Four s services -solar energy report
- 1. Research4India India Solar Energy Report June 2012 Private & Confidential
- 2. Table of Content 1. Solar Energy in India – Introduction………………………………………………………………………………………. 3 2. Solar Energy Segments………………………………………………………………………………………………………….. 9 3. Drivers for Solar Market ……….……………………………………………………………………………………………... 18 4. Government Incentives/NSM……………………………………………………………………………………………….. 23 5. Investment Opportunities in the Solar Sector ………..…………………………………………………………….. 29 6. Key Issues/Challenges ………………………………………………………………………………………………………….. 37 7. Companies …………………………………………………………………………………………………………………………. 45 Manufacturers of Cells/Modules/Systems Developers of Solar Power Plants i. Moser Baer Photovoltaic (MBPV) i. Lanco Solar ii. XL Energy ii. Moser Baer Clean Energy iii. Websol Energy iii. Azure Power iv. Indosolar iv. SunBorne v. Tata BP Solar v. Kiran Energy vi. Titan Energy vii. Solar Semiconductor viii. Kotak Urja ix. Photon Energy x. Maharishi Solar xi. Vikram Solar xii. Reliance Solar xiii. PLG Power xiv. HHV Solar Private & Confidential 2
- 3. Untapped potential of Renewable Energy in India India has an enormous potential of renewable energy (~XXMW) across various sources. However India has realized ~xx% (~xx MW) , leaving a huge untapped potential. This is xx% of total installed power capacity However, the contribution of renewable energy to real power generated is only x%. As part of the National Action Plan on Climate Change, (NAPCC) the government has set the target of increasing contribution of renewable energy sources in power generations to x% by 2015. The share will continue to grow steadily with renewable energy expected to contribute as high as xx% by 2050. Installed Capacity for Renewables in India Renewable Potential Vs Achievements in India RE Sources Potential (MW) Achieved (MW) CAGR 23% Wind XX XX Small Hydro (up to XX XX 25 MW) Biomass + Bagasse XX XX Solar and others XX XX 1 TW = 1000,000 MW 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Source: MNRE Source: MNRE India has realized less than XX% of its installed renewable energy capacity, leaving huge untapped opportunity Private & Confidential 3
- 4. Methods of harnessing solar power Installed Capacity for PV in India (MW) Solar Photovoltaic Solar Photovoltaic (SPV) technology converts light directly into electricity. CAGR 57% India has current installed capacity of XXMW (PV systems and power plants). PV installations in India today almost entirely comprise small capacity applications. Ministry of New and Renewable Energy (MNRE) is aiming to achieve XXMW grid-connected SPV capacity by 2012. 2009 2010e 2011e 2012e 2013e Source: European Photovoltaic Industry Association Solar Thermal Solar Thermal technology converts light first into heat and then electricity. Solar thermal can be used for heating and drying and for power generation (concentrating solar power, CSP). In India, there is no power generation currently using solar thermal. Solar thermal has been used exclusively for heating and drying. India ranks ninth worldwide in production of solar thermal power systems. Solar PV technology has always been the main technology adopted for solar power in India. Solar thermal is largely confined to heating and drying applications Private & Confidential 4
- 5. Status of Solar Energy in India Solar Power Capacity Sources / Systems Cumulative Achievement Grid-interactive Power PV constitutes a miniscule part in India’s installed Solar Power XX power generation capacity with grid connected From all renewable sources XX solar PV generation at a mere XXMW Off-grid Power Solar PV Power Plants XX From all renewable sources XX Total Solar Power XX Decentralised Energy Systems (Off-grid) Solar Street Lighting XX Bulk of India’s installed SPV capacity is in the form of non-grid applications. They are most visibly Home Lighting System XX seen in lighting applications (street lighting, and home lightning systems), small electrification Solar Lantern XX systems and solar lanterns in rural areas. SPV Pumps XX Solar Water Heating In India, solar thermal technology has been used XX exclusively for heating and drying. System Private & Confidential 5
- 6. Availability of public and private capital PE deals in solar in the last 4 years Date Investor (s) Company Value($Mn) Oct-11 GE Energy Financial Services Company 1 XX Jun-11 IFC Company 2 XX New Silk Route, Bessemer Ventures and Argonaut Company 3 XX Jan-11 Ventures Oct-10 IFCI Ventures Company 4 XX Oct-10 New Silk Route, Argonaut, Bessemer Company 5 XX Oct-10 IFC Company 6 XX Aug-10 Blackstone Group Company 7 XX Jul-10 Bessemer Venture, IFC Company 8 XX Apr-10 IFC Company 9 XX Mar-10 IFC, Helion Venture Partners, Foundation Capital Company 10 XX Dec-09 Khosla Ventures, General Catalyst Partners Company 11 XX May-09 Pangea Capital Company 12 XX Company 13 XX Nov-08 Sherpalo Ventures, KPCB, Applied Ventures Oct-08 General Catalyst Partners Company 14 XX Sep-08 Helion Ventures, Foundation Capital Company 15 XX Morgan Stanley, Credit Suisse, IDFC PE, Nomura Company 16 XX Sep-08 Holdings, Others Mar-08 Aureos India, SIDBI VC Company 17 XX Investing in solar power plants could fit in PE portfolio owing to the fact a long power purchase agreement with a government-backed entity assures them of a stable revenue flow Private & Confidential
- 7. Incentives under National Solar Mission Incentives under National Solar Mission Incentives for power plant Incentives for solar PV/thermal developers manufacturers NTPC Vidyut Vyapar Nigam Generation Based Incentive Semiconductor Policy and (NVVN) for large scale power (GBI) for roof top and small Special Incentive Package PV plants (5-25 MW) and scale power plants (1-5 MW) Scheme thermal plants (20-100 MW) Reduce the cost of grid connected NVVN will enter into PPA with solar 20% subsidy on capital expenditure solar systems power developers to purchase solar for SPV project in a SEZ while 25% GBI to power developers: Rs.12/ power @ CERC tariff (Rs 17.91/kWh subsidy in case of a non SEZ. KWh for SPV and of Rs.10/KWh for PV and Rs. 15.40/kWh for No Central Excise duty on specific for Solar Thermal Power Plants thermal) capital equipment, critical materials GBI for a period of 10 years NVVN to get equivalent MW from and project imports NTPC Low interest rate loans NVVN will sell bundled power to Promote solar water heating systems State utilities at the rates determined ensuring that applications below 80 as per CERC regulations °C are solarised Aims at 100 MW power by 2013 Aims at 1,000 MW power by 2013 Aims at 4-5 GW capacity by 2020 Private & Confidential
- 8. High cost of solar power Cost of power generation (Rs /kWh) The estimated unit cost of generation of electricity from SPV and solar thermal route is much higher than the electricity obtained from conventional fossil fuels. Thermal Solar Thermal SPV Source: TERI Min Max Cost of setting up power plants (Rs Mn/MW) The primary reason for the high cost of solar power is the high capital cost. Component Amount (Rs Mn) Solar panel arrays XX Inverter XX Balance of System XX Installation XX SPV cost breakup Others XX Total XX Thermal Wind Nuclear Solar Thermal SPV Source: CERC The main issue impending the solar industry is high cost of power generation which is due to high capital cost Private & Confidential
- 9. Manufacturers of PV cells/modules/systems Product PV Solar Company Location Capacity Wafers Cells Modules Systems Thermal Future Plans Moser Baer Photovoltaic Delhi XX √ √ √ XX XL Energy Hyderabad XX √ √ XX Websol Energy Kolkata XX √ √ XX Indosolar Noida XX √ XX Tata BP Solar Bangalore XX √ √ √ √ XX Titan Energy Hyderabad XX √ √ XX Solar Semiconductor Hyderabad XX √ √ XX Kotak Urja Bangalore XX √ √ √ XX Photon Energy Hyderabad XX √ √ √ XX Maharishi Solar Delhi XX √ √ √ √ √ XX Vikram Solar Kolkata XX √ √ XX Reliance Solar Mumbai XX √ √ XX PLG Power Mumbai XX √ √ XX HHV Solar Bangalore XX √ √ XX Private & Confidential 9
- 10. Websol Energy Systems BACKGROUND AND OVERVIEW PRODUCTS AND SOLUTIONS Established in 1990, Websol Energy Systems Ltd. (formerly Webel SL Products/solutions Details Energy Systems Ltd.) is a leading manufacturer of photovoltaic Solar Photovoltaic Crystalline Cells monocrystalline solar cells and modules. Crystalline Modules The Company’s production facility is located at Falta SEZ, West The product range from 5 watt to 220 watt caters to Bengal and has the manufacturing capacity of 42MW. needs ranging from rural electrification to big power plants. Websol solar modules have been certified by various reputed institutes like Underwriters laboratories Inc , TUV Rhienland MANAGEMENT Germany, EuroTest Laboratori S.R.l Italy and CSA International Canada. Name/Designation Profile The Company manufactures cells and modules for stand-alone and Mr. S L Agarwal, Mr. Agarwal is a commerce graduate from Kolkata Founder and University and has more than 25 years experience in grid connected projects. managing different types of businesses and organisations. Managing Director Websol primarily focuses on the international markets: Mr. Agarwal is a recipient of the prestigious Udyog Ratna Award from the President of India and Shiromani Award − In FY10, it exported more than 99% of its production to Europe from the Indian Institute of Economic Studies in 1987. He and USA is also a core committee member of Indian Semiconductor − It is selling its products to system integrators and project Association Solar PV Cell. developers BUSINESS STRATEGY − In order to address customer enquiry and develop customer relations it has set up offices at Germany and US The Company plans to increase the capacity to XXMW by 2011 and In India, the companies operations are largely focused to the state to XXMW by 2012. It expects to grow peak revenues to Rs XXbn of West Bengal once XXMW is fully commissioned, and to Rs XXbn when XXMW is commissioned. Private & Confidential 10
- 11. Websol Energy Systems REVENUES (EXPORTS AND DOMESTIC) EBITDA AND EBITDA MARGIN FY08 FY09 FY10 FY11 FY08 FY09 FY10 FY11 FY12 EBITDA (Rs Mn) EBITDA Margin (%) FY’12 EBITDA : Rs -1,123mn PAT AND PAT MARGIN RETURN ON NET WORTH AND RETURN ON CAPITAL EMPLOYED FY08 FY09 FY10 FY11 FY08 FY09 FY10 FY11 Net Profit (Rs Mn) PAT Margin (%) RoE RoCE FY’12 PAT : Rs -1,489mn Private & Confidential 11
- 12. Developers of solar power plants Capacity Under Company Location Current Future Plans implementation Lanco Solar Delhi XX XX XX Moser Baer Clean Energy Delhi XX XX XX Azure Power Delhi XX XX XX SunBorne Gurgaon XX XX XX Kiran Energy Mumbai XX XX XX KVK Energy Hyderabad XX XX XX Rajasthan Sun Technique Mumbai XX XX XX (Reliance Power unit) Private & Confidential 12
- 13. About Research4India Research4India is the research services arm of Four-S Services Pvt Ltd. It provides regular research reports on key sectors of the Indian economy, and large unlisted companies in these sectors. These reports are available on www.research4india.com, as well as from leading international research sellers like Thomson Reuters, Bloomberg, Research and Markets, CapitalIQ etc. About Four-S Services Founded in 2002, Four-S Services is a financial boutique providing Research, Financial Consulting and Investment Banking services. We have executed more than 100+ mandates across diverse range of industries for Indian as well as global companies, investment firms and private equity and venture capital firms. Our clients value our focused, actionable advice which is based on deep domain expertise in Education, Financial Services, Media & Entertainment, Healthcare, Consumer Goods, Automotive, Energy, Logistics and Manufacturing. For further information on the company please visit www.four-s.com Disclaimer The information contained herein has been obtained from sources believed to be reliable but is not necessarily complete and its accuracy cannot be guaranteed. No representation, warranty, guarantee or undertaking, express or implied, is made as to the fairness, accuracy or completeness of any information, projections or opinions contained in this document. Four-S Services Pvt. Ltd. will not accept any liability whatsoever, with respect to the use of this document or its contents. This document has been distributed for information purposes only and does not constitute or form part of any offer or solicitation of any offer to buy or sell any securities. This document shall not form the basis of and should not be relied upon in connection with any contract or commitment whatsoever. This document is not to be reported or copied or made available to others. Four-S may from time to time solicit from, or perform consulting or other services for any company mentioned in this document. Copyright The report and the content therein are property of Four-S Services Pvt Ltd. Subsribers to this product are authorised to use it for internal purposes. Any resale or unauthorised recirculation are strictly prohibited. Private & Confidential
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