23 August 2008 Renewable Energy India 2008 Expo New Delhi

BOVING FOURESS
POWERING THE WORLD TODAY FOR A BETTER TOMORROW
23rd August 2008
Renewable Energy India 2008 Expo New Delhi
BOVING FOURESS
Small Hydro Power

Small Hydro refers to hydro electric projects with
capacity Generation less than 25 MW

Typically canal based or run of the river type
23rd August 2008
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Run of the River Project
23rd August 2008
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Canal based Project
23rd August 2008
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Why Small Hydro

Hydro is a renewable source of clean energy
Has very little operation cost Sustainable since the projects uses only renewable
resources
23rd August 2008
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HYDRO POTENTIAL IN INDIA

Small hydro potential in the country (<25 MW) 15,000 MW
Small hydro plants in operation 430 with installed
capacity of 1423 MW Small hydro plants under construction 187 schemes with installation capacity of 521 MW
23rd August 2008
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Growth in Small Hydro

140 119 108 100 85 80 # of Machines 60 51 33 21 20 9 11 10 10 6 6 23 46 50 Capacity, MW 120
40
32
21 17
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
Growth as seen by BFL
23rd August 2008
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SEGMENTATION OF IPP in Small Hydro
32%
68%
CORPORATE
23rd August 2008
ENTREPRENUERS
Source: BFL
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States of India where IPPs are active in small hydro

(As seen by BFL)
23rd August 2008
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ENABLERS IN SMALL HYDRO
IPP POLICY IN MANY STATES

WHEELING OF GENERATED ENERGY CARBON CREDITS ADDED REVENUE STREAM HYDRO BEING FINANCED BY COMMERCIAL BANKS
23rd August 2008
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CARBON CREDITS AN OPPORTUNITY
23rd August 2008
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Industry Challenges
Hydrology Data Accuracy
Input Cost increase
Stagnant PPA Rates

Natures fury
Project Delays
23rd August 2008
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Input Costs
Increase in Civil Cost
Increase in Cement and Steel Cost Increase in Fuel Costs Increase in E&M equipment cost
Increase Steel, Copper prices

Increase in Fuel Costs
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Increase in E&M Cost
Dramatic increase in Steel cost in 2008 Increase in Copper prices since 2005 Significant increase in interest rates and hence cost of capital
23rd August 2008
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Steel Prices
Steel Price in December 2007 Steel Price in April 2008 Increase in Steel Price
Rs 32/Kg - RS 52/Kg
- 62.5%
23rd August 2008
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Copper Price increase
23rd August 2008
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Net Effect of Input Costs

Cost Per MW in 2003
Cost Per MW in 2005 Cost Per MW in 2007 Cost per MW in 2008
3.9 Cr / MW
4.2 Cr / MW 5 Cr / MW 6.0 Cr /MW 8% 26 % 52%
23rd August 2008
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Input Costs & PPA

PPA remained the same since 2003
Rs 2.80 / Unit (in karnataka for 10 years, based on cost of 3.9 Cr /MW) With input cost increasing by 52% and PPA remaining the same, Project becomes unviable and hence not getting implemented
23rd August 2008
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PPA in other countries

South Africa
Turkey Vietnam Philippines
12 Dollar Cents (RS 5)

13 Dollar Cents (Rs 5.2) 8 Dollar Cents (3.2) 10 Dollar Cents (Rs 4.2)
Indonesia
Srilanka
23rd August 2008
15 Dollar Cents (Rs 6.0)

8 Dollar Cents (Rs 3)
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Some examples of natures fury
A Power Plant in karnataka, Slated for commissioning Sept 1st Week Photo Taken on 7th August 2008
Photo Taken on 14 h August 2008

23rd August 2008
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Some examples of natures fury
A Power Plant in karnataka, Slated for commissioning Oct 1st Week Photo Taken on 28th July 2008
18TH April 2007 CHENNAI
Photo Taken on 14 h August 2008
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Policy framework
- Approvals
- Cost mitigation avenues - Duty Exemptions - PPA responsive to input costs
23rd August 2008
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Current situation in Small Hydro

Total Duty and Tax burden of 18 to 20 % of
project cost Deemed Export Status if ICB followed Duty Drawback (pay first, claim refund for excise and customs) Advance components
23rd August 2008 Renewable Energy India 2008 Expo New Delhi
Authorization
for
imported
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UMPP Situation
New Mega Power Policy (awaiting cabinet approval)
Exemption of customs and excise duty for equipments
No Need for following ICB process

Equipment Cost certified by CEA
Ref: Economic Time Bangalore edition 13th august 2008
23rd August 2008
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Taxes and duties for Small Hydro

All Small Hydro projects to have automatic
Deemed export status Exempt from Excise duty and customs duty with no riders attached (The Turkey example) Uniform VAT structure across the states (same rate as CST)
23rd August 2008
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PPA
PPA Needs to be responsive to the market conditions (Andhra has increased PPA for wind power from 3.10 to 3.50 on account of steel price increase*) Allow for changes in a signed PPA, if ground conditions change No cap on total units generated
* Ref: Economic Time Bangalore edition 14th august 2008
18TH April 2007
CHENNAI
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Conclusion
Small Hydro is a viable business proposition
Challenges and risks are high The growth can be stimulated by -Responsive PPA (will attract investments)
- Policy support in line with other power projects
23rd August 2008
BOVING FOURESS
Economic Times bangalore Edition 13th August 2008
BOVING FOURESS
: Economic Time Bangalore edition 14th august 2008

23 August 2008 Renewable Energy India 2008 Expo New Delhi

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BOVING FOURESS

POWERING THE WORLD TODAY FOR A BETTER TOMORROW

23rd August 2008

Renewable Energy India 2008 Expo New Delhi

POWERING THE WORLD TODAY FOR A BETTER TOMORROW

Small Hydro Power

capacity Generation less than 25 MW

23rd August 2008

Renewable Energy India 2008 Expo New Delhi

POWERING THE WORLD TODAY FOR A BETTER TOMORROW

Run of the River Project

23rd August 2008

Renewable Energy India 2008 Expo New Delhi

POWERING THE WORLD TODAY FOR A BETTER TOMORROW

Canal based Project

23rd August 2008

Renewable Energy India 2008 Expo New Delhi

POWERING THE WORLD TODAY FOR A BETTER TOMORROW

Why Small Hydro

23rd August 2008

Renewable Energy India 2008 Expo New Delhi

POWERING THE WORLD TODAY FOR A BETTER TOMORROW

HYDRO POTENTIAL IN INDIA

23rd August 2008

Renewable Energy India 2008 Expo New Delhi

POWERING THE WORLD TODAY FOR A BETTER TOMORROW

Growth in Small Hydro

Growth as seen by BFL

23rd August 2008

Renewable Energy India 2008 Expo New Delhi

POWERING THE WORLD TODAY FOR A BETTER TOMORROW

SEGMENTATION OF IPP in Small Hydro

Renewable Energy India 2008 Expo New Delhi

POWERING THE WORLD TODAY FOR A BETTER TOMORROW

States of India where IPPs are active in small hydro

23rd August 2008

Renewable Energy India 2008 Expo New Delhi

POWERING THE WORLD TODAY FOR A BETTER TOMORROW

ENABLERS IN SMALL HYDRO

IPP POLICY IN MANY STATES

23rd August 2008

Renewable Energy India 2008 Expo New Delhi

POWERING THE WORLD TODAY FOR A BETTER TOMORROW

CARBON CREDITS AN OPPORTUNITY

23rd August 2008

Renewable Energy India 2008 Expo New Delhi

POWERING THE WORLD TODAY FOR A BETTER TOMORROW

Stagnant PPA Rates

23rd August 2008

Renewable Energy India 2008 Expo New Delhi

POWERING THE WORLD TODAY FOR A BETTER TOMORROW

Increase Steel, Copper prices

POWERING THE WORLD TODAY FOR A BETTER TOMORROW

Increase in E&M Cost

23rd August 2008

Renewable Energy India 2008 Expo New Delhi

POWERING THE WORLD TODAY FOR A BETTER TOMORROW

23rd August 2008

Renewable Energy India 2008 Expo New Delhi

POWERING THE WORLD TODAY FOR A BETTER TOMORROW

Copper Price increase

23rd August 2008