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Wind Power Investment Opportunities:

For Independent Power Producers

Suzlon Energy Limited

• Role of wind turbine manufacturers in India

• Opportunity for IPPs: The Indian Contexto Winds of Change in India

o Wind Energy: Answer to Power Sector Challenges

o Investment Imperatives for IPPs

o Overview of Market Framework

• Regulatory and Policy Environment in Indiao Regulatory Support: State – Wise Tariff Structure (Existing)

o SUO MOTO CERC Tariff Order: For Wind Zone 1

o SUO MOTO CERC Tariff Order: For Wind Zone 2

o SUO MOTO CERC Tariff Order: For Wind Zone 3

o SUO MOTO CERC Tariff Order: For Wind Zone 4

o Conducive Policy Environment

Structure of the Presentation

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Suzlon: Global Scenario

Resources & Capabilities Bandwidth

Integrated Supply Chaincapacities for timely

deliveries and long term operations & maintenance

support

Secured Land Resourcesfor better planning,

flexibility & development of large scale wind park

projects

Power Evacuation capacity blocking & ability to develop

grid infrastructure like sub-stations and

transmission lines

Project & Financial Planning assistance

from experienced domain experts in wind energy and banking & finance sectors

Wind Resource Assessmentwith state-of-the-art

technology and expertise for more accurate & scientific

estimation

Value Added Services to assist on financial closure,

regulatory approvals, PPAs, CDM registration and CSR

Life Cycle Asset Management

with a truly comprehensive O&M

contract and a dedicated CRM team

End to End Solution with single source coordination & accountability over the entire

project life cycle for hassle-free experience

Wind TurbineManufacturers

In India

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Opportunity for IPPs:

The Indian Context

Winds of Change in India• Wind energy market - a significant opportunity

for IPPs

• Key drivers of paradigm shift:

o Investment Conducive Regulatory Environment ~ CERC Tariff Regimes

o New policy Initiatives ~(GBI, RPS/RPO, RECs)

o Rising power demand

o Mounting pressure for action on climate change

o Inherent growth potential of wind energy sector

Source: Suzlon Internal

Wind Energy: Answer to Power Sector Challenges

Source: WISE & GWEC Report and CII Report on Power Sector & * Wikipedia 2006 Statistics on GHG emissions

Thermal 63.2%

Large Hydro 25%

Nuclear2.8%

Renewable9%

Wind 71%

10.2GW

Other RE29%

Capacity Augmentation

•Current capacity:

146 GW

•Peak Shortage: 13.8%

•Addition Req. by 2020:

150 GW

Sustaining Fuel Mix

Current Fuel Mix for

Power Generation:

Coal :52%, Hydro:25%,

Gas & Oil:11%, RE:9%,

Nuclear:3%

Climate Change

India is the 4th

largest emitter of

GHG gases globally

(total emission of

1293 MT CO2e* pa)

Solution : Wind Power

•Proven ability & readiness to

quickly augment capacities

•Lowers burden on fossil fuel need

•Mitigation of climate change by

substantial CO2 displacement

• High growth potentialo Economic growth & power demand

o 80% untapped potential in wind energy

• Matured marketo 3rd largest in the world (10.2GW+)

o Access to proven technology & skill-set

• Progressive Policy Supporto Attractive feed in tariff & long term PPAs

o Fiscal incentives (GBI), RPO & RECs

• Investment Economicso 20 yrs predictable cash flows &

multiple revenue streams

o Impressive Returns : 14-16% IRR

o Flexibility to build ‘green power’ portfolio

o Easy ‘End to End’ solution – no hassles of managing market, material or manpower

Investment Imperatives for IPPs

Source: Suzlon Internal

Overview of Market framework

IPP Investor

Financier

End to End Solution ProviderEquipment Supply, EPC, VAS

Life Cycle Asset Management

Local Power Utility

ERC, Nodal

Agency, IREDA

Key Stakeholders

Power Trading Options

Procurement by Local Utilities

RPO set by Regulatory Commission, mandates local distribution utilities to procure power from renewable at a binding feed-in tariff under a long term PPA

Captive Usage

After adjusting the losses / charges towards wheeling & transmission, a proportionate set-off is given in the monthly electricity bills

OA / Merchant Generation

Investor can sell power to any open access consumer (with more than 1 MVA load) after paying OA charges

Source: Suzlon Internal

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Regulatory & Policy Environment in India

Regulatory Support: State- Wise Tariff Structure (Existing)

StatesFeed –In–Tariff Rates

(Rs/kWh)

Tenure

( Number of Years)

Other Conditions RPO (%)

Maharashtra Rs 3.50 13 Escalation of 15 Paisa per

year6%

Rajasthan Rs 4.28/ Rs 4.50 20 NA 7.5%

Madhya Pradesh Rs 4.03 20

Depreciation of 17 paise for 3 years, 16 paise in the 4th year. Constant rate of Rs 3.36/Unit thereafter

10%

GujaratRs 3.37

(Proposed: Rs 3.55/ Unit)20 No Escalation

2% (10% Proposed)

Karnataka Rs 3.70 10 No Escalation Min 7.5%

Andhra Pradesh Rs 3.50 10 No Escalation 5%

Tamil Nadu Rs 3.39 20 No Escalation 12-13%

Kerala Rs 3.14 10 No Escalation 2%

Source: Suzlon Internal, SERC Orders

SUO MOTU CERC Tariff Order: For Wind Zone 1

Assumption Head Unit Particulars

Wind Power Density Watts/ m2 200 - 250

Power Generation Capacity MW 1

Capacity Utilization Factor % 20

Project Cost Rs Lacs/ MW 515

Tariff Period Years 13

Debt – Equity Ratio % 70 – 30

Repayment of Debt Years 10

Return on Equity for 1st 10 years % 19

Return on Equity 11th year onwards

% 24

Source: CERC Petition Number: 284/2009 SUO MOTU

Levelised Tariff : Rs 5. 63 per kWhDepreciation Benefit : Rs 0. 37 per kWhGBI , as a pass through : Rs 0. 50 per kWh

Most Sites, now fall under this category

Currently applicable to Central Generating Stations. Different SERCs may chose to adhere to these guidelines, at a future date

SUO MOTU CERC Tariff Order: For Wind Zone 2

Assumption Head Unit Particulars

Wind Power Density Watts/ m2 250 - 300

Power Generation Capacity MW 1

Capacity Utilization Factor % 23

Project Cost Rs Lacs/ MW 515

Tariff Period Years 13

Debt – Equity Ratio % 70 – 30

Repayment of Debt Years 10

Return on Equity for 1st 10 years % 19

Return on Equity 11th year onwards

% 24

Levelised Tariff : Rs 4. 90 per kWhDepreciation Benefit : Rs 0. 32 per kWhGBI , as a pass through : Rs 0. 50 per kWh

Some places in MH, KAR, AP and TN

Source: CERC Petition Number: 284/2009 SUO MOTU

Currently applicable to Central Generating Stations. Different SERCs may chose to adhere to these guidelines, at a future date

SUO MOTU CERC Tariff Order: For Wind Zone 3

Assumption Head Unit Particulars

Wind Power Density Watts/ m2 300 - 350

Power Generation Capacity MW 1

Capacity Utilization Factor % 27

Project Cost Rs Lacs/ MW 515

Tariff Period Years 13

Debt – Equity Ratio % 70 – 30

Repayment of Debt Years 10

Return on Equity for 1st 10 years % 19

Return on Equity 11th year onwards

% 24

Levelised Tariff : Rs 4. 17 per kWhDepreciation Benefit : Rs 0. 28 per kWhGBI , as a pass through : Rs 0. 50 per kWh

Some places in KAR, AP and TN

(Although very few)

Source: CERC Petition Number: 284/2009 SUO MOTU

Currently applicable to Central Generating Stations. Different SERCs may chose to adhere to these guidelines, at a future date

SUO MOTU CERC Tariff Order: For Wind Zone 4

Assumption Head Unit Particulars

Wind Power Density Watts/ m2 350 - 400

Power Generation Capacity MW 1

Capacity Utilization Factor % 30

Project Cost Rs Lacs/ MW 515

Tariff Period Years 13

Debt – Equity Ratio % 70 – 30

Repayment of Debt Years 10

Return on Equity for 1st 10 years % 19

Return on Equity 11th year onwards

% 24

Levelised Tariff : Rs 3. 75 per kWhDepreciation Benefit : Rs 0. 25 per kWhGBI , as a pass through : Rs 0. 50 per kWh

Sites with above mentioned WPD are

nearly exhausted

Source: CERC Petition Number: 284/2009 SUO MOTU

Currently applicable to Central Generating Stations. Different SERCs may chose to adhere to these guidelines, at a future date

Conducive Policy Environment

• Prime Minister’s National Action Plan on Climate Change (NAPCC)

o To attain 5% National RPO by 2010

o To increase by 1% every year for 10 years, reach 20% National RPO by 2020

o Special focus on Solar: Announcement of Solar Mission, to attain 1000 MW by 2013 (Phase I)

• Provision of Tax Incentives, via the 80% Accelerated Depreciation route

o Makes Wind Power Investment attractive for investors with high tax appetite

• Introduction of Generation Based Incentives (GBI)

o GBI of 50 paise/kWh

o Applicable Cap of 62 lacs per MW

o Co-existent with Accelerated Depreciation till 2012, or till implementation of DTC

• Proposal for framework for Introducing RECs in Indian Markets rolled out

o RECs envisaged to aid fulfillment of RPS in non windy states

o Trading of RECs to take place, via power exchanges

Source: Suzlon Internal

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Thank You

Chintan ShahHead – Strategic Business Development

Suzlon Energy LimitedEmail: cns@Suzlon.com