Overview of the Off-grid PV Sector in India

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Overview of the Off-grid PV Sector in India Simon Bergmann – GIZ Advisor InterSolar Munich, Germany, 04. June 2014

11/06/2014

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Outline India at a glance The Energy Access Landscape The Policy & Regulatory Scenario for PV The Off-grid PV Market Opportunities for the German RE Industry What we can do for you

11/06/2014

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Outline India at a glance The Energy Access Landscape The Policy & Regulatory Scenario for PV The Off-grid PV Market Opportunities for the German RE Industry What we can do for you

11/06/2014

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India at a glance The Growth Story • GDP – $ 1,590 billion • GDP growth rate 4,5% in 2013 • Infl. (WPI) – 4.89% • Strong financial sector • Access to quality HR • Good infrastructure, although bottlenecks exist

The Development Challenge • Ranked 136 – HDI, 2013 • Large parts of rural India lack access to basic infrastructure – energy, water, health, sanitation • India likely to miss 2015 targets on some of the MDGs – poverty ratio, child mortality, hunger & nutrition

Source: statisticsofindia.com

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Installed Generation Capacity Type

Capacity (MW)

%

Coal

145,408.39

59.25

Gas

21,781.85

8.88

1,199.75

0.49

40,531.41

16.48

4780.00

1.95

31,692.14

12.91

Oil Hydro Nuclear Renewable Energy

• Energy shortage – 8.7%; Peak power – 9% (Energy Statistics, 2013) • Does not take into account the latent demand of nearly 300 million people without access to electricity • Average electricity consumption of households per capita ~ 139 kWh; World Average – 726 kWh (Source: WEC, 2011) 11/06/2014

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RE Achievements – On-grid System Wind

Achievements (20013-14) (MW)

Cumulative (MW)

2084.80

21,136.30

Solar PV

960.60

2647.00

Small Hydro

171.40

3,803.70

Biomass

100.40

1,365.20

Bagasse Cogen

311.00

2,648.40

Waste to Energy

10.50

106.60

• The wind sector is mature and attracts commercial investment • Recent thrust in the Solar PV sector on account of the National Solar Mission with a target of 20 GW in on-grid by 2022 11/06/2014

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RE Achievements – Off-grid System

Achievements (20013-14)

Cumulative

Biomass Gasifiers (MW)

0.70

Watermills/Micro hydro (MW)

2.61 13.21 MW (2643 nos)

Family Biogas (nos)

17.50 MW

70,000

4,740,000

Biogas Energy Sys. (MW)

0.55

3.77

Solar Water Heating (in million sq.m.)

1.10

8.10

SPV Systems (MW)

49.70

174.40

• Several subsidy programmes but the actual impact on the ground limited due to lack of adequate M&E mechanisms • Recent thrust in the Solar PV sector on account of the National Solar Mission with a target of 2 GW in off-grid by 2022 11/06/2014

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Outline India at a glance The Energy Access Landscape The Policy & Regulatory Scenario for PV The Off-grid PV Market Opportunities for the German RE Industry What we can do for you

11/06/2014

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The Energy Access Challenge South Asia & Sub-Sahara Africa account for a large part of the problem

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The Energy Access Paradox

The regions with highest coal deposits also the ones lacking energy access the most Source: Vasudha Foundation 11/06/2014

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Key Drivers in the Energy Access Space Over 30% of the population, especially a large portion of rural India, still doesn’t have access to electricity Grid supply - where available - is highly unreliable Several government schemes to encourage the uptake of off-grid renewables, but limited impact o Key policy in recent times – the National Solar Mission

Social enterprises, typically based on RE solutions, have stepped in to fill this gap o Nascent sector, but fast growing o Innovative business models for delivery but inadequate support on the policy and technology front o Key challenge remains scale-up/replication for widespread impact 11/06/2014

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Outline India at a glance The Energy Access Landscape The Policy & Regulatory Scenario for PV The Off-grid PV Market Opportunities for the German RE Industry What we can do for you

11/06/2014

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National Solar Mission - Targets Segment Grid connected Off-grid Solar Collectors

Phase I (2010 – 2013)

Phase II (2013 – 2017)

Phase III (2017 – 2022)

1,100 MW

4,000 MW

20,000 MW

200 MW

1000 MW

2000 MW

7 M sq.m.

15 M sq.m.

20 M sq.m.

Source: MNRE

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NSM - Guidelines Multiple Channels to facilitate contact between users and suppliers Accreditation process for partners; in line with international standards Financial support o 40% capital subsidy

Benchmark price o Rs. 300/Wp/ Rs. 210/Wp (w/o batteries); Rs. 240/Wp currently o 10% decrease per year, leading to grid parity by 2022

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NSM Phase 2 – Proposed Targets 1 GW of off-grid power – product linked or enhancing income generation activities o Energy Access Scheme (mini-grids) – 20,000 villages/hamlets/bastis o Off-grid Lighting - 10 lakh solar lanterns, SLHS & Street Lights o Solar Pumping – 25,000 pumps o Solar Cookers – 50,000

Thrust on Microfinance Institutions for financing solar products Human resource development – 25,000 village level technicians 11/06/2014

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Outline India at a glance The Energy Access Landscape The Policy & Regulatory Scenario for PV The Off-grid PV Market Opportunities for the German RE Industry What we can do for you

11/06/2014

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Solar PV Lighting/Electrification (1) Lighting Products LED/CFL Configuration Lanterns (1 – 5 W)

Home Lighting Systems • •

10 – 100 W DC < 1 kW AC

Mini-grids (Lighting)

Mini-grids (Electrification)

200 W DC; connected to 40 h/h within 100 m radius

kW scale DC/AC; connected to 50 – 400 h/h Lighting + Mobile charging + Entertainment + Productive enduse

Service

Lighting + Mobile charging

Lighting + Mobile charging + Entertainment

Lighting + Mobile charging

Price (€)

10 - 50

100 - 500

1,500 – 2,500

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40,000 – 150,000

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Solar PV Lighting/Electrification (2) Lighting Products Buss. Model

Cash sales; MFI loans

Market Potential (€, million)*

14

Stage of Market Market Drivers

Home Lighting Systems Asset financing through rural banks

Mini-grids (Lighting)

Mini-grids (Electrification)

Entrepreneur driven fee for service model

20

1500

Growth

Growth (boost from the NSM)

Nascent

Nascent

Non-subsidy market

Partial subsidy (40% on benchmark cost of €4/Wp)

Subsidy & Nonsubsidy models

Requires significant subsidy

*Source: Power to the People, WRI Report, 2009 11/06/2014

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Solar PV Pumping PV Pumping Configuration

AC/DC Configuration; Surface & Submersible; 1 – 5 HP

Service

Irrigation or drinking water

Price (€)

2,000 – 10,000

Business Model

Individual/Group Farming; Direct sales

Market Potential

Potential replacement of 12 million electric and 9 million diesel pumps (4,5 million PV potential – 17 GW) (21% of total electricity consumption)

Stage of Market

Nascent

Market drivers 11/06/2014

Subsidy driven market

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Outline India at a glance The Energy Access Landscape The Policy & Regulatory Scenario for PV The Off-grid PV Market Opportunities for the German RE Industry What we can do for you

11/06/2014

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Market Structure – Rural Energy Service Market Barriers • High upfront cost/ Storage • Low awareness among consumers, financiers, etc • Lack of adequate maintenance services

Technological Barriers • Lack of standardization/ quality assurance • Lack of adequate R&D/ innovation • New & untapped markets

Equipment Suppliers – PV Panels, Batteries, Bio energy solutions, etc

System Integrators/ Micro Utility Operators

End-users

Policy/Regulatory Barriers

Opportunity for the German Industry! 11/06/2014

• Maze of policies/regulations/ political responsibilities • Lack of market orientation • Issues in policy implementation Page 21

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PV Home Lighting Systems & Products Strengths • Strong policy thrust – National Solar Mission • Relatively mature sector (since 1995) • End user financing available • Several private sector players

Opportunities • Better storage solutions/batteries • More flexible plug and play solutions to cater to increasing demand • Energy efficient appliances designed for rural areas

GIZ, on behalf of BMZ, is providing support to the SELCO Incubation Centre, where potential entrepreneurs are exposed to the business model and processes of SELCO, one of the most successful social enterprises in this sector 11/06/2014

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PV Mini-grids Strengths • Strong policy thrust – National Solar Mission • State level programmes to promote solar minigrids • Several private sector players with innovative business models

Opportunities • Low cost pre-paid meters • Low cost grid integration solutions • Better storage solutions/batteries • Anchor models with telecom towers

GIZ, on behalf of BMZ, is supporting the development of a sustainable framework for promoting solar mini grids in Uttar Pradesh. There are over 20 million rural households without access to electricity in this state alone. 11/06/2014

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PV Pumping Strengths

Opportunities

• Strong policy thrust – National Solar Mission • Several private sector players and associations

• Reduction in cost of technology • Mobile pumping solutions

GIZ, on behalf of BMZ, is promoting innovative business models and end user financing for PV pumping in Bihar.

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Doing business in rural India Link up with strong local partners with good understanding of the ground realities, e.g. social enterprises, NGOs Take time to analyse and understand the market (e.g. through CSR activities) Design affordable technologies that meet the local demand (demanddriven instead of technology-driven) Lower expectations on immediate high returns Be aware of rules and regulations for FDI in India: more information available at moia.gov.in/pdf/foreign_direct_investments.pdf

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Outline India at a glance The Energy Access Landscape The Off-grid PV Market The Policy & Regulatory Scenario for PV Opportunities for the German RE Industry What we can do for you

11/06/2014

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Developing Partnership – Claro Energy Innovative Business Models - Pilot • Pay - per - use model with a farmer cooperative • Replacement for a diesel pump entrepreneur • Individual/Marginal farmer ownership

Capacity building

Awareness raising

• Bank Manager Training on technology/viability • Developing appropriate financial products • Training of local entrepreneurs/technicians

• Documentation of business models/ lessons • Dissemination workshops • Engagement with policy makers

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What can we do for you? Links to potential sources of additional information Feedback on potential plans for market entry Access to networks / potential partners – through the CLEAN Energy Alliance ( an alliance of energy access enterprises) Coordinate German Industry Delegations to India (with support from IGEF) [email protected] www.energyforum.in In selected cases: possible support under the existing project portfolio Integrated Development Partnership Project (iDPP)

For more information contact GIZ in India: [email protected]

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Thank you for your attention. For more information please visit www.igen-re.in

As a federal enterprise, GIZ supports the German Government in achieving its objectives in the field of international cooperation for sustainable development. Published by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

Responsible at GIZ India Hari Natarajan Photo credits © GIZ

Registered offices, Bonn and Eschborn, Germany Indo-German Energy Programme B-5/2, Safdarjung Enclave New Delhi – 110 029, India T +91 11 4949 5353 F +91 11 4949 5391 E [email protected] I www.giz.de

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In cooperation with

Ministry of New and Renewable Energy Government of India

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Selco Solar Established in 1995 to provide solar lighting solutions in rural Karnataka Key elements of their business model • Customized solutions based on end user needs • Dedicated service network (26 centres across Karnataka) • End consumer financing through various channels

Over 150,000 systems to date • Nearly 85% of the customers are rural (2/3/4 light systems) • Around 90% of these systems are financed through RRBs, Commercial Banks, Cooperative Banks & MFIs Page 30

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Selco’s Customers

Silk Cocoon Farmer

Dairy Customer

Household Lighting

Rural Clinic

Vegetable Vendor Page 31

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PV Mini grids Bosch Solar – Gram Oorja •

10 kW system serving 35 households in Western India

•

Bosch covered the entire capital cost for the pilot

•

Interesting lessons with regards demand increase, WTP, etc

SPEED Programme •

Anchor load – telecom tower or any other rural enterprise forms the base load/revenue source for the mini-grid

•

Surplus power is sold to households in surrounding communities

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