How Companies Are Buying Clean Energy in India: Lessons from 3 Years of the Green Power Market Development Group

How Companies Are Buying Clean Energy in India: Lessons from 3 Years of the Green Power Market Development Group

• 1.
  HOW COMPANIES ARE BUYINGCLEAN ENERGY IN INDIA Deepak Krishnan, Manager, WRI India
• 2.
  TODAY’S SPEAKERS • AlexPerera, Deputy Director, Energy Program, WRI • Deepak Krishnan, Manager, Charge, WRI India • Vince Digneo, Sustainability Strategist, Adobe • Sujatha Ganapathy, Senior Manager – Site Operations, Adobe
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  FLOW OF THEPRESENTATION I. Setting the Stage II. About Green Power Market Development Group (GPMDG) III. Sector Snapshot – India IV. What Does GPMDG Do? V. Adobe’s Experience in India VI. Building on India Work Internationally
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  SETTING THE STAGE
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  TRADITIONAL MARKETS (USAAND EU) HAVE RETAINED THEIR PRIMACY, BUT OTHER REGIONS, PRIMARILY ASIA, ARE CATCHING UP Source: Corporate Renewable Energy Procurement Monthly, December 2016, Bloomberg New Energy Finance
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  CLEAN ENERGY MINISTERIALCAMPAIGN http://www.cleanenergyministerial.org/Our-Work/Campaigns/Corporate-Sourcing-of- Renewables Goal: get more companies to commit powering operations with renewables and deploy tools and resources to enable more companies large and small, to do so.
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  WHAT IS GREENPOWER MARKET DEVELOPMENT GROUP (GPMDG)?
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  EASY TO REMEMBERMNEMONIC…  • Good Policies Make Demand (for corporate RE) Grow • … if you are not a mnemonic fan… • Green Power Market Development Group
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  GPMDG: A PARTNERSHIPOF WORLD RESOURCES INSTITUTE (WRI) AND CONFEDERATION OF INDIAN INDUSTRY (CII) • Aggregates demand and facilitates deals • Creates interactive platform for buyers, sellers and government • Maps energy requirements of industry • Advocates government to address policy and regulatory issues
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  GPMDG BENEFITS TOINDUSTRY • Help fulfil RPO obligations and green mandates for industry • Connect industry to top RE suppliers • Address policy and regulatory issues faced by industry
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  2000 GPMDG founded and joint by11 major U.S. businesses. 2005 GPMDG model replicated in Europe. 2012 GPMDG launched in India and has been making tangible progress. 2013 U.S. utility- customer engagements 2014 Corporate RE Buyers’ Principles launched in U.S. WRI’S WORK WITH CORPORATE RE BUYERS
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  Green Power MarketDevelopment Group - India Transaction support for iconic companies Policy advocacy Demand aggregation/ CollabSolar Supported industry representation in convincing Karnataka electricity regulator to waive off grid usage charges for solar projects Provided feedback on the amendments to the captive generation rules by Ministry of Power Started in 2013 in India to replicate WRI’s global renewable energy initiatives. Today, 200+ MW projects in various stages WRI INDIA AND CII AIM TO SCALE UP RENEWABLE ENERGY (RE) IN INDIA BY ENGAGING WITH PRIVATE SECTOR
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  MEMBERS OF GPMDGINDIA
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  SECTOR SNAPSHOT: INDIA
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  DRIVERS OF CHANGEIN INDIA National • 175 GW of RE by 2022 (100 GW solar, 60 GW wind) • 40% of installed capacity to be non-fossil fuel based by 2030 • Electricity in all houses by 2019 • 100 Smart Cities program State • Green Energy Corridor to ensure evacuation from RE plants and inter-state transfer of green energy • States developing strong RE policies, “electricity for all” plans http://mnre.gov.in/file-manager/UserFiles/Achievements-of-Power-Coal-and-MNRE-Nov2015- English.pdf
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  THEORY OF REPROCUREMENT: BUSINESS CASE Diesel power ₹ 14 ₹ 30 Grid power ₹ 6.3 ₹ 8.4 Solar power ₹ 6.0 ₹ 6.5 Wind power ₹ 5.5 ₹ 6.5 Cost per kWh of electricity from various sources in India, 2016 3.6 % 3.9 % 3.8 % 3.9 % 4.8 % 5.7 % 3.3 % 5.3 % HT Commercial HT Industrial LT Commercial LT Industrial % average annual increase in electricity tariffs (FY13-17) TANGEDCO BESCOM • Fossil fuel-based electricity prices are rising sharply and continuously • Power deficit is a critical business risk • RE is already cheaper or competitive with grid power and supplements/ augments it
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  THEORY OF REPROCUREMENT: REGULATORY COMPLIANCE AND SUSTAINABILITY COMMITMENTS • Renewable Purchase Obligations (RPOs) mandate businesses that procure power from third parties to procure a share of such energy from renewable energy sources • 24 Indian states have notified RPOs • Obligated buyers can also procure Renewable Energy Certificates (RECs) in lieu of direct RE to fulfil their RPO compliance. • Enforcement of penalties for RPO non- compliance is slowly becoming the norm. In Karnataka, non-compliance penalties mandate purchase of RECs to the tune of 110% of the shortfall. • Consumers increasingly prefer products/ services of companies that adhere to the principles of sustainability • Reducing Green House Gas (GHG) emissions by shifting to renewable energy is proven to be an effective way of reducing impacts on the environment. Forums like the India GHG Program help businesses plan such strategies. • Corporates are increasingly aware of this and consider it as one of the elements of their CSR strategy. They also include this as part of their brand positioning by communicating to their consumers about their leadership in sustainability Regulatory Compliance Sustainability Commitments
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  ENABLERS OF CORPORATERE PROCUREMENT Open Access Mechanism Group Captive Scheme Gross/Net Metering REC Mechanism Accelerated Depreciation
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  CHALLENGES FOR CORPORATERE PROCUREMENT IN INDIA •Maharashtra, Karnataka – additional surcharges for open access purchases •Group captive amendments •Non uniform net/gross metering rules across states
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  WORK IN INDIA
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  POLICY FOCUSED ACTIVITIES •Karnataka, Tamil Nadu: Steering committee based approach • Maharashtra: Evaluating a sub-committee based approach
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  WRI’s Experience HelpingCorporations Buy Renewable Energy WRI’s CollabSolar projectWRI’s support to BIAL’s solar procurement WRI’s support to MWC’s aggregated RE procurement WRI supported Bangalore International Airport’s solar procurement by: • Filling-in knowledge gaps at the strategy level • Providing decision making tools • Supporting competitive procurement of solar power
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  ADOBE’S EXPERIENCE IN INDIA Vince Digneo,Sustainability Strategist, Adobe Sujatha Ganapathy, Senior Manager – Site Operations, Bangalore, Adobe
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  $5.85B FY2016 Revenue Adobe is oneof the largest and most diversified software companies in the world . 34 Years of revolutionizing industries 1%+ Pre-tax profits given to the community ~3,700 Patents* 73% Of employees work in LEED certified workspaces ~16,000 Employees in 37 countries * As of December 2016
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  Adobe’s Renewable EnergyStrategy 25 Onsite Collaboration: NGO’s, peers, governments Energy Efficiency Offsite PPA’s Inside Adobe Outside Adobe
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  Adobe Bangalore
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  WRI’s CollabSolar project Singlelarge bundle of demand for rooftop solar power Buyers of various sizes Economies of scale Cheaper pricing Seller Concept Process Lessons learned Convening WRI’s support to BIAL’s solar procurement WRI’s support to MWC’s aggregated RE procurement WRI’s Experience Helping Corporations Buy Renewable Energy
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  WRI’s CollabSolar projectWRI’ssupport to BIAL’s solar procurement WRI’s Experience Helping Corporations Buy Renewable Energy Concept Process Lessons learned Socializing the concept (by WRI) Data collection from interested buyers (by WRI) Preliminary site visits (by WRI) Preparation and release of Request for Information (RFI) document (by WRI) Site visits and submission of proposals (by Sellers) Preparation and release of the RFP document (by WRI) Educating the buyers about decision making (by WRI) Analysis & screening of responses to RFI (by WRI) Analysis of the proposals (by WRI) Selection of the winners (by buyers) WRI’s CollabSolar projectWRI’s support to BIAL’s solar procurement WRI’s support to MWC’s aggregated RE procurement
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  WRI’s Experience HelpingCorporations Buy Renewable Energy Concept Process Lessons learned Aggregate bundles at industrial park level to allow for fluctuations of demand and supply Segregate bundles using 2x2 matrix - based on nature of buyer (commercial / industrial) and preference of business model (Capital investment / PPA) Addressing weekend (dynamic) demand, deemed generation & net-metering Addressing the data collection problems Clarify on “CollabSolar rebate” Vs “Cross subsidy within the buyers” Roof space and ownership type Sellers are expected to give an individual price to each buyer based on their credentials and offer a uniform discount that is reflective of the CollabSolar benefit. In case of buyers who operate out of leased spaces, sellers are not comfortable with a third-party PPA based rooftop solar PV installation. Tripartite agreement between the seller, landlord and the buyer is a possible solution in such cases. Neither the sellers nor the buyer wants to pay for the unconsumed power over the weekends. Net- metering is possible solution in such cases. Signing Non-Disclosure Agreements (NDAs) and having detailed clauses about access/ ownership in the next phase can address most of the security concerns of buyers. For MNCs, capital investments need changes in corporate charter and clearance from the head quarters WRI’s CollabSolar projectWRI’s support to BIAL’s solar procurement WRI’s support to MWC’s aggregated RE procurement
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  WRI’s Experience HelpingCorporations Buy Renewable Energy WRI’s CollabSolar project Socializing the concept and identifying the business models WRI met with all the buyers to socialize the concept. Mahindra’s presence was ensured in all the meetings to alleviate concerns about conflict of interest and confidentiality of data. WRI has, with Mahindra’s support, collected data about all aspects of electricity consumption and tariffs. Two feasible business models were presented to buyers after rigorous data analysis. Capacity building for decision making WRI organized a workshop for the interested buyers. RE sellers explained various business models, their offerings and also clarified the concerns of buyers. All the participants were provided with a detailed financial analysis and FAQ documentation. Facilitating the transaction Buyer seller meetings were organized between interested parties. Site visits for detailed assessments and proposal submissions were also facilitated. WRI’s support to BIAL’s solar procurement WRI’s support to MWC’s aggregated RE procurement
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  A GLOBAL APPROACH
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  WRI’S GLOBAL RENEWABLEENERGY WORK: • Deep dive: – China – India – United States • Light touch, with partners: – Vietnam • Exploring: – Colombia – Indonesia – Kenya – Mexico – Philippines
• 33.
  EVENTS FOR IMMEDIATEENGAGEMENT • Enabling Private Sector Clean Energy Investment in South and Southeast Asia; March 27-28, Bangkok • ConnectKaro, April 5-7, New Delhi • Clean Energy Ministerial, June 6-8, Beijing
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  EVENT: ENABLING PRIVATESECTOR CLEAN ENERGY INVESTMENT IN SOUTH AND SOUTHEAST ASIA March 27-28, 2017 Radisson Blu Plaza Hotel, Bangkok, Thailand Details, registration: http://wri-india.org/events/enabling-private-sector-clean-energy-investment- southeast-and-south-asia Attendees • Leading global and regional corporations • Asia-based manufacturers • Government officials from India, Indonesia, Philippines, and Vietnam Objectives • Showcase corporate clean energy goals • Highlight strategies to operationalize clean energy goals within corporate supply chains in Asia • Explore country policies to enable more and faster deployment of clean energy investment Outcomes • Policy recommendations for clean energy investment in key Asian markets • Aggregate corporate demand into bankable deals for financing solar, energy efficiency, and other solutions at scale
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  RECOGNIZING FUNDERS Strategic CoreFunding Partners Bloomberg Philanthropies; Agence Française de Développement (AFD); Irish Aid – Department of Foreign Affairs and Trade; Ministry of Foreign Affairs of the Netherlands; Royal Danish Ministry of Foreign Affairs; Swedish International Development Cooperation Agency (SIDA)
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  THANK YOU Deepak SriramKrishnan Manager, WRI India [email protected]