Hidden Opportunities

Monday 17th May will be marked in Golden Words in Indian Infrastructure History because of a decision and action plan of “Planning commission” set up for the current fiscal year. Planning commission set a quarterly target for its infrastructure sector to monitor progress in power generation and building of roads and ports, which are believed to be crucial for the economic growth.

According to the targets set by the commission, both the central and state governments along with private companies, will add 20,359 MW of power to its present capacity. Of this, 4,126.5 MW will be added by the end of the quarter ending June 2010.

Though the target seems a little bit unachievable but still I’m sure that as the development will be monitored on a quarterly basis it will give a more controlled positioning and monitoring of the targets. The reason for me to think that the targets are more than optimistic and less of realistic is because of the last year status-quo.

During the last fiscal the government had set a target of 14,507 MW of Power generation capacity additions, but was able to add only 9,585 MW, i.e. the target was missed by 40%.

But the good news is that as the government is very keen and optimistic for the targets resulting in ample opportunities in power sector and the sector appearing more lucrative and worth investing. With the relaxed FDI (Foreign direct investments) limits of 100% in power and infrastructure promising new opportunities for the foreign investors to invest in India growth story.

There is immense potential in power and infrastructure sector but the way things will be implement will put new challenges to honor. One site we need to honor the commitment we as a country have in terms of reducing the carbon emission and on the other hand we need to keep the country moving by adding additional power generation installations.

As per statistics Fossil fuels are the source for 70% of 90,000 MW installed capacity for electricity generation, Hydro-electricity contributes about 25%, and the remaining is mostly from nuclear power plants (NPPs). This statistics of generation may be because of the opportunities, government norms, technicalities and what not but if we believe the statistics then any new investment will follow the same pattern.

The new opportunities appearing out of the new infrastructure targets seem to be in non conventional energy especially wind power. Wind power project are turning to be a lucrative investment avenues and to add more government is announcing more perks in terms of tax holidays, commitment of purchasing power generated and flexible tariff.

This a opportunity knocking at the doorsteps for People/entrepreneurs who are interested in cleaner energy, people who are farsighted and can see the benefits of implementing a Cleaner energy project at this juncture. I believe this is the right time to do a Value Investing and initiate a Power project that is eco friendly having early breakeven and having subsidiary projects of livestock farming, organic farming and carbon credit trading.

Invitation for investment

Since the initiation of the economic liberalization process in 1991 most of the sectors have attracted considerable investments (automobiles, chemicals, food processing, oil & natural gas, petrochemicals, power, services, and telecommunications). Today India offers exciting business opportunities in virtually every sector of the economy. I’m having affection and inclination towards Non conventional energy (the obvious reasons being clean and environment friendly). In spite of having benefits in investing in India, raising fund for clean power projects is bit difficult and the hunt for investors to invest in clean energy project is on.

Investment Policy
Foreign Investors can enter into a joint venture with an Indian partner for financial and/or technical collaboration and also for setting up of renewable energy based power generation projects. The liberalized foreign investment approval regime is aimed at facilitating foreign investment and transfer of technology through joint ventures.
100% foreign investment as equity is permissible.

Government of India encouraging foreign investors to set up renewable energy based power generation project on Build-Own-Operate basis.

Opportunities
In India, investment opportunities are available for the following types of investors and users:-
Investment by foreign investors in renewable energy:

Wind, Solar Photo-voltaic, Solar Thermal, Small Hydro, Biomass, Co-generation, Geothermal, Tidal and Urban & Industrial Wastes based power projects.

Investment by foreign investors for manufacturing of renewable energy systems and devices based on:

Solar Photo-voltaic, Solar Thermal, Small Hydro, Biomass, Co-generation, Geothermal, Tidal and Urban & Industrial Wastes for their utilization in India and also for exports to developing and Third World countries.

Information Source: http://iic.nic.in/iic3_a.htm
Image source: : thewe.cc

Carbon price predictions

European Union carbon emissions futures rose on Monday, as a cold weather snap across Europe continued, if the cold weather lasts into next week and energy demand remains high, prices could break a key resistance level of 13.55 euros.

Market analyst, Point Carbon has published a report predicting that Europe’s Emissions Trading Scheme (EU ETS) is likely to raise the price of carbon in the EU from around €15 per tonne today to €30 in 2013 and €40 by 2016. If we go with the predictions and wish they come true, will bring a pressure globally to reduce the carbon emission and will create awareness among the people and manufacturers as to what products and services use more carbon and what are the substitutes available. High carbon price will give more incentive to the inventors and innovators to develop and introduce low carbon products.

What is carbon credit: Carbon credits create a market for reducing greenhouse emissions by giving a monetary value to the cost of polluting the air. Emissions become an internal cost of doing business and are visible on the balance sheet alongside raw materials and other liabilities or assets. Carbon credits are a key component of national and international attempts to mitigate the growth in concentrations of greenhouse gases with One Carbon Credit is equal to one ton of Carbon Dioxide or in some markets Carbon Dioxide equivalent gases.

There are also many companies that sell carbon credits to commercial and individual customers who are interested in lowering their carbon footprint on a voluntary basis. There are two distinct types of Carbon Credits: Carbon Offset Credits (COC's) and Carbon Reduction Credits (CRC's). Carbon Offset Credits consist of clean forms of energy production, wind, solar, hydro and biofuels. Carbon Reduction Credits consists of the collection and storage of Carbon from our atmosphere through biosequestration (reforestation, forestation), ocean and soil collection and storage efforts. Both approaches are recognized as effective ways to reduce the Global Carbon Emissions.

Information Sources: reuters.com
Knowledge Source: Wikipedia.org

Image source: philsbackupsite.wordpress.com

Opportunities knocking.

Private sector was holding there investment until the conclusion of Copenhagen conference. As the future investment in clean technology was heavily dependent on the outcome of the 15th Conference of Parties (COP 15) to the UN Framework Convention on Climate Change (UNFCCC), private sector was anxious to hear the target world leaders would have committed to and the mitigation actions developing countries would have to take.

Prior to the conference major of the countries proposed plans and targets to further reduce their emissions; however, all of those plans were contingent on reaching an international agreement.

With no concrete conclusion deriving of the conference and many developing countries having an opinion that climate change is a moral issue, caused by developed countries and it should be solved at their cost, the counter argument was that developing countries are causing greater extend of damage to the climate due to faster industrialization and deforesting, so owners are with them.

Every one from the industrialist to governments might be relaxed as of now and relaxing on there chairs because if any concreate decision would have arrieved at Copenhagen conference then they could have been in trouble to comply with those commitments. But this is not the time to push back to our seats and relax, instead this is a time to make strategy, (What is strategy : Strategic is nothing but being different in the context one is operating).

This a opportunity knocking at the doorsteps for People/entrepreneurs who are interested in cleaner energy, people who are farsighted and can see the benefits of implementing a Cleaner energy project at this juncture, I Consider this as Value Investing and the investment made today will reap immense profit in the coming future.


Wind, not the sail determine the way we go…

Image source: farmersguardian.com