rajasthan a solar component manufacturing hub 28 jun 2011
TRANSCRIPT
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Seizing Transformational Opportunities:Solar Component Manufacturing in RajasthanConverting solar power generation potential to viable commercial manufacturing propositions
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India as an attractive solar investment destination
Opportunities galore along the value chain
Way ahead
Feedback
Rajasthan – Upcoming solar component manufacturing hub
Presentation Outline
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India as an Attractive SolarInvestment Destination
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India as an attractive renewable energy destinationSolar energy poised to grow in near future
Rank All Renewable index
1 China
2 US
3 Germany
3 India
5 UK
5 Italy
7 France
8 Spain
9 Canada
10 Portugal
Rank Solar index
1 US
2 India
3 Italy
4 Spain
5 China
6 Greece
6 Japan
6 Germany
9 Australia
10 France
• Ernst & Young Renewable Country Attractive Index tracks the relative attractiveness of renewable energy market of 30 countries across technologies every quarter
• India is the second most attractive market on the solar index (Latest ranking – February 2011)
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National Solar Mission (NSM)US$55-65 bn generation opportunity in the offing
200
1,000
2,000
1,000
4,000
20,000
FY13 FY17 FY22
Off Grid Grid connected
Utility grid power and Off-grid installations (MW) Envisages 20GW grid interactive
and 2GW off grid solar power by
2022
Solar manufacturing sector
expected to expand production
capacities to meet demand
Envisages target production
capacity of 4-5 GW equivalent by
2020 across the value chain,
including 2 GW of solar cells
Source: MNRE, National Solar Mission document
Government thrust: Critical phase
Spur domestic manufacturing
Drive down costs of generation
Promote off-grid Applications
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Robust solar energy policy framework
Electricity Act Energy Conservation Act
National Electricity Policy National Tariff Policy
Integrated Energy Policy
Special Incentive Package Scheme (SIPS)
Jawahar Lal Nehru National Solar Mission
JNNSM Guidelines CERC Tariff Regulation
Rajasthan Industrial & Investment Promotion Policy
Rajasthan Solar Energy Policy, 2011 SERC Tariff and RPO/SPO
Pricing and taxationSupply side Demand side
N a t i o n a l
S t a t e
Rajasthan Investment Promotion Scheme
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Incentives for manufacturing at National level
100% Foreign Direct Investment allowed
Zero Customs & Excise Duties on solar cells and modules
Zero or concessional custom/excise duty on capital equipment and raw materials
Soft loan @ 5% available through IREDA for solar energy equipment manufacturing
Special Incentive Package Scheme (SIPS), which closed on 31st March 2010, received 26 applications,
cumulatively valued at INR2,290 billion.
• The scheme has received proposals across the value chain of both crystalline & thin-film
segments.
• NSM policy provides for similar incentives for manufacturing of CSP and niche SPV materials and
technologies segments.
Incentives under SIPS, 2007
Unit Minimum NPV SEZ Non SEZ
Fab unit INR25 billion 20% 25 % + CVD exemption
Eco system INR10 billion 20% 25 % + CVD exemption
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Renewable Energy Certificate (REC) Market based instrument to promote solar energy
REC mechanism: Launched inNovember 2010
To meet their Renewable PortfolioObligation (RPO) targets
To promote renewable energydevelopment.
RPO obligation: Mandates a State to
purchase a minimum level ofrenewable energy
Issuance: The National Load Dispatch Centre (NLDC)would issue RECs to renewable energy generators.
Pricing: The REC component will be priced on a notionalbasis and electricity component will be linked to thenormative renewable energy tariff.
Trading: RECs can be traded on power exchangesapproved by the Central Electricity RegulatoryCommission (CERC).
Redemption: An REC can be redeemed by presenting itto NLDC for redemption or on expiry of its shelf life (oneyear from the date of generation of the correspondingunit).
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Rajasthan: Upcoming SolarComponent Manufacturing Hub
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Critical levers for creating a sound solarmanufacturing ecosystem
Levers
EconomicDevelopment
EmploymentCreation
InvestmentGeneration
Attractiveness of end market
Competitive-ness
RevenueGrowth
Profitability
Government objectives
Business objectives
Availability of raw materials
Skilled manpower
Logistics
Policies and Incentives
Ease of Doing Business
The roadmap for solar component manufacturing
to harness opportunities
across the entire value
chain…
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Rajasthan: A beacon of solar development in India
Rajasthan
Delhi
Gujarat
UttarPradesh
Madhya
Pradesh
Punjab
Haryana
Strategic location and pipelinecommitments of solar generation projects augur well for the solar manufacturing sector in Rajasthan
Highest daily solar insolation: 5–6.5kWh/m2
81% of the grid connected projects
under NSMHighest number of projects aggregatingto 12 MW capacity under Rooftop &Small Solar Power GenerationProgramme
5% of total projects
52% of projects for Off-grid PV &decentralized solar applications
Source: Rajasthan Renewable Energy Corporation Limited, MNRE, IREDA, NTPC Vidyut Vyapar Nigam Limited
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Rajasthan is among the top investment magnets insolar generation
Source: Rajasthan Renewable Energy Corporation Limited, MNRE, IREDA, NTPC Vidyut Vyapar Nigam Limited
Application Category NSM allocation Remarks
ON-GRID
Power plants 571 MW 81% of the allocation under the NSM out
of 704 MW
Rooftop PV Systems 12 MW 12 SPV projects of each 1 MW capacity
have been sanctioned for Rajasthan.
OFF-GRIDIndividual &CommercialApplications
10.268 MWHighest sanctioned projects (52%)
under NSM
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……offering great potential for solar componentmanufacturing
Source: Rajasthan Renewable Energy Corporation Limited, MNRE, IREDA, NTPC Vidyut Vyapar Nigam Limited
TechnologyAllocationunder NSM
Segment Present status
Solar PV 163.2 MW*
• Polysilicon, wafer and cell • Absence of players in Rajasthan
• Module• Production capacity of 22 MW in Modulemanufacturing
Solar CSP 430MW
•
Glasses and mirrors
• No players in the CSP segment
• Considerable supplier base to integrateinto CSP related supply chain
• Power block
• Iron and Steel
• Zinc
• Tubes and pipes
Existing players Planned projects Potential sub suppliers
*Includes both on grid and off grid projects
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Huge mineral base endowmentSolar component manufacturing at an advantage
Largest deposits of lead-zinc ore in India,amounting to 468.51 million tonnes
Nearly 99% and 80% of zinc and leadconcentrate production in India
Third largest producer of salt in India withaverage annual production of 1.2 millionmetric tonnes
Large reserves of quartz and silica sand forglass manufacturing
Second highest cement producing state in
India, with 14 major cement plants with atotal capacity of 41 million tonnes per annum
Around 500 ceramic units, covering Glass andMineral Grinding units are operatingsuccessfully
MineralShare in Country’s
Production (%)
Zinc concentrate 99
Lead concentrate 80
Phosphate rock 75
Ball clay 71
Calcite 70
Felspar 70
Source: Government of Rajasthan
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Cost competitive workforce
Over 122 engineering colleges, 164polytechnics, 849 ITIs, and 136 MBA institutes
50,000 engineers are produced out ofengineering colleges every year
Nearly 100,000 ITI and 44,000 Polytechnic
seats are available in the state Center of Excellence
IIT Jodhpur: Centre of Excellence for SolarThermal Research and Education
General manufacturing skills easilytransferable to solar manufacturing and
allied industries - specialized glass for SolarPV and Solar CSP
Rajasthan
Peer states
Competitive salary rates in the State*
30-40%
Ranked No.1 in Talent Sourcing and Employee CostsAccolades “
“
*Salary of entry level engineer in manufacturing
Source: Government of Rajasthan
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Dedicated Fright Corridor and Delhi MumbaiIndustrial Corridor is expected to be a game changer
1483-km long Dedicated Freight Corridorbetween Delhi and Mumbai is likely to becommissioned by 2016
About 39% of the corridor passes throughRajasthan
Delhi Mumbai Industrial Corridor (DMIC) -150km band to be developed on both sidesof the corridor
46% of the total DMIC Project InfluenceArea (PIA) falls in the state.
About 60% of the State’s area falls under
the PIA
Major districts to benefit from project
Jaipur, Alwar, Kota, Bhilwara, Dausa,Pah, Sikar and Sirohi
Source: Government of Rajasthan
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Sound Industrial PolicyCatalyst for investments, socio-economic growth and employment
Features
Benefit of subsidy and exemptions to investors, without any precondition of loan borrowingfrom any commercial bank.
Precondition of minimum employment of 10 persons has been relaxed to boost MSMEs.
Introduction of time-frame for grant of subsidy and exemptions
Provisions for e-payment of subsidy have been incorporated
Subsidies
Introduction of investment and employment generation subsidy for 7 years and for MSMEs inthe notified area for 10 years
Maximum amount of subsidy shall be 50% of the VAT and CST tax deposited
Investment subsidy: 30% of the VAT and CST tax deposited
Employment generation subsidy: INR10,000 per employee/ annum; INR12,000 for women,SC/ST and persons with disability
Simplification of subsidy disbursement by introducing a challan for adjustment through
treasury
Exemptions from Taxes
Electricity Duty and Land Tax 50%
Stamp duty on purchase or lease of land and construction/improvement ofsuch land
50%
Land conversion charge 50%
Source: Government of Rajasthan
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Rajasthan Enterprise Single Window Enabling and ClearanceAct (RESPECT)
Ensure time-bound clearances to investors in the State
Step towards improving the
investment climate and simplifyingregulatory approval mechanism inthe State.
Objective: To serve as a single pointinterface between investors and
various Government departments.
Notified on 27 March 2011
Notification for Electronic Single WindowSystem issued on 25 January 2011
Projects above INR100 million under the system
Mandatory for 10 Departments to receive theapplication only through Single Window Systemand process approvals as per prescribedtimelines
Empowered Committee to provide variousapprovals in case the competent authority fails
to decide on applications within the prescribedperiod.
Investors can file and track applications onlinethrough the electronic Single Window portal.
Source: Government of Rajasthan
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Rajasthan Solar PolicyCreating Favorable Conditions for Solar Manufacturing
Reserved Solar Generation Capacity of 200MW by 2013 for PV manufacturers fromRajasthan with production capacity of aminimum 25 MW/year
Development of Solar Park i.e. zoneshoused with Solar Power Plants,Manufacturing Zones, R & D and TrainingCenters zone and other amenities
State to extend all facilities and fiscalincentives provided by Central Govt/NSM tomanufacturers in Solar Parks
State to provide additional fiscal incentives
for solar based industries in consultationwith Finance Department & IndustriesDepartment, GoR
Land allotment: As per RIICO Rules andRegulations and Rajasthan Land Revenue(Industrial Areas Allotment) Rules, 1959
Selection of developers through tariff based competitive bidding
Solar Power Producer required to source
SPV modules from their ownmanufacturing unit established inRajasthan
Manufacturing capacityper annum
Capacity allocation forSPV power plant
More than 25 MW butless than 50 MW
10 MW
50 MW and above 20 MW
Source: Government of Rajasthan
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Significant potential of allied industries –
Glass, mirror, Steel etc.
Rajasthan ShiningAdvantage Investors
Solar insolations - comparable todeserts of California, Nevada, Coloradoand Arizona
+
Rajasthan is strategically located toaccess the domestic market +
Rich mineral wealth: viz. silica, quartz,zinc, lead, etc.
+
Abundance of suitable land for solar power generation and equipmentmanufacturing
Adequate power supply +
Upcoming DFC/DMIC could be a gamechanger for logistics
+
Competitive manpower cost, less by 30-40%
+
Clearly articulated, progressive Solar Policy
+
+
+
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Opportunities Galore along the ValueChain
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Rajasthan offers strong local manufacturingopportunities
Solar PhotovoltaicConcentrated Solar Power +• Mirror and glass production
• Molten salt
• Mounting structures• Receiver production
• Collector assembly and
installations
• Module manufacturing
• Cell manufacturing
• Glass production• Balance of system
manufacturing for SPV power
plants/systems
• Ingot and wafer manufacturing
• Polysilicon manufacturing
+
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Way Ahead
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Rajasthan aims to be among the leading states insolar component manufacturing
A minimum share of 10% of installed module manufacturing capacity of Indiain 2020 from the present 2% and from no installed base in cell manufacturingto 10% in 2020
Impact:Production capacity of 500MWp of PV modules by 2020, including 200MWp ofsolar cell manufacturing
INR10-15 billion (US$200-300 million) of investment with presence of playersacross value chain creating nearly 20,000 additional jobs*
Top 3-4 global integrated photovoltaic and CSP players
*Includes both one time and permanent jobs
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Incentivising development of a competitive solarmanufacturing ecosystem (1)
Existing Incentives What more??
Policy framework
Solar specific Renewable
Purchase obligation (RPO):
0.5% starting 2011-12, risingto 1% in 2013-14
Identify solar manufacturing zone within the
state or existing SEZs/Parks
Develop an inventory of sites that could
meet the needs of solar manufacturing
industries, and an analysis of what each ofthese potential sites needs
Deeper local content in generation plants
under state policy
Adequate fiscalincentive
100% exemption on the VAT
on all solar energy equipment 50% exemption from payment
of electricity duty for 7 years
Develop a solar manufacturing specificincentive package
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Incentivising development of a competitive solarmanufacturing ecosystem (2)
Existing Incentives What more??
Water Treatment(identifiedmanufacturing zone)
Common Effluent Treatment
Plants (CETP): 50% of capital
cost for establishment provided
unit uses 80% of recycled water
Adequate support
infrastructure
(Up to gate of the
park)
Dedicated HT line to the park
Development and facilitation for support
infrastructure like approach roads,
common industrial infrastructure such as
drainage system, electronic exchange,
laying of telecommunication cables,
water availability etc.
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Opportunity for development of competitive solarmanufacturing ecosystem (3)
Existing Incentives What more??
Availability of
competitively priced
land
50% exemption from payment
of applicable stamp duty
Skill developmentand manpoweravailability
50% of capital cost involved in
developing a training institute
Vocational courses for targeted skill setssuch as glass coating, bending,
galvanisation etc.
Develop industry driven certification
programmes/UG and PG courses in
modules & systems, O&M etc.
Leverage higher education institutions
such as IIT in Solar IT - Related software
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Your Perspective Matters…
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Your perspective matters…
Is Rajasthan doing enough to develop the solar manufacturing sector?
Where are the gaps? What key challenges do you foresee in setting up solar
manufacturing facilities in the state?
What can the state do to further enhance Rajasthan as a solar manufacturinglocation?
How does the State compare with other emerging destinations
(National/International)? What are the lessons to be learnt and best practices to be
followed ?
What are the potential areas for engagement between the government and industry
to develop the sector in Rajasthan?
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Point of contact
•Mr. Nagesh C Sharma: Bureau of Investment Promotion
•Cell: 09829055087
•Email: [email protected]
•Ms. Anjali Garg: International Finance Corporation
•Cell: 09560874009
•Email: [email protected]
•Mr. Harsh Jhanjaria: Ernst & Young•Cell: 09911445784
•Email: [email protected]