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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Chapter I

Introduction

This report gives information on all the possible RE areas that have scope for investment.

It offers detailed information on the existing and potential strength of each programme,

the potential sites in the country, the achievements to date, specific investment

opportunities and subsequent benefits that can be accrued, resources and support

available, and fiscal and financial incentives to encourage investment. It also gives a

glimpse of the policies and procedures under each RE area. The technology areas appear

in the following order:

Power Generation Technologies

Power Generation Technologies

Wind Power

Small Hydro

Biomass Power

Biomass Cogeneration

Biomass Gasifiers

Energy from Wastes

Solar Energy Technologies

Solar Photovoltaics

Solar Thermal

Stand-alone Wind Energy and Hybrid Systems

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Rural Energy Technologies

Biogas

Improved Chulhas (Cookstoves)

New Technologies

Chemical Sources of energy

Hydrogen Energy

Geothermal Energy

Alternative Fuels for Surface Transportation

Tidal Energy

Bio-Diesel

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Chapter II

Power Generation Technologies

2.1 Power Generation Technologies

Special emphasis is being given to the generation of grid quality power from renewable

sources of energy.

MNES has issued guidelines to all the states on policies in this sector to encourage

commercial development. The total installed capacity of power generation from various

non-conventional energy sources has reached about 4872.5 MW. The details of specific

areas are given in the next page.

These technologies are discussed in detail in the chapters ahead.

Cumulative Achievements of Renewable Energy Programmes in India

(Upto 30-09-04)

Cumulative India's Position in


Source/Technologies Units*
Achievements the World
Power Generation
Wind Power MW 2483.2 Fifth
Small Hydro Power (up to 25 MW) MW 1603.32 Tenth
Biomass-based Power MW 681.53 Fourth
Biomass Gasifiers MW 60.480 First
Solar Photovoltaics MW 2.54 Fifth
Energy from Urban & Industrial
MWe 41.43 -
Wastes
Total 4872.5
* MW - MegaWatt

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

2.2 Wind Power

Highlights

India is the fifth largest wind power producer in the world after Germany, the

USA, Denmark and Spain, with an installed capacity of about 3000 MW. (Table

1.1)

The gross wind energy potential in India has been estimated at 45,000 MW.

However, the technical potential is limited to about 13,000 MW.

Wind is one of the largest RE source in the country, based on mean annual wind

power density (MAWPD)

The Wind Resource Assessment Programme (WRAP) carried out in India to

assess the wind potential is one of the largest programmes of this kind in the

world covering around 1000 wind monitoring and mapping stations in 25 states

and union territories. This programme is being implemented by the state nodal

agencies (SNAs) and C-WET through the Wind Energy Survey Project. WRAP

has so far identified 208 potential sites in 13 states

States with high wind power potential are Tamil Nadu, Gujarat, Andhra Pradesh,

Karnataka, Kerala, Madhya Pradesh and Maharashtra. About 11.3 billion units of

electricity have been fed to various state grids from wind power projects (Table

1.2). Almost 80% of the power thus generated has been used for captive

consumption, and the rest sold to the grid or to a third party

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Some 30 project sites have been developed in the high potential states under the

Demonstration Programme, resulting in a capacity of 65 MW

About a dozen domestic companies are manufacturing wind power turbines and

components, achieving an annual turnover of Rs 1,500 crore. Wind electric

generators ranging from 55 to 1250 kW rating have been developed and

manufactured in the country by using the latest technologies.

State-of-the-art wind power technologies are now indigenously available in India.

An annual production capacity of 500 MW has been established. Wind electric

generators up to 1250 kW unit capacity are now being manufactured.

Blades, a crucial component of wind turbines, is manufactured in India. Nearly 80

per cent indigenisation has been achieved

R&D activities undertaken through research institutions, laboratories, technical

centres:

o State-of-the-art wind R&D centre and field-test station established

o A project on the "Development of an Intelligent Power Controller for

Wind Electric Generators (WEGs)" has been undertaken by the

Electronics Research & Development Centre (ERDC), at

Thiruvananthapuram to maximise generation and reduce reactive power

requirements of WEGs. The Controller has been fabricated and field tested

o A project on "Power Quality and Integration of Wind Farms in the Grid"

has been taken up jointly by ERDC, Thiruvananthapuram, in collaboration

with institutions from Denmark to prepare guidelines for the integration of

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

wind turbines with weak grids. The guidelines have been circulated to the

potential states.

Table 2.1
State-wise Wind Power Installed Capacity in MW (As on 31-12- 2004)
Demonstration Private Sector Total
State
Projects Projects Capacity
Andhra Pradesh 5.4 95.9 898.8
Gujarat 17.3 202.6 202.0
Karnataka 7.1 268.9 209.2
Kerala 2.0 0.0 2.0
Madhya Pradesh 0.6 27 22.6
Maharashtra 8.4 402.8 407.4
Rajasthan 6.4 256.8 178.5
Tamil Nadu 19.4 1658 1361.6
West Bengal 1.1 0.0 1.1
Others 0.5 0.0 0.5
Total 68.2 2912.0 2980.2

Table 2.2
Total Generation from Wind Power Projects (kWh)
(As on 31-12- 2004)
State Generation
Andhra Pradesh 622340136
Gujarat 1304183451
Karnataka 1186445699
Kerala 15862500
Madhya Pradesh 171752939
Maharashtra 2395479421
West Bengal 1651762
Tamil Nadu 10399971308
Rajasthan 73303417
Orissa 1174856
Total 16172165489

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

STATE-WISE/YEAR-WISE GENERATION FROM WIND POWER PROJECTS (kWh)

States 2000-01 2001-02 2002-03 2003-04 Total


Andhra Pradesh 87,032,475 114,988,086 93,634,923 92,238,695 587,409,287
Gujarat 142,227,142 134,759,803 157,612,149 138,303,120 1,205,290,461
Karnataka 72,363,609 92,859,341 165,203,907 306,675,709 732,275,699
Kerala 2,582,228 2,476,390 755,359 0 15,862,500
Madhya Pradesh 28,859,874 28,238,283 30,391,441 18,942,964 158,930,039
Maharashtra 142,575,869 332,747,859 636,005,296 602,392,663 1,812,191,089
Tamil
1,095,839,373 1,245,763,198 1,305,704,301 1,430,452,101 9,392,084,985
Nadu
Rajasthan 5,649,422 18,578,126 21,535,791 15,001,380 62,390,384
West
338,470 435,905 473,723 1,300,450
Bengal
Total 1,577,029,992 1,970,749,557 2,411,279,071 2,604,480,355 13,967,724,894

Cost Economics

Capital cost of wind power projects ranges from Rs 4.5-5.5 crore per MW

Cost of generation is estimated to be Rs 2.25-2.75 per kWh (depending upon the

site)

These costs compare favourably with new conventional power projects

There is the added advantage of short gestation, and modularity of systems

The costs are expected to decline and profitability increase with technology

improvements, and increase in size of turbines, and optimal planning and site

selection

A cost ceiling of Rs 3.5 crore/MW has been fixed for the determination of MNES

support to state government projects

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Aims and Targets

The wind power programme in India aims at catalysing commercialisation of wind power

generation in the country, through:

The implementation of a countrywide WRAP

R&D support

Implementation of demonstration projects to create awareness and opening up of

new sites; close involvement of utilities and industry

development of infrastructure capability and capacity for manufacture,

installation, operation and maintenance of wind electric generators

Adaptation of technologies for improved performance of turbines at low to

medium wind speeds and improved capacity utilisation, cost reduction and high

reliability, and increased life of turbines

Policy support

Targeted capacity for the next five years is about 1,500 MW. This will require an

investment of Rs 7,500 crore. Most of this investment is expected to come from

commercial developers.

Investment Opportunities

Investment opportunities are available for:

Corporate users of power

Long-term investors in power

Promoters of clean power

Potential pollution traders

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Opportunities exist for Indian companies for joint ventures in the production and services

related to wind electric equipment:

Investment in generation of power

As developers/project promoters

Consultancy

O&M

Monitoring and inspection

Opportunities also exist for export of wind related services such as:

Consultancy

Wind resource assessment

Formulation of policies

Project planning

Guidelines for Project Implementation

The following basic guidelines have been laid down for healthy and orderly growth of the

sector:

Location of project on a site with optimal parameters

Selection and installation of state-of-the-art machines

Optimum generation of power; proper utilisation of incentives

Capacities to be announced for each windy location in line with power evacuation

facilities; project clearance before commencement of work and commissioning

certification in accordance with the prescribed guidelines

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Detailed Project Reports (DPRs) must be submitted and must include complete

information on:

Site

Selection of equipment

Capital cost/mechanism of financing

Annual energy output

Cost of generation

Captive generation or sale

O&M systems planned

Site selection and micro-siting

Quality aspects:

o Wind turbine - Type approval/power curve certificate/self-certification by

manufacturers

o Suppliers manufacturing base and installation support infrastructure

o Quality systems adopted

o Grid Parameters - Conformity with laid down parameters

o Minimum monthly average power factor

o O&M contract

o Spare-parts stock

o Submission of "Monthly Energy Output Statements"

Policy Measures and Incentives

The policy framework and incentives on offer are:

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Fiscal and financial incentives

Wheeling, Banking, Third Party sale and Buy-back facility by State Electricity

Boards (SEBs)

Capital subsidies and Sales Tax incentives in certain states

Soft loans from the Indian Renewable Energy Development Agency Ltd (IREDA)

Fiscal and Promotional Incentives from Central Government

The following fiscal and promotional incentives are available from the Central

Government:

Concessional import duty on specified wind turbine parts

Accelerated depreciation in the first year

Sales Tax, Excise Duty relief

Loans through IREDA

Five-year Income Tax holiday

Nine states have introduced policies for wind power based on MNES guidelines:

2 per cent Wheeling charges

Banking up to one year

Third Party sales at remunerative prices

Buy-back facility at minimum price of Rs 2.25 per kWh (Base year 1994)

5 per cent annual escalation in tariff

Financial Assistance

In case of state government projects, 60 per cent cost of the wind turbine equipment,

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

maintenance spares, and erection and commissioning (subject to a benchmark cost of Rs

3.5 crore/MW) would be borne by the Central Government. All other costs will be met by

the state government.

IREDA Loans for Wind Power Projects:

IREDA loans for wind power projects are available under different schemes, as follows:

Project financing

Equipment financing (up to 1 MW per party per financial year for grid-connected

projects)

Manufacturing equipment.

The terms for each of these categories of finance are as follows:

Project Financing

(i) Development of wind farms on lease basis 13.75%

(ii) Development of wind farms on ownership basis 13.5%

(iii) Development of wind farms by machines suppliers / manufacturers

upto 5 MW /party/year on built, operate, own, lease, transfer basis 13%

(iv) Development of wind farm / estates with minimum capacity of 10

MW by Cooperative Sector / Public Joint Sector / Private Sector

Companies on built operate, own, lease, transfer basis 12.75%

(v) New technology above 750 KW machines (loan to be provided only

under International lines of credit) 12.5%

(vii) Promoter's Contribution 30%

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

(vi) Repayment Period * 10 years.

Equipment financing (Up to 1MW per party per financial year, Grid connected)

(i) Interest 14.5%

(ii)Promoter's Contribution Loan up to 75% of the cost of eligible

equipment.

(eligible equipment comprise of WEG,Tower,Control Panel,Transformer

and Reactive Power Compensator)

(ii) Promoter's Contribution 25%

(iv) Repayment Period * 10 years.

Manufacturing of Equipment

(i) Interest 14%

(ii)Promoter's Contribution 30%

(iii) Term loan up to 70% of total project cost

(iv) Repayment Period* 8 years.

* including moratorium period

Other Applications of Wind Energy

While grid-connected power generation from wind is a key focus area for MNES,

incentives are available for other applications of wind energy such as water pumps and

battery chargers. These are covered under Solar Energy Technologies Stand-alone

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applications of Hybrid Systems and Wind Energy. For more information on the various

incentive structures, please refer to the respective technology area in appendices.

Wind power project at Jogimatti in Karnataka

2.3 Small Hydro Power

Highlights

The focus of the Small Hydro Power (SHP) programme is on promoting

commercialisation and active private sector participation

An estimated potential of about 15,000 MW of SHP exists in India

MNES has a database of 4,233 potential sites with an aggregate capacity of

10,324 MW for projects up to 25 MW (Table 2.1)

In 1989, the total installed capacity of SHPs up to 3 MW capacity was only 63

MW. In just 12 years, this capacity has increased nearly four-fold to 250 MW

SHP between 3-25 MW were brought under the purview of MNES in 1999-2000

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

At the end of Dec 31,2004,the total installed capacity of SHP projects upto 25MW

station capacity was 1693 MW.

A capacity of 80.39 MW was added during 2002-03.SHP projects with a total

capacity of 84.04 MW were commissioned during the year 2003-04,taking the

total installed capacity to 1603 MW.

Most SHPs are grid-connected. However, there are some projects, which are

decentralised and are managed by local community organisations or NGOs

SHPs are developed in the potential regions either by SEBs or the state agencies

responsible for SHP development or by Private Sector

The 14 potential states which have announced their policies for private sector

participation in the SHP sector are Himachal Pradesh, Uttar Pradesh, Uttaranchal,

Punjab, Haryana, Madhya Pradesh, Karnataka, Kerala, Andhra Pradesh, Tamil

Nadu, Orissa, West Bengal, Maharashtra and Rajasthan

Recently, a programme on development and up-gradation of water mills has been

started by MNES. This would enable the direct use of mechanical power for

different applications

MNES is also implementing a UNDP-GEF Hilly Hydro project in 13 states of

Himalayan and Sub-Himalayan region

159 SHP projects with a capacity of 488 MW are under implementation.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Small Hydro Power project in Himachal Pradesh

India has a well-established manufacturing base for a full range and type of SHP

equipment. There are over eight manufacturers in the country in the field of SHP

who are supplying various types of turbines, generators and control equipment.

Aims and Targets

Keeping in view the overall policy of the Government of India to encourage private

sector participation in the field of power generation, the thrust of SHP programme is

to set up commercial SHP projects. 14 states have suitable policies in this direction. A

capacity addition of 600 MW is envisaged during 2002-07 through:

A nationwide SHP resource assessment

Encouragement to commercial SHPs

Special incentives to northeastern states to exploit SHP potential

Projects aggregating 100 MW under the renovation and modernisation (R&M)

programme

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Demonstration projects based on commercially viable and environmentally sound

technologies

Development/Upgradation of 1000 water mills for mechanical and/or electrical

applications

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Table 3.1
MNES' Database of Small Hydro Potential Sites Identified in India up to 25 MW
Capacity
Sl No Name of State Identified Sites up to Total Capacity
25 MW (in MW)
1 Haryana 22 30.05
2 Himachal Pradesh 323 1,624.78
3 Jammu & Kashmir 201 1,207.27
4 Punjab 78 65.26
5 Rajasthan 49 27.26
6 Uttar Pradesh 211 267.06
7 Uttaranchal 354 1,478.23
8 Gujarat 290 156.83
9 Madhya Pradesh 85 336.32
10 Chattisgarh 47 57.90
11 Maharashtra 234 599.47
12 Andhra Pradesh 286 254.63
13 Karnataka 230 652.61
14 Kerala 198 466.85
15 Tamil Nadu 147 338.92
16 Bihar 92 194.02
17 Jharkhand 89 170.05
18 Orissa 161 156.76
19 West Bengal 68 202.75
20 Sikkim 145 182.62
21 Arunachal Pradesh 492 1,059.03
22 Assam 46 118.00
23 Manipur 96 105.63
24 Meghalaya 98 181.50
25 Mizoram 88 190.32
26 Nagaland 86 181.39
27 Tripura 8 9.85
28 A&N Island 6 6.40
29 Goa 3 2.60
. Total 4,233 10,324.37

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Investment Opportunities

Business opportunities exist in:

Industry-based R&D

Technical collaboration with equipment manufacturers of small hydro

As developer/promoter of commercial SHP projects

Resource assessment, Detailed survey and Investigation, DPR preparation for

projects

Detailed designing of SHP projects

Consultancy

Policy Measures and Incentives

Fiscal and Promotional Incentives

The facilities available in the states include Wheeling, Banking, attractive Buy-back rate,

and facility for Third-party sale among others. In order to accelerate development of SHP

power in the country, MNES is providing incentives for:

Detailed survey and investigation -- up to Rs 3 lakh per site

Detailed project report preparation - up to Rs 2 lakh per project

Interest subsidy for commercial projects - up to 7.5 per cent in the hilly regions

and up to 5 per cent in the plains

Under special incentives for the northeastern region and Sikkim, capital grant of

up to Rs 7.5 crore per MW is available for SHP projects in the region. The

maximum support per project is Rs 22.5 crore

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Capital subsidy for SHP projects in hilly regions/A&N Islands executed by

government departments/SNAs - up to Rs 4.5 crore per MW

Financial support for renovation, modernisation and capacity up-rating of old

SHP stations - up to Rs 2 crore per MW or 75 per cent of the R&M cost,

whichever is lower. The R&M scheme has been extended to cover SHP projects

up to 15 MW with a maximum support of Rs 10 crore per project

Financial support for development/upgradation of water mills: up to Rs 30,000 or

75 per cent of actual cost, in mechanical mode and Rs 1.0 lakh or 75 per cent of

actual cost in electrical/electrical plus mechanical mode per mill

IREDA, the financial institution under MNES, provides Term loans for setting up

of SHP projects up to 25 MW capacity in the commercial sector.

2.4 Biomass Energy and Cogeneration

Highlights

Currently, biomass contributes 14 per cent of the total energy supply worldwide

and 38 per cent of this energy is consumed in developing countries,

predominantly in the rural and traditional sectors of the economy

The various applications of biomass energy include:

o Thermal or heat

o Mechanical water pumping for irrigation

o Power generation (stand-alone or grid-connected) including village

electrification and industrial applications

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

19,500 MW (including 3,500 MW from biomass cogeneration-Table 4.1) can be

generated from fuel wood, crop residues and forest sources(about 500 million

tonnes per annum) and bagasse in sugar industry

A district level biomass resource assessment studies in 6 potential States will be

initiated during the year to help identify locations where the density of biomass

availability is adequate and available for power projects

Biomass Resource Atlas for India is under preparation

The prime power generation/ cogeneration technologies using biomass are:

o Gasification

o Direct combustion

57 bagasse based cogeneration projects aggregating 437 MW capacity have been

commissioned and 35 projects aggregating 323 MW are under implementation

(Table 4.2)

A cogeneration project with 87 Ata pressure and 5150C have been commissioned

in Andhra Pradesh and three such projects are under implementation in Tamil

Nadu, UP and Karnataka

52 commercial grid-connected biomass-based power projects aggregating

290MW capacity have been commissioned, and 41 projects of 284 MW capacity

are under implementation (Table 4.2)

Table 4.1
Potential for Bagasse-based Cogeneration in Major Sugar Producing States in India
State Potential Commissioned till
(in MW) December 31, 2004
(in MW)
Maharashtra 1,000 32.5

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Uttar Pradesh 1,000 73.0


Tamil Nadu 350 138.5
Karnataka 300 116.0
Andhra Pradesh 200 63.0
Bihar 200 0
Gujarat 200 0.50
Punjab 150 12.0
Others 100 15.00
Total 3,500 450.5

Aims and Targets

Existing Projects

The current status of Biomass Power and Cogeneration projects commissioned is:

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Table 3.2

Biomass Power and Cogeneration Status


Projects commissioned 727 MW 109 projects
Biomass Power 290 MW 52 projects
Cogeneration 437 MW 57 projects
Projects under implementation 607 MW 76 projects
Biomass Power 284 MW 41 projects
Cogeneration 323 MW 35projects

6 MW biomass power project in Andhra Pradesh

Biomass Resource Assessment

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

The Ministry had undertaken Taluka level Biomass Resource Assessment Studies

during the 9th Plan with a view to assess biomass availability for power generation in

500 Talukas in the country. 475 studies have been completed in 23 States; A project

on Biomass Resource Atlas for India is being jointly undertaken by Indian Institute of

Science (IISc) and Regional Remote Sensing Service Centre (RRSSC), Bangalore to

integrate the data obtained from filed-level study on biomass assessment and inputs

from other sources likely Ministry of Agriculture, Government of India, etc.

Biomass Power /Cogeneration Programme

o Biomass power / Cogeneration programme has the following components:

Biomass Resource Assessment

Research & Development including Advanced Biomass

Gasification

Biomass/bagasse based cogeneration

Biomass based power generation

Industrial cogeneration

o The objective of this programme to promote technologies of cogeneration,

biomass combustion, MW scale gasification & Industrial Cogeneration for

generation of power and also to establish the techno commercial feasibility

and viability of power generation from biomass that are either wastage or

sub optimally utilised

o Biomass Conversion technologies include combustion, gasification, etc.

deploying gas/steam turbine, dual-fuel engine/gas engine, or a

combination thereof, either in power alone or in cogeneration (steam and

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

power) mode. Each plant will have a minimum eligible capacity of 1MW,

grid interfaced and/ or captive power projects (with or without surplus

power to grid)

o Following are the initiatives for acceleration of the biomass power/

cogeneration programme during 10th Plan Period:

Thrust to bagasse cogeneration in cooperative sugar mills.

Advanced Biomass Gasification for development of and

application of advanced technologies, such as Biomass integrated

gasification-cum-gas turbine combined cycle technology.

Promotion of industrial cogeneration for surplus power

UNDP-GEF biomass power project approved.

To promote MW scale projects with 100% producer gas engines

Investment Opportunities

The following investment opportunities are open to investors for renewable

energy based power generation projects:

o Joint Venture: A foreign investor can enter into a Joint Venture not only

for manufacturing RE devices/products but also for setting up RE-based

power generation projects on Build, Own and Operate (BOO) basis.

Investors would be required to enter into a Power Purchase Agreement

(PPA) with the concerned State Government

o A foreign investor could enter into a Joint Venture with an Indian partner

who understands the local environment and could exploit the business

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

opportunities. A feasibility study of the projects could be done before

entering into such a venture. A Joint Venture is a preferable mode as it

provides maximum visibility and presence in the country

o R&D initiatives and thrust areas for technology development

MNES supports the following R&D initiatives and has identified them as thrust

areas for technology development by investors and technical institutions:

o High-pressure boilers and new turbine configurations

o Development of process systems and equipment for enhancement and

optimisation of power generation

o Development of cost-effective biomass handling, storage and drying

systems

o Feasibility of blending or co-firing of mix of biomass materials, or with

fossil fuels

o Indigenous technology development/adaptation for Advanced Biomass

Gasification (ABG) involving gas turbines in the combined cycle mode

Policy Measures and Incentives

Promotion of biomass-based power generation in the country is being encouraged

through enhancement of favourable policy regimes at the state as well as at the

Central levels. The state polices include Buy-back/wheeling/Banking of generated

electricity by the SEBs and fiscal incentives such as concessional custom duties;

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

exemption from excise duty and sales tax; tax holiday and accelerated

depreciation; and, soft loans are available for commercial projects.

Guidelines for Project Implementation

Eligibility Criteria for Admissible Projects

MNES's eligibility criteria in the three areas are given below:

o For Bagasse/Biomass Cogeneration Projects: Bagasse, forestry and

agro-based industrial residues. Mix of conventional and/or non-

conventional fuel, up to 25 per cent only, allowed in both cases to achieve

extended operating days in a year

o Technologies: Any technology package such as Combustion/ Gasification,

through gas/steam-turbine, dual fuel engine/gas engine route or a

combination thereof, appropriate and efficient for power

generation/cogeneration as per the above biomass resources

o Capacity: The minimum eligible capacity shall be 1.0 MW; grid

interfaced and /or captive power projects (with or without surplus power

to grid)

Fiscal and Financial Incentives

The following information is given in appendix in detail:

o The details of Central Financial Assistance under the NBGP for various

items for different modes of applications - mechanical, electrical,

thermal/cooking.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

o The numerous financial incentives and assistance packages under the

national programme

o Incentives such as interest subsidies for developers of biomass power and

cogeneration projects

o Fiscal incentives and concessions for investors in power generation

projects based on biomass

Biomass Gasifier Programme

The details of Biomass Gasifier Programme entailing the objectives, the eligibility

criteria, pattern of financial assistance / incentives for eligible projects and other

promotional activities, including the procedure for availing the said financial

assistance / incentives, are given in Annexures.

Implementation

The Programmes will be implemented through the State Governments, State Nodal

Agencies, and Financial Institutions involving Intermediaries, Industries, NGOs,

Panchayats, Co-operatives, ESCOs etc.

Pattern of Release of Central Financial Assistance (CFA) for Biomass Gasifier

Projects

i) CFA for Thermal Applications and Electrical Applications:

Capital subsidy shall be provided on satisfactory completion of project on

reimbursement basis through State Nodal Agencies for projects up to 3 MW

Thermal. No releases to be made alongwith sanction letter and upto completion of

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

the project. Certification of completion of the project to be provided through a

Joint Commissioning Report (JCR) by the State Nodal Agency, Manufacturer and

user beneficiaries /Organization alongwith documents providing necessary

technical and financial audited documents.

ii) Biomass Gasifier based Village Electrification:

The implementation will be done by / through SNA with the involvement of

ESCOs, Co-operatives, Panchayats, NGOs, Manufacturers or Entrepreneurs. The

CFA for the sanctioned projects will be released to the State Nodal Deptts. / SNAs

in the following manner:

Initial release of 20% of the total MNES cost share would be made alongwith the

sanction letter of the project.

Second instalment of 50% of MNES cost share would be released on supply of

equipment at site.

Third instalment of 20% of MNES cost share on erection and commissioning.

Final instalment of 10% on MNES cost share would be released after three

months of trouble-free operation of the whole system and submission of Audited

SOE & UC by the implementing agency

iii) Demonstration Programme for 100% Producer Gas Engines:

The Scheme will be implemented through State Nodal Agencies. The terms of

release of CFA shall be on the same pattern as per (b) (ii) above.

iv) Conversion of existing diesel power plants in North-Eastern Region and

others islands to Biomass Gasifier based Power Stations:

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

The Scheme will be implemented through State Power Departments/State Nodal

Agencies. The terms of release of CFA shall be on the same pattern as per (b)(ii)

above.

v) Financial Assistance for Promotional Activities:

The pattern of releases for promotional activities and for applied R&D Projects

would be determined on case-to-case basis, on merit.

Biomass-gasifier power plant

2.5 Energy from Wastes

Highlights

The quantity of wastes generated in class-I cities per annum is estimated to be

about 27 million tonnes of municipal wastes and about 4400 million cubic meters

of sewage.

In addition, large quantities of wastes are produced by industries, such as sugar

mills, distilleries, pulp and paper mills, dairies, slaughter houses, tanneries,

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

pharmaceutical industries, etc. These estimates translate into a potential for about

1000 MW equivalent of power from urban wastes and over 700 MW from

industrial wastes. From the ongoing exercise for preparing the National Master

Plan for Waste-to-Energy, the estimated potential is emerging to be over 2500

MW.

Waste-to-Energy is a "win-win" option as application of advanced waste

management practices and techniques helps not only to reduce the quantity of

wastes at source but also facilitates their treatment and disposal in environment

friendly manner besides helping in generation of a substantial amount of energy.

Waste-to-Energy technologies can help in reducing the total waste quantities by

50% to over 90%, which, in turn, can greatly reduce the demand for land, which

is already scarce in cities and the cost of waste transportation to far-away landfill

sites.

Even Globally, the Waste-to-Energy is emerging as a high priority subject in the

efforts for reducing Green House Gases Emissions and Climate Change related

initiatives.

Technological Options for Energy from Urban and Industrial Wastes

Anaerobic Digestion/Biomethanation

Landfill Gas Recovery

Incineration

Densification/Pelletisation

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

In addition to the above, there are some other conversion technologies such as pyrolysis,

gasification, alcohol fermentation, slurry carb process, plasma are technology etc.

Ministry's Initiatives

In view of the vast potential for recovery of energy from wastes and associated benefits

of waste-to-energy projects, the Ministry is implementing two programmes for the

recovery of energy from Urban & Industrial wastes. Some details of these programmes

are as follows:

1. National Programme on Energy Recovery from Urban and Industrial Wastes

o The National Programme aims at promoting efficient and proven

technologies for treatment, processing and disposal of waste, as a means

of improving the Waste Management Practices in the country besides

augmenting decentralised power generation. The scheme is implemented

through State Nodal Agencies, Govt. Departments, and Urban Local

Bodies who have to forward the project proposals to MNES in accordance

with a prescribed procedure for applying for Central Financial Assistance.

This scheme is applicable to both, private as well as public sector

entrepreneurs and investors having technical and managerial capabilities

for implementing such projects on the basis of Build Own Operate and

Transfer (BOOT), Build Operate and Transfer (BOT), Build Own and

Operate (BOO), Build Operate Lease and Transfer (BOLT).

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

o The Waste-to-Energy Programme of MNES has generated considerable

interest and activity in this sector and is expected to witness a quantum

jump in near future.

o A total of 5 projects:2 based on muncipal solid waste and one eash on

sewage,vegetable waste and starch industry solid waste were completed

and commissioned during the year 2003-04.

o The total installed capacity of these projects was 15.65 MW,thus making

the cumulative installed capacity of waste to energy projects in the country

to around 41.50 MW till 31.04.2004.

o The financial incentives being provided under the scheme are as follows:

Interest subsidy for commercial projects

Interest subsidy is provided for reducing the rate of interest to

7.5% (4% in case of projects taken up by Municipal

Corporations/Urban Local Bodies) subject to certain limits on

capitalised amounts for upfront payment to Financial Institutions.

Capital subsidy for demonstration projects

Financial assistance of up to 50% of capital cost of the project

limited to Rs. 3.00 crore per MW is available for innovative

demonstration projects for power generation from Municipal Solid

Waste and for selected Industrial Wastes.

Power generation at sewage treatment plants

Financial assistance of up to 50% of the incremental capital cost

for generation of power from biogas at STPs.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Other Incentives

Incentives are also provided to Urban Local Bodies and State

Nodal Agencies for promoting WTE Programme.

2. UNDP/GEF assisted project on development of high rate biomethanation

processes

o The project on Development of High Rate biomethanation Processes as a

means of reducing green house gases emission was started in September

1994. The project has the following key objectives:

To develop institutional framework at the National level to

generate necessary awareness and capabilities to provide impetus

to the Bio-energy Development Programme utilising high rate

biomethanation processes

To develop requisite expertise and capabilities in the national and

state level institutes, R&D organisations and universities to

assimilate and adapt technologies, improve applied R&D skills in

the field of high rate biomethanation processes, and to provide

technical know-how and assistance in setting up plants using

biomethanation processes

To promote the use of biomethanation technology and biogas

utilisation as cost effective means of energy generation through

demonstration sub-projects and national and local level seminars

and workshops, promotional campaigns, training and

demonstration

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

To develop a National Master Plan and a shelf of investment to

utilise this important renewable resource through

commercialisation of biomethanation processes.

o Major activities under this project are as follows:

Setting up of 16 demonstration sub-projects

Preparation of National Master Plan

Capacity Building

Publication of a quarterly newsletter 'Bio Energy News'

Investment Opportunities

Industry Participation: Corporate bodies and large industrial groups must join hands

with R&D institutions and further develop these fully matured technologies. Criteria for

Eligibility of Projects for Financial Support

1. Criteria based on Wastes

o Projects based on any waste of renewable nature from Urban and

Industrial sectors are eligible under this programme. While rice husk,

straw, stalks, bagasse and fines of biomass origin are not covered under

this programme, mixing of urban or industrial wastes with other wastes of

renewable nature from Urban and Industrial sectors, including rice husk

and bagasse, as backup fuel or feedstock up to a maximum of 30 per cent

is permissible under this programme. Projects based on waste heat (flue

gases), wastes, residues or derivatives from non-renewable sources viz.

Coal rejects, dolochar, oil refinery waste etc. shall not be eligible.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

o Projects for production of biogas from distillery effluents (spent-wash) are

not eligible under this programme. However, projects for power

generation from biogas being produced from Urban and Industrial wastes

(including distillery effluents), through biogas engines / turbines, dual fuel

engines using oil up to a maximum of 5% as pilot fuel, and steam turbines

with a minimum steam pressure of 42 bar shall be eligible.

In case of any violation of the conditions stipulated above by the project

promoters, within first five years of the project operation, the total subsidy

would have to be refunded to MNES. Decision of Secretary, MNES shall

be final n case of ambiguity or violation in respect of provisions of this

scheme.

2. Criteria based on Technologies

Projects based on conversion technologies namely, biomethanation, pelletisation (only

from urban waste), gasification, pyrolysis, incineration, combustion, sanitary landfilling,

etc, or a combination thereof shall be eligible under this programme. Power generation

through steam turbine route shall be permitted for a minimum steam pressure of 42 bars.

3. Criteria based on Capacity of Projects

1. Minimum capacities of waste-to-energy projects

Forms of Energy Minimum Capacity


Waste to Energy (In the form of fuel pellets) 15 TPD
Waste to Energy (in the form of biogas) 300 cu m /day
2.5 tonnes/hr at minimum
Waste to energy (in the form of steam)
Pressure of 20 bar
Waste to energy (in the form of Electricity) 25 Kw
2. Maximum capacity of waste-to-energy projects

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Type of Projects Maximum Capacity


MSW based demonstration projects
5 MW
(two projects per state)
Industrial waste based demonstration
2 MW
Projects (two projects per state)

Note: Amount of subsidies would be determined on the basis of net output i.e. gross

installed capacity minus the auxiliary power consumption

The thrust areas in this sector are:

Biomethanation of mixed waste

Mixing of toxic or otherwise bio-chemically difficult wastes with simpler wastes to

improve amenability to anaerobic digestion (such as tannery/slaughterhouse wastes along

with animal waste/municipal solid waste (MSW)/sewage); designation of suitable

combinations in terms of microbial parameters and for actual projects in terms of site

specific availability; evolution of optimal digester designs along with their O&M routines

Performance enhancement of UASB reactors

Characterisation of different waste streams (such as distillery spent-wash, dairy waste and

food processing industry wastes), and corresponding O&M routines in the existing

Upflow Anaerobic Sludge Blanket (UASB) systems for optimal performance. Laboratory

and pilot-scale studies to understand the process of granulation and its application to

different waste streams

Municipal solid waste

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Development of scientific landfills with gas recovery for Class-I towns with

population around 0.5 million

Case studies for cities where firm tie-ups for land, garbage delivery at site, and

biogas utilisation can be assured

Focus on towns, which have maximum potential in this area. Feasibility Studies

on non-landfill technologies such as RDF and scaling up of already existing plug-

flow digesters and gasification reactors

Efficient energy recovery through upstream processing

R&D on removal of inhibitory and toxic components of waste upstream of the energy

recovery system to improve the system efficiency. R&D on removal of lignin from black

liquor in paper industry. Processes for chromium removal in leather industry effluents

End-use reliability through downstream processing

Examination/quantification of effect of biogas recovered from industrial waste on

the life of the engines or the combustors (particularly due to H2S content of the

biogas)

Technologies for biogas purification. Treatment and safe disposal of effluents

after energy recovery for different waste streams

Monitoring of existing plants and sub-projects completed under UNDP/GEF

assisted biomethanation programme

Study of the performance data on completed plants/sub-projects to diagnose the design

and O&M parameters leading to expected efficiencies. Identification of operational

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

problems, if any/areas requiring further R&D efforts. Evaluation of degree of success of

the sub-projects in the field .

Policy Measures and Incentives

Support from the State Government

State Governments of Uttar Pradesh, Madhya Pradesh, Punjab, Rajasthan, Kerala, Tamil

Nadu, Andhra Pradesh, Maharashtra, Haryana and Karnataka have announced policy

measures pertaining to allotment of land, supply of garbage and facilities for evacuation,

sale and purchase of power to encourage setting up of Waste-to-Energy projects. Efforts

are being made to persuade other State Governments to announce their policy guidelines

to encourage setting up of waste-to-energy projects in their respective States.

Implementation Arrangements

The scheme is implemented through SNAs, government departments, and urban local

bodies who have to forward the project proposals to MNES in accordance with a

prescribed procedure for applying for Central financial assistance. This scheme is

applicable to both private as well as public sector entrepreneurs and investors having

technical and managerial capabilities for implementing such projects.

The scheme is implemented after MNES approves initial project profiles that have been

submitted. Financial support required to recover energy from wastes will also be granted

on application though project profiles, and is applicable to both private and public sector

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

entrepreneurs and investors having technical and managerial capabilities for

implementing such projects on the basis of

Build, Own, Operate and Transfer (BOOT)

Build, Operate and Transfer (BOT)

Build, Own and Operate (BOO)

Build, Operate, Lease and Transfer (BOLT)

Chapter III

Solar Energy Technologies

3.1 Solar Photovoltaics

Highlights

There are about 300 clear sunny days in a year in most parts of India. This is equal to

over 5,000 trillion kWh/year, which is far more than the total energy consumption of the

country in a year

The daily average solar energy incident over India varies from 4-7 kWh/m2,

depending upon location

SPV systems have found applications in households, agriculture,

telecommunications, defence, and railways among others. In the last two decades,

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

the cost of PV has gone down significantly, increasing affordability for dispersed

rural applications

Costs are expected to reduce further thus creating more demand

About 66 MW aggregate capacity (about 10,80,000 individual PV systems and

power plants) have been installed for various applications. In addition, PV

products of 55 MW aggregate capacity have been exported

A number of SPV systems have been installed in various parts of the country

during the year. The number of systems installed so far under the programme is as

follows.307, 763 home lighting systems, 52,102 street lighting systems, and 5,000

water-pumping systems. About 1,791.31 KWp of aggregate capacity of stand-

alone and grid-interactive PV power plants have been installed as on March 31,

2004.

Lighting systems, stand-alone power plants and other specialised systems,

implemented mainly through SNAs/departments/corporations, 'Aditya' solar shops

operated by Manufacturers' Associations and NGOs

Water-pumping systems for agriculture and related uses, implemented through

IREDA and SNAs

Aims and Targets

An all India SPV programme to develop cost-effective PV technology and its applications

for large-scale diffusion in different sectors, especially in rural and remote areas is under

implementation by MNES. Major components of PV programme include:

R&D

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Demonstration and utilisation

Testing and standardisation

Industrial and promotional activities

Thrust Areas of R&D in SPV

Following is a list of some of the priority areas for research support in SPV technology.

Materials and Devices

Development of crystalline silicon thin film layers and low-cost substrates for

deposition of films

Development of large size solar cells/modules based on crystalline silicon thin

films

Development of multi-junction amorphous silicon solar cells/modules; pilot plant

demonstration

Development of process technology for polycrystalline thin film solar

cells/modules; pilot plant demonstration

Development of devices based on new materials/concepts

Improvement in solar cell efficiency to 14-15 % at commercial level and greater

than 20 % at research level

Improvements in PV module technology, higher packing density, suitability for

solar roofs, etc

Development of light-weight modules for use in solar lanterns and similar

applications

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Child studying using solar lantern

Applications

Improvements in system design for PV lighting systems, including development

of a new design of electronics used in solar lanterns

Development of high efficiency inverters, charge controllers and power

conditioning units

Development of spill-proof tubular plate lead acid batteries

Development of maximum power point trackers

Development of high efficiency motor pumps and water pumping systems

Development of integrated power conditioning units

Development of new PV systems

Reliability studies on crystalline silicon, amorphous silicon modules and other

type of PV modules

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Performance evaluation studies on solar lanterns, domestic lighting systems,

power plants, PV pumps and other type of systems for system design

validation/improvements

Development of solar roof systems and electronics used in solar roof systems

PV Products

Solar lanterns, home lighting systems/solar home systems, street lighting systems, stand-

alone PV power plants, refrigerators for medicines and vaccines, solar PV water-pumping

systems for agriculture and related uses, and other applications of PV technology,

including new applications.

Guidelines for Project Implementation

Specifications of SPV Systems

Indian standards for PV modules and other related aspects have been developed. Most

standards are in line with the relevant International Electro-technical Commission (IEC)

standards. MNES has drawn specifications for the purchase of solar lanterns, solar home

systems, street lighting and solar water pumping systems under its capital and interest

subsidy programmes.

Testing Centres and Certification

The Solar Energy Centre (SEC) in Gurgaon, Haryana, is the lead SPV training and test

centre set up by MNES. There are three test centres that have been authorised to test solar

lighting systems like solar home systems, solar street lighting systems and solar lanterns.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

It is mandatory for manufacturers/suppliers to obtain a test certificate from an authorised

test centre for the testing and certification of solar home systems, and street lighting

systems and solar lanterns for supply under the MNES programme. Standards for solar

generators and BIPV are being evolved.

Solar Lighting Systems

Non-grid applications in solar PV include solar lanterns, home, community and street

lighting systems, water pumping for agricultural and related uses, stand-alone power

plants, solar generators, solar powered refrigerators for remote health centres or clinical

uses. These technologies make the benefits of electricity availability in remote,

inaccessible areas. Some of these systems are covered under the subsidy programme of

the Ministry. The details are in appendices.

Solar Water Pumping Systems

MNES has been implementing through IREDA and SNAs, a programme on deployment

of SPV water pumping systems for agriculture and related uses, with the objective of

development of marketing infrastructure and obtaining direct feedback on their

performance and utilisation, for meeting specific needs of the users in different agro-

climatic conditions. MNES provides an interest subsidy on the loan component given by

IREDA. The details are in appendix, "Financial Incentives".

SPV Power Programme

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

During the tenth five-year plan, the Ministry proposes to establish a SPV power capacity

of 5 MW for "niche" applications, viz., voltage stabilisation at the tail-ends of rural grids,

centralised system for peak shaving or demand side management in urban centres and

diesel saving in island/remote locations.

The manufacturers of solar cells and modules can implement the project by entering into

a suitable power purchase agreement (PPA) with the SEBs. MNES also encourages the

industry and private sector to set up grid interactive SPV power projects.

Investment Opportunities

Opportunities exist in all the major thrust areas as listed above under "Major

Thrust Areas".

Joint ventures with global PV manufacturers

Setting up manufacturing plants as 100 per cent Export-oriented Units (EOUs)

Technology transfer for PV modules especially based on thin film materials

R&D

Policy Measures and Incentives

Joint Ventures

A number of companies have entered into joint ventures with leading global PV

manufacturers. There are no specific conditions laid down by MNES for the formation of

joint ventures. General conditions laid down by the Ministry of Industry, Secretariat for

Industrial Approvals and the Reserve Bank of India are applicable for this sector.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Export-oriented Units

It is possible to set up a manufacturing plant as a 100 per cent EOU. Generally, these are

permitted duty-free import of raw materials and components. They are also eligible to sell

up to 20 per cent of their production in domestic markets.

Technology Transfer

Indian PV industry is interested in seeking technology for the manufacture of PV

modules especially based on thin film materials, and is able to offer technology for the

manufacture of silicon solar cells, PV modules and PV systems.

Technology Development

R&D projects are supported by the government at Central/state government research

organisations, autonomous societies, universities, recognised colleges, IlTs, industries

(with suitable infrastructure for R&D) and NGOs.

Financial Assistance

The details of financial incentives available from MNES are given in appendices.

Rs 1 lakh is offered for the preparation of a DPR for the grid-interactive SPV

power project. In addition, MNES provides 2.5 per cent of its share of project

cost, subject to a maximum of Rs 5 lakh for performance evaluation, monitoring,

report writing, etc, to the SNA.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

3.2 Solar Thermal

Highlights

One of India's first and among the largest in the world, the 140 MW Integrated

Solar Combined Cycle (ISCC) with a solar thermal component of 35 MW Power

project at Mathania near Jodhpur in Rajasthan has been sanctioned. The solar

thermal component is based on the parabolic trough collector technology. The

combined cycle power plant of 105 MW capacity will be run on conventional fuel

Non-grid solar thermal technologies include water heating systems, solar

cookers, solar drying applications and solar thermal building designs. These

technologies on the other hand help conserve energy in heating and cooling

applications, especially in urban and semi-urban environment

Solar Water Heating: Around 700,000 sq. m collector area for water heating has

been installed. Solar water heating systems are now being manufactured on a

commercial scale at around 1,00,000 sq. m collector area annually. There are

more than 70 manufacturers approved by BIS

Solar Cookers: Over 5,41,000 box solar cookers have been sold in India since

the inception of MNES. There are about 30 manufacturers of these solar cookers.

Concentrating type solar cookers are also being installed under a demonstration

scheme. These include Dish Solar cooker, community cooker for indoor cooking

and solar steam cooking system. The world's largest solar steam cooking system

has been installed at Tirupathi, Andhra Pradesh, which cooks food for 15,000

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

people per day. About 15 manufacturers are involved in manufacturing and

supplying of different types of concentrating solar cookers

Solar Air Heating: Solar heating systems comprising over 5,000 sq. m collector

area has been installed in India. Most of these systems are installed in industrial

and agricultural sectors of the country having conventional drying units.

Integration of the solar system with their existing system has helped them in

saving large amount of fuels besides reducing environmental pollution.

Solar Buildings: A Solar Buildings Programme to promote solar-efficient

building designs in the country is being implemented by MNES with the

following components: training and education; demonstration and promotional

programmes.

o A number of buildings based on this concept have been designed and

constructed

o Financial assistance is available from MNES for construction of solar

efficient buildings of Government and semi-government sectors under the

demonstration programme.

o Solar Thermal Demonstration Programme: To promote other solar thermal

technologies, a demonstration programme is being implemented by the

Ministry on cost-sharing basis.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

A 200 litre per day solar water heating system installed in Karnataka by IREDA.

Solar water heaters, solar cookers and solar dryers are priority areas for meeting

heat energy requirements of different applications in the domestic, commercial,

and industrial sectors. Soft loans are available for promotion of these applications.

Over 700,000 sq. m of solar water heating collectors, which could heat more than

35 million litres of water to a temperature of 60-70 C every day, have so far been

installed in the country. Hot water applications are in the sectors of:

o Individual residential and apartment buildings

o Restaurants and canteens

o Guest houses, lodges, hotels and hostels

o Hospitals and nursing homes

o Boiler feed water for commercial and industrial applications

o Process feed water for paint industry, electroplating, galvanising industry,

etc

o Bottling plants and distilleries for syrup making, bottle cleanings, etc

o Pharmaceutical, chemical and fertilizer industries

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

o The textile industry

o The food processing industry

Standardisation and Quality Control

To ensure quality and performance of the systems, the Indian National Standards on solar

flat plate collectors and solar cookers have been brought out by the Bureau of Indian

Standards (BIS). Revised standards on solar water heating collectors and for solar

cookers have been published.

BIS approval (ISI mark) is compulsory for any solar water heating system to be installed

under projects seeking soft loan from the commercial banks or IREDA.

Apart from the Solar Energy Centre, six Regional Test Centres established by MNES in

different parts of the country, test solar collectors and cookers and provide technical

backup services. These Centres also act as technical back-up units under the solar thermal

energy programme, besides conducting a number of training programmes.

There are now more than 70 BIS-approved manufacturers at present, with a production

capacity of more than 2,00,000 sq m collectors per year. The annual sale of solar

collectors is estimated at around 1,00,000 sq. m. Export of solar collectors and systems

has also commenced.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

World's largest Solar Steam Cooking System at Tirupathi in Andhra Pradesh

Aditya Solar Shops

Solar shops called 'Aditya' are being established in different parts of the country to

promote spot sale of different RE products, servicing and repair of the devices, and

dissemination of information. There are currently 48 such shops. MNES provides a one-

time grant for setting up of these shops, besides some grant for publicity. These shops can

be established in private as well as public sectors through State Governments. Some

shops are also being established directly by State Governments at their own

lands/buildings.

Policies and Incentives

Incentives for Solar Water Heating

IREDA has changed its financing norms for solar thermal systems. The repayment

period for loans has now been made 6 years including moratorium period. The

minimum promoters contribution for such loans is 20%.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

The rate of interest for loans to end users in the commercial category through

IREDA has been reduced to 7% from 8.3%.

Under the new schame, Banks have been authorized to finance solar water heaters

without any upper limit to the capacity of the system. The subsidized rate of

interest is 5%.

Many state governments are also pursuing this programme by offering various

incentives

Details of the soft loan programme on solar water heaters through IREDA and

commercial banks are given in appendices.

Incentives for Solar Cookers

Financial support is provided to SNAs for promotional activities such as publicity,

cooking demonstrations/competitions, training, development of marketing

network and repair/servicing facilities at sales outlets, etc. and also towards their

service charges. This support is linked with actual sale of box-type solar cookers.

Provision has also been made to provide support to reputed

NGOs/Universities/Institutions/Registered Test Centres for promotional activities

based on specific proposals received from them

Incentives are also offered to their associated promoters such as manufacturers,

SEWs (self employed workers), NGOs etc for selling cookers through their own

efforts. SEW's earn a living by repairing and servicing of solar cookers also at the

doorsteps of users

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Under a loan scheme of MNES, interest-free loans are given to users for purchase

of solar cookers through a few commercial banks

Financial support up to 50% cost is available to beneficiaries for installation of

concentrating type solar cookers including steam cooking systems under a

demonstration scheme.

Financial support is made available to manufacturers for taking BIS approval on

their products

In order to encourage SNAs to take up large-scale promotion of solar cookers in

their respective states, MNES has instituted an annual award for the best

performance

Incentives for Aditya Solar Shops

Non-recurring and recurring grant for establishment of shops owned by State

Governments/Agencies

One time grant for private shops/solar counters through State Governments

Support for publicity of shops to State Governments

Details of incentives available for solar cookers and Aditya Solar shops may be seen in

appendix.

3.3 Stand-alone Wind Energy and Hybrid Systems

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Hybrid and Stand-alone Systems

Hybrid Systems

For reliable supply of power in remote locations or inaccessible rural areas it is possible

and sometimes necessary to design and set up hybrid system which combine the

advantages of two different energy technologies. These could be either two renewable

technologies or a renewable and a conventional energy or fossil technology - a RE system,

say PV or wind, to take care of base load requirements and the conventional systems (say

diesel generator) to supplement for peak load requirement. An integrated hybrid system

would ensure that power supply could be maintained at an optimum level during cloudy

days (for PV system) or low wind conditions (for wind electric generators). MNES and

IREDA provide financial assistance for some of the hybrid systems (see appendix).
Stand-alone Wind Technologies

While grid-connected power generation from wind is a focus area for MNES, incentives

are available for other applications of wind energy such as water pumping windmills and

wind battery chargers. The terms of the financial incentives are given in appendix.

Chapter IV

Rural Energy Technologies

4.1 Biogas

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Highlights

The main programmes under the Rural Energy are Biogas (including community,

institutional and the night soil-based programme), Improved Chulhas (Cookstoves) and

the Integrated Rural Energy Programme (IREP)

The national project on Biogas Development (NPBD) was launched in 1981-1982

to promote family size biogas plants in rural areas

The objectives of NPBD are to:

o provide fuel for cooking purposes and organic manure to rural households

through biogas plants

o mitigate drudgery of rural women, reduce pressure on forest and

accentuate social benefits

o make available enriched fertiliser as a by-product for supplementing and

optimising the use of chemical fertilizers

o improve sanitation in villages by linking toilets with biogas plants

Both floating-drum and fixed-dome models are being promoted. Nearly 3.37

million plants have been installed till date, which is nearly one-fourth of the

estimated potential of 12 million plants

A large manufacturing industry for biogas equipment such as stoves, burners and

lamp mantles exists in India

Investment Opportunities

Manufacture of biogas burners

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Manufacture of high quality biogas lamps

Production of dual-fuel and biogas engines

Incentives for Biogas

Special incentives are available for turnkey entrepreneurs in rural areas to carry

out biogas installation and maintenance as a commercial venture. Over 500 such

entrepreneurs are currently operating

Besides dedicated nodal departments and nodal agencies, Central agencies such as

the Khadi and Village Industries Commission (KVIC) also promote NPBD.

National- and regional-level NGOs are also involved

Commercial and cooperative banks provide loan for setting up of biogas plants

under Agricultural Priority Area

National Bank for Agriculture and Rural Development (NABARD) is providing

the facility of automatic refinancing to banks

Turn-key job fee is given to entrepreneurs, service charges is provided to

SNDs/SNAs for training and publicity are also supported

There are Biogas Development and Training Centres functioning in nine major

states, to provide technical and training back-up to SNDs and SNAs

4.2 Energy-efficient Wood-burning Cookstoves or Improved Chulhas

Highlights

Improved chulhas are scientifically designed for optimal regulation of heat flow

and better fuel utilisation

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

A variety of smokeless efficient chulhas have been popularised to conserve fuel

wood and reduce indoor air pollution

The National Programme on Improved Chulhas (NPIC) is under consideration for

transfer to the State Sector

Investment Opportunities

Manufacture of portable metallic chulhas

Manufacture of various chulha components

Maintenance and service

4.3 Integrated Rural Energy Programme

Integrated Rural Energy Programme (IREP) aims at developing micro-level

planning and implementation capabilities for promotion of an optimum mix of

both conventional and non-conventional energy sources in selected blocks in the

country.

The objectives of IREP are to:

o provide the minimum domestic energy needs of cooking and lighting in

IREP Blocks

o provide the most cost-effective mix of various energy sources and options

to meet the requirements of sustainable agriculture and rural development

with due consideration to environment

o develop capabilities in states/UTs for preparation and implementation of

Block-level energy plans and projects

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

o ensure large-scale people's participation in the planning and

implementation of IREP through the involvement of panchayats, voluntary

organisations and institutions at the micro level

o set up and strengthen the mechanisms and coordination arrangements for

linking micro-level planning and rural energy and economic development

so as to ensure regular and planned flow of energy inputs for meeting the

requirements of various end-users in the IREP projects

Biogas Plant

Incentives Available

Financial support for IREP has two components:

Central Sector Component

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

The Centrally Sponsored Scheme provides grants-in-aid to partially meet the cost

of supporting staff in the IREP project cells at the state and block levels, training

of the staff and extension work

State Sector Component

State Sector outlays are utilised for the implementation of IREP block energy

plans and projects including funding of demonstration activities, financial

incentives for various energy devices, extension and other related activities and

mobilisation of resources from other ongoing schemes and programmes for

energy and rural development in the IREP Blocks

Chapter V

New Technologies

5.1 Emerging Renewable Options

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Besides solar, wind and biomass, there are other eco-friendly and renewable sources from

which energy can be tapped for varied applications in India. These are:

Chemical Sources of Energy - Fuel Cells

Hydrogen Energy

Alternative Fuel for Surface Transportation - Battery operated Vehicles

Geothermal Energy

Ocean and Tidal Energy

Biofuels

5.2 Chemical Sources of Energy - Fuel Cells

Highlights

The focus is on the development and applications of fuel cell technology to generate

electricity, through reaction between hydrogen and oxygen

Because of the modular nature, fuel cells are ideally suited for decentralised power

generation

Hydrogen is the primary fuel for fuel cells

Other fuels can also be used to produce hydrogen gas with the aid of reformers

Potential applications of fuel cells are:

Production of electricity, water and heat for various end-uses

Industrial uses

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Surface transportation

Residential applications

Power supplies for personal computers, hospitals, health clinics, etc

Electrification of remote locations and villages

Thrust Areas

R&D in fuel cell technology specifically in the areas of material and stack

development, and performance improvements

Research in materials, technology development and upgradation in the area of fuel

cells

Production of fuel cells at affordable prices

Applications of fuel cell technology

Creation of infrastructure to support production and applications of fuel cells

Ongoing Projects

Development of 1 kW solid oxide fuel cell power pack

Preparation and characterisation of new polymeric membranes for protonic and

lithium ion transport to be used in chemical sources of energy

Development of 250 W direct methanol fuel cell stack

Construction of an improved 100 W solid polymer electrolyte-direct methanol

fuel cell

Proton exchange membrane fuel-cell based UPS system

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Design of polymer membranes for fuel cell and battery applications

Optimisation of PEMFC stack design using advanced computational techniques

5.3 Hydrogen Energy

Highlights

Hydrogen as a clean fuel and energy carrier, can be used in a broad range of

applications as a possible substitute to fossil fuels

Support for R&D projects for the production, storage and applications of

hydrogen for power generation and transport sector as well as training and

manpower development is available

Hydrogen-fuelled fuel cells, two wheelers and catalytic burners have been developed

and demonstrated.

Hydrogen motorcycle developed at Banaras Hindu University, Uttar Pradesh

Thrust Areas

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Research on materials, technology development and upgradation in the area of

hydrogen energy

Production of hydrogen by environmentally benign methods at affordable prices

Applications of hydrogen as a fuel

Creation and expansion of infrastructure

Awareness building

MNES also supports projects on utilisation of hydrogen as a fuel for stationary as well as

mobile applications.

Ongoing Projects

There are several research, development and demonstration projects in Hydrogen energy.

Hydrogen is receiving worldwide attention as a clean fuel and energy storage medium for

various applications. The ongoing projects supported by MNES include:

Hydrogen energy R&D activities and analyses for application and

commercialisation

Development of low-polluting hydrogen-diesel dual-fuel engine

Development of hydrogen storage device with Indian Mischmetal Laves phase

AB2 alloys

Development of novel metal hydride reactor for environment-friendly energy

conversion devices

Demonstration of hydrogen fueled two-wheeler road transport

Biological hydrogen production

Hydrogen production through bacterial route employing bagasse

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Compressor driven metal hydride cooling and heating systems

5.4 Geothermal Energy

Highlights

Geothermal resources are used to generate power and heat for space heating,

greenhouse cultivation and cooking applications.

There are more than 300 geothermal spring sites spread throughout the country.

The National Geophysical Research Institute (NGRI), Hyderabad, has conducted

magneto-telluric investigations in Tattapani Geothermal fields in Chhatisgarh to

identify sub-surface geological structures to evaluate its energy and thermal

potential. Based on the promising results obtained during the investigations, it is

planned to develop the site for power generation. A similar study has been carried

out through NGRI in Puga Geothermal Fields in Ladakh region of Jammu &

Kashmir and the site is planned to be developed for power generation.

Thrust Areas

Resource assessment and creation of a database on infrastructure for indigenous

production of geothermal power plants and equipment for deeper drilling of bore

holes

Applications of geothermal energy for power generation and direct heat

utilisation, viz., cooking, bathing, space heating, etc

5.5 Alternative Fuels for Surface Transportation

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Highlights

In recent years, vehicle manufacturers have taken interest in this area spurred by

the increasingly stringent fuel emission norms

Through its demonstration programmes, MNES has been gathering feedback on

the electric vehicle performance, operation and maintenance and infrastructure

requirements

Reva, the electric car manufactured in Karnataka

Thrust areas

R&D on eco-friendly electric and alternate energy/hydrogen energy vehicles

R&D on advanced high energy density batteries for electric vehicles

R&D on material/technology development, performance improvements, cost

reduction, etc

Ongoing Projects

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Development of lithium ion secondary batteries

Development of high energy lithium polymer electrolyte batteries of 1 Ah

capacity with a cycle life of 350 for vehicular traction

Development of novel route synthesis, characterisation and electrochemical

studies of high quality cathode materials for lithium batteries

Preparation and characterisation of carbonaceous composite materials for ultra

capacitors

Development of solid electrolyte materials for electrochemical double layer super

capacitors

Development of conducting polymers based super capacitors

Pilot project for demonstration of 300 nos. of battery operated three-wheelers in

different cities

5.6 Biofuels

Highlights

In view of the worldwide demand for energy and concern for environmental

safety, there is a need to search alternate fuels to petrol and diesel for their use in

automobiles and other petrol and diesel engines

Ethanol, and other biofuels are being increasingly looked at as a potential fuel for

running automobiles and other engines

Ethanol and other biofuels when used as a blend with gasoline and diesel enhance

the combustion of the fuel, conserve fuel and improve urban air quality by

reducing emissions of green house gases

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Besides ethanol, biodiesel extracted by trans-esterification of non-edible oils e.g.

Jatropha Curcas, Karanje, Honge etc. have great potential to be used as an

alternative to diesel in diesel driven vehicles and engines

Oil bearing seeds from jatropha curcas (for bio-diesel production) plantation in Hissar,

Haryana

Thrust Areas

Identification and characterisation of different petro crops

Development of technology for converting different vegetable oils to bio-diesel

Field trials on use of vegetable oils as transport fuels

Exploiting various routes of ethanol production including biomass, sugarcane

juice, degraded foodstock etc.

Manpower development/publicity/awareness/documentation

5.7 Ocean Energy

Highlights

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Tides, Ocean Thermal Energy Conversion, Ocean Waves and Ocean currents are

different forms of Ocean Energy

With the present status of technology only tides can be harnessed commercially to

produce power

Potential sites in India are:

o The Gulf of Kutch and the Gulf of Khambat (Cambay) in Gujarat on the

western coast

o Durgaduani Creek in Delta of Ganga in Sunderbans area of West Bengal

on the eastern coast

Based on the preliminary assessment of the potential of Durgaduani Creek, a Detailed

Project Report has been prepared for a 3 MW tidal power project in Sundernbans area of

West Bengal. An Environmental Impact Assessment Study is being undertaken to assess

the Environmental impact of the proposed plant before taking a final view on the project.

Chapter VI

CONCLUSION

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Business Opportunities

Indian and foreign investors can contribute to technology development, manufacture and

export of various RE systems and devices. Some of the specific areas include:

Technology import or collaborations for:

Manufacturing low cost solar photovoltaic cells/modules

Processing and constructing treatment plants for municipal solid waste using

technologies that can recover resources and energy - high efficiency

biomethanation, pelletisation, gasification, incineration and landfill

Advanced technologies for treatment of, and energy recovery from, industrial

effluents and sewage wastewater

Fluidised bed biomass gasifiers using a variety of biomass for electrical,

mechanical and thermal applications

Fuel cells and electric vehicles

Requirement for specialised entrepreneurs to provide services for RE projects on a

short-/long-term contract for:

Marketing and sales

After-sales service

Operation and maintenance (O&M)

Renovation and modernisation

Managerial expertise

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Opportunities for enhancing manufacturing capacity of different end-use

applications of RETs through:

Low-cost, proven RE devices and systems produced on a mass scale

Biomass gasifiers for providing electricity and as prime mover in rural areas

Small capacity wind electric generators

Standard SPV power packs for supply of electricity in private buildings

Stand-alone systems and hybrid systems

Existing Capabilities

With a strong industrial base and successful commercialisation of technologies in wind,

SPV, solar thermal, small hydel, biogas and improved biomass stoves, India is in a

position today to offer 'state-of-the-art' technology to other developing countries and play

a leading role in the global movement towards sustainable energy development. Besides

looking for investment, India can assist other countries in the following areas:

Wind Energy

Indian organisations and institutions have developed expertise in:

Wind resource assessment

Wind farm planning, design and development

Wind energy policies

A Centre of Wind Energy Technology (C-WET) has been established in Chennai as a

specialised institution in this field.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Small Hydro Power

India has well-established institutional capabilities for providing consultancy services in:

Planning, investigation and hydro resource survey

Engineering designs for construction of SHP projects

Techno-economic analysis of SHP, including renovation of old plants

Preparation of pre-feasibility and feasibility reports

DPRs for SHP projects

Design, manufacture and installation of improved water mills.

Biomass Production and Gasification

Several Indian organisations have the capability and expertise in various areas of biomass

related technologies - development and management of energy plantations, project

development and installation of biomass gasifier systems. These organisations are

exporting indigenously developed biomass gasifiers, as well as offer training and

technical assistance in these areas.

Solar Photovoltaics

India has a strong manufacturing base for solar cells/modules and systems. It can provide

consultancy services in setting up of manufacturing units and projects in rural

electrification, water pumping, SPV power plant, refrigeration, training, testing and

evaluation. There are a large number of institutions and professionals providing

consultancy in this vital area of RE.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Solar Thermal

India, as one of the pioneers in the area of solar thermal technologies, has the competitive

edge in terms of prices when compared to other international players providing renewable

energy equipment and services. Professional services are available in areas of:

Solar hot water systems and solar cookers

Resource assessment, monitoring, and applications

Design, manufacture and installation of systems

Solar Water Heaters: Indian solar thermal collectors (Flat plate type) and selectively

coated absorbers are now of internationally accepted quality. The manufacturing base is

well established. Indian manufacturers can export solar thermal collectors, selectively

coated absorbers and complete solar hot water systems to any country at competitive

price. India can provide assistance in setting up manufacturing facility, consultancy and

technical assistance to any country in this area.

Solar cookers: The Indian box-type solar cookers are the best in the world in both

performance and efficiency. There are number of solar cooker manufacturers in the

country. India can provide training, consultancy and technical assistance to other

developed and developing countries in the area of solar cookers.

Improved Chulhas (Cookstoves)

India has developed an extensive base to manufacture high quality chulhas

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Biogas

India has a large manufacturing base in biogas related technology. These include:

Various types of biogas plants

Biogas stoves and lamps

Gas distribution pipelines, fittings and accessories, including gas valves and

pressure regulators

Dual-fuel engines

Bag digesters made of rubberised nylon fabric

India has well-equipped institutions which organise training courses and provide

technical assistance to technicians of other developing countries who can then fabricate

and install biogas plants.

Chapter VII

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

References

Reports: Annual Reports

1. Ministry of Non-conventional Energy Sources, Government of India

2. Indian Renewable Energy Development Agency (IREDA)

3. Ministry of Power, Government of India.

Journals

1. Renewable Energy World (bimonthly), James & James (Science Publishers)

Ltd.

2. Solar Industry, International Solar Energy Society.

3. Power line

Websites

Websites of various government departments, ministries and organisations can be seen at

www.nic.in

Govt of India and Ministries: MNES <mnes.nic.in>, Min of Industry <indmin.nic.in>,

Ministry of Finance <finmin.nic.in>, Ministry of Environment & Forests <envfor.nc.in>,

IREDA <ireda.nic.in>

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Institutions/Agencies:

IREDA, SIA, NSIC, HUDCO, ICICI, IDBI, IFCI, ILFS.

NGOs/International Agencies:

TERI <www.terin.org>, CREST<www.solstice.crest.org>, NREL<www.nrel.org>,

DOE<www.eren.doe.org> , World Bank <www.worldbank.org>, UNDP

<www.undp.org> WRI <www.wri.org>, Worldwatch <www.worldwatch.org>. PV Portal:

<www.pvportal.com>

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

ANNEXURE- I

Ministry of Non-conventional Energy Sources

The Prime Facilitator

The focus of the RE programme in India in the first decade was on direct use of RE

systems, promoted through the use of direct subsidy and decentralised energy use. This

technology centric focus and subsidy driven programme involved dissemination of large

numbers of energy devices, mostly cookstoves and biogas digesters. While this achieved

the desired quantitative results, clearly it was not sustainable. Importantly, it did not help

mainstreaming of the RE sector nor did it support private sector involvement.

Based on the lessons learnt, the shift in the RE programme in the 1990s was towards

market development and a much needed and sharper focus on commercialisation. Direct

subsidies continued, but the RE programme introduced initiatives whereby RE for

electricity generation was encouraged, and a new set of fiscal and financial incentives

were promulgated to bring in greater private sector participation. RE also found greater

regulatory and policy support through a slew of incentives from state governments, who

were keen to support greater private-public partnership in the unbundling of the

electricity sector. While the experience has been mixed, it can be argued that by and large

these efforts were in support of greater commercialisation of what was clearly a new

sector, and that several important milestones have been achieved, as detailed in the

following pages.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Key Activities of MNES

MNES is the nodal ministry for all matters relating to non-conventional and renewable

energy. The key functions include:

Policy-making and planning

Programme formulation and implementation

R&D

Technology development and commercialisation

Promotion of demonstration, pilot projects and extension programmes

Implementation of fiscal and financial incentives

Human resource development

Training

Promotion of Intellectual Property Rights (IPR) protection, international

cooperation, consultancy services and coordination

International cooperation

R&D Thrust Areas of MNES

MNES has identified thrust areas in which R&D efforts are required. It considers R&D

proposals, which are directly related to these activities or programmes of the Ministry and

hold promise for commercialisation in the near future. MNES has constituted an R&D

Advisory Committee comprising eminent persons in the field of RE, research, industry,

academic institutions, etc, that evaluates and clears R&D projects submitted to the

Ministry for financial support.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Institutions of MNES

Programmes for dissemination of RETs are implemented through SNAs.

Administratively, the SNAs are under the control of the respective state governments, but

they receive financial support from MNES for programme implementation. MNES also

implements certain programmes through NGOs. In 1987, MNES established an

autonomous financial institution - the Indian Renewable Energy Development Agency

(IREDA), in order to promote RETs on a commercial basis.

There are three organisations under MNES for technology development, testing and

certification of RE systems:

Solar Energy Center (SEC), Gurgaon, Haryana

Centre for Wind Energy Technology (C-WET), Chennai, Tamil Nadu

Sardar Swaran Singh National Institute of Renewable Energy (NIRE), Jallandhar,

Punjab

MNES has nine regional offices in different state capitals, besides a network of

autonomous organisations, NGOs, R&D and financial institutions and private

entrepreneurs. These regional offices monitor, supervise, and create awareness; liaise

with state agencies, NGOs, and project promoters; and provide feedback from the field.

There are nodal agencies of MNES in each state and UT which implement MNES

programmes in each state.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Solar Energy Centre

The Solar Energy Centre (SEC), as a part of MNES, undertakes activities related to

design, development, testing, standardisation, consultancy, training and information

dissemination in the field of solar energy. The Centre has been playing a crucial role in

promoting solar energy technologies in the country, providing technical information,

carrying out support activities, such as testing and demonstration, and building

information and databases for the National Solar Energy Programme. Equipped with

highly advanced and unique facilities, the Centre is recognised as a leading institution in

India and South Asia. Besides testing and standardisation of solar devices, its capabilities

span optimum system designing, evaluation and assessment of emerging technologies,

specialized training in repair and maintenance, and technical expertise for actual

installation of systems.

Objectives

The main objectives of SEC are:

To act as a National test and standardisation Centre for Solar materials,

components and systems

To take up joint collaborative research projects with other research institutions

and industry

To provide Advisory and Consultancy services to industry and users

To promote solar passive architecture

Solar radiation resource assessment in the country

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

To organise training courses, workshops, conferences and to bring out technical

brochures

To participate in / coordinate bilateral and multilateral projects

To undertake systems design, engineering and prototype development

To evaluate new and improved technologies/products/systems to assess their

adaptability to Indian conditions

Achievements

Development of National Standards for testing of solar collectors and box type

solar cookers

Establishment of Solar Thermal Test Facility for certification and developmental

testing of solar thermal devices and systems

Establishment of Solar PV Test Facility for testing of solar cells, PV modules, and

PV systems (viz. Solar lanterns, home/street lighting systems, PV refrigerators,

PV pumps etc.)

Development of testing protocols for solar thermal and solar PV devices for

ensuring uniformity in the test results from other authorised test agencies

Establishment of battery test facility for PV applications

Establishment of a 25 kWp test bed facility with mono-crystalline PV modules.

Establishment of a 21 kWp test bed facility for thin film PV modules

Establishment of performance monitoring and computer simulation facilities for

solar passive buildings.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Integration of existing 50kW solar thermal power plant with a biomass gasifier

system

Commissioning of a weather station for solar radiation resource monitoring at

SEC, Gwalpahari

Preparation of a number of technical reports and papers on important solar energy

topics, such as solar thermal power generation, solar refrigeration, solar

desalination, and other technologies

Expertise and Services

Solar thermal testing, standardisation and system design

Solar passive architecture

SPV testing, standardisation and system design

Material testing

Solar thermal power generation

Interactive research and development

Consultancy

International cooperation

Opportunities for Collaboration: Current R&D Activities

SEC invites individual professionals working in solar energy or institutions interested in

similar activities to building up a mutually beneficial relationship through joint projects.

The centre has been working jointly on a number of projects with national institutions

such as the IITs, NPL, Indian Agricultural Research Institute, Tata Energy Research

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Institute, etc. It is also collaborating with reputed international institutions such as the

National Renewable Energy Laboratory (NREL) of USA; Inter-solar Centre of Moscow,

GENEC of France.

Consultancy Services from SEC

In addition to the existing user-oriented services of type testing, certification etc., the

Centre offers a comprehensive set of services to provide full technical assistance to users,

right from the state of initial conceptualisation. This includes the following:

Technology assessment report, both at national as well as at international levels

Identification of application-based renewable energy potential

Preparation of Feasibility Reports

Integration of solar and conventional systems

Financial and cost benefit analysis

Assessment of improvement in environment

Operation, performance monitoring and maintenance protocols

Diagnostic studies for performance improvement of existing systems

Designing of energy efficient buildings using solar passive concepts

International Cooperation

The Centre is designated as the Secretariat for G-15 project on solar energy applications.

A Pilot Project on Solar Energy Lighting has been implemented in Senegal by India by

providing technology and financial support under this project. India is also participating

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 83


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

in sub-project on solar water heating, coordinated by Egypt, by exchanging solar

collector and test data.

The Centre has an MoU with National Renewable Energy Laboratory (NREL), USA for

cooperation in the area of solar energy. As part of this MoU, a technology validation

project is currently under implementation where a test bed facility for thin film PV

modules manufactured in USA has been installed at the Centre to evaluate its

performance under Indian conditions.

The Centre and GENEC, France has identified hybrid PV Power Plants and battery for

PV applications as areas for cooperation.

The Centre for Wind Energy Technology

The Centre for Wind Energy Technology (C-WET) has been established as an

autonomous registered society in Chennai to undertake:

o R&D

o Wind resource assessment, standards and certification

o Wind turbine testing, information, training, monitoring

o Commercial services

National Institute of Renewable Energy

The Sardar Swaran Singh National Institute of Renewable Energy (NIRE) is

being set up 12 km off Jallandhar in Punjab at an estimated investment of Rs 377

million. When commissioned, the Institute would focus on new areas which are

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 84


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

not being taken up by the existing centres such as in biomass energy, energy

recovery from wastes, new technologies, energy needs in rural areas and hybrid

and integrated systems. The Institute will focus on commercialization, human

resources development, training and international cooperation, besides

supplementing the activities of existing centres and providing coordination as an

apex institute in the area of RE.

Indian Renewable Energy Development Agency Limited

The Indian Renewable Energy Development Agency Limited (IREDA) is a

financial institution set up by MNES in order to provide concessional financial

support to energy efficiency/conservation and RE sectors. The Secretary, MNES,

is the Chairman of IREDA.

Objectives

o To operate a revolving fund for the promotion and development of new

and renewable sources of energy

o To assist in the upgradation of technologies in the country through new

and renewable sources of energy (NRSE)

o To assist in rapid commercialisation of NRSE technologies, systems and

devices

o To extend financial support to energy efficiency and conservation projects

and schemes

Sectors

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 85


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

o Hydro Energy

o Wind Power

o Bio Energy

o Solar energy

o Development Activities/New Initiatives

o New & Emerging Technologies

o Energy Efficiency & Conservation

o Biofuel/Alternate fuel

New initiative

o IREDA has introduced two new windows of financing for wind energy

projects with reduced interest rates for 7 and 8 years repayment period.

o It has announced an incentive scheme to referring parties for the

generation of energy efficiency/conservation projects proposals.

o IREDA has been co-opted by IDBI for the operation of the Technology

upgradation fund scheme for installation of captive wind energy plants by

non-SSI textiles units to enable them to receive 5% interest incentive from

the Ministry of Textiles.

Special Programmes

o Special concessions for northeastern states and Sikkim, Jharkhand,

Chattisgarh, Uttaranchal, J&K, islands and estuaries

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 86


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

o Special concession to SC/ST, women entrepreneurs, ex-servicemen and

handicapped entrepreneurs

Financing Norms)

Instrument Level
Debt Instruments Project /Equipment Financing Schemes
Manufacturing Loans
Quantum of Assistance Up to 75% of project cost or up to 80% of equipment cost
Rate of Interest 5% to 12.50%
Moratorium Up to 3 years
Repayment Period Up to 12 years

Sector-wise Loan Sanction and Disbursement of IREDA since inception (As on

December 31, 2004)

Sectors Cumulative Sanctions Cumulative Disbursements


Hydro Energy 1621.69 644.26
Wind Energy 2152.01 1343.27
Cogeneration 1134.99 664.71
Biomass Power 617.34 425.2
Biomass Gasification 10.75 3.87
Biomass Briquetting 19.48 9.99
Biomethanation 72.47 57.6
Waste to Energy 49.14 38.1
Energy Efficiency and Conservation 271.97 86.41
Solar Photovoltaics 585.95 283.32
Solar Thermal 105.96 59.73
Miscellaneous 25.66 3.24
Total 6667.4 3,619.7

Tenth Plan Targets (2002-07)

o Additional capacity generation of 1,500 MW

o Energy savings to the tune of 1,20,000 MTCR/year

o Loan Sanctions - Rs. 5,270 crores

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 87


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

o Disbursements - Rs. 3,070 crores

New Initiatives

o Financing of Electrification of remote villages

Ministry of Power

Rural Electrification Corporation Limited

Rural Electrification Corp Ltd (REC) under the Ministry of Power, finances rural

electrification schemes in the country, and promotes and finances rural electricity

cooperatives; administers funds and grants from the Government of India and

other sources for financing rural electrification; provides consultancy services and

project implementation in related fields including RE; finances and executes

small, mini and micro generation projects; and develops other energy sources.

REC promotes, develops and finances viable decentralised power system

organisations in cooperative, joint, private sector, panchayat and other local

bodies.

REC has a mandate for financing generation projects of capacity up to 25 MW.

There is a vast scope for financing small generation projects for exploiting the

available NRSE.

ANNEXURE- II

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 88


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Policies, Procedures and Incentives

Part a Policies

Part b Procedures

Part c Approvals and Clearances

Part d Fiscal Incentives

Part e Financial Incentives

Part a: Policies

The Prime Minister of India has announced a goal of 10% share for RE or 10,000 MW in

the power generation capacity to be added during the period up to 2012.

Renewable Energy Policy

A comprehensive RE Policy for all-round development of the sector, encompassing all

the key aspects, has been formulated by MNES. The broad objectives envisaged in the

policy are:

Meeting the minimum energy needs through RE

Providing decentralised energy supply in agriculture, industry, commercial and

household sectors in rural and urban areas

The policy envisages 10% of additional grid power generation capacity to be from RE by

2012. The policy is awaiting approval by the Government.

Policy for All-round Development of Renewable Energy

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 89


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Policy measures aim at overall development and promotion of RETs and applications.

Policy initiatives encourage private as well as FDI including provision of fiscal and

financial incentives for a wide range of RE programmes. Further, the procedures have

been simplified, and provide excellent opportunities for increased investment in

technology upgradation, induction of new technologies, market-development and export

promotion.

Foreign Investment Policy

Foreign investors can enter into a joint venture with an Indian partner for financial

and/or technical collaboration and for setting up of RE-based power generation

projects

Proposals for up to 100 per cent foreign equity participation in a joint venture

qualifies for automatic approval

Hundred per cent foreign investment as equity is permissible with the approval of

the Foreign Investment Promotion Board (FIPB)

Foreign investors can also set up a liaison office in India

The Government of India also encourages foreign investors to set up RE-based

power generation projects on BOO basis. Various Chambers of Commerce and

industry associations in India provide guidance to the investors in finding

appropriate partners

Industrial Policy

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 90


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

MNES is promoting medium, small, mini and micro enterprises for manufacturing

and servicing of various types of RE systems and devices

Industrial clearances are not required for setting-up of an RE industry

No clearance is required from Central Electricity Authority (CEA) for power

generation projects up to Rs 1,000 million

A five-year tax holiday is allowed for RE power generation projects

Soft loans are available through IREDA for RE equipment manufacturing

Facilities for promotion of Export Oriented Units (EOUs) are available for the RE

industry

Financial support is available to RE industries for R&D projects in association

with technical institutions

Import of power projects are allowed

Private sector companies can set up enterprises to operate as licensee or

generating companies

Customs duty concession is available for RE spares and equipment, including

those for machinery required for renovation and modernisation of power plants.

Excise duty on a number of capital goods and instruments in the RE sector has

been reduced or exempted

Policies by State Governments

A number of states have announced policy packages including wheeling, banking,

third party sale and buy-back, which have been outlined in the respective

technology or programme areas in this publication

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 91


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Some states are providing concessions or exemption in state sales tax and octroi.

These rates vary widely from state to state for different technologies and devices

and in periodicity

Fourteen states have so far announced policies for purchase, wheeling and

banking of electrical energy generated from various RE sources

Policies for Small-scale Industries

An industrial undertaking is defined as a small-scale unit if the investment in

fixed assets in plant and machinery does not exceed Rs 10 million

Small-scale industries (SSIs) are not permitted more than 24 per cent equity in its

paid up capital from any industrial undertaking, foreign or domestic

SSIs can get registered with the Directorate of Industries or District Industries

Centre in the state government concerned

SSIs are free to manufacture any item including those notified as exclusively

reserved for the small-scale sector

SSIs are free from locational restrictions, which are mandatory for large industries

Incentives for Investing in RETs

MNES provides financial incentives, such as interest and capital subsidy

Soft loans are provided through:

o IREDA, a public sector company of the Ministry

o Nationalised banks and other financial institutions for identified

technologies/systems

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 92


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

The government also provides various types of fiscal incentives for the RE sector,

which include:

o Direct taxes - 100 per cent depreciation in the first year of the installation

of the project

o Exemption/reduction in excise duty

o Exemption from Central Sales Tax, and customs duty concessions on the

import of material, components and equipment used in RE projects

The National Small Industries Corporation

RETs provide one of the best options for first-generation entrepreneurs and small-scale

industries (SSIs) and enterprises. MNES and IREDA have drawn up financial and fiscal

incentives to suit technology of varying sizes and scales for small- and medium-sized

investors and entrepreneurs

The National Small Industries Corporation (NSIC), under the Ministry of Industry

and Commerce, also provides assistance through a number of schemes, which

include financial and marketing services, technical services and training, and

RETs and Abatement of Greenhouse Gas Emissions

With increased international concerns to reduce greenhouse gas (GHG) emissions,

developed countries seek to meet their commitments under the Kyoto Protocol by

switching to RE and investing in this area in developing countries. In the context of

environmental sustainability, RETs are considered a highly attractive option since they

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 93


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

are clean and renewable.

The energy sector in India is the largest emitter of GHG emissions in India. Coal is the

countrys largest source of commercial energy. Thermal power plants, steel and cement

industries and railways are the major industrial consumers of coal. The CO2 emission

from coal consumption depend on the quality of coal used. Of the overall CO2 emissions

from fossil fuels, emissions from coal consumption account for almost 65%.

MNES has drafted a Renewable Energy Policy, which seeks to ensure that Renewable

Energy Technologies account for 10% of total power generation capacity in India by

2012.

Part b: Procedures

Highlights

Investment opportunities are available in all the RE areas that have been discussed

in the previous pages of this report, as well as other RE-based systems and

devices for decentralised applications

Indian and foreign investors can set up facilities for manufacture of RE systems

and devices based on any of the areas mentioned for their utilisation in India and

also for exports to other countries

Users of various RE systems and equipment, whether individual or corporate

houses, can invest in decentralised electrical and thermal plants and systems, and

install RE power projects for captive use

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 94


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Facilitating Investment in Renewable Energy Technologies

The Government of India encourages foreign investors to set up power projects on

Build, Own and Operate (BOO) basis. Investors are required to enter into a power

purchase agreement with the concerned state government

No prior approval of the government is required to set up an industrial

undertaking with Foreign Direct Investment (FDI) by Non-Resident Indians

(NRIs) or Overseas Corporate Bodies (OCBs)

The Reserve Bank of India (RBI) has permitted Indian companies to accept

investment under the automatic route without obtaining prior approval from

RBI. Investors are required to notify the regional office of RBI, of receipt of

inward remittances within 30 days of such receipt and file required documentation

within 30 days of issue of shares to foreign investors

Foreign Investment Promotion Board (FIPB)

The FIPB has been revamped and made the nodal single window agency for all

matters relating to FDI as well as for promoting investment into India

The Board is chaired by the Secretary (Department of Industrial Policy &

Promotion), Government of India

It provides appropriate institutional arrangements, transparent procedures and

guidelines for investment promotion and to evaluate proposals for foreign

investment (other than those eligible for automatic approval by the Reserve Bank

of India)

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 95


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

FIPB would also monitor implementation of mega projects to facilitate further

investment and remove bottlenecks

The Board considers all investment proposals with or without technical

collaboration and/or industrial license

This Board meets every week and considers all applications within 15 days of

their receipt with the endeavour to communicate decisions to the applicants within

four weeks

Foreign Investment Implementation Authority (FIIA)

The FIIA has been set up in the Ministry of Commerce and Industry to translate

FDI approvals and implementations

It is headed by the Secretary (Department of Industrial Policy & Promotion) and

is serviced by the SIA

FIIA would provide a one-stop after-care service to foreign investors by helping

them to expedite approvals and clearances and to sort out operational problems

with other government agencies

The FIIA will act as a single-point interface between the investors and

government agencies including administrative ministries, state governments,

Pollution Control Boards, Directorate General of Foreign Trade, regulatory

authorities, tax authorities and Company Law Board among others

Approval holders have been requested to get in touch with respective officers in

FIIA

Simplified Mechanisms

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 96


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Under the existing Industrial Policy, a short list of only six industries is kept under

licensing

All applications for which approval is required from the government are to be

filed with SIA and considered by subject specific committees or boards, and

decisions are taken within the specified time

These Committees include the:

o Project Approval Board (PAB) for foreign technology agreement cases

o Board of Approval (BOA) for 100 per cent EOUs

o Licensing Committee (LC) for industrial license

o Inter-ministerial Committee for Electric Hardware Technology Park

Sectors (EHTPs) and Electronic Software Technology Parks (ESTPs)

o Empowered Committee for granting concessions under the Income Tax

Act for Industrial Model Towns, Industrial Parks, etc

Secretariat of Industrial Assistance (SIA)

The SIA has been set up as an investor-friendly agency to provide a single

window for entrepreneurial assistance, investor facilitation, and for receiving and

processing applications, which require government approval

They are also expected to convey the governments decisions on applications filed

and for assisting entrepreneurs to set up projects and monitoring implementation

SIAs promotional activities include dissemination of information and data on a

monthly basis through the SIA newsletter and "SIA Statistics"

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 97


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

It also assists potential investors in finding joint venture partners and provides

information on relevant policies and procedures

Joint Ventures

Joint ventures are the commonly used mode by foreign investors as it provides

maximum visibility and presence in the country

A joint venture is generally a financial as well as technical collaboration. Various

Chambers of Commerce or the public accountants in India could guide the

investor in finding an appropriate partner

A foreign investor can enter into a joint venture not only for manufacturing RE

products and systems, but also in setting up RE-based power generation projects

A foreign investor can enter into a joint venture with an Indian partner who

understands the local environment and can exploit the business opportunities. A

feasibility study of the project should be done before entering into such a venture

Joint ventures could be in the following forms:

o Takeovers or strategic alliances with existing Indian companies: usually

joint ventures are in the form of takeovers or strategic alliances with the

existing reputed companies with a niche market

o A Greenfield project is the one which is set up with new manufacturing

facilities and new plant and machinery. For this purpose, an Indian joint

venture company could be formed with up to 100 per cent equity being

held by the foreign investor

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 98


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

o Whether it is a Greenfield project, takeover or a strategic alliance, an

Indian company is required to be formed for this purpose

A foreign investor can set up a liaison office as an intermediate step before

entering into a joint venture

Part c: Approvals and Clearances

CEA Clearances

CEA has prepared guidelines to help private sector generating companies to formulate

detailed project reports for obtaining techno-economic clearance and concurrence of

CEA.

Clearances Required for Power Projects and Agencies Concerned

Item Agency Remarks


STATUTORY CLEARANCE
Clearances under Electricity Act
Cost Estimates
Any Power project involving capital expenditure exceeding Required under Section 29 of
Central Electricity Authority
1 the limit set by the government needs to be scrutinised by Electricity (Supply) Act, 1948 {E
(CEA)
CEA for examination of salient features and benefits which (S) Act 1948)}.
may accrue therefrom
Techno-economic Clearance/Concurrence of CEA
By CEA after examination of:
River works/dams to be put up for hydro and for
water availability for thermal plants
Greatest possible economic output of electric Under section 30 of Electricity
power (Supply) Act, 1948 SEBs, state
2 Transmission lines and systems Central Electricity Authoritygovernments concerned, Ministries
(CEA) of Coal Petroleum & Natural Gas,
Reasonableness of the scheme Railways & Surface Transport
involved
Site location for optimum utilisation of fuel
resources, distance from load centres
transportation facilities, water availability and
environmental considerations
1 State Governament
3 SEB Clearance Sec 44E (S) Act 1948
2 State Electricity Government
4 Publication State governments Section 29 clause (2), (3), (4) and
Schemes to be published in the Official Gazette or local (6) Electricity (Supply) Act, 1948.
newspapers as the generating company may consider State Governments
necessary along with a notice for at least two months and

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 99


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

modification, if any consequent to public representation


Environment and Water-related Clearances
Water (Prevent
ion & Control of
Pollution) Act,
State or Central Pollution Control1974 & Air
5 Pollution Clearance: Water and Air (Prevention &
Board
Control of
Pollution) Act,
1981
Coordination with State
1 State Government
Forest Department and
6 Forest Clearance 2 Ministry of Environment &
MoEF regarding Forest
Forests (MoEF)
(Conservation) Act, 1980
1 State Government
7 Environment & Forest Clearance As per item 6 &7 and Governments Policy in force
2 MoEF
Interaction between state government departments &
1 State Government
8 Water Availability CWC required. Relevant Irrigation Act of the state and
2 Central Water Commission (CWC)
CWC
9 Hydro Project (Mini-Micro) Ministry of Water Resources Under Relevant Acts
Civil Aviation Clearance for
10 National Airport Authority
Chimney Height
Clearances under Companies and
Trade Acts
11 Registration of Company Registrar of Companies Under Indian Companies Act, 1956
12 Rehabilitation of Company Registrar of Companies Under Indian Companies Act, 1956
Directorate General of Trade
13 Equipment Procurement Development, Chief Controller of Import & Export Acts
Imports & Exports
NON-STATUTORY CLEARANCES
14 Land Availability State government
Dept of Coal, Ministry of Petroleum
15 Fuel Linkage
& Natural Gas
CEA, Department of Power;
16 Financing Department of Economic Affairs;
Financial Institutions
Department of Coal, Ministry of Petroleum & Natural
17 Transportation of Fuel
Gas, Ministry of Railways, Shipping & Surface Transport

Environmental Clearances

Entrepreneurs are required to obtain statutory clearances from MOEF, Government of

India, relating to Pollution Control and Environment, for setting up an industrial project.

Part d: Fiscal Incentives

The fiscal incentives include direct taxes - 100% depreciation in the first year of the

installation of the project, exemption or reduction in excise duty, exemption from central

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 100


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

sales tax, and customs duty concessions on the import of material, components and

equipment used in RE projects.

MNES has issued guidelines to all state governments for creation of an attractive

environment for evacuation and purchase, wheeling and banking of electrical power from

RE sources.

Incentives for 2003-2004

The fiscal incentives applicable for 2003-2004 are stated under the following subheads:

I. Indirect Taxes

i. Customs Duty

Customs duty for wind energy equipment and components

Customs duty for SPV equipment and materials

Customs duty for solar thermal equipment and systems

Customs duty for power generation plants and machinery

ii. Excise Duty

Specified list of RE devices and systems for excise duty concession.

II. Direct Taxes

Specified list for rates of depreciation under Income Tax rules.

Non-conventional energy power policies in states as on October 2002

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 101


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Buy-
Wheeling Banking back Annual
Sl No State Programme TP Sale
2% 12 months Rs 2.25 Escalation 5%
per kWh
9 Maharashtra Wind b b b b 1994-95
Wind b b b 1994-95
Cogen @2% from the year of
b Cogen 7% x ba bb 1994-95
Rs. 3.05/kWh commissioning
2% for old SHP b b b b 1999-2000
WTE 2% 2.6% b b b
projects 1994-95
x
28.4%+Rs0.5/
1 Andhra Pradesh 10 Orissa SHP 2-3% b b At mutually
unit for new x
b not < agreed rate
projects
11 Punjabb Cogen bHTT b x Rs. 3.01 @ 3% 2001-02
b SHP bb not < b b Rs. 2.73 1998-99
SHP 2%,
WTE8-12M bHTT ba bb 1997-98
Rs. 3.01 3% from 2000-01
WTE 2%, 8-12M a b 1997-98
12 Rajasthan SHP b b b Rs. 2.75 1998-99
Wind a Wind a b a b b b x Rs. 2.89 1999-2000
2 Chattisgarh Biomass a Cogena b a bb b x b 1994-95
WTE a WTE a b a b b b x Rs. 3.03 2000-01
Wind
13 4%
Tamil Nadu 6
Windmonths 5% x Rs.
5% 2.60 5 paise
x 2002-03
Rs. 2.70 No escalation
3 Gujarat Biomass 4% Cogenb 2-10%b b 2% b x 1994-95
Rs. 2.73 1995-96
WTE 4% SHPb 5% b xb x 1994-95
Mutually 2001-02
b with agreed rate
4 Himachal Pradesh SHP b x Rs. 2.50 x
addl.charge Rs. 2.70
Wind b WTE b x b b b x 1994-95 1995-96
Cogen
14 U.P.b Windb 12% b bb 0.5%1994-95 b 1995-96
5 Haryana
SHP b Cogenb 12.5%b b 24b x 1994-95 b 1999-2000
WTE b SHPb b b months b b 1994-95 b 1995-96
Wind 20% b 2% on ba 1994-95
WTE a
monthly b b b b 1995-96
Cogen
15 20%
W.B. Windbasis a x 1994-95 x
ab not < b 6M x
b On
Cogen -HTT - - - -
6 Karnataka monthly b
SHP b 6M x x x
16 Uttaranchal SHPbasis b b 2M b Mutually
-
a agreed rate
SHP 2-5% b 2% a 1994-95
SHP: Small Hydro a
WTE b Power, Wind:
b Wind Power, WTE: a Waste1994-95
to Energy, Cogen: Bagasse Cogeneration.
a: allowed; x: not allowed
Rs.
2.80 /
kWh 2000-01 for 5
Wind 5% June-Feb x years
Rs.
Cogen/Biomass b x x 2.50 / b
kWh
7 Kerala
Rs.
SHP 5% June-Feb x 2.80 / 2000-01 for 5
kWh years
WTE 5% June-Feb x 2000-01 for 5
Rs. years
2.80 /
kWh
Wind b x b b x
Cogen b x b b x
8 M.P.
SHP b x b b x
WTE b x b b x

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 102


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

INCENTIVES FOR NON-CONVENTIONAL ENERGY SECTOR: 2003-2004

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 103


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Sl
Item 2003-04 duty rates
No
Spl.
Sl Item Basic Addl
2003-04
Addlduty rates
No CUSTOMS DUTY
(A) WIND ENERGY (Notification No. 21/2002 item No. 224, condition No. Basic
35) Spl.
Addl
modified by Notification No. 26/2003 dated 1.3.2003 Addl
Chapter5%No. 85 Item No.0%
85.024%
Wind operated electricity generators (B) SOLAR PHOTOVOLTAICS
1 up to 30 kW and Battery Chargers up (Notification No. 27/2002 item no. 86, condition 5)
8
to 30 kW The following goods namely: Nil
(A) Silicon
Parts of wind operated electricity in all forms, that is,
polycrystalline
generators for the manufacture of the silicon or ingots, for
the
maintenance of wind operated manufatcure of undiffused
electricity generators, namely:- silicon wafers
(B) Undiffused silicon wafers, for
(a) Special bearings
2
(b) Gearbox the manufacture of solar cells or
(c) Yaw components solar cell modules
(d) Wind turbine controllers and Chapter No. 85 item No. 8541.40
(e) Parts of goods specified at (a) to cells whether or not
9 Photovoltaic 15%
(d) above assembled in modules or made up
Blades for rotor of wind operated into panels 0% 4%
electricity generators, for the A Solar cells
3
manufacture or the maintenance B of PV modules
wind operated electricity generatorsNotification No. 27/2002 item no. 116, condition no. 5 & 13
Parts for the manufacture
11 Silverorpowder
the suspension of chapter 5%
0% 4%
maintenance of the blades for rotor 32 or 71
4
of wind operated13 electricity
Silicone resins and silicone rubbers 5%
generators 0% 4%
of chapter 38
Raw materials for manufacture of Notification no. 25/99 item nos. 7, 18 & 38
5 blades for rotor of wind operated
14 Raw materials for manufacture of 5%
electricity generators 16% 4%
solar cells and modules
8502.31 Wind operated electric
6 Notification
25%no. 26/2003 item no. 4%
Nil 423
generators
15 The following goods namely: 5%
8503.00 Parts of wind electric
7 (1) High purity graphite felt/graphite
25% Nil 4% 0% 4%
generators
pack for growing silicon ingots

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 104


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Sl
Item 2003-04 duty rates
No
Spl.
Basic Addl
Addl
(C) SOLAR THERMAL
(Notification No. 21/2002 item no. 223)
The following goods namely:
(A) Vacuum tube solar collectors
concentrating solar collectors plastic
collectors or sterling engine for
manufacture of solar energy
16 15% 0% 4%
equipment
(B) Linear actuator for tracking
system, Fresnel lens or sun sensor
for manufacture of concentrating
solar collectors
Notification No. 26/2003 item no. 421
Toughened glass with low iron
RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 105
content and transmissivity of
17 5% 16% 4%
minimum 91% and above for use in
solar thermal collectors or heaters
BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Sl
Item 2003-04 duty rates
No
Spl.
Basic Addl
Addl
(D) POWER GENERATION(Notification No. 21/2002 item no. 237, condition
no. 46)
All goods supplied by a
manufacturer-supplier for the
manufacture and supply of
18 5% 16% 4%
machinery and equipment to a power
generation plant (other than captive
power generation plant)
Notification No. 21/2002 item no. 399
Captive Power Plants of 5 MW or
19 25% 16% 4%
more
Power generation projects
(excluding captive power plants set
20 5% 16% 4%
up by projects engaged in activities
other than in power generation)
21 Other industrial plants or projects 25% 16% 4%

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 106


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Sl No Item 2003-04 Basic duty rates


EXCISE DUTY
Notification No. 6/2002 item no. 237, list 9
Specified Non-conventional Energy
1 Nil
Devices/systems
Notification No. 6/2002 item no. 51
2 Silicon in all forms Nil
Notification No. 6/2002 item no. 27
3 Biogas Nil
Notification No. 6/2002 item no. 179
4 Biogas stoves, biogas lights Nil
Chapter No. 84 item no. 8410
Hydraulic turbines, water wheels and
5 16%
regulators therefor
Notification No. 6/2002 item no. 209

Modified by Notification No. 6/2003 dated 1.3.2003


6 Battery powered road vehicles 8%
Notification No. 6/2002 item no. 210
Chassis for use in the manufacturing of
7 16%
battery powered road vehicles
Notification No. 62/91
8 Improved chulhas Nil

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 107


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

List of Specified Non-conventional Energy Devices/Systems exempted from Excise

Duty

Flat plate solar collectors

Black continuously plated solar selective coating sheets (in cut lengths or in coils

and fins and tubes)

Concentrating and pipe type solar collectors

Solar cookers

Solar water heater and systems

Solar air heating systems

Solar low pressure steam systems

Solar stills and desalination systems

Solar pumps based on solar thermal and solar photovoltaic conversion

Solar power generating systems

Solar photovoltaic modules and panels for water pumping and other applications

Solar crop driers and systems

Wind operated electriity generators, their components and parts thereof

Water pumping windmills, wind aero-generators and battery chargers

Biogas plants and biogas engines

Agricultural, forestry, agro-industrial, industrial, municipal and urban waste

conversion devices producing energy

Equipment for utilizing ocean waves energy

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 108


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Solar lantern

Ocean thermal energy conversion systems

Parts consumed within the factory of production of such parts for the

manufacture of goods specified at S. No. 1 to 19 above

Solar photovoltaic cells

Direct Taxes

Concession under Income Tax Rules

Under Income Tax Rules following concessions are available to the non-conventional

energy sector:

Section 32

1 Accelerated 80% depreciation on specified RE- based devices/projects (see table

Specified List...)

Section 80 IA

2 Industrial undertakings set up in any part of India for the generation or generation and

distribution of power at any time during the period beginning on the 1st day of April,

1993 and ending on the 31st day of March 2003. Hundred per cent deduction from profits

and gains for first five years and thereafter 30 per cent of the profits and gains. This

benefit can be availed for any 10 consecutive assessment years falling within a period of

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 109


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

15 assessment years beginning with the assessment year in which that industrial

undertaking begins generation or generation and distribution of power.

3 The budget for 2001-2002 has proposed a 10-year tax holiday for the core sectors of

infrastructure, including solid waste management systems. This may be availed during

the initial 20 years. Further, the Budget has also proposed a 10-year tax holiday for the

generation and distribution of power, to be availed during the initial 15 years.

Section 115 J

4 Exemption from MAT to industrial undertakings on profits derived from the business of

generation and distribution of electricity.

Section 80JJA

5. Hundred per cent deduction in respect of profit and gains from business of collecting

and processing bio-degradable wastes.

Section 10 (23G)

6 Income by way of dividends, interest or long-term capital gains of infrastructure capital

fund or infrastructure capital company from investments by way of shares or long-term

finance in any enterprise wholly engaged in the business of developing, maintaining and

operating any infrastructure facility and which has been approved by the Central

Government on an application made by it in accordance with the rules made in this behalf

and which satisfies the prescribed conditions.

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 110


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

For the purpose of this clause among other things, infrastructure facility means a project

for generation or generation and distribution of electricity or any other form of power

where such project starts generating power on or after April 1, 1993.

Specified List for Rates of Depreciation under Income Tax Rules

Depreciation
Block of Assets
Allowance
Cogeneration systems
a. Back pressure pass out, controlled extraction, extraction-cum-condensing turbines
80%
for cogeneration along with pressure boilers
b. Vapour absorption refrigeration systems
c. Organic rankine cycle power systems
d. Low inlet pressure small steam turbines
Renewable energy devices being
a. Flat plat solar collectors 80%
b. Concentrating and pipe type solar collectors
c. Solar cookers
d. Solar water heaters and systems
e. Air/gas/fluid heating systems
f. Solar crop driers and systems
g. Solar refrigeration, cold storages and air-conditioning systems
h. Solar steels and desalination systems
i. Solar power generating systems
j. Solar pumps based on solar thermal and solar photovoltaic conversion
k. Solar photovoltaic modules and panels for water pumping and other applications
l. Wind mills and any specially designed devices which run on wind mills
m. Any special devices including electric generators and pumps running on wind
energy
n. Biogas plant and biogas engines
o. Electrically-operated vehicles including battery-powered or fuel-cell powered
vehicles
p. Agricultural and municipal waste conversion devices producing energy
q. Equipment for utilising ocean wave and thermal energy
r. Machinery and plant used in the manufacture of any of the above sub-items
Part e: Financial Incentives

MNES provides financial incentives for various RE programmes. These include interest

and capital subsidies. In addition, soft loans are provided through IREDA, a public sector

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 111


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

company of the Ministry and also through some of the nationalised banks and other FIs

for identified technology systems.

Details for the sectors are given in the following order:

Power Generation Technologies

Wind Power

Small Hydro Power

Biomass Power - Bagasse-based Cogeneration and Gasifiers

Energy from Wastes

Solar Energy Technologies

Solar Photovoltaics

Solar Thermal

Hybrid systems and Wind

Rural Energy Technologies

Biogas

Improved Chulhas (Cookstoves)

New Technologies

Battery-operated Vehicles (BOVs)

Energy Efficiency

Energy Efficiency Projects and Equipment

Miscellaneous

Miscellaneous Schemes

1.0 Power Generation Technologies

1.1 Wind Power

MNES Financial Incentives for Wind Power

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 112


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Sl No Programme/Scheme Amount of Subsidy


60% of the cost of wind turbine equipment,
Financial Assistance for Wind Power
maintenance spares, and erection
1 Demonstration projects provided to SNAs/state
commissioning, subject to eligibility and
Governments/SEB
benchmark cost of Rs 3.50 crore/MW

IREDA Financial Assistance for Wind Power

Min.
Interest Repa
Moratorium Promoters
Category Rate % yment Lending Norms
(max) (yrs) Contribution
pa (max) (yrs)
%
Project Financing
Development of wind farms Up to 70% of total project
11.50 10 1 30
on lease basis cost
Development of wind farms Up to 70% of total project
11.00 10 1 30
on ownership basis cost
Development of wind farms
by machine
suppliers/manufacturers up Up to 70% of total project
11.50 10 1 30
to 10 MW/party/year on cost
built, operate, own, lease,
transfer basis
Development of wind
farms/estates with minimum
station capacity of 10 MW
by co-operative
sector/Public/Joint/Private
sector on built, operate, own, Up to 70% of total project
11.25 10 1 30
lease, transfer basis subject cost
to following conditions:
i. Applicant having minimum
net worth Rs. 100 crores
ii. Applicant having AAA or
equivalent rating.
Development of
demonstration of off-shore
wind farm capacity of 10
MW by co-operative
sector/Public/Joint/Private
sector on built, operate, own, Up to 70% of total project
11.00 10 2 30
lease, transfer basis subject cost
to following conditions:
i. Applicant having minimum
net worth Rs. 100 crores
ii. Applicant having AAA or
equivalent rating.
Equipment Financing

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 113


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Up to 75% of the cost of


eligible equipment
(Eligible equipments
Wind Electric Generators up
12.00 10 1 25 comprise WEG, Tower,
to 1 MW capacity
control panel, transformer
and reactive power
compensator)

Incentives Declared by the State Governments for Wind Power

Andhra West Madhya Tamil


Items Karnataka Maharashtra* Rajasthan Gujarat Kerala
Pradesh Bengal Pradesh Nadu
2% of 20% of 2% of 2% of 2% of 5% of 4% of 5% of
Wheeling 2% of energy
energy energy energy energy energy energy energy energy
2% per 5%
12 6 9 months
Banking month for -- 12 months 12 months 12 6 months
months months (Jun-Feb)
12 months months
Rs
To be Rs Rs
Rs Rs 2.80/kWh
decided Rs 2.89/kWh Rs. 2.60/kWh
2.25/kWh 2.25/kWh Rs 2.25/kWh (5% esc.,
Buy-back on case 2.25/kWh (5% esc.), 2.70/kWh (5paise
(5% esc., (5% esc., (5% esc., 1994) 2000-01
to case (no esc.) (1999- (no esc.) esc., 2002-
1994) 1994) for 5
basis 2000) 03)
years)
Third Not Not Not Not Not
Allowed Allowed Allowed Allowed
Party Sale allowed Allowed allowed allowed allowed
Maximum
20% max Rs. 25 Same as
Capital 30% (max Rs
(Rs 25 lakhs for -- for other -- -- -- --
Subsidy 20 lakh)
lakh) backward industries
area
Exemption
on 30% of
No No the
Other Industry electricity electricity installed
-- -- -- -- --
Incentives Status duty for 5 duty for 5 capacity
years years on
electricity
duty

The Policy expired on March 31, 2002.

1.2 Small Hydro Power

MNES Financial Incentives for Small Hydro Power Programme

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 114


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Above 15
500 kW
Below 500 Above 1 MW Above 5 MW & MW &
Schemes Areas up to 1
kW & up to 5 MW up to 15 MW up to 25
MW
MW
Up to Rs. 1.00
Plain Up to Rs. 0.75 lakh Up to Rs. 1.50 lakhs
Survey & lakh
Investigation Up to Rs. 2.00
Hilly Up to Rs. 1.00 lakh Up to Rs. 3.00 lakhs
lakhs
Up to Rs. 1.00
Plain Up to Rs. 0.75 lakh Up to Rs. 1.50 lakhs
Detailed Project lakh
Report Up to Rs. 1.00
Hilly Up to Rs. 0.75 lakh Up to Rs. 2.00 lakhs
lakh
Interest Subsidy Plain 5.00% 2.50% 2.00% 1.50%
for Commercial
Projects Hilly 7.50% 5.00% 3.00% 2.00%
90% cost
90% cost of of the 75% cost of the Equipment cost+
NE Region, the project up project up project up to 25% of civil cost
Nil
Sikkim to Rs. 75000/- to Rs. Rs. 45000/- up to Rs. 22.50
kW 60000/- kW crore/project
kW
Equipment
Capital Subsidy Middle Equipment cost+
Equipment cost+ 50% of cost+ 25% of
for Govt. sector Himalayas, 25% of civil cost
civil cost up to Rs. civil cost up to Nil
projects Ladakh, up to Rs. 15
45,000/kW Rs. 3.00
A&N crore/project
crore/MW
Equipment
Other Areas Equipment cost+
Equipment cost+ 50% of cost+ 25% of
(only 25% of civil cost
civil cost up to Rs. civil cost up to Nil
notified hilly up to Rs. 7.5
30,000/kW Rs. 1.5
regions) crore/project
crore/MW
Renovation & Modernisation Limited to Rs. 10
Up to Rs. 2.0 crores/MW Nil
of old projects crores/project
Development/Upgradation of
water mills
Mechanical Mode Rs. 30,000
Mechanical/Electrical Mode Rs. 60,000

IREDA Financial Assistance for Small Hydro Power

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 115


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Interest Repayment Moratorium Min. Promoters


Category Lending Norms
Rate % pa (max) (yrs) (max) (yrs) Contribution %
Project Financing
Up to 75% of total
project cost
100% of eligible
equipment cost & 90%
Up to 1 MW of civil cost limited to a
11.75 12 3 25
capacity maximum of 75% of
total project cost in
case of project is
sanctioned from
International funds
Up to 70% of total
project cost
100% of eligible
equipment cost & 90%
Above 1 MW
of civil cost limited to a
and up to 5 MW 12.00 12 3 30
maximum of 70% of
capacity
total project cost in
case of project is
sanctioned from
International funds
Up to 70% of total
project cost
100% of eligible
equipment cost & 90%
Above 5 MW
of civil cost limited to a
and up to 15 12.25 12 3 30
maximum of 70% of
MW capacity
total project cost in
case of project is
sanctioned from
International funds
Up to 70% of total
project cost
100% of eligible
equipment cost & 90%
Above 15 MW
of civil cost limited to a
and up to 25 12.50 10 3 30
maximum of 70% of
MW capacity
total project cost in
case of project is
sanctioned from
International funds

1.3 Biomass Power

Central Financial Assistance (CFA) in the form of interest subsidy will be provided

for bagasse cogeneration project on the following pattern

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 116


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Pressure Interest
Bagasse Co-generation
Configuration Subsidy
40 bar & above 3%
Projects by Cooperative / Public / Joint Sector Sugar 60 bar & above 4%
Mills 80 bar & above 5%
100 bar & above 6%
60 bar & above 2%
Projects in IPP mode in Cooperative / Public / Joint
80 bar & above 3%
Sector Sugar Mills
100 bar & above 4%
60 bar & above 1%
Projects by Private Sector Sugar Mills 80 bar & above 2%
100 bar & above 3%

For projects by cooperative / public sector / joint sector sugar mills in the first category,

the floor rate of interest shall not be lower than 6%. For projects under the other two

categories, a floor rate interest of 8% shall apply. The maximum amount of capitalized

interest subsidy to a bagasse cogeneration project shall be limited to Rs. 400 crore.

Central Financial Assistance (CFA) in the form of interest subsidy will be provided

for Biomass power projects on the following pattern

Pressure Interest
Biomass Power
Configuration Subsidy
Direct combustion, cogeneration, including captive power 60 bar & above 2%
projects 80 bar & above 3%
Atmospheric gasification, includingcaptive power projects - 3%
Projects with MW scale 100% Producer Gas Engines Capital subsidy of Rs. 1.00 crore / MW
Advanced biomass gasification projects Capital subsidy of Rs. 1.00 crore / MW An

additional interest subsidy @ 2% will be provided with floor rate of interest not lower

than 6% for Biomass Power / Cogeneration Projects in all Special Category States, and

Islands. The floor rate of interest for other categories of projects shall not be lower than

8%. The maximum amount of capitalized interest subsidy for any biomass power project

shall be limited to Rs. 2.00 crore. A total capacity not exceeding 100 MW shall be

supported in any State during the 10th Plan. The capital subsidy to projects based on MW

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 117


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

scale 100% producer gas engines shall not exceed Rs. 2.00 crore per project, and to

advanced biomass gasification projects shall not exceed Rs. 8.00 crore per project.

FINANCIAL ASSISTANCE FOR BIOMASS POWER/COGENERATION

(a) Interest Subsidy for Biomass Power Projects (Commercial Projects) (subject to

net rate of Interest, after the interest subsidy, not being less than 11%)

Category Reduction of Interest Rate on Term Loan


a) Forestry based & Agro-based Industrial
2%
residues
b) Energy Plantation; Forestry & Agro Residues 3%

(b) Interest Subsidy for Bagasse/Biomass Cogeneration Projects (Commercial

Projects) (subject to net rate of interest, after the interest subsidy, not being less

than 11%)

Configuration Reduction of Interest Rate on Term Loan


40 bar and above 1%
60 bar and above 2%
80 bar and above 3%

Additional 2% interest subsidy is provided for projects in public sector/cooperative sugar

mill.

(c) OTHER INCENTIVES FOR BIOMASS POWER/CO-GENERATION

PROJECTS

To BIOMASS POWER/CO-GENERATION PROJECTS


SNAs Rs. 0.50 lakh/project; Max. 5.00 lakhs/project
DPR Rs. 1.00 lakh/MW; Max. 5.00 lakhs/project

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 118


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

(d) Financial Assistance for the district level Biomass Assessment Studies under the

Programme

Financial Assistance up to Rs. 1.00 lakh per district, will be provided

IREDA Financial Schemes for Co-generation (Grid-interfaced)

Biomass Co-generation (Including Sugar Industry)

Promoter's
Interest Rate (% Repayment Moratorium Lending
Category Contribution
pa) (yrs) (max) (yrs) Norms
(%)
Project Financing
(a) Small scale cogeneration (except sugar industry) up to 7.5 MW installed capacity with
1. 63 kg/m2 Up to 70% of total
12.50 10 3 30
Pressure project cost
2. 87 kg/m2 Up to 70% of total
12.25 10 3 30
pressure project cost
3. 100 kg/m2 Up to 70% of total
11.75 10 3 30
pressure project cost
(b) Above 7.5 MW installed capacity with
4. 63 kg/m2 Up to 70% of total
12.00 10 3 30
Pressure project cost
5. 87 kg/m2 Up to 70% of total
11.75 10 3 30
pressure project cost
6. 100 kg/m2 Up to 70% of total
11.50 10 3 30
pressure project cost

IREDA Financial Assistance for Biomass Power (Direct Combustion Mode)

Promoter's
Interest Rate (% Repayment Moratorium Lending
Category Contribution
pa) (yrs) (max) (yrs) Norms
(%)
Project Financing
(1 MW to 7.5 MW)
1. 63 kg/m2 Up to 70% of total
12.00 10 3 30
Pressure project cost
2. 87 kg/m2 Up to 70% of total
11.75 10 3 30
pressure project cost
3. 100 kg/m2 Up to 70% of total
11.25 10 3 30
pressure project cost

1.4 Energy from Wastes

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 119


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

MNES Financial Incentives for Energy from Urban, Municipal and Industrial

Wastes

Sl
Programme/Scheme Amount of Subsidy
No
For reducing rate of interest to 6.0%
(4% in case of projects taken up by
Municipal Corporation/Urban Local
Bodies) subject to a maximum of Rs 2
1 Interest Subsidy
crore/MW for waste-to-power
project, Rs 1 crore/MW for fuel-to-
power project and Rs 0.50 crore/MW
for waste-to-fuel project
Financial support for the preparation of
50% of the cost, subject to a maximum
2 DPR/Techno-economic Feasibility Report
of Rs 2 lakh
(TEFR)
Incentive to Municipal Corporation/ Rs 15 lakh per MW
3 Urban Local Bodies for site Rs. 7.5 lakh per MW if the project is
clearance/facilitation/coordinated actions for waste to fuel or fuel to power
Rs 5 lakh per MW
Incentive to SNAs for their coordinated
4 Rs. 2.5 lakh per MW if the project is
actions/monitoring, etc
for waste to fuel or fuel to power
Financial Support for Demonstration
5 Under review
Projects
IREDA Financial Assistance for Waste to Energy

Interest
Repayment Moratorium Promoter's Lending
Category Rate (%
(yrs) (max) (yrs) Contribution (%) Norms
pa)
Project Financing
Up to 70% of
Recovery of energy
12.25 10 3 30 total project
from Industrial Waste
cost
Recovery of energy
from Urban and
Up to 70% of
Municipal Waste 11.00 10 3 30
total project
(i) up to 3 MW 11.50 10 3 30
cost
(ii) above 3 MW & up
to 6 MW
IREDA Financial Assistance for Grid Inter-connection facility for eligible utilities

for Renewable Energy Power Evacuation

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 120


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Interest Promoter's
Repayment Moratorium Lending
Category Rate (% Contribution
(yrs) (max) (yrs) Norms
pa) (%)
Grid Inter- 100% of
connection eligible
facility for equipment cost
eligible utilities 12.50 10 1 30 limited to a
for Renewable maximum of
Energy Power 70% of total
Evacuation project cost

IREDA Financial Assistance for Transmission/Distribution facility for eligible

utilities for Renewable Energy Power Evacuation

Interest Promoter's
Repayment Moratorium Lending
Category Rate Contribution
(yrs) (max) (yrs) Norms
(% pa) (%)
100% of
eligible
equipment
cost
Transmission/Distribution
limited to
facility for eligible
12.50 10 1 30 a
utilities for Renewable
maximum
Energy Power Evacuation
of 70% of
total
project
cost
IREDA Financial Assistance for Alternate Fuel

Interest Promoter's
Repayment Moratorium Lending
Category Rate (% Contribution
(yrs) (max) (yrs) Norms
pa) (%)
Biofuel (Ethanol
Up to 70%
production through
of total
Biomass/Sugar 11.00 8 2 30
project
juice/Molasses and
cost
Biodiesel production)

IREDA Financial Assistance for Fuel Cells

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 121


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Interest Promoter's
Repayment Moratorium Lending
Category Rate (% Contribution
(yrs) (max) (yrs) Norms
pa) (%)
Up to 70% of
Fuel Cells 11.00 8 2 30 total project
cost

HUDCO Financing for Waste Management Projects

Financing Pattern (Other than EWS and Action Plan Scheme)

Interest
Repayment
Sl Extent of Rate (Excl.)
Category
No Finance (%) Interest Tax Period
(%) (Yrs )
Housing (Other than EWS, LIG &
APS)
utility and social infrastructure, 13.50 10
1 80
waste management, land acquisition, 13.75 15
Line of Credit, commercial, building
material

IREDA Financial Assistance for Solar Photovoltaic Systems

Interest Promoter's
Repayment Moratorium Lending
Category Rate (% Contribution
(yrs) (max) (yrs) Norms
pa) (%)
Manufacturing Equipment
Up to 80% of
Solar PV modules &
12.50 6 1 20 total project
systems
cost
Production of SPV Up to 80% of
Cells & silicon 12.50 6 1 20 total project
ingots/wafers for SPV cost
Funding SPV under Market Development Programme
Systems of all
categories except Up to 80% of
pumping 12.50 6 1 20 total project
All cost
applications
RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT)
Up to 80% of 122
SystemsWind-SPV
12.00 10 1 20 total project
Hybrid System
cost
BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

2.0 Solar Energy Technologies

2.1 Solar Photovoltaic Power

MNES Financial Incentives for Solar PV Grid-connected Power Projects

Sl
Programme/Scheme Amount of Subsidy
No
- 2/3rd of the project cost
subject to a maximum of Rs
Solar Photovoltaic Grid-connected Power Projects:
1.2 crore per 100 kW
Solar Photovoltaic Grid-connected Power Projects for niche
- Up to Rs 1 lakh for
applications, namely, voltage support systems at the tail-end of the grid
1 preparation of DPR
in rural areas and rooftop peak-shaving systems in Urban Centres.
- 2.5 % of MNES share
Projects to be implemented by SEBs, SNAs and Private Electric
subject to maximum of Rs 5
Utilities only.
lakh for O&M, data
compilation, etc
MNES Financial Incentives for Solar Photovoltaic Systems (2 years AMC)

Financial Assistance (central subsidy) is available for purchase of various solar PV

systems to certain eligible categories of users. Under the PV water pumping programme a

combination of soft loan and central subsidy can be availed.

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 123


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

(A) For General Areas (excluding all special category States and Islands)
Sl
SPV System Central Subsidy
No
Solar Home System 50% of ex-works cost, subject to a maximum of
Model 1 (18 W module, 1
light) Rs. 2,400/-
Model 2 (37 W module, 2
lights) Rs. 4,550/-
1 Model 3 (37 W module, 1
light, 1 fan) Rs. 4,550/-
Model 4 (74 W module, 2
lights, 1 fan) Rs. 8,440/-
Model 5 (74 W module, 4
lights) Rs. 8,440/-
2 Street Lighting System Rs 9,100/-
Power Plants and other
3 Rs. 1,19,000/kWp of PV array capacity
Community Systems
(i) Rs. 100 / W of PV array used, subject to a maximum of Rs. 2
lakh/system when no soft loan is availed
4 PV Water pumping system
(ii) Rs. 75 / W of the PVarray subject to a maximum of Rs. 2
lakh/system
(B) For special category States and Islands
Sl
SPV System Central Subsidy
No
Solar Home System 90% of ex-works cost, subject to a maximum of
Model 1 (18 W module, 1
light) Rs. 4,300/-
Model 2 (37 W module, 2
lights) Rs. 8,200/-
1 Model 3 (37 W module, 1
light, 1 fan) Rs. 8,200/-
Model 4 (74 W module, 2
lights, 1 fan) Rs. 15,190/-
Model 5 (74 W module, 4
lights) Rs. 15,190/-
2 Street Lighting System Rs 16,390/-
Power Plants and other
3 Rs. 2,14,200/kWp of PV array capacity
Community Systems
Rs. 135/W of the PV array of the system (subject to a maximum of
4 PV Water pumping system
90% of approved ex-works cost)
Eligible categories of Beneficiaries for Central Subsidy

SPV System Eligible Category of Beneficiaries


All categories of individual beneficiaries and non profit
Solar Home
institutions/organisations
Systems
No individual would be given more than one solar lantern
All categories of non-commercial institutions/organisations, State
Street Lighting
Nodal Agencies, Electricity Boards, Panchayats, Zilla Parishads
Systems
and DRDA's
SPV Power All categories of non-commercial institutions/organisations, State
Plants/ Other Nodal Agencies, Electricity Boards, Panchayats, Zilla Parishads
RAGHURAM.C.SORAGAVI
Systems (MBA IN POWER MANAGEMENT)
and DRDA's 124
PV water pumping
All categories of users
systems Systems
BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

SCHEME FOR INTEREST SUBSIDY FOR USERS OF PV SYSTEMS

The interest subsidy scheme is aimed at expanding the commercial market for SPV

products in the country, so that the capital subsidies can be gradually phased out. The

scheme will offer soft loans for the purchase of Solar Photovoltaic (SPV) systems and

power plants. The scheme will be implemented through IREDA and banks for which

MoUs will be signed between MNES and IREDA and banks. Only those SPV systems

and power plants, which conform to the MNES specifications will be eligible for supply

and other benefits under this scheme.

The main features of the scheme are shown in the table below:

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 125


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

S.
Feature Implementation through IREDA Implementation through Banks
No.
Individuals and organizations
Eligible All categories of users including
which do not claim any
1. categories of intermediaries and commercial
depreciation benefit on the
beneficiaries organizations
investment
7% (commercial borrowers who can
claim depreciation benefits) 5%
(individuals and other organizations)
Financial intermediaries who borrow
funds from IREDA for on-lending at
Rate of 5% or 7% rate of interest will be
2. 5%
Interest charged an interest rate of 2.5% or
4.5% respectively by IREDA. Such
intermediaries will not be able to claim
depreciation benefit and the on-lending
arrangement will not be treated as a
lease arrangement.
3. Loan Period 5 years 5 years
4. Moratorium 1 year No Moratorium
Amount of
5. 80% of the cost of the project 85% of the cost of the systems
loan
Upper limits
6. No Limit Rs. 5 lakhs
for a loan
Service
7. 1% of the loan disbursed Rs. 300 per loan disbursed
Charge
All types of SPV systems except
solar pumps are covered under this
scheme. Loans will not be
provided at subsidized rates for
All types of SPV systems except solar
systems that are available with
pumps are covered under this scheme.
capital subsidy, with the exception
Loans will not be provided at
of solar generators for which both
Systems subsidized rates for systems that are
8. subsidies and soft loans will be
covered available with capital subsidy, with the
available during 2002-03.
exception of solar generators for which
For solar home systems installed
both subsidies and soft loans will be
as part of the MNES programme
available during 2002-03
for electrification of remote
villages, banks may provide soft
loans for the unsubsidized
portionof the cost of the systems.
The amount of loan will be up to 85% of the cost of solar lantern. The
Loans for interest rate for individual users will be 5% p.a. in general areas and 3% in
9. Solar the North-Eastern Region. Banks will be available for a service charge of
Lanterns Rs. 100 per loan for solar lanterns. The service charge for IREDA will be
1% of the loan amount disbursed.

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 126


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Soft Loan for PV Water Pumping Systems

Users of PV water pumping systems and intermediaries are eligible to avail a soft loan at

the rate of 5% / 2.5% per annum respectively for 90 % of the remaining unsubsidised part

of the price of the SPV water pumping system. The loan can be repaid in maximum of 10

years in installments, beginning at the end of the first year after sanction of loan.

2.2 Solar Thermal Systems

Financial Grants for Solar Thermal Power Plant

Implemented by the Rajasthan State Power Corporation Ltd. (RSPCL), the Indian

government will provide a grant of Rs 50 crore; the World Bank/Global Environment

Facility (GEF) will provide a grant of $49 million, including technical assistance of $4

million, while the Government of Germany, through KfW, will provide a composite loan

of 250 million DM. The Government of Rajasthan will provide equity of Rs 50 crore, and

a loan of Rs 200 crore, if required. A consultant for preparing the Request for

Qualification (RfQ) and Request for Proposal (RfP) has been finalised.

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 127


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

MNES Financial Incentives for Solar Thermal Systems

Sl
Programme/Scheme Amount of Subsidy
No
Rs 4,000 per sq. m of
Demonstration Programme on Solar Water Heating Systems - For NE installed collector area
1
states, islands, J&K and Sikkim (Special Demonstration Programme) (Rs. 6,000 per sq. m for
States of NE and Sikkim)
Financial assistance:
Rs 3-5 lakh non-
recurring
Rs 0.50 lakh
2 Aditya Solar Shops recurring for two
years

Rs 1 lakh for
publicity

Interest Subsidy

Rate of
Technology Implementing Organisation Category of End-user
Interest
Individual, institution,
5%* (to
Solar water heating system Banks/HUDCO, etc association, small
end-user)
business establishment
IREDA (through financial
intermediaries). IREDA provides Individual, institution,
5%* (to
Solar water heating system loans to financial intermediaries association, small
end-user)
@ 2.5% rate business establishment
of interest
Solar water heating system (any Institutions, trusts,
capacity), solar air heating IREDA (direct or through charitable organisations,
5% *
system, solar desalination financial intermediaries)** etc (non-profit
system, solar swimming pool organisations)
Solar water heating system (any Industry, hotels and other
capacity), solar air heating IREDA (direct or through commercial
7%
system, solar desalination financial intermediaries)** organisations (profit-
system, solar swimming pool making)

* End-users (other than individuals) will have to give an undertaking that no

depreciation allowance will be claimed under Income Tax rules

** The financial intermediaries may charge a spread up to 4% over the rate charged

from them by IREDA

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 128


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

IREDA Financial Package for Solar Thermal Systems

Interest Promoter's
Repayment Moratorium Lending
Category Rate (% Contribution
(yrs) (max) (yrs) Norms
pa) (%)
Manufacturing of Equipment
Up to 70% of
Manufacturers of
13.50 6 1 20 total project
equipment
cost
Equipment Financing
Up to 80% of
Non-profit-making
12.50 6 1 20 total project
Institutional Users
cost
Up to 80% of
Profit-making
12.50 6 1 20 total project
Institutional Users
cost
Up to 80% of
Domestic
12.50 6 1 20 total project
Intermediaries
cost
Other than
Domestic- Up to 80% of
Non-Profit making 12.50 6 1 20 total project
and claiming 100% cost
depreciation

Solar Water Heaters

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

A solar water heater consists of a collector to collect solar energy and an insulated storage

tank to store hot water. Based on the collector system, solar water heaters can be of two

types:

Solar water heaters based on Flat plate

Collectors (FPC based SWH)

Here the solar radiation is absorbed by flat

plate collectors which consist of an insulated

outer metallic box covered on the top with

glass sheet. Inside there are blackened metallic absorbe (selectively coated) sheets with

built in channels or riser tubes to carry water. The absorber absorbs the solar radiation

and transfers the heat to the flowing water.

Solar water heaters based on Evacuated Tube Collectors (ETC based SWH)

Here the collector is made of double layer

borosilicate glass tubes evacuated for

providing insulation. The outer wall of the

inner tube is coated with selective absorbing

material. This helps absorption of solar

radiation and transfers the heat to the water

which flows through the inner tube.

Solar water heating is now a mature technology. Wide spread utilization of solar water

heaters can reduce a significant portion of the conventional energy being used for heating

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 130


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

water in homes, factories and other commercial and institutional establishments.

Inetrnationally the market for solar water heaters has expanded significantly during the

last decade. It is estimated that around 40 million sq. m. of collector area has so far been

installed world wide for heating water. In the country, the collector area so far installed

for water heating is over 650,000 sq. m.

Salient Features

Hot water at 60-80 C for hotels, hospitals, restaurants, dairies, homes, industry

etc.

Solar water heaters (SWHs) of 100-300 litres capacity are suited for domestic

application.

Larger systems can be used in restaurants, canteens, guest houses, hotels,

hospitals etc.

Fuel Savings:

A 100 litres capacity SWH can replace an electric geyser for residential use and saves

1500 units of electricity annually

Avoided utility cost on generation:

The use of 1000 SWHs of 100 litres capacity each can contribute to a peak load saving of

1 MW.

Environmental benefits

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 131


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

A SWH of 100 litres capacity can prevent emission of 1.5 tonnes of carbon-dioxide per

year.

Life: 15-20 years

Approximate cost:

Around Rs. 18000 for a 100 litres capacity SWH

Rs. 110-150 per installed litre for higher capacity systems

Payback period:

2-3 years when electricity is replaced

4-5 years when furnace oil is replaced

6-7 years when coal is replaced

Though the initial investment for a solar water heater is high compared to available

conventional activities, the return on investment has become increasingly attractive with

the increase in prices of conventional energy. The pay back period depends on the site of

installation, utilization pattern and fuel replaced. To offset the high initial investment for

solar water heaters, the Ministry is currently implementing a soft loan programme

through seven designated banks and Indian Renewable Energy Development Agency

(IREDA).

Soft Loan Scheme on Solar Water Heaters

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 132


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Under the Interest Subsidy Scheme of the Ministry, soft loans are provided by the

designated banks for installation of

Solar water heaters based on Flat plate Collectors (FPC based SWH)

Solar water heaters based on Evacuated Tube Collectors (ETC based SWH)

Any individual, institution, association, small business establishment is eligible for this

loan upto 85% of the cost of the system at an interest rate of 5% per annum repayable in

5 years. End-users (other than individuals) will, however, have to give an undertaking

that no depreciation allowance will be claimed under income tax rules. Hotels will not be

eIigible for the subsidized interest rates on loans offered by banks.

Solar water heaters of capacity up to a maximum of 5000 litres are eligible for soft loans

from banks.

The housing cooperatives societies and the developers of real estates are eligible for soft

loans for installing solar water heaters in bulk at an interest rate of 5% since the systems

are ultimately being used by individuals. However, the borrowers will have to give an

undertaking that no depreciation allowance would be availed.

An additional amount of Rs.300 will also be made available by MNES to the banks as

promotional incentive / business development charge for each loan disbursed irrespective

of the size of the system. As soon as a loan is disbursed, an amount of Rs.300 can be

debited by the bank to the MNES interest subsidy account. The funds so collected /

accumulated can be used for the' following purposes and in the following manner by the

bank:

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 133


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Publicity expenses including advertisements, posters, brochures etc.

Commission to motivators / agents who bring in loan applications from potential

buyers of solar products.

Other business development charges relating to solar energy products.

In order to keep the interest of the motivators/agents alive, it is advisable that the

commission to the motivators/agents be paid at the branch level itself and a debit

advice sent to the nodal branch/headquaters.

Soft Loan Scheme on Solar Water Heaters

Terms of Loans under the Bank Scheme

Capacity Up to 2,000 litres of hot water at 60-80C per day


Loan amount 85% of the ex-factory or ex-showroom cost of the system
Interest rate for soft loan 5% per annum
Loan repayment period 5 years
Repayment starts at 3 months after the release of funds to the consumers
For defaulted loans, banks may charge penal interest @ 2%
Penalty for defaulted loans
over and above the stipulated interest rate
Any individual, institution, association, business establishment
Eligibility for loan
etc.
Solar Water Heaters based on Flat Plate Collectors (FPC based SWH) Flat plate
collector specification as per ISI 12933:1992
Suppliers of solar water heaters with BIS (Bureau of Indian
Eligible suppliers
Standards) approved solar collectors
Upper limit of cost of solar water heating systems to be financed by banks (for calculating
loan amount)
System with collector
Approximate capacity Cost
area
1 no. collector system (2
100 litres Rs. 18,000
sq. m approx.)
2 nos. collector system (4
200 litres Rs. 35,000
sq. m approx.)
3 nos. collector system (6 300 litres Rs. 50,000

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 134


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

sq. m approx.)
4 nos. collector system (8
400 litres Rs. 65,000
sq. m approx.)
5 nos. collector system (10
500 litres Rs. 80,000
sq. m approx.)
6 nos. collector system
and up to 20 nos. collector 600 litres to 2000 litres Rs. 14,500 for each collector
system
i.e. for 10 nos. collector
1000 litres Rs. 1,45,000
system (20 sq. m approx.)
For 15 nos. collector
1500 litres Rs. 2,17,500
system (30 sq. m approx.)
For 20 nos. collector
2000 litres Rs. 2,90,000
system (40 sq. m approx.)
For 21 nos. collector
system and onwards up to 2100 litres to 5000 litres Rs. 12,000 for each collector
50 nos. collector system
Suppliers will be responsible for maintenance of the systems
Maintenance guarantee for 5 years and it will form part of unit cost to be financed by
the banks as per above guidelines
The cost indicated above includes the cost of collector, insulated hot water storage tank, system pipings,
instrumentation, controls etc. The cost also includes maintenance responsibility of the systems by the
manufacturers for five years. The bank will provide 85% of the cost of the system as soft loan.

Solar Water Heaters based on Evacuated Tube Collectors (ETC based SWH)

Individual Tube Length: 150 cm

Outer diameter of the tube: 47 mm

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 135


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Eligible Suppliers Suppliers of solar water heaters based on ETCs approved by MNES
System Capacity No. of Storage tank Upper limit of cost of the solar water heating
(notional) Tubes capacity system (Rs.) (for calculating loan amount)
50 litres 7 7 x 1350 = Rs. 9500
75 litres 11 70-80 11 x 1318 = Rs. 14500
100 litres 14 100 14 x 1286 = Rs. 18000
200 litres 28 150-175 28 x 1250 = Rs. 35000
250 litres 34 200-220 34 x 1250 = Rs. 42500
300 litres 40 230-260 40 x 1250 = Rs. 50000
400 litres 52 340-370 52 x 1250 = Rs. 65000
500 litres 64 400-425 64 x 1250 = Rs. 80000
From 600 litres to 2000 litres, 12 tubes per 100 litres. Cost Rs. 1207 for each tube; total cost rounded
off as follows:
600 litres 72 72 x 1207 = Rs. 87000
1000 litres 120 120 x 1207 = Rs. 145000
1500 litres 180 180 x 1207 = Rs. 217500
2000 litres 240 240 x 1207 = Rs. 290000
From 2000 litres to 5000 litres, 12 tubes per 100 litres. Cost Rs. 1000 for each tube
3000 litres 360 360 x 1000 = Rs. 360000
4000 litres 480 480 x 1000 = Rs. 480000
5000 litres 600 600 x 1000 = Rs. 600000
Maintenance Suppliers will be responsible for maintenance of the systems for 5 years and it
guarantee will form part of unit cost to be financed by the banks as per above guidelines.
The cost indicated above includes the cost of collector tubes, back reflector, double jacketed stainless
steel tank with PUF insulation of minimum 50 mm thichkness, collector stand made of mild steel
(powder/plastic coated). The systems may consist of tubes, the number of which may be different than
what has been indicated above. For the pupose of loan, the cost of such a system may be determined
based on the cost of each tube in the same capacity range. For example, the indicative cost of a system
with 12 tubes will be: 12 x Rs. 1318 = Rs. 15800 (approximately). The capacity of the system indicated
is notional since the amount of hot water likely to be delivered depends on the solar radiation
availability which varies from location to location. The cost also includes maintenance responsibility of
the systems by the manufacturers for 5 years. The bank will provide 85% of the cost of the system as
soft loan.
SOLAR COOKERS

MNES Financial Incentives for Solar Cookers

A. Promotional Scheme

i) Incentive to State Nodal Agencies (SNAs) and associated promoters for promotional

activities/service charges, etc:

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 136


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

ii) Support to reputed NGOs/universities/institutions/Regional Test Centres etc

Up to a maximu of Rs. 1.50 lakhs, towards organization of promotional activities like

publicity, cooking demonstrations/competitions, seminars/workshops, evaluation studies,

development of improved models, etc. on solar cookers based on specific proposal

received from them in the prescribed format.

(This support is also extended to SNAs for organizing workshops/seminars/training

programmes/business meets on solar cookers)

iii) Support to manufacturers for taking BIS Approval

Reimbursement of BIS fee (including application and marking fee and test charges),

directly by MNES on 100% basis during 1st year and on 50% basis during further years

of 10th Plan (subject to modification, if any), on submission of approval certificate and

copies of necessary bills/receipts issued by BIS. The BIS standards for Box Solar

Cookers are IS 13429: 2000 (3 parts).

B. Demonstration Scheme on installation of Concentrating Solar Cookers

Support to users* Service charges to SNAs for


Type of solar cooker
(Rs. /%) implementation & monitoring
50% of total cost,
Dish solar cooker
limited to Rs. 2,500/- Rs. 250 per cooker
(Minimum diameter 1.4m)
per cooker
Community solar cooker
50% of total cost,
for indoor cooking
limited to Rs. Rs. 2,500 per cooker
(Minimum aperture area 7
25,000/- per cooker
sq.m)
50% of eligible 1 to 2% of MNES support
capital cost, as depending on system capacity
Solar steam cooking system
agreed upon by the (Higher % for lower capacity
Ministry system)
RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 137
BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

* This amount of support will be available during next financial year also where after it

will be reduced for remaining years of 10th Plan. For solar steam cooking systems the

support is also made available if they are used for other applications also like drying,

sterilization, water pasteurization besides cooking.

ADITYA SOLAR SHOPS

MNES Financial Incentives for Solar Cookers

A. Establishment of shops owned by State Governments/agencies

i) Non-recurring grant : Rs. 5 lakhs for construction/purchase & furnishing or

Rs. 3 lakhs for renovation including rent for one year

ii) Recurring grant : Rs. 0.50 lakhs/year for 2 years

iii) Grant for inauguration : Up to Rs. 35,000/- (to be considered on merit basis)

Rented shops run by Government Agencies are supported only if agencies agree to bear

the rent on a long term basis, after the initial support of MNES.

B. Establishment of private Aditya Shops/Solar Counters

- Rs. 50,000/- per Aditya shop and Rs. 20,000 per solar counter, as a one-

time grant for meeting the expenditure on furnishings and fittings, sign

boards etc.

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 138


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

C. Publicity of Aditya shops

- Rs. 50,000/- per shop/year to a maximum of Rs. 10 lakhs to each state.

2.3 Hybrid Systems

WIND ENERGY SYSTEMS

MNES Financial Incentives for Wind Pumps and Wind Battery Chargers/Wind-

Solar hybrid systems

Sl
Programme/Scheme Amount of Subsidy
No
Rs 20,000-45,000 per wind mill depending on its
1 Wind Pumps
design
75% of ex-works cost subject to a maximum of Rs
2 lakh per kW for community applications, direct
Wind Battery use by Central/state government, Defence, etc
2 Chargers/wind/solar hybrid
systems 50% of ex-works cost subject to a maximum of Rs
1.25 lakh per kW for individuals, academic
institutions and industrial use

3.0 Rural Energy Technologies

3.1 Biogas

Financial Incentives during 2002-2003 under NPBD (Family Type)

Amount of
Category Central Subsidy Central
per plant Subsidy
Northeastern region states and Sikkim, except plain areas of Assam Rs. 11,700/-
Plain areas of Assam Rs. 9,000/-
Jammu & Kashmir, Himachal Pradesh, Uttaranchal (excluding terai region),
Niligiris of Tamil Nadu, Sadar Kursoong and Kalimpong sub-divisions of the Rs. 3,500/-
Darjeeling distt (WB), Sunderbans, Andaman and Nicobar Islands
Scheduled Caste, Scheduled(MBA
RAGHURAM.C.SORAGAVI Tribe,IN
desert
POWERdistricts, small and marginal
MANAGEMENT)
farmers, landless labourers, terai region of Uttaranchal, Western Ghats and Rs. 2,300/-
139
other notified hilly areas
All Others Rs. 1,800/-
BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Other Forms of Incentives for Biogas Plants under NPBD

Turn-key job fee linked with three years free maintenance warranty:

A sum of Rs 800 per plant is given in northeastern region states (excluding plain areas of

Assam), Sikkim, Jammu & Kashmir, Himachal Pradesh and hilly districts of Uttar

Pradesh, Andaman & Nicobar Islands and Lakshadweep, whereas Rs 700 per plant is

given in all states.

Financial support for repair of old non-functional plants:

Financial support limited to 50% of the rate of Central subsidy, as applicable for different

categories of beneficiaries and areas, is admissible for repair and revival of family type

biogas plants, which are at least five years old and which are in disuse at present for want

of structural repairs.

Service Charges to State Nodal Departments and Implementing Agencies

Target Range
Amount of Service Charges
(Nos.)
100-3,000 plants Rs 0.50 lakh + Rs 300 per plant in excess of 200 plants
3,001-7,000
Rs 8.90 lakh + Rs 150 per plant in excess of 3,000 biogas plants
plants
Above 7,001 Rs 14.90 lakh + Rs 100 per plant in excess of 7,000 plants subject to
plants a maximum of Rs 30 lakh

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 140


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Northeastern region states, Jammu & Kashmir and Sikkim are given grant for specific

staff sanctioned at the state and for districts on 100% basis.

Communication and Publicity

Target Range (Nos.) Amount


Up to 1,000 plants Rs 1 lakh
1,001-10,000 plants Rs 2.50 lakh
More than 10,000 plants Rs 5 lakh

Demonstration on the use of digested slurry: Rs. 50,000 per demonstration

Cattle dung based power generation plants and marketing of manure

(i) Rate of CFA

Installed capacity of Power Station Central Financial Assistance (CFA) rates


100-250 kW Rs. 30,000 per kW
250 - 500 kW Rs 75.00 lakh plus Rs. 25,000 per kW (ii)

Financial support for preparation of DPR: Rs. 1.00 lakh per site for projects up to 250

kW, Rs. 2.00 lakh per project above 250 kW

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 141


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

3.2 Improved Chulhas (Cookstoves)

Financial Incentives during 2001-2002 under NPIC for Chulhas

Amount of Central
Type of Chulha
Subsidy per chulha
Durable fixed type chulhas with chimneys
(i) N.E. Region states and Sikkim Rs 270/-
(ii) Other states Rs 80 /-
Portable Chulha
(i) N.E. Region states & Sikkim Rs. 135/-
(ii) Islands and notified hilly and desert areas Rs. 75/-
(iii) SC/ST beneficiary in other States/UTs Rs. 50/-
High altitude chulha
(i) N.E. Region states & Sikkim Rs. 450/-
(ii) Jammu & Kashmir, Uttaranchal, Himachal Pradesh
Rs. 450/-
and Hilly Districts of West Bengal
Hilly Districts of West Bengal Maximum up to Rs. 250/-

Other Forms of Incentives for Chulhas under NPIC

SEWs charges for construction and maintenance of improved chulhas

Single pot fixed chulha with chimney - Rs 30 per chulha

Two/three pot fixed chulha with chimney and community chulha - Rs 40 per chulha

Dealership support for fair price shops, and cooperative stores and private

retailers - Rs 5 per chulha

Support for organisational infrastructure - Rs 4 per chulha to state government

nodal departments and agencies

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 142


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Support for state-level publicity awareness: A minimum support of Rs 30,000 is

given to the states and agencies having an annual target of up to 15,000 improved

chulhas. The other states and agencies which have an annual target of more than

15,000 chulhas are entitled to receive funds @ Rs 2 per chulha, with an upper

ceiling of Rs 2.50 lakh

Training support: @Rs 16,000 per SEW Course; Rs 10,000 per Trainers Training

Course; Rs 27,000 per Entrepreneurship Development Course; and Rs 1,000 per

Users Course

Support for Technical Back-up Units - @ Rs 8 lakh to Rs 10 lakh per year

Support for Fixed Chulha Moulds - @ Rs 1,500 per village panchayat

4.0 New Technologies

4.1 Battery-operated Vehicles

MNES Financial Incentives for Battery-operated Passenger Vehicles

Sl
Programme/Scheme Amount of Subsidy
No
50% of the price of BOPV excluding
Battery-operated Passenger Vehicles
1 excise duty, sales tax and all other
(BOPVs): 10 seaters and bigger capacity
levies.
Subsidy and Incentives:

The amount of subsidy will be fixed at the rate of Rs 125 per peak Watt subject to

maximum of Rs 1,50,000 to be reimbursed to the manufacturer/supplier upon satisfactory

proof of the supply and installation of system. Further 100% depreciation is available in

the first year.

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BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

IREDA Financial Assistance for Battery Powered Vehicles

Interest Moratorium Promoters


Repayment Lending
Category Rate (% Contribution
(yrs) Norms
pa) (max) (yrs) (%)
Manufacturing of Equipment
Battery- Up to 70% of
powered 12.50 8 2 30 total project
Vehicles cost
Equipment Financing
Battery- Up to 75% of
powered 12.50 5 1 25 total project
Vehicles cost

5.0 Energy Efficiency

5.1 Energy Efficiency Projects and Equipment

IREDA Financial Package for Energy Efficiency Projects and Equipment

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 144


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Interest Moratorium
Repayment Promoters Lending
Category Rate (%
(yrs) Contribution (%) Norms
pa) (max) (yrs)
Project Financing
Up to
70% of
Commercial and Industrial sector 11.50 10 2 30 total
project
cost
Up to
70% of
Domestic sector 11.00 5 1 30 total
project
cost
Up to
70% of
Agricultural sector 11.00 10 2 30 total
project
cost
Energy Efficiency/Conservation Systems and Equipments (including DSM)
Equipment Financing
Up to
75% of
Commercial and Industrial Sector 12.00 10 2 25 total
project
cost
Up to
75% of
Domestic sector 11.50 5 1 25 total
project
cost
Up to
75% of
Agricultural sector 11.50 10 2 25 total
project
cost
Manufatcuring of Equipments/Facilities
Up to
70% of
All Energy Efficiency/Conservation
12.50 8 2 30 total
systems and Equipment
project
cost
6.0 Miscellaneous

6.1 Miscellaneous Schemes

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 145


BUSINESS OPPORTUNITIES FOR RENEWABLE ENERGY IN INDIA

Interest Moratorium Promoters


Repayment
Category Rate (% Contribution Lending Norms
(yrs)
pa) (max) (yrs) (%)
Infrastructure loan The advance should not
5.00 8 2 -
under BDA Scheme exceed Rs. 3 lakhs
Renewable
Line of Credit: Minimum Rs.
Energy/Energy
10.00 10 2 - 25 lakhs & maximum Rs. 1
Efficiency umbrella
crore
Financing Schemes
The term loan will be up to
70% of last 3 years average
expenditure on promotional
efforts (or the previous year's
of operation in case of
applicants with less than 3
Market Development years of operation). In case of
Assistance (including 10.50 5 1 30 new companies/enterprise the
Export Promotion) term loan will be uo to 70%
of the estimated expenditure
for the activity. Minimum
loan of Rs. 2.50 lakhs and a
maximum of Rs. 10.00 lakhs
per client subject to
availability.
Establishment of
Energy Centers 12.50 7 2 30 Up to Rs. 50 lakhs
(a) A1 & A Cities
(b) B1 & B2 Cities 12.00 7 2 30 Up to Rs. 30 lakhs
(c) Other cities &
District/
11.50 7 2 30 Up to Rs. 20 lakhs
Block/Taluk/Mandal/
Tehsil/Headquarters
Electrification of
remote villages
11.00 10 2 20
(projects implemented
in ESCO model)

RAGHURAM.C.SORAGAVI (MBA IN POWER MANAGEMENT) 146

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