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Exploring Energy Opportunities In India
NABC Conference
June 29, 2006
India’s Energy Sector - Present & Future
Coal, 55%Hydro, 26%
Oil, 1%Gas, 10%
Renewable, 5%
Nuclear, 3%
Fuel Sources, 2006 Per Capita Consumption of Electricity• 2004 - 2005: 606 kWh / year• Currently 56% of households in rural
areas are without electricity
124 GW
200 GW
Current
Goal by 2012
Power Generation in India61% Increase
83,094
95,583
101,666
113,868Energy
Demand
Met
Peak Energy
Demand
Met 13.1% Deficit
MW
10.7% Deficit
Indian Power Situation (April – May 2006)
MW
MW
MW
India needs more than $225 billion to finance energy projects from 2005 to 2012
• Geo-political issues limiting access to energy supply
• Power failures due to supply shortages
• ~ 32.5% in transmission & distribution losses– International average is approximately 8%
• Resource challenged State Electricity Boards– Inefficient and poorly maintained systems– Subsidized tariffs to residential / agricultural customers– Theft and uncollected bills
• Lack of integration between power grids
• Inadequate financing
• Environmental concerns
India’s Power Sector - Major Challenges
Way Forward in Land of Opportunity
• Address unrealized as well as unmet energy needs
• Find innovative ways to diversify fuel dependency and generate power at reasonable marginal cost
• Strengthen regional and national Transmission & Distribution grid to reliably move and meter supply where it is needed
• Overcome geo-political and other issues to secure and transport fuel from nearby countries within South Asia or other regions
• Meet the energy needs of the underserved markets in rural and urban areas to fuel GDP growth
• Take a patient and realistic view of the time and effort required to solve challenges and implement long-term solutions
Rationale for involvement • Underserved market• Creating and serving your own demand• Scalability and adaptability as a portfolio• Capitalization of a niche market
Strategies to employ• Offer decentralized sources of energy supply using untapped, local, renewable sources
including wind, solar and hydro• Potential to connect to grid in the future• Offer affordable energy efficiency and generation technologies and financing
Rural Electrification
Potential Opportunity
Domestic Product And Percentage Of Electrified Households
50% of Population
Country GWh Electricity Consumed 2005
India 519,398
Pakistan 71,454
Bangladesh* 16,333
Sri Lanka* 6,160
Nepal* 1,654
Bhutan* 250
Regional Energy Needs
Total Consumption Emerging Asia: 2,914 GWh
Total 2025 Demand In Emerging Asia: 7,552 GWh– Net increase in demand by 159%
*2003 Figures
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Potential Opportunities for Energy Imports & Exports
• Gas pipelines
• Transmission grids
• LNG shipping
• Rail transport
Typical Profile of Tara’s International Projects
• Ability to leverage Tara’s extensive experience in energy and water project finance, energy trading or retail distribution
• Allow Tara to be a first-mover in identifying and tapping smaller, fragmented opportunities in underserved, niche segments
• Projects requiring patient capital with higher overall returns
– A dynamic South Asian and American management team and investors/stakeholders that have cultural intimacy and experiences in India and the broader region
– Greater tolerance for sovereign risk – Realistic expectations– Long-term commitment
• Opportunity to form strong local partnerships at grass-roots level– In the U.S., Tara’s motto is “Supporting the Community” and “Supported by
the Community” – Ability to create an eco-system of support and cooperation with the local
stakeholders