INDIA RE CEO SURVEY 2018

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MarketIntelligenceUp-to-date information

Industry network

360 degree view

Strategy ConsultingBusiness strategy Market environment Strategic alliances

TransactionAdvisoryFinancial advisory

Fund raising, M&A

Due diligence

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1© BRIDGE TO INDIA, 2018

This is the third year of our CEO survey. And the survey is bigger than ever - we have got 44 responses covering full range of private sector stakeholders from India as well as abroad.

Introduction

Project developers

Equipment manufacturers

EPC contractors

Financiers

Some company names are shown more than once in this table depending on range of their business activitiesFor multinational companies, the survey has been completed by respective heads of Indianbusiness units.

Notes:1.

2.

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The survey participants are highly diversified by business profile and geography.

Respondents across the value chain

Respondents from across the globeThis year’s survey has an almost equal level of participation from Indianand international players. Among the international players, we saw a greaterparticipation from German, Chinese and US companies.

45%55%

International

India

35% 36%

4%

25%

EPC

Financiers

Equipmentmanufacturers

Projectdevelopers

2

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Key findings

Industry outlook

Balanced Extremelyoptimistic

3%Very optimistic

15%Optimistic52%27%

Not optimistic3%

Bidding environment

Integrated manufacturingcapacity of modules by 2022

Ranking of states

Top 3 states forutility scaleRE projects

Top 3 states foropen accessRE projects

Top 3 states forrooftop solarprojects

AndhraPradesh

MadhyaPradesh

Gujarat

AndhraPradesh

TamilNadu

Karnataka

Madhyapradesh

HaryanaMaharashtra<3 GW

77%

Total capacity by March 2022

Solar power

66 GWRooftop solar power

10 GWWind power

52 GW

66%of target

25%of target

87%of target

Irrationallyaggresive70%

< 50 GW18%

75 - 100 GW14%

>100 GW7%

50 - 75 GW61%

< 8 GW21%

10 - 14 GW24%

>14 GW17%

8 - 10 GW38%

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Even with the threat of duties, falling tariffs, weak power demand and various policy challenges, bulk of respondents are optimistic about the industry and its growth prospects.

60% of respondents expect total rooftop solar capacity to be less than 10 GW by March 2022.

Market growthIndustry outlook

Sentiment regarding total solar power capacity addition by March 2022 is in line with previous year. Most respondents believe that India will achieve total solar capacity of 50-75 GW by 2022, a little over 60% of the Government of India’s target.

Solar capacity by March 2022

Rooftop solar capacity by March 2022

CEO Survey2017

<40 GW10%

40-60 GW48%

60-80 GW26%

< 10 GW39%

15 - 20 GW29%

>20x GW10%

> 80 GW16%

10 - 15 GW22%

5

CEO Survey2017

Balanced

27%

15%

3%

3%

Optimistic

Extremely optimistic

Not optimistic 52%

Very optimistic

< 50 GW42%

> 60 GW13%

50 - 60 GW45%

< 6 GW39%

> 10 GW19%

6 - 10 GW42%

None28%

3 - 6 GW27%

> 6 GW12%

1 - 3 GW33%

< 3 GW14%

5 - 10 GW36%

>10 GW14%

3 - 5 GW36%

6© BRIDGE TO INDIA, 2018

Wind power has undergone a compete paradigm shift in the last year by moving from feed-in-tariffs to auctions. Despite the resulting disruption, 58% of the industry believes that India would achieve a total capacity of over 50 GW byMarch 2022.

Open access prospects seem largely unchanged from last year. Most respondents feel that India will add about 6-10 GW of open access power by March 2022.

Open access RE capacity by March 2022

Wind power capacity by March 2022

Notwithstanding the ongoing safeguard duty investigation and the government’s Make in India push, the industry is pessimistic about module manufacturing prospects in India. 61% of the respondents believe that India will have less than 3 GW of integrated manufacturing capacity by March 2022.

Integrated solar module manufacturing capacity by March 2022

Outlook for individual business growth seems a little muted in comparison to last year. Most industry players believe that their business shall grow by 3-5x by 2022.

Business growth by March 2022

CEO Survey2017

CEO Survey2017

3x-5x48%

>3x19%

5x-10x16%

>10x16%

3-5x40%

5-10x16%

>10x5%

<3 GW40%

Storage has been talked about as a vital component of clean energy grid, but it is yet to find acceptance in India. The industry feels that high cost, lack of awareness and enabling policy environment (in that order) are restricting the growth of this market.

Storage market challenges

7© BRIDGE TO INDIA, 2018

Not surprisingly, more than 70% of respondents feel that the current bidding environment is irrationally aggressive, a view maintained by BRIDGE TO INDIA for some time now. Tariffs ought to move up particularly in view of the increasing tender issuance, but it remains to be seen if DISCOMs are willing to accept that.

Challenges in utility scale renewable energy market

The response on variousoperational challenges paints a bleak picture. All factors are assessed as challenging/ very challenging. The three biggest concerns are safeguard dutythreat, poor policy environmentand weak financial condition of DISCOMs.

3%

27%70%Irrationallyaggressive

Balanced

Fairlyaggressive

Challenges facing the sectorCurrent bidding environment

Lack of techo-commercialunderstanding

33%

Lack of enablingpolicy environment

32%

High Cost35%

Very challenging Not challenging Very challenging

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Gujarat (followed by Madhya Paradesh and Andhra Pradesh)tops ratings for the mostfavourable state for policyframework (clarity and visibility), land acquisition, transmission capacity, permits and approval process. The three worst stateson these combined parametersare Maharashtra, Tamil Naduand Haryana.

Karnataka is understandably the overwhelming favourite for open access projects because of its very attractive policy and ease of getting approvals. It is followedby Andhra Pradesh and Tamil Nadu. The bottom three states are Rajasthan, Maharashtra and Gujarat.

Attractiveness for open access RE projects

Madhya Pradesh, Maharashtra and Haryana are the most preferred states for rooftop solar. Less enthusiasm for Tamil Nadu, Punjab and Uttar Pradesh.

Attractiveness for rooftop solar projects

State rankingsEase of doing business for utility scale projects

Andh

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Kar

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Mad

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Para

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Mah

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Guj

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Har

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Punj

ab

Raj

asta

han

Tela

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a

Tam

il N

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Utt

ar P

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Very poor

Fair

Very good

Guj

arat

Andh

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Kar

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ka

Mad

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Para

desh

Mah

aras

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Har

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Punj

ab

Raj

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Tela

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a

Tam

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Utt

ar P

rade

sh

Very poor

Fair

Very good

Guj

arat

Andh

ra P

rade

sh

Kar

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ka

Punj

ab

Raj

asta

han

Tela

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a

Mad

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Para

desh

Mah

aras

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Har

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Tam

il N

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Utt

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Very poor

Fair

Very good

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