RajasthanSolar Power

Component Manufacturing

Investment Brochure

Rajasthan

Delhi

INDIA

Mumbai

Rajasthanat a Glance

Area 342,239 sq km

Largest State in India

Location North-western India; shares domestic borders with Punjab, Haryana, Uttar Pradesh, Madhya Pradesh and Gujarat

Population 66.3 million (estimate 2011)

Capital Jaipur

Time Zone GMT + 5 hours, 30 minutes

Districts 33

Share of India's GDP 4.3%

The National Solar Mission (NSM) was formally launched in January 2010 by the

Government of India (GoI). Launching the mission, the Prime Minister of India, Dr.

Manmohan Singh emphasized the importance of solar energy by stating that in

India’s renewable strategy, the sun should occupy center-stage, literally being the

original source of all energy. In addition to achieving environmentally sustainable

growth, the NSM is also of significance for enhancing India’s energy security.

The objective of the solar mission is “to establish India as a global leader in solar

energy by creating the policy conditions for its diffusion across the country as

quickly as possible.” The mission has set out phased targets for off-grid as well as

grid connected solar power through to 2022. The Figure below reveals the phase

wise development on grid and off-grid capacity addition under the three phased

mission.

OverviewSolar Industry in IndiaNational Solar Mission

Off Grid

Grid connected

Cumulative installed solar capacity envisaged under NSM

Source: National Solar Mission

FY13

FY17

FY22

200

1,00

0 2,00

0

1,00

0

4,00

0

20,0

00

The GoI has put in place a robust mechanism for assured off-take

of solar power generated through grid connected projects under

Phase I of NSM. NTPC Vidyut Vyapar Nigam Ltd (NVVNL) has been

identified as the nodal agency that will purchase power from the

solar power project developers. This will be bundled with

electricity from equal capacity conventional power and sold to the

distribution utilities. The Government has also set up a solar

payment security fund (INR 4,860 million or US$ 108 million) to

address the risk of default in payment by the distribution utilities

involved in the mechanism.

Feed in Tariff (FIT) for power from solar photovoltaic and solar

thermal power plants is announced by the Central Electricity

Regulatory Commission (CERC) on an annual basis. The tariffs for

the financial year 2011-12 have been set as INR15.39 (US$ 0.342)

per kWh for solar PV and INR15.04 (US$ 0.334) per kWh for solar

thermal. Given that a large number of entities are likely to apply for

the projects, the Government may allocate projects on discounted

tariffs to applicants. In the case of rooftop solar PV and other small

solar applications, the mission provides for generation based

incentives. For off-grid and decentralized solar applications, the

NSM provides incentives through a combination of a 30% subsidy

and a 5% interest bearing loan.

Solar PowerOff-take and Tariffs

The RPO policy is to ensure that the Electricity Distribution Utilties

purchase a portion of their electricity from renewable energy

sources. RPO target for the distribution companies of a state is

announced by its State Electricity Regulatory Commission (SERC).

SERCs are gradually assuming solar-specific obligations within the

overall RPO announced by them for their state. The NSM policy

document envisages a target of 3% for solar RPO by 2022. A report

by Ernst & Young published in 2010 estimates that taking a target

range of 2%-3% solar RPO, India would need around 17GW-26GW

of solar power by 2022, which substantiates the NSM target of

20GW.

The RPO policy is supported by a Renewable Energy Certificate

(REC) mechanism which is similar to the carbon credit mechanism.

The REC mechanism enables a distribution company with a

shortfall in renewable energy installations to meet the shortfall in

their RPO (solar and non-solar) targets by buying RECs from

renewable/solar power producers. The REC trading on CERC

approved power exchanges, Indian Energy Exchange (IEX) and

Power Exchange India Limited (PXIL), was launched in the first

quarter of 2011.

Renewable Purchase Obligation (RPO)to Fuel Growth

Subsequent to the announcement of the NSM, the GoI has already

approved the migration of 16 ongoing solar power projects

totaling 84MW to the NSM. Rajasthan accounted about 11 projects

worth 66 MW under the migration scheme (8 Solar PV of 36 MW

and 3 Solar CSP of 30 MW). The Government invited applications

for new projects under three main categories.

Allocation of Projects

New Projects Application Response

Project type Guidelines issued Status

Off grid & decentralizedsolar application

Rooftop solar PV andsmall scale solar powerRPSSGP (under IREDA)

29 projects(totaling around 20MW)

80 projects(worth ~98MW) have

been sanctioned

Grid connectedsolar power (PV and CSPunder NVVN for Phase I)

June 2010

June 2010

July 2010 andAugust 2010

Batch I: 30 PV power projects of total capacity 150 MWp and 7 solar thermal power projects of total capacity 470 MW have been sanctioned.Batch II: Over 218 proposals received of over 2500 MWp

Source: MNRE, IREDA, NVVN, National Solar Mission, Government of India

NVVN selected 37 companies to develop solar power projects

under Phase-1 of the NSM, based on reverse bidding. The winning

bidders offered discounts of around 30–40% for solar PV and

around 20–30% for solar thermal projects over the respective CERC

determined base tariffs. 30 companies will be setting-up 5 MW of

solar PV projects each, totaling 150 MW. On the other hand, 7

companies will set up 470 MW of solar thermal plants.

In addition, the Indian Renewable Energy Development Agency

(IREDA) sanctioned 98MW of solar PV capacity across 80 projects.

These projects are part of the 100 MW rooftop solar PV and small

solar projects (RPSSGP) under Phase-I of the mission and are

separate from the projects under NVVN.

Another significant development pertains to the launch of a

capital subsidy-cum-refinance scheme under the NSM by the

National Bank for Agriculture and Rural Development (NABARD)

aimed at promoting installation of off-grid solar applications by

providing financial incentives such as capital subsidies and soft

loans, to the various individuals or groups intending to replace

non-renewable energy systems with solar powered ones.

The Indian Government is intent on executing the NSM in a timely

and structured manner and the NSM is paving the way to

significantly develop India’s solar sector.

The NSM also aims to boost India’s domestic manufacturing

capability in respect of components/equipment required by solar

power plants. The NSM targets a 4GW-5GW equivalent

manufacturing capacity by 2020, including capacities for

polysilicon for which India is currently import reliant. The

Government is providing subsidies, tax incentives and liberal FDI

policy to facilitate manufacturing in India. In addition, under the

NSM, the Government had announced a policy to introduce

domestic content clause wherein 30% domestic content is

mandatory for the solar thermal power projects in the first phase

of the Mission.

Further, for stage II of Phase I for PV Power plants based on

crystalline silicon technology use of both Indian make crystalline

silicon cells and modules is mandatory. The Mission has also

indicated about the increasing share of indigenous components in

the solar power plants to be taken up under the subsequent

phases of the Mission.

Enhancing DomesticManufacturing

100% Foreign Direct Investment in allowed

0% Customs & Excise Duties on solar cells, modules and many raw materials

5% Customs and Excise duty on other raw materials, components and grid power projects

Soft loan made available through IREDA for solar energy equipment manufacturing

Provision under NSM for SIPS like incentive for promoting manufacture of solar thermal power components/ systems

Incentives for Domestic Manufacturing

The players in the solar energy market in India are concentrated largely around activities which involve the

manufacture of crystalline-based PV cells and modules, along with the development and distribution of solar

PV systems. According to MNRE, there are 65 module manufacturers with an aggregate capacity of 1500 MWp

and 15 solar cell manufacturers with an aggregate capacity of 700 MWp. The estimated production in the

country during FY 2010-11 has been estimated to be 320 MWp of solar cells and 550 MWp of PV modules.

In addition to these manufacturing companies, over 100 companies assemble and supply solar-based systems.

These include both PV-based and thermal-based systems.

On the basis of technology, very few players (such as Moser Baer) are manufacturing thin-film based modules.

The market is currently dominated by crystalline technology. However, the increasing instance of

collaborations between domestic players and their global counterparts is leading to the fast emergence of

newer technologies.

There is no manufacturer of CSP technologies in the country as of now, particularly for power generation. Since

the mission has targeted for major capacity addition through solar thermal power in the years to come, it

becomes absolutely necessary to have indigenous manufacturers of equipment and components of solar

thermal power technologies.

Current ManufacturingCapabilities

Rajasthan is experiencing a transition to a low carbon, more resource efficient

economy, with increasing share of solar energy in its generation portfolio. In

Rajasthan, the installed capacity for power generation was 8.5 GW. Thermal power

plants (coal, gas and diesel) form a major portion (~62%) of the installed capacity of

Rajasthan. More than 88% of the power in the thermal segment is generated

through coal fired power plants. The generation mix of the power sector in Rajasthan

has changed significantly in the last 10 years.

The State’s total installed capacity in renewable stood at 1.42 GW in FY 2009-10.

Renewable energy installed capacity is approximately 14% of Rajasthan’s total

installed power generating capacity. The most significant renewable energy source

was wind power with a capacity of 1.08 GW or 90% of Rajasthan’s generation

capacity.

The state currently has about 45 MW of operational solar power generation plant.

While solar electric generation has made a limited entry into the generation

portfolio to date, the committed solar generation projects and unique position on

the solar map of India has positioned the state to emerge and enter into new

dimensions.

With this transition, solar component manufacturing offers a unique potential to

deliver long-term economic growth, sustainable job creation and cutting edge

competitiveness to Rajasthan’s economy over the next ten years and beyond.

Solar manufacturing in Rajasthan is at a nascent stage and there is a limited presence

of few downstream players in the solar photovoltaic business. The installed capacity

of module manufacturing in Rajasthan is 22 MW in 2010 with handful of players.

The large pipeline of generation projects, broad mineral base, relatively low

manpower cost, and a significant allied industry base, positions the state well in

exploiting this unique growth opportunity in the solar manufacturing sector.

Why Invest in Rajasthan

What makes Rajasthan attractive for solar component manufacturing?

High solar insolations

Upcoming solar park and large land parcels

Huge end market for solar generation

Large supplier base

Rich mineral wealth

Competitive manpower cost

Supportive government

Incentive packages for large investments

Offers a ‘good quality of life’

Rajasthan shines on the solar map of India. The state is endowed with 300-330 clear sunny days and

average daily solar incidence of 5–7 kWh/m2, comparable to deserts of California, Nevada, Colorado and

Arizona. Within the state the districts such as Barmer, Bikaner, Jaisalmer, Jodhpur are the key regions

with best solar radiation in the state.

High Solar Insolation

6.6 - 6.4

6.4 - 6.2

6.2 - 6.0

6.0 - 5.8

5.8 - 5.6

5.6 - 5.4

5.4 - 5.2

5.2 - 5.0

5.0 - 4.8

4.8 - 4.6

4.6 - 4.4

KWh / sq. m

< 4.94

4.95 - 5.14

5.15 - 5.34

5.35 - 5.54

5.55 - 5.74

5.75 - 5.94

5.95 - 6.14

6.15 - 6.34

> 6.35

Radiation2

(kWh/m /day)

On-Grid ProjectsThe upcoming generation projects are fueling optimism in the

manufacturers. Rajasthan has emerged as the preferred

destination among project developers, accounting for 571 MW or

an overwhelming 81% of the total allocations of 704 MW made so

far under the NSM, including the migration projects.

The State is exploring to provide long term viability and certainty

to build up of solar energy generation and manufacturing

platforms. To achieve this, Solar Park at Bhadala, Tehsil Phalodi,

District Jodhpur is being developed.

About 10,000 hectare of government land has been identified for

park and 1,000 hectare has been earmarked for Solar

manufacturing. The topographic survey & geo-technical

investigation for 3,000 hectare has already been done in 1st phase

and another 5,000 hectare land is planned in second phase. In

addition, 60 cusecs of water has been reserved for this purpose

from Indira Gandhi Nahar Project (IGNP).

The Rajasthan State Industrial Development and Investment

Corporation (RIICO) is highly proactive in providing land and

supporting infrastructure within the State. The State also has set

aside a 1,000 acre land for a solar manufacturing facility near

Ghilot in Alwar district.

Upcoming Solar Park and Large Land Parcels

The state government aims at developing Rajasthan as a global

solar power hub of 10,000-12,000 MW capacity over the next 10-12

years to meet energy requirements.

Also, the pipeline commitments of generation projects in

Rajasthan ushers a significant business opportunity for solar

component manufacturing.

Rajasthan

Solar PV (MW)

Solar CSP (MW)

141 430

Andhra Pradesh15 50

Others32

Maharashtra16

Gujarat20

State wise allocation under First phase of NSMSource: MNRE, NVVN, Government of India

Huge End Market

The allocation of projects reveals that maximum sanctioned projects are in the

districts of Jaisalmer, Bikaner, Jodhpur, Nagaur and Barmer. Jaisalmer is the leader

in allocation of solar projects with installation of 320 MW across 8 projects (four

each in Solar PV and Solar thermal). Jaisalmer district scores over the others

primarily due to solar radiation in the region, which is ideally suited for harvesting

solar energy. Bikaner is also expected to have projects of over 120MW.

The Indian Renewable Energy Development Agency (IREDA) sanctioned 98MW of

solar PV capacity across 80 projects under the Rooftop PV & Small Solar Generation

Programme (RPSSGP). Rajasthan accounts for the highest number of projects

RPSSGP. Rajasthan accounts for 12 projects (15% of total projects) of 12 MW (12% of

total capacity) sanctioned under rooftop solar PV and small solar projects.

State wise allocation under phase for RPSSGP (Capacity)Source: MNRE, IREDA

Others (34.35 MW)

Jharkand (16 MW)

Rajasthan (12MW)Andhra Pradesh (10.75 MW)

Haryana (8.55 MW)

Punjab (8.5MW)

Others (23)

Jharkand (8)

Rajasthan (12)Andhra Pradesh (11)

Haryana (9)

Punjab (7)

State wise allocation under phase for RPSSGP (No. of. Projects)Source: MNRE, IREDA

Rajasthan has the highest sanctioned projects (~52% of the

total allocation) in Off-Grid Solar Application scheme of NSM.

Rajasthan’s competitive advantage lies in its large existing

supplier base spread across sector such as glass and mirror,

cement, steel, iron, salt, etc. which are critical raw materials for

manufacturing solar components, especially for Solar CSP

technology. With agglomeration and spillover effects, the State

has the opportunity to build on its glass and ceramic

manufacturing experience to develop solar grade glass and

mirrors.

Rajasthan(10268 MW)

State wise allocation under off grid scheme of NSMSource: MNRE, NVVN, Government of India

Madhya Pradesh

Uttar Pradesh(2318 MW)

(1701 MW)

Chattisgarh(1457 MW)

Lakshwadeep(1100 MW)

Others(2924 MW)

Off-Grid Projects

Large Supplier Base

Average manpower costs in the State are 30-35% lower across all

skill categories. In addition, the state has a requisite pool of skilled

manpower that could cater to the requirements for solar

component manufacturing. Certain skills in general

manufacturing industry (such as glass) are easily transferable to

solar manufacturing and related industries.

Rajasthan’s competitive advantage lies in its large existing

supplier base spread across sector such as glass and mirror,

cement, steel, iron, salt, etc. which are critical raw materials for

manufacturing solar components, especially for Solar CSP

technology. With agglomeration and spillover effects, the State

has the opportunity to build on its glass and ceramic

manufacturing experience to develop solar grade glass and

mirrors.

The State alone produces 99% of zinc concentrates of India. The

state also holds the largest resources of lead-zinc ore amounting

to 468.51 million tonnes (90%) in India. The developed iron and

steel industry in and around the State coupled with high

availability of zinc concentrates used for galvanization offers a

potential for manufacturing mounting structure.

Rajasthan is also the third largest producer of salt in India with an

average annual production of 1.2 million metric tonnes.CompetitiveManpower Cost

Comparative salary rates

Rajasthan

Peer states ``````````````````````````````````````````

````````````````````````````

Rich Mineral Wealth

Dedicated Freight Corridor (DFC) and Delhi Mumbai Industrial Corridor

(DMIC) are expected to be a game changer in bringing about logistical

efficiencies for the industry. A 1483-km long Dedicated Freight Corridor

between Delhi and Mumbai is expected to be completed by 2016. About

39% of the corridor passes through State and 46% of the total DMIC Project

Influence Area (PIA) falls in the state.

DFC Alignment

DMIC Influence

Junctions along DFC

End Terminals

Delhi

Haryana

Punjab

Gujarat

MadhyaPradesh

Rajasthan Jaipur

CBB

DDD

EEE

Phulera

Rewari

Dadri

Kota

Marwar Jn.

Palanpur

Jodhpur

Pirthala

AAAAAA

B

A

Amli Road/Sabarmati

Development Nodes

ABCDE

Bhiwadi-NeemranaAjmer-KishangarhJaipurBhilwara-ChittorgarhJodhpur-Pali

5 out of 6 Development Nodes are in Rajasthan

Logistics

Rajasthan offers a good and comfortable quality of life to its

residents.

The State has excellent medical & health facilities and is home

to several state-of-the-art hospitals such as Fortis, Narayan

Hrudalaya, Santokba Durlabhji Memorial Hospital and S.K Soni

Hospital

The State has a large number of renowned educational

institutions such as IIM, IIT, AIIMS, BITS Pilani, Raffles University,

FDDI, Mayo College, Amity University and many more.

Rajasthan has 2 out of 3 hotels in India that have been ranked

amongst 15 best hotels in the world and top 5 in Asia by the

readers of Travel & Leisure, USA in 2011. The State has almost

all major hotel brands including Oberoi, Taj, ITC, and Marriott.

Rajasthan has a very peaceful environment with one of the

lowest crime rates in the country

Jaipur, the State capital is a modern city, with low congestion

and pollution with all conveniences and a great night life like

that of a metropolis including restaurants, cinemas, malls and

supermarkets.

Good Quality of Life

Annual Manufacturing Capacity SPV Power Plant Allocation

10 MW

20 MW

More than 25 MW but less than 50 MW

More than 50 MW

Time bound approvals and clearances

Online submission of application

Mandatory to submit application only through this

system to render transparency to the system

BIP is the nodal agency for this system

Single WindowSystem

A Welcoming &SupportiveGovernmentGenerating higher levels of economic growth and prosperity through

increased private sector investment is a top priority for the State of

Rajasthan. The Bureau of Investment Promotion (BIP) is the primary State

Institution supporting inward private sector investment in Rajasthan. BIP is

committed to providing a professional service and a timely response to

current and prospective investors in the State.

The Agency assists investors to objectively evaluate Rajasthan as a location

for their investment projects. It works with State and Local Governmental

authorities to expedite approvals, where necessary, to enable a fast start-up

of operations. Because “time is money”, the Government has introduced a

Single Window System that serves as a single point interface between

investors and various government departments and ensures faster decision-

making on applications for licenses and permits. BIP is the nodal agency for

the Single Window System.

The Government of Rajasthan has issued Rajasthan Energy Solar Policy, 2011 in April 2011. The policy provides framework for development

of large scale solar power for achieving the cost of solar power generation leading to grid parity. The Rajasthan Solar Energy Policy, 2011

aims to develop the state as a global hub of solar power of 10,000-12,000 MW capacity in next 10-12 years. The policy also aims at

establishing large scale manufacturing capability of solar and allied industries resulting in creation of direct and indirect employment

opportunities in the State. The policy envisages allocation of 200 MW of solar photovoltaic power generation plant for establishing

manufacturing facility with processing from wafer stage. The policy aims to create an annual manufacturing capacity of 500 MW by 2013.

Rajasthan Solar Energy Policy, 2011

The Rajasthan Investment Promotion Scheme 2010 provides a range of subsidies

and exemptions from taxes for investors in Rajasthan. In addition, for investments

above US$100m and providing minimum employment for 200 people, the State is

willing to provide special customized incentive packages tailored to the needs of

individual investors. The State's aim is to ensure that Rajasthan is competitive with

peer states in terms of financial incentives offered to major investors.

Customized Incentive Packages for Large Investments

The Rajasthan Investment Promotion Scheme (RIPS) 2010

is a package of financial incentives and subsidies for

investors.

RIPS 2010 provides investment subsidy to all eligible

investors of an amount equal to 30% of the tax deposited,

without any linkage with payment of interest and wages.

Employment generation subsidy @ Rs. 15000 per

employee/annum. For women, SC/ST and persons with

disability this amount has been enhanced to Rs. 18000 per

employee/annum.

Subsidies:

Exemption from Taxes:Some of the tax exemptions announced in RIPS are

50% exemption from payment of Electricity duty;

50% exemption from payment of land Tax;

50% exemption from payment of Stamp duty on

purchase or lease of land and

construction/improvement on such land;

50% exemption from payment of conversion charge

payable for change of land use.

The exemptions have been announced for seven years for

payment of Electricity duty, and Land Tax.

Rajasthan Investment PromotionScheme (RIPS) 2010

BIP’s Messageto InvestorsAs the IPA for Rajasthan, the Bureau of Investment Promotion (BIP) offers you a dedicated professional

support team for your Solar Power investment.

We are a One Stop Shop for all your investment needs, from project inception through completion to

investment aftercare.

Guided by the highest standards of business ethics, we promise to make a timely and effective response

to your enquiries and to provide information on all aspects of investment in Rajasthan.

We look forward to meeting with you soon and we warmly invite you to visit Rajasthan to see for

yourself the exciting opportunities available.

Please contact us using the details given on the back cover.

Knowledge Partners

Contact Officers

Dr. Purushottam Agarwal Commissioner, BIP

Mr. Amit BorahSolar Sector Incharge, BIP

Bureau of Investment PromotionUdyog Bhawan, Tilak Marg, Jaipur 302005Rajasthan, IndiaTel. +91-141-2227274, 2227812, 2227713Fax +91-141-2227506www.investrajasthan.comE-mail: bip.raj@nic.in