan National Clean Energy Fund New and Renewable Sources of Energy Open Access Program Administrator Performance Management Division Power Purchase Agreement Renewable Energy Renewable Energy Certificate, Rural Electrification Corporation Renewable Energy Sources Renewable Energy Service Companies SIP(SEL), School of Petroleum Management | Annexure 95
RET RETC RFD RPO RPS SBU SEB SERC SLDC SNA SPV SWH SWOT UNDP WTG
Renewable Energy Technology Renewable Energy Technology Centre Results Framework Document Renewable Purchase Obligation Renewable Portfolio Standards Small Business Units State Electricity Board State Electricity Regulatory Commission State Load Dispatch Centre State Nodal Agency Special Purpose Utility Vehicle Solar Water Heating Strengths, Weaknesses, Opportunities and Threats United Nation Development Program Wind Turbine Generator WEIGHTS AND MEASURES
BU (billion units) KWh (kilowatt-hour) MW (megawatt) GW (gigawatt) MT (metric ton)
Unit Unit Unit Unit Unit
of of of of of
energy, equal to 1x109 energy, equal to 1 unit power, equal to 1x106 power, equal to 1 billion (109) watts weight, equal to 1,000 kg or 2,204.6 pounds Conversion
Rs1 Rs1 Rs1 Rs1
million billion lakh crore
Equal Equal Equal Equal
to to to to
Rs1x106 Rs1x109 Rs1x105 Rs1x107
96
References
http://www.eai.in/club/users/pmwind/blogs/11496 http://thermalpower.industry-focus.net/gujarat-power-plants.html http://www.dnaindia.com/money/report_bpcl-mozambique-gas-pie-worthrs10000-crore_1681191 http://www.csmonitor.com/World/Africa/2012/0427/New-coal-giantMozambique-faces-rising-public-anger http://business-standard.com/india/news/fearrevenue-loss-dissuadesdiscomsproviding-open-access/472987/ http://en.wikipedia.org/wiki/Arrears http://reconnectenergy.com/blog/2012/02/open-access-faces-hurdles-fromdiscoms-in-rajasthan/ http://www.powermin.nic.in/whats_new/national_electricity_policy.htm http://www.thehindubusinessline.com/features/article3342620.ece http://www.watchlivetvchannels.com/2009/06/watch-sony-max-live-online-tvchannel.html http://mnre.gov.in/file-manager/UserFiles/wp_installed.htm http://www.cwet.tn.nic.in/html/departments_211wps.html http://www.mnre.gov.in/file-manager/UserFiles/wpp.htm http://mnre.gov.in/file-manager/UserFiles/wp8.htm http://www.mnre.gov.in/file-manager/UserFiles/wp_tariff_serc.htm http://www.ireda.gov.in/incentives.asp http://www.cwet.tn.nic.in/html/departments_wra.html http://www.inwea.org/centralpandr.htm http://www.inwea.org/tariffs.htm http://www.mnre.gov.in/schemes/grid-connected/solar-thermal-2/ http://www.windpro.org/IERClinks.html http://www.suzlon.com/wind-matters.html http://guj-epd.gov.in/pdf/WindGR13.6.2007.pdf http://guj-epd.gov.in/epd_futureplan.htm http://www.reconnectenergy.com/rec/index.php/renewable-energy-certificatesrec.html SIP(SEL), School of Petroleum Management | References 97
http://www.reconnectenergy.com/rec/index.php/preferential-tariff-and-feed-intariff.html http://reconnectenergy.com/blog/2012/04/accelerated-depreciation-benefit-forwind-projects-withdrawn/ http://rajenergy.com/ http://en.wikipedia.org/wiki/Marketing http://en.wikipedia.org/wiki/Market_development http://en.wikipedia.org/wiki/Market_research
SIP(SEL), School of Petroleum Management | References
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Final Report

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A REPORT ON

MARKET DEVELOPMENT OF WIND POWER PROJECT

School of Petroleum Management Pandit Deendayal Petroleum University, Gandhinagar

School of Petroleum Management

Rishi Agarwal 20111045

1.1 Energy Sector

1.2 World Energy Scenario

SIP(SEL), School of Petroleum Management | Introduction

Figure 1-1 GDP and Energy Consumption Growth

Figure 1-2 World incremental growth in electricity generation, 2000-2011

SIP(SEL), School of Petroleum Management | Introduction

1.3 Indian Energy scenario

Figure 1-3 Indian Power Deficit Scenario

SIP(SEL), School of Petroleum Management | Introduction

Chapter 2 Renewable Energy

Figure 2-1 Global Renewable Energy Potential (TW)

SIP(SEL), School of Petroleum Management | Renewable Energy

Economics -Profitable investments and Sustainble Returns

Figure 2-2 3 Fold benefit of Renewable Energy

2.2 World Scenario

Figure 2-3 Share of Global Electricity from Renewable Energy, 2011

2.3 Indian Scenario

SIP(SEL), School of Petroleum Management | Renewable Energy

Figure 2-4 Break-up of installed Power Capacity (MW) in India as on 31.1.2011

SIP(SEL), School of Petroleum Management | Renewable Energy

I. POWER FROM RENEWABLES:

Small Hydro Power

Solar Power (SPV)

OFF-GRID/ CAPTIVE POWER

Waste to Energy -Industrial

Biomass Gasifiers Industrial

10.00 Aero-Generators/Hybrid systems 0.50

SPV Systems (>1kW)

SIP(SEL), School of Petroleum Management | Renewable Energy

Water mills/micro hydel

II. REMOTE VILLAGE ELECTRIFICATION

No. of Remote Village/Hamlets provided with RE Systems

III. OTHER RENEWABLE ENERGY SYSTEMS

Family Biogas Plants (No. in lakhs)

Solar Water Heating - Coll. Areas (Million m2)

Table 2-2 Power from Renewable

SIP(SEL), School of Petroleum Management | Renewable Energy

Chapter 3 Wind Power Scenario

3.1 Global Scenario

Figure 3-1 Global Wind Power Cumulative Capacity

3.2 Indian Scenario

SIP(SEL), School of Petroleum Management | Wind Power Scenario

SIP(SEL), School of Petroleum Management | Wind Power Scenario

Figure 3-2 India Wind Power Density Map

SIP(SEL), School of Petroleum Management | Wind Power Scenario

3.2.2 Wind Energy Development in India

SIP(SEL), School of Petroleum Management | Wind Power Scenario

SIP(SEL), School of Petroleum Management | Wind Power Scenario

SIP(SEL), School of Petroleum Management | Wind Power Scenario

Figure 3-3 Schematic Wind Power Wheeling for Captive Users

SIP(SEL), School of Petroleum Management | Wind Power Scenario

Chapter 4 Regulatory Framework of Renewable Energy Resources in India

4.2 A brief History of Regulatory Bodies

Providing special provisions for rural areas.

Constitution of CEA, Regulatory Commissions and establishment of an Appellate Tribunal.

VIII. For other related matter

Such procurement by Distribution Licensees for future requirements shall

Figure 4-3 REC Price for FY-12