Rajasthan a Solar Component Manufacturing Hub 28 Jun 2011

8/2/2019 Rajasthan a Solar Component Manufacturing Hub 28 Jun 2011

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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


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


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


http://www2.hewittassociates.com/Default.aspx



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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




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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%




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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.




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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




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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)


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)


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


•Mr. Harsh Jhanjaria: Ernst & Young•Cell: 09911445784


Documents

Rajasthan a Solar Component Manufacturing Hub 28 Jun 2011