May 2012 Strictly private and confidential

REC, GBI and CDM can lead to significant upsides
10
5
0
20
15
7.8
Equity IRR Impact of REC, GBI and
CDM
1.7
2.6
8.6
20.7
5,0
4,0
3,0
2,0
1,0
0,0
2.5
Tariff Impact of REC, GBI and CDM
1.5
0.3
0.18
4.5
Key Assumptions:
1)
REC : Rs. 1.5 /u till FY17 and Rs. 1/u post FY17
2)
CDM : 3.5 euro/CER is sale price; revenues from second year
2

REC market stabilizing (Non-solar), but limited government utilities participation
3500
3000
2500
2818
2000
1500
1500 1500 1505
1554
1789
2237
250 000
2710
2891
2950
3051 3065
2907
200 000
150 000
100 000
1000
500
0
50 000
0
3 мар-
2011
MCP (INR/REC) 2818
MCV (RECs) 424 апр-
2011
1500
260 май-
2011 июн-
2011 июл-
2011 авг-
2011 сен-
2011 окт-
2011 ноя-
2011 дек-
2011 янв-
2012 фев-
2012 мар-
2012
1500 1505 1554 1789 2237 2710 2891 2950 3051 3065 2907
18 502 16 385 18 568 25 096 46 362 95 504 105 527 111 621 171 524 206 188 199 737
Source: www.recregistryindia.in
MCP (INR/REC)
1) REC Sale Price stabilised over second half of FY12
MCV (RECs)
2)
Buy bids peaked in Jan-2012; modest decline in Feb & Mar 2012
3)
For FY12, the closing balance of REC inventory was 38545 RECs against annual redemption volume of 1 million RECs
4)
Most State Government owned utilities have not even opened trading account

4
RECs: An upside
•
REC option for power sale has its own risk, but might turn out to be more profitable than Feed-in tariff (FIT)
– It might be possible that REC market may be the only option for selling Renewable and FIT is not available or vice-versa
 Key Risk of REC is liquidity and if Discoms don’t participate and RE
Generator’s RECs increases , without a market maker, it will become  difficult to sell

5
GBI : IPP’s taking over AD investors
Installed Capacity Addition in MW
3500
2
3000 3000
2500
1
2350
2000
1748
1778
1584
1500
1565
1484
1000
1115
500
0
608
285
239
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12
1000
800
600
400
200
0
Source : MNRE
GBI Registered Projects
(MW)
867
2010
449
2011
1  Growth was largely on account of accelerated depreciation linked tax benefit market
2
 Growth in last two years is driven by
Independent Power
Producers (IPPs)
 AD in FY12 might be approximately 1500
MW out of 3000 MW
 The pace at which IPP segment is growing might replace atleast
1000 MW out of 1500
MW of AD, making
FY13 end at 2500 MW

6
•
We understand that MNRE has been supporting GBI extension and decision is pending with Ministry of Finance
– Current GBI benefit might get extended to 4000 MW
 Key risks are some of the SERCs are asking for GBI benefits to be reimbursed to the Utilities (e.g. RERC latest order)
– This completely negates the objectives of MNRE to incentivize renewable

7
•
Inspite of lower CER prices, it is a significant upside
– CER Prices are expected to go up with recovery of demand in European Unions
 Key issues in CER
– One should target to get the CDM registration done by end of 2012, as EU, has extended certain regulation to bar applicability of CERs generating from project registered beyond 2012 from +5 nations in compliance of emission reduction targets, increases the risk of commercialization of such projects
– Huge back lock at MoEF for Host Country Approval

8
 Irrespective of key risk and uncertainty associated with each of the options, growth of Wind Industry is dependent on these upsides
 In Karnataka REC or TPS/Group Captive is the only viable option to invest, with FIT so low
 In Gujarat REC is the only option, unless GERC revises FIT tariff to a comfortable level
 In Rajasthan, with recent uncertainties on signing PPA, many investors are looking at RECs
 Currently FIT in most of the States other than Maharashtra, Orissa and to some extent Rajasthan are so low that it is impossible for making a project viable at FIT and hence one has to depend on one of these upsides or try for Group Captive or
Third Party Sale structure

9
Parag Sharma
Chief Operating Officer
ReNew Wind Power
M: 9810052210; parag@renewpower.in