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

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HOW COMPANIES ARE BUYING CLEAN ENERGY IN INDIADeepak Krishnan, Manager, WRI India

TODAY’S SPEAKERS

• Alex Perera, Deputy Director, Energy Program, WRI

• Deepak Krishnan, Manager, Charge, WRI India

• Vince Digneo, Sustainability Strategist, Adobe

• Sujatha Ganapathy, Senior Manager – Site Operations, Adobe

FLOW OF THE PRESENTATION

I. Setting the StageII. About Green Power Market Development

Group (GPMDG)III. Sector Snapshot – IndiaIV. What Does GPMDG Do?V. Adobe’s Experience in IndiaVI. Building on India Work Internationally

SETTING THE STAGE

TRADITIONAL MARKETS (USA AND 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

CLEAN ENERGY MINISTERIAL CAMPAIGN

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.

WHAT IS GREEN POWER MARKET DEVELOPMENT GROUP (GPMDG)?

EASY TO REMEMBER MNEMONIC…

• Good Policies Make Demand (for corporate RE) Grow

• … if you are not a mnemonic fan…

• Green Power Market Development Group

GPMDG: A PARTNERSHIP OF 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

GPMDG BENEFITS TO INDUSTRY

• Help fulfil RPO obligations and green mandates for industry

• Connect industry to top RE suppliers

• Address policy and regulatory issues faced by industry

2000GPMDG

founded and joint by 11 major U.S. businesses.

2005GPMDG model

replicated in

Europe.

2012GPMDG

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

Green Power Market Development 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

MEMBERS OF GPMDG INDIA

SECTOR SNAPSHOT: INDIA

DRIVERS OF CHANGE IN 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

• 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

THEORY OF RE PROCUREMENT: 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

HT Commercial HT Industrial LT Commercial LT Industrial

3.6 %3.9 % 3.8 % 3.9 %

% 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

THEORY OF RE PROCUREMENT: 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

ENABLERS OF CORPORATE RE PROCUREMENT

Open Access Mechanism

Group Captive Scheme

Gross/Net Metering

REC Mechanism

Accelerated Depreciation

CHALLENGES FOR CORPORATE RE PROCUREMENT IN INDIA

•Maharashtra, Karnataka – additional surcharges for open access purchases

•Group captive amendments

•Non uniform net/gross metering rules across states

WORK IN INDIA

POLICY FOCUSED ACTIVITIES

• Karnataka, Tamil Nadu: Steering committee based approach

• Maharashtra: Evaluating a sub-committee based approach

WRI’s Experience Helping Corporations 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

ADOBE’S EXPERIENCE IN INDIA Vince Digneo, Sustainability Strategist, AdobeSujatha Ganapathy, Senior Manager – Site Operations, Bangalore, Adobe

$5.85BFY2016

Revenue

Adobe is one of the largest andmost diversified software companies in the world

34Years of

revolutionizing industries

1%+Pre-tax profitsgiven to the community

~3,700Patents*

73%Of employees work

in LEED certified workspaces

~16,000 Employees in 37 countries

* As of December 2016

Adobe’s Renewable Energy Strategy

Onsite Collaboration:NGO’s, peers, governments

Energy Efficiency Offsite PPA’s

Inside Adobe Outside Adobe

Adobe Bangalore

WRI’s CollabSolar project

Single large 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

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

Educating the buyers about decision making (by

Analysis & screening of responses to RFI (by WRI)

Analysis of the proposals (by WRI)

Selection of the winners (by buyers)

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 /

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 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

A GLOBAL APPROACH

WRI’S GLOBAL RENEWABLE ENERGY WORK:

• Deep dive: – China– India– United States

• Light touch, with partners: – Vietnam

• Exploring:– Colombia– Indonesia– Kenya– Mexico– Philippines

EVENTS FOR IMMEDIATE ENGAGEMENT

• 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

EVENT: ENABLING PRIVATE SECTOR CLEAN ENERGY INVESTMENT IN SOUTH AND SOUTHEAST ASIAMarch 27-28, 2017Radisson Blu Plaza Hotel, Bangkok, ThailandDetails, 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

RECOGNIZING FUNDERS

Strategic Core Funding PartnersBloomberg 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)

THANK YOU

Deepak Sriram Krishnan Manager, WRI India DKrishnan@wri.org

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

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