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1、Apoorva Bahadur+91(22)6616-9325 Goldman Sachs India SPL Nikhil Bhandari+65 6889-2867 Goldman Sachs(Singapore)PteEQUITYRESEARCH|July 18,2023|10:45PM ISTIndia Clean EnergyGoldman Sachs does and seeks to do business with companies covered in its research reports.As a result,investors should be aware th

2、at the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.For Reg AC certification and other important disclosures,see the Disclosure Appendix,or go to employed by non

3、-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.The Goldman Sachs Group,Inc.Balancing Growth with DecarbonisationIndias electricity sector is undergoing a generational shift in our view,as the country attempts to grow and decarbonise,simultaneously.Years of pea

4、k demand growth(rising electrification and appliances penetration)alongside less reliable capacity additions(renewables accounted for c.75%of new power capacity additions in the last 7 years)have absorbed the systems supply surplus.We foresee the beginning of a peak power deficit cycle,elevating the

5、 criticality of storage-backed round-the-clock renewable energy(RTC RE).Our analysis suggests the viability of RTC RE in certain use cases which will provide an economic incentive for transition,and unlock a superior business model for utilities.The need to balance energy security along with the tra

6、nsition would result in a premium for pumped hydro storage(PSP)capacity.We also see upside risk to our and the governments coal capacity targets,which could lead to a valuation re-rating of legacy thermal businesses.We highlight 4 key inferences:#1 Superior return profile of PSP-backed RTC RE(20-25%

7、equity IRR vs.13-15%for solar&coal)can structurally improve the business model of utilities.#2 c.400GW economically viable RE capacity potential with corporates shifting to net-zero compliant and economically viable RTC RE supply,alongside the solarisation of agricultural power supply.This is a uniq

8、ue opportunity for India vs.other large economies.For context,we estimate RTC RE viability in China closer to 2030E despite it being self-sufficient in RE&batteries.#3 Our India Stationary Storage Demand model estimates c.600GWhr storage demand by FY32E,but India will meet only c.80%of it even in an

9、 optimistic execution scenario.Consequently,India may need to add c.23GW more coal capacity than what government targets.#4 Public Sector Undertakings are uniquely positioned in the RE business with equity IRR advantage of 150-200bps given their significant structural funding cost advantage backed b

10、y large balance sheets.Note:The following is a redacted version of the original report published 18 July 2023 41 pgs.PM Summary 4 Thesi s i n 15 charts 7#1 I ndi as economi cs dri ven RE transi ti on di fferent from that wi tnessed elsewhere globally 13#2.wi th the potenti al to di srupt Uti li ty b

11、usi ness model,for the better 18#3 But ri si ng peak defici ts wi ll ri sk supply reli abi li ty.21#4.even as Pumped Hydro emerges as I ndi as rescuer,ad i nteri m 27#5 Battery storages cost di spari ty could force hi gher coal capaci ty addi ti on 29#6 Demand growth underperformance key ri sk to ou

12、r thesi s 34 Di sclosure Appendi x 37 18 July 2023 2Goldman SachsIndia Clean EnergyTable of Contents Who stands to gain?Public Sector Undertakings with significant funding cost advantageDevelopers with firm(coal&hydro)untied capacitiesIndias unique economics-led renewable transition driving a busine

13、ss model upgrade;power storage critical but coal to stay relevantPumped hydro backed round-the-clock renewable power supply earns 1.5-2x returns vs.plain vanilla solar and cost-plus coal plantsWe see an economic case for c.400GWrenewable capacity addition in India across corporate and agriculture se

14、ctorsOur India Peak Power Demand Supply model forecasts 47GW peak shortages by FY32E,factoring firm capacity addition pipeline and plansPlayers with access to cost competitive storage capacityDevelopers with ability to add de-risked(cost plus)fossil capacities to meet marginal demand while staying p

15、rotected from risk of stranded investmentOur India Stationary Storage Demand model estimates c.600GWhr storage demand by FY32E but India will meet only 80%of it even in optimistic execution scenario requiring 50%more coal capacity additionthan govt.plan0.00.51.01.52.02.53.03.54.04.502468101214161820

16、Peak deficitCoverage P/BV(reported)-RHS(%)(x)051015202530Coal-cost plusSolar-plain vanillaRTC PSP for C&I(leased storage)RTC PSP for C&I(owned storage)Equity IRR(%)PM Summary What makes I ndias Renewabl e transition different from the worl d?1.We see an economic case for RE transition i n I ndi a fo

17、r certai n use cases(TAM ofc.400GW economi cs-supported RE capaci ty addi ti on)vs.bei ng mostly dri ven by government subsi di es and i ncenti ves elsewhere,whi ch can potenti ally enable superior returns for devel opers.Whi le old pi thead coal plants conti nue to lead the cost curve for reli able

18、 power supply,we esti mate PSP backed RTC RE power to cost onl y 15-17%more than new pithead coal pl ants(negli gi ble after factori ng the transmi ssi on cost wai ver).Further,thi s di fference i s expected to narrow over ti me due to i nflati on i n coal and coal logi sti c costs.2.The country wi

19、ll have to decarboni se whi le i ts electri ci ty demand conti nues to grow.Unli ke globally,risk of stranded investments in I ndia wil l be l ow(as demand growth wi ll ensure absorpti on of margi nal capaci ti es),ensuri ng supply reli abi li ty wi ll remai n challengi ng i n an envi ronment where

20、the potenti al for sharp cost decli nes i n up and comi ng technologi es i s hi gh.3.As per our esti mates,I ndi as leveli sed cost for RTC RE is currentl y 27%l ower than that of China,on account of i ts hi gher solar i rradi ati on and a fully i ntegrated nati onal transmi ssi on gri d whi ch allo

21、ws uti li sati on of most opti mal si tes wi thout evacuati on constrai nts.What are its impl ications?We anticipate a structural improvement in the business model of devel opers1.on two fronts:a)hi gher returns from compli cated RTC proj ects(20-25%equi ty I RRvs.13-15%for plai n vani lla solar and

22、 regulated coal proj ects),and b)i mprovement i ncustomer base from financi ally weak state DI SCOMs to corporates wi th bettercredi t profiles.Phase of peak shortages has al ready started as the country added 71GW net2.firm capacity(thermal and nucl ear)when peak demand rose by 80GW over thel ast 1

23、0 years.We expect the situation to worsen despite factoring 54GW firmcapacity addition as we estimate peak demand to grow by 138GW overFY23-32E.Based on the above,we expect firm capacity to command a premium over the3.next few years unti l battery storage pri ces decli ne to a level whi ch makes coa

24、lcapaci ty redundant(USD89/kWhr by FY30E as per our global batteri es teamesti mates).However,unti l then,PSP and unti ed coal&hydro capaci ti es wi ll li kelyearn returns si gni ficantly above thei r cost of equi ty.How l arge is the opportunity?We peg the TAM for economics driven RE capacity addit

25、ion at c.400GW.Thi s1.wi ll also be i n addi ti on to our 203GW/48GW gri d-level solar and wi nd capaci tyaddi ti on esti mates between FY23-32E(vs.govt.target of 298GW/79GW).Our I ndi a Stati onary Storage Demand Supply model esti mates the countrys total2.18 July 2023 4Goldman SachsIndia Clean Ene

26、rgystati onary uti li ty-scale storage requi rement at c.600GWhr by FY32E.Even in the l ess l ikel y scenario of a timel y devel opment of the entire c.400GWhr PSP capacity(under pl anning and devel opment)and c.70GWhr BESS depl oyment,I ndia wil l stil l see a 20%shortage of storage capacity.Reali

27、sti cally,we expect 19GW PSP and 18GW battery storage capaci ty i nstallati on3.by FY32E,wi th the balance demand bei ng met by i ncremental coal capaci tyaddi ti on.We see potential upside of 23GW/30GW coal capacity addition between4.FY24-32E,over and above the governments/GS estimate of 48GW/42GWr

28、espectivel y,in our scenario to avoid peak shortages after factori ng the storagedemand supply equati on.We factor i n li mi ted executi on on Nati onal Electri ci ty Plansforecast of outsi zed battery storage deployment(47GW by FY32E),on concernsaround ti mely cost pari ty and domesti c capaci ty a

29、dequacy.Who stands to gain?PSUs(Publ ic Sector Undertakings)with a significant funding cost advantage,1.whi ch wi ll allow them to deploy large RE capaci ti es whi le maki ng materi ally betterreturns i n RTC PPAs.Pl ayers with access to l ow cost PSPs(owned or leased),allowi ng them to charge2.a pr

30、emi um for thei r abi li ty to despatch firm on-demand renewable power.Devel opers with firm(coal&hydro)untied capacities wi ll potenti ally gai n from3.pri ci ng arbi trage ari si ng out of a demand supply mi smatch.Lastly,devel opers who wil l be abl e to add de-risked(cost pl us)fossil capacities

31、4.to meet margi nal demand growth whi le stayi ng protected from the ri sk of strandedi nvestments.What can go wrong?Underwhelmi ng demand growth,as was the case i n the last cycle post FY08,whi ch led to maj or over capaci ty i n the system.However,unli ke last ti me,we draw comfort from:a)i ncome

32、growth led i mprovi ng appli ance penetrati on,b)i ncreased i mportance ofensuri ng supply reli abi li ty now that electri ci ty access i s almost uni versal,c)sharpgovernment focus on i ncreasi ng electri ficati on(rai lways,EVs,cooki ng etc.),and 4)support from the start of a manufacturi ng led ec

33、onomi c upcycle.What can surprise us?Battery storage achi evi ng cost pari ty and supply adequacy,faster than expected1.Qui cker and larger than anti ci pated PSP capaci ty executi on2.18 July 2023 5Goldman SachsIndia Clean EnergyThesis in 15 charts Exhibit 1:Round-t he-clock renewable power already

34、 economically viable for corporat e&indust rial consumers viz-a-viz.grid t ariff.3.1 4.2 4.9 13 6.0 2.1 4.1 7.4 2.0 2.6 4.9 10.0 5.6 6.0 5.3 5.1 0246810Coal-pithead(old)Coal-pithead(new)Coal-non-pitheadGas-LNGGas-APMHydro-oldHydro-newNuclearSolar-lowest bidWind-lowest bidRTC RE-PSPRTC RE-BESSRTC RE-

35、PSPFY27RTC RE-Li-ionbatteryFY27RTC RE-PSPFY32RTC RE-Li-ionbatteryFY32Cost of electricityC&I green tariff-avg.(Rs/kWhr)Grid green tariff-avg.*LNG-Li qui fied Natur al Gas,APM-Adj usted Pr i ce Mechani sm,BESS-Batter y Stor age,PSP-Pumped Hydr o Stor age,RTC RE-Round-the-Cl ock Renewabl es;as of Jun 2

36、3 Sour ce:SERCs,CEA,Gol dman Sachs Gl obal Investment Resear chExhibit 2:.wit h India having lowest RTC RE LCOE among major count ries 0102030405060708090India-SolarIndia-WindIndia-RTC REChina-SolarChina-WindChina-Solar+10hr BESSUS-Solar US-WindEurope RELCOEAvg.Grid Tariff(USD/MWhr)*LCOE-Level i sed

37、 Cost of Ener gyas of Jun23 Sour ce:Gol dman Sachs Gl obal Investment Resear ch18 July 2023 7Goldman SachsIndia Clean EnergyExhibit 3:.which pot ent ially opens c.300GW solar capacit y addit ion opport unit y,increment al t o government t arget s Our TAM analysis estimates solar capacity installatio

38、n required to replace Indias entire non-RE industrial power consumption with green power 171 5 96 25 62 309 10 4 295 050100150200250300350Industrial powerdemand-grid+10%ofCommercial powerdemand+Non RE captivedemand-existing REpenetration+PSP inefficiencyTotal REopportunity forGreen OA-existing Solar

39、 OAcapacity-Solar OA underdevelopmentNet OA solaropportunity(Solar capacity equivalent;GW)*OA-Open Access Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear chExhibit 4:Similarly,solarisat ion of agricult ural power supply is an economically viable use-case for 114GW solar capacit y addit ion Our

40、TAM analysis estimates solar capacity installation required to replace Indias entire non-RE agricultural power consumption with green power Exhibit 5:We est imat e mat erially bet t er ret urns for pumped st orage backed RTC-RE power vs.cost plus coal and plain vanilla solar.130 16 114 0204060801001

41、20140Agri power demand-existing RE penetrationNet agri solarisation opportunity(GW)051015202530Coal-cost plusSolar-plain vanillaRTC PSP for C&I(leased storage)RTC PSP for C&I(owned storage)Equity IRR(%)Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch*C&I-Commer ci al and Industr i alas of Jun

42、 23 Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 8Goldman SachsIndia Clean Energy Exhibit 6:.which along wit h a shift in cust omer profile(from B2G t o B2B)can help upgrade t radit ional ut ilit ies t o t ransit ion enablers,driving valuat ion re-rat ing Business modelTraditi

43、onal UtilityTransition EnablerCapacity typeCost plus thermal,nuclear,hydroPlain vanilla RE,RTC-RE,Power StorageOfftakerLicensed entities(state&pvt.DISCOMs)DISCOMs&CorporatesReturns-equity IRR(%)13-15%12.5-25%-depending upon PPA complexityCapital structure(D:E)-%70:30Typically 80:20 with scope for fu

44、ture capital recyclingDepreciationLinked to capital repaymentLinked to asset lifeTariff design2 part tariff with bulk of capital cost loaded upfrontSingle part levellised tariffOfftake agreement duration25 years12-25 yearsRegulatory oversightHigh;5yr regulatory periodLow;mostly pertains to interpret

45、ation of agreement®ulationsKey risksUnfavorable regulatory orders&return resetOfftakers credit worthiness,capex&opex overruns,refinancing riskValuationPrice/Regulated BookDCF,peer multiples in high M&A environment Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch Exhibit 7:However,rising pe

46、ak deficit will impact grid supply reliabilit y-our India Peak Power Demand Supply model forecast s 47GW peak short ages by FY32E,fact oring firm capacit ies planned&under-execut ion 216 138 353 216 45 48 3 47 -50 100 150 200 250 300 350 400Peak demand FY23+FY23-32 peakdemand growth est.FY32 est.pea

47、kdemand-FY23 installed RTCcapacity(fossil+non-fossil)-fossil RTC capacityaddition-non-fossil RTCcapacity addition+Grid constraintFY32 Peak shortageest.(GW)Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 9Goldman SachsIndia Clean Energy Exhibit 8:.which could in-t urn drive a sect

48、 or rerat ing,as seen in t he last cycle 0.00.51.01.52.02.53.03.54.04.502468101214161820Apr-05Apr-07Apr-09Apr-11Apr-13Apr-15Apr-17Apr-19Apr-21Apr-23Apr-25Apr-27Apr-29Apr-31Peak deficitCoverage P/BV(reported)-RHS(%)(x)Sour ce:Datastr eam,Company data,Gol dman Sachs Gl obal Investment Resear ch Exhibi

49、t 9:Our India St at ionary St orage Demand Model fact ors est imat ed grid short ages along wit h demand from Green Hydrogen and Corporat e Decarbonisat ion use-cases Exhibit 10:While bat t ery st orage t akes t he least t ime t o deploy,it s levelised cost is 2x t hat of pumped hydro,which has a lo

50、ng execut ion t imeline even aft er fast-t racking approvals -100 200 300 400 500 600 700FY23FY24EFY25EFY26EFY27EFY28EFY29EFY30EFY31EFY32EGridGH2C&I(GWhr)024681012-10 20 30 40 50 60 70 80 90CoalPSP-normalPSP-expeditedBESSConstruction duration(Months)*GH2-Gr een Hydr ogen Sour ce:CEA,Gol dman Sachs G

51、l obal Investment Resear ch*batter y and pumped-hydr o l evel i sed cost f actor s 2 cycl es of oper ati on per day Sour ce:CEA,Mi ni str y of Power,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 10Goldman SachsIndia Clean Energy Exhibit 11:.and even in t he unlikely scenario of all planned

52、 pumped hydro capacit ies being execut ed in t ime,India will run c.20%st orage deficit by FY32E 393 152 62 607 10 16 33 72 374 102 -100 200 300 400 500 600 700Grid storagedemand+GH2 storagedemand+C&I storagedemandFY32E totalstorage demand-operational PSPcapacity-non-operationalPSP capacity-PSP unde

53、rdevelopment-BESS storageest.-PSP at MoU/pre-DPRIncrementalstoragerequirement(FY23-32E;GWhr)Less likely that all projects under-survey/MoU will be executed given the technical difficulties inherently associated with hydro projects.Also expect bulk of these to be commissioned by the end of this decad

54、e or later,by when peak demand would have gone up further Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch Exhibit 12:While we est imat e solar t o drive t he bulk of grid capacit y addit ion bet ween FY23-32E.Exhibit 13:.inadequacy of st orage capacit y will impact DISCOMs appet it e for inf

55、irm RE power,hence our grid RE capacit y addit ion est imat es are lower t han government t arget s -5 10 15 20 25 30 35 40 45 50 Thermal Hydro Nuclear Solar Wind Other RE(Annual capacityaddition;GW)-100 200 300 400 500 600GS est.-FY27E Draft NEP-FY27E Final NEP-FY27EGS est.-FY32E Draft NEP-FY32E Fi

56、nal NEP-FY32E Solar Wind Other RE(Installed capacity;GW)Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 11Goldman SachsIndia Clean EnergyExhibit 14:We est imat e requirement of at least 23GW coal capacit y addit ion incremen

57、t al t o government t arget s(30GW beyond our est imat es)t o avoid peak short ages,fact oring t he pumped hydro demand supply equat ion and our bat t ery cost curve est imat es Exhibit 15:Indias generat ion mix likely t o be coal dominat ed over t he next decade even wit h significant planned RE ca

58、pacit y addit ion 66 6 19 18 23 010203040506070FY32 peakshortage(ex-BESS)less:govt coaladdition target notin GSeless:incrementalPSP capacityaddition for gridless:BESScapacity at 10%attach rateAdditional coalcapacityrequirement(GW)-500 1,000 1,500 2,000 2,500 3,000FY12FY14FY16FY18FY20FY22FY24EFY26EFY

59、28EFY30EFY32EBUsCoal&ligniteDieselGasHydroNuclearSolarSour ce:Gol dman Sachs Gl obal Investment Resear chSour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 12Goldman SachsIndia Clean Energy#1 Indias economics driven RE transition dif f erent f rom that witnessed elsewhere globally V

60、iabil ity of RTC RE opens c.300GW corporate RE transition market:Our calculati ons suggest pumped hydro backed RTC RE power i s already cheaper than the average green tari ffs offered by DI SCOMs to commerci al and i ndustri al consumers.Thi s cost advantage,along wi th the corporate push for achi e

61、vi ng net zero opens a si gni ficant capaci ty addi ti on opportuni ty for RE developers.As per our esti mates,I ndi as leveli sed cost for RTC RE i s currently 27%lower than that of Chi na,dri ven by cheaper RE costs overall.When combi ned wi th I ndi as hi gher average gri d tari ff vs.that of Chi

62、 na,i t begi ns to make economi c sense for consumers(especi ally corporates,whi ch are charged even hi gher gri d tari ffs)to shi ft to RTC RE.Si mi larly,I ndi a has a materi ally lower RE LCOE(Leveli sed Cost of Electri ci ty)vs.Europe and i t i s competi ti ve wi th that i n US,despi te havi ng

63、a si gni ficantly hi gher cost of debt(key cost i tem for RE proj ects).I ndustri al and commerci al users consti tute c.50%of I ndi as overall electri ci ty demand and fully transi ti oni ng them to RE could unlock a solar equi valent capaci ty addi ti on opportuni ty worth 295GW at materi ally sup

64、eri or returns and lead to an i mprovement i n customer profile from financi ally struggli ng DI SCOMs to credi t-worthy corporates.Whi le the Central Government has noti fied Green Open Access Norms whi ch have eased processes and pre-condi ti ons to faci li tate di rect RE procurement by corporate

65、s,we note the hi stori cal resi stance by state government owned DI SCOMs to letti ng go of thei r most profitable customers as evi denced by the i mposi ti on of i ncremental costs such as cross-subsi dy surcharge(CSS),addi ti onal surcharge etc.by state electri ci ty regulators to reduce the attra

66、cti veness of open access vi s-a-vi s gri d tari ffs.18 July 2023 13Goldman SachsIndia Clean EnergyExhibit 16:Round-t he-clock Renewables backed by pumped st orage already at cost parit y wit h non-pit head coal 3.1 4.2 4.9 13 6.0 2.1 4.1 7.4 2.0 2.6 4.9 10.0 5.6 6.0 5.3 5.1 0246810Coal-pithead(old)

67、Coal-pithead(new)Coal-non-pitheadGas-LNGGas-APMHydro-oldHydro-newNuclearSolar-lowest bidWind-lowest bidRTC RE-PSPRTC RE-BESSRTC RE-PSPFY27RTC RE-Li-ionbatteryFY27RTC RE-PSPFY32RTC RE-Li-ionbatteryFY32Cost of electricityC&I green tariff-avg.(Rs/kWhr)Grid green tariff-avg.*LNG-Li qui fied Natur al Gas

68、,APM-Adj usted Pr i ce Mechani sm,BESS-Batter y Stor age,PSP-Pumped Hydr o Stor age,RTC RE-Round-the-Cl ock Renewabl es;as of Jun 23 Sour ce:Gol dman Sachs Gl obal Investment Resear chExhibit 17:Indias RTC RE LCOE lowest among among major count ries Exhibit 18:C&I t ariff charged by DISCOMs across m

69、ost st at es significant ly higher t han RTC RE power cost 0102030405060708090India-SolarIndia-WindIndia-RTCREChina-SolarChina-WindChina-Solar+10hrBESSUS-SolarUS-WindEuropeRELCOEAvg.Grid Tariff(USD/MWhr)012345678910(Grid tariff;Rs/kWhr)*LCOE-Level i sed Cost of Ener gy,as of Jun 23 Sour ce:Gol dman

70、Sachs Gl obal Investment Resear chas of CY22 Sour ce:SERCs,SECI,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 14Goldman SachsIndia Clean Energy Exhibit 19:Commercial&Indust rial sect ors account for c.50%of Indias overall,c.40%of grid power consumpt ion FY21 power consumption breakup -200

71、400 600 800 1,000 1,200 1,400GridGrid+CaptiveDomesticCommercial&IndustrialOthersAgriculture(BUs)Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch Exhibit 20:c.300GW solar capacit y equivalent opport unit y from Corporat e&Indust rial decarbonisat ion 171 5 96 25 62 309 10 4 295 050100150200250

72、300350Industrial powerdemand-grid+10%ofCommercial powerdemand+Non RE captivedemand-existing REpenetration+PSP inefficiencyTotal REopportunity forGreen OA-existing Solar OAcapacity-Solar OA underdevelopmentNet OA solaropportunity(Solar capacity equivalent;GW)*OA-Open Access Sour ce:CEA,Gol dman Sachs

73、 Gl obal Investment Resear ch18 July 2023 15Goldman SachsIndia Clean EnergySol arisation of agricul tural power suppl y l ow hanging fruit for financial l y struggl ing DI SCOMs:Si mi larly,solari sati on of agri culture i s an economi cally vi able use case for I ndi as RE transi ti on,and helps to

74、 cut the subsi dy and loss burden of DI SCOMs.We attri bute c.70%of DI SCOMs losses&subsi di es(Rs1.7tn i n FY22)to agri cultural power supply cost under-recovery.I n our opi ni on,solari sati on of the agri cultural power supply i s low hangi ng frui t si nce the load profile wi ll support i nfirm(

75、but i nexpensi ve)solar capaci ty addi ti on wi thout the requi rement of correspondi ng storage capaci ty addi ti on for gri d balanci ng.We esti mate 114GW solar equi valent capaci ty opportuni ty from full solari sati on of the agri cultural power supply,whi ch could help save c.35-46%i n subsi d

76、y outgo for state governments,thereby supporti ng a materi al i mprovement i n the financi al condi ti on of DI SCOMs.Exhibit 21:114GW capacit y addit ion opport unit y from solarisat ion of agricult ure Exhibit 22:Agricult ural power realisat ion significant ly below cost of power supply-indicat in

77、g high level of cross-subsidisat ion*incl.state transmission charge 130 16 114 020406080100120140Agri power demand-existing RE penetrationNet agri solarisation opportunity(GW)-1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0FY11FY12FY13FY14FY15FY16FY17FY18FY19FY20FY21Avg.agri power realisationCost of supplyCost of s

78、olar power*(Rs/kWhr)Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch Sour ce:PFC,Gol dman Sachs Gl obal Investment Resear ch Exhibit 23:Subsidy cont ribut ion per unit of power supplied has risen at 11%CAGR since FY11 Exhibit 24:We est imat e agri supply cost under-recovery t o cont ribut e c

79、.70%of DISCOM subsidies and losses -0.2 0.4 0.6 0.8 1.0 1.2 1.4FY11FY12FY13FY14FY15FY16FY17FY18FY19FY20FY21FY22Subsidy per unit(Rs/kWhr)01020304050607080-200 400 600 800 1,000 1,200 1,400FY11FY12FY13FY14FY15FY16FY17FY18FY19FY20FY21FY22Agri subsidyAgri subsidy as%of overall subsidy&losses(Rs bn)(%)So

80、ur ce:PFC,Gol dman Sachs Gl obal Investment Resear ch Sour ce:PFC,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 16Goldman SachsIndia Clean Energy 400GW economical l y viabl e RE capacity addition opportunity over and above government targets and GSe:The earli er menti oned 400GW economi ca

81、lly vi able opportuni ty i s over and above the governments and our gri d RE capaci ty addi ti on targets and could see an accelerated uptake gi ven adopti on i n both these cases i s dri ven by economi c pull rather than government push.Our RE capaci ty esti mates do not factor these si nce corpora

82、te RE proj ects wi ll li kely operate as group capti ves and we are yet to see a meani ngful upti ck i n solari sati on of agri.feeders.I n the event of an accelerated pi ck up i n solar capaci ty i nstallati on for agri.power supply,our RE capaci ty addi ti on numbers could see an upward revi si on

83、.Case study 1:PM Kusum Scheme-what i t entai ls&the progress so far Case study 2:Learni ngs from Andhra Pradeshs(AP)agri solari sati on dri ve I n Feb20,AP government announced plans to set up 10GW solar capaci ty for supplyi ng 9 hours of free npower to farmers for i rri gati on.I n FY21,the state

84、had to allocate a subsi dy worth Rs84bn towards supply of 13bkWhr free electri ci ty to the agri segment.I n Jan23,AP government entered an agreement wi th Solar Energy Corporati on of I ndi a(SECI)for nprocurement of 7GW solar power at a tari ff of Rs2.49/kWhr.Thi s capaci ty wi ll be operati onali

85、 sed between Sep24-Sep26 i n phases and wi ll ease the subsi dy burden by c.Rs25bn.Exhibit 25:Cent ral Government s PM Kusum scheme provides capit al subsidy support for solarisat ion of agricult ural power consumpt ion;however,execut ion is yet t o pick up PM KusumComponent-A10GW decentralised RE c

86、apacity to be set up by farmers/farm co-operatives with power supplied to DISCOMs at pre-determined tariffsMay23 update-4.9GW capacity sanctioned,107MW installedComponent-BIndividual farmers to be provided 60%capital subsidy and priority lending for installation of solar pumps in off-grid areasMay23

87、 update-0.96mn pumps Component-C1)Grid connected individual pumps to be solarised supported by 60%capital subsidy&sale of excess power to grid2)Separation&solarisation of agri feeders aided by 30%capital subsidy upto Rs10.5mn/MWMay23 update-0.14mn pumps&2.4mn feeder level solar sanctioned Sour ce:Mi

88、 ni str y of New&Renewabl e Ener gy,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 17Goldman SachsIndia Clean Energy#2.with the potential to disrupt Utility business model,f or the better Superior returns from corporate RE transition opportunity.:As per our esti mates,the corporate RE trans

89、i ti on opportuni ty offers materi ally superi or returns to developers over plai n vani lla solar or cost plus coal power supply to DI SCOMs.We attri bute hi gher returns to the followi ng factors:Hi gh cost of gri d power supply to i ndustri al and commerci al consumers on account 1.of cross-subsi

90、 di sati on by DI SCOMs makes swi tch to RTC RE an economi cally vi able deci si on.We esti mate RTC RE power cost to be 35%lower vs.gri d green tari ff for corporate consumers connected to the central gri d,and on average 10%lower for those connected to state gri ds.Ri si ng pressure on corporates

91、to meet thei r net zero commi tments i s also dri vi ng a 2.demand si de push for green open access.Whi le state DI SCOMs have begun offeri ng a separate green tari ff,the coal domi nated nature of I ndi as gri d power supply mi x and requi rement for traceabi li ty of supply chai ns make green open

92、-access more attracti ve.Dependence on the gri d also exposes consumers to gri d supply reli abi li ty i ssues,3.especi ally i n a phase of ri si ng peak shortages.Rather than i ncurri ng an addi ti onal cost of mai ntai ni ng a back up(whi ch would mostly be polluti ng di esel gensets),corporates w

93、i ll li kely find dedi cated RTC RE supply reassuri ng.Lastly,gi ven the i mportance of power storage(i n overcomi ng the i nherently 4.i ntermi ttent nature of RE power)and i ts i nadequate capaci ty,corporates seem wi lli ng to pay a premi um for firm,despatchable renewable power,especi ally for r

94、unni ng processes whi ch requi re constant electri ci ty supply.Exhibit 26:Est imat e pumped hydro backed RTC power t o generat e significant ly bet t er equit y IRRs t han plain vanilla solar®ulat ed coal capacit ies at average green C&I t ariff 051015202530Coal-cost plusSolar-plain vanillaRTC P

95、SP for C&I(leased storage)RTC PSP for C&I(owned storage)Equity IRR(%)as of Jun 23 Sour ce:Gol dman Sachs Gl obal Investment Resear ch18 July 2023 18Goldman SachsIndia Clean Energy Exhibit 27:RTC-RE RoE wat erfall for C&I business opport unit y 2.4 5.0 2.5 2.0 6.9 0.8 7.7 0.7 7.0 012345678Cost of pow

96、er+Cost of leasedPSP-PSP cost declineon running 2cycles/day+State chargesCost of deliveredpowerEquity RoEAvg.Industrial Tariff-GreenGreen premiumAvg.Industrial Tariff(Rs/kWhr)c.20%RoE Sour ce:Gol dman Sachs Gl obal Investment Resear chWhy I RR is a better metric to assess RE investments vs.RoE?Unli

97、ke the flat RoE trendli ne of tradi ti onal regulated coal power plants(whi ch operate on a cost plus basi s),the tari ff structure of renewable proj ects set up under aucti on&bi lateral mechani sms entai l ri si ng RoE over ti me as proj ect debt i s repai d.Addi ti onally,the shorter executi on t

98、i meli ne of RE proj ects allows lower capi tal downti me when equi ty i nvestment doesnt earn any returns.Whi le RE proj ects mi ght appear to have lower RoE vs.regulated thermal plants,thi s metri c doesnt capture the benefit of thei r shorter executi on ti meli ne and i nherent tari ff desi gn.Ex

99、hibit 28:Short er execut ion period,back-ended RoE increase on debt repayment ensures similar equit y IRR for plain-vanilla solar asset vs.higher RoE regulat ed coal plant s 05101520253035FY0FY+1FY+2FY+3FY+4FY+5FY+6FY+7FY+8FY+9FY+10FY+11FY+12FY+13FY+14FY+15FY+16FY+17FY+18FY+19FY+20FY+21FY+22FY+23FY+

100、24FY+25FY+26FY+27FY+28FY+29Solar RoESolar IRRRegulated coal RoERegulated coal IRR(%)Sour ce:Gol dman Sachs Gl obal Investment Resear ch18 July 2023 19Goldman SachsIndia Clean Energy.has the potential to upgrade Util ity business model:Along wi th better returns,the corporate RE transi ti on wi ll al

101、so i mprove the quali ty of counterparty for developers as they shi ft from bei ng Busi ness-to-Government(B2G)suppli ers to Busi ness-to-Busi ness(B2B)servi ce provi ders.We foresee corporate RE demand wi ll dri ve a structural upgrade i n busi ness model of developers from Uti li ti es to Transi t

102、i on Enablers,provi di ng energy-as-a-servi ce,and potenti ally dri vi ng a sector re-rati ng.Addi ti onally,the opportuni ty si ze whi ch we have esti mated factors only the RE capaci ty requi red for shi fti ng from exi sti ng grey to green power supply.Wi th a hei ghtened focus on i ncreasi ng th

103、e share of RE electri ci ty i n the pri mary energy mi x,there could be further upsi de to our esti mates.Exhibit 29:Head t o Head:Transit ion Enablers present superior ret urns opport unit y t han Tradit ional Ut ilit ies,albeit at a higher risk Business modelTraditional UtilityTransition EnablerCa

104、pacity typeCost plus thermal,nuclear,hydroPlain vanilla RE,RTC-RE,Power StorageOfftakerLicensed entities(state&pvt.DISCOMs)DISCOMs&CorporatesReturns-equity IRR(%)13-15%12.5-25%-depending upon PPA complexityCapital structure(D:E)-%70:30Typically 80:20 with scope for future capital recyclingDepreciati

105、onLinked to capital repaymentLinked to asset lifeTariff design2 part tariff with bulk of capital cost loaded upfrontSingle part levellised tariffOfftake agreement duration25 years12-25 yearsRegulatory oversightHigh;5yr regulatory periodLow;mostly pertains to interpretation of agreement®ulationsKe

106、y risksUnfavorable regulatory orders&return resetOfftakers credit worthiness,capex&opex overruns,refinancing riskValuationPrice/Regulated BookDCF,peer multiples in high M&A environmentSour ce:Regul ator y Commi si ons,Mi ni str y of Power,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 20Gol

107、dman SachsIndia Clean Energy#3 But rising peak deficits will risk supply reliability.Transition coul d be threatened by shortages:Our I ndi a Peak Demand Supply model forecasts that the phase of peak shortages has already begun and i s expected to worsen i n the medi um term.We beli eve thi s mi sma

108、tch wi ll challenge the countrys energy securi ty,and wi ll be pri ori ti sed over RE transi ti on.We esti mate c.47GW peak shortages by FY32E based on our peak demand and capaci ty addi ti on esti mates.Whi le our demand esti mates are lower than that of the government(whi ch has been revi si ng i

109、ts esti mates upwards),we thi nk the governments battery capaci ty addi ti on target of 47GW by FY32E i s on the hi gher si de.Our model does not factor PSP capaci ty not under executi on yet.Exhibit 30:Our propriet ory India Peak Demand Supply model indicat es t he beginning of a mult i-year supply

110、 deficit sit uat ion.024681012141618(Peak deficit;%)*r ed bor der s denote per i od of r i si ng peak defici ts,gr een denote per i od of decl i ni ng peak defici ts Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 21Goldman SachsIndia Clean Energy Peak demand surge structural:Bac

111、ked by the 100%household electri ficati on scheme under SAUBHAGYA and ri si ng appli ance penetrati on(ai r condi ti oni ng and refri gerati on pri mari ly),we beli eve the recent out performance of peak demand growth over base i s i ndi cati ve of a structural shi ft.We expect thi s trend to conti

112、nue,i f not accelerate,as appli ance penetrati on and usage durati on grows i n tandem wi th the i mprovement i n di sposable i ncome of households.Exhibit 31:.wit h 47GW peak short ages est imat ed by FY32E,based on current capacit y addit ion pipeline 216 138 353 216 45 48 3 47 -50 100 150 200 250

113、 300 350 400Peak demand FY23+FY23-32 peakdemand growth est.FY32 est.peakdemand-FY23 installed RTCcapacity(fossil+non-fossil)-fossil RTC capacityaddition-non-fossil RTCcapacity addition+Grid constraintFY32 Peak shortageest.(GW)Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 22Gold

114、man SachsIndia Clean Energy Exhibit 32:Peak demand growt h has out paced base demand by 115bps FY18 onwards vs.65bps underperformance b/w FY00-FY18-2024681012FY00FY01FY02FY03FY04FY05FY06FY07FY08FY09FY10FY11FY12FY13FY14FY15FY16FY17FY18FY19FY20FY21FY22FY23 Base demand YoY growth Peak demand YoY growth

115、(%)Sour ce:CEA,Gol dman Sach Gl obal Investment Resear ch Exhibit 33:New aircondit ioner demand has risen at c.16%CAGR bet ween FY01-23 -1 2 3 4 5 6FY01FY03FY05FY07FY09FY11FY13FY15FY17FY19FY21FY23New airconditioner demand(mn)*new ai r condi ti oner sal es=total sal es-r epl acement sal es Sour ce:Co

116、mpany Data,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 23Goldman SachsIndia Clean Energy GS peak demand estimates bel ow rising government estimates:Our peak demand esti mates are conservati vely lower than those of the government.However,upward revi si on i n government esti mates for b

117、oth FY27E and FY32E are i ndi cati ve of an upti ck i n demand momentum and could lead to an upsi de surpri se on our esti mates.UP Regul ators recent anal ysis of peak demand suppl y equation indicative of system-wide situation:Uttar Pradeshs power regulator(UPERC),i n a suo-motu order on a long-te

118、rm power procurement plan by state DI SCOMs over FY28-40E flagged the emergence of wi deni ng peak shortages at the state level from FY23 onwards.The order,a volte-face from i ts FY19 order whi ch hi ghli ghted peak supply adequacy ti ll FY26-27E,ci ted sharper than expected i ncrease i n peak deman

119、d along wi th lower than planned firm capaci ty addi ti on as the reasons behi nd the defici t.Based on its demand projection and pl anned capacity addition,UPERC pegged states peak shortage at 26GW in FY32E(c.40%of our al l I ndia peak shortage estimate)and 63GW by FY40E.I nteresti ngly,the regulat

120、or also hi ghli ghted the mi smatch between solar supply hours and the states load profile,renderi ng the standalone solar capaci ty addi ti on largely Exhibit 34:Penet rat ion of split aircondit ioners has increased c.300bps over t he last 5 years.Exhibit 35:.and t hat of refrigerat ors by c.800bps

121、 over t he same period 10.111.111.712.312.90246810121420182019202020212022Split Air Conditioners(%of households)30.332.934.736.538.1202224262830323436384020182019202020212022Refrigerators(%of households)Sour ce:Eur omoni tor,Gol dman Sachs Gl obal Investment Resear ch Sour ce:Eur omoni tor,Gol dman

122、Sachs Gl obal Investment Resear ch Exhibit 36:Our peak demand est imat es below t hose of t he government,indicat ing possibilit y of larger t han expect ed short ages.Exhibit 37:.which is corroborat ed by rising search int erest in power out ages despit e relat ively clement weat her in CY23 summer

123、s 272 272 277 319 340 335 353 363 366 -50 100 150 200 250 300 350 400GSe-FY27DraftNEP-FY27FinalNEP-FY27GSe-FY30Optimalgen.mix-2030NewOptimalgen.mix-2030GSe-FY32DraftNEP-FY32FinalNEP-FY32(Peak demand estimate;GW)024681012141618-20 40 60 80 100 120Search Interest in Power OutagePeak deficit-RHS(Indexe

124、d)(%)Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch Sour ce:Googl e Tr ends,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 24Goldman SachsIndia Clean Energyi ncapable of meeti ng eveni ng peak loads and allowi ng DI SCOMs to enter i nto long term power purchase agreements wi th fir

125、m supply sources.Exhibit 38:UPs act ual average power demand has consist ent ly been higher t han st at e regulat ors est imat es.Exhibit 39:.while act ual capacit y addit ion has lagged project ions by 8%12.7 12.5 13.8 14.1 15.6 16.1 13.8 14.3 14.8 15.3 17.1 17.5 101112131415161718FY19FY20FY21FY22F

126、Y23FY24(ARR)UPs avg.demand-approvedUPs avg.demand-recorded(GW)0510152025303540FY23E capacity-projected in FY19FY23 commissioned capacityThermalHydroRE(GW)Sour ce:UPERC,Gol dman Sachs Gl obal Investment Resear ch Sour ce:UPERC,Gol dman Sachs Gl obal Investment Resear ch Exhibit 40:UP Elect ricit y Re

127、gulat or project s 63GW peak deficit by FY40E in t he st at e wit hout adequat e firm capacit y t ie-up Exhibit 41:.and base deficit of 30GW 5 4 6 9 12 15 18 22 26 30 34 39 43 48 53 58 63 0102030405060FY24EFY26EFY28EFY30EFY32EFY34EFY36EFY38EFY40EUPs Projected Peak deficit(GW)(5)(6)(6)(4)(3)(1)1 3 6

128、8 11 14 17 20 23 26 30-10-505101520253035FY24EFY26EFY28EFY30EFY32EFY34EFY36EFY38EFY40EUPs Projected Base deficit(GW)Sour ce:UPERC,Gol dman Sachs Gl obal Investment Resear ch Sour ce:UPERC,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 25Goldman SachsIndia Clean EnergyCoverage val uations cl

129、 osel y track peak demand suppl y situation:Whi le developers wi th open capaci ti es tend to be the earli est and largest benefici ari es of power shortages,our coverage valuati ons have closely tracked the peak demand supply si tuati on hi stori cally despi te havi ng mostly ti ed up capaci ti es.

130、We attri bute thi s to an upward revi si on i n the streets capaci ty growth expectati on,especi ally i n the legacy coal power busi ness whi ch has been i mpacted by ESG pressures of late.Exhibit 42:Upcoming peak short ages could drive up sect or valuat ions 0.00.51.01.52.02.53.03.54.04.50246810121

131、4161820Peak deficitCoverage P/BV(reported)-RHS(%)(x)Sour ce:Datastr eam,CEA,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 26Goldman SachsIndia Clean Energy#4.even as Pumped Hydro emerges as Indias rescuer,ad interim Estimating c.600GWhr I ndia storage demand by FY32E with pumped hydro stor

132、age most preferred:Our I ndi a Stati onary Storage Demand model esti mates storage capaci ty requi rement of 607GWhr by FY32E,c.50%hi gher than the government esti mate as i t factors the proj ected peak defici t along wi th demand from corporate decarboni sati on and green hydrogen proj ects.We exp

133、ect the bulk of thi s storage demand to be met by PSPs,as they ensure energy securi ty and faci li tate the RE transi ti on at costs si gni ficantly below that of battery storage,wi th negli gi ble i mport dependence and have li mi ted envi ronmental i mpact.We esti mate PSP backed RTC RE power to c

134、ost only 15-17%more than new pi thead coal plants(negli gi ble after factori ng the transmi ssi on cost wai ver),wi th the di fference expected to narrow over ti me as coal and coal logi sti cs costs ri se.Exhibit 43:Our India St at ionary St orage Demand Model fact ors est imat ed grid short ages a

135、long wit h demand from Green Hydrogen and Corporat e Decarbonisat ion use-cases Exhibit 44:Less t han half of inst alled PSP capacit y operat ional as st orage due t o t echnical&legal issues;bulk of capacit y addit ion 5-10 years away -100 200 300 400 500 600 700FY23FY24EFY25EFY26EFY27EFY28EFY29EFY

136、30EFY31EFY32EGridGH2C&I(GWhr)10 16 33 153 221 -50 100 150 200 250OperationalNot in operationUnder constructionUnder assessmentMoU/Pre-feasibilityPSP storage capacity(GWhr)Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch as of Jun 23 Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch Exhi

137、bit 45:Pit head coal st ill t he cheapest dispat chable power source on bot h capex&opex basis but pumped hydro cat ching up Exhibit 46:Bat t ery st orage quickest t o deploy;government t rying t o bring down pumped-hydro execut ion t ime by easing approval process -20 40 60 80 100 120 140-50 100 15

138、0 200 250 300 350Coal-pitheadPSPBESSCapex/KWhrLCOE-2 cycles per day(USD)(USD/MWhr)-10 20 30 40 50 60 70 80 90CoalPSP-normalPSP-expeditedBESSConstruction durationTime needed for approvals&clearances(Months)as of Jun 23 Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch as of Jun 23 Sour ce:CEA,G

139、ol dman Sachs Gl obal Investment Resear ch18 July 2023 27Goldman SachsIndia Clean EnergyExhibit 47:Pumped Hydro St orage-key t o overcoming RE int ermit t ency Sour ce:Gol dman Sachs Gl obal Investment Resear ch18 July 2023 28Goldman SachsIndia Clean Energy#5 Battery storages cost disparity could f

140、orce higher coal capacity addition c.20%storage capacity shortage expected even in optimistic PSP execution scenario:Even i n the unli kely scenari o of all PSPs currently under MoU,survey,i nvesti gati on etc.becomi ng operati onal by FY32E,I ndi a wi ll li kely face a c.20%shortage i n meeti ng i

141、ts storage requi rement.Whi le government esti mates factor outsi zed battery storage(BESS)capaci ty deployment(47GW/236GWhr)to bri dge thi s gap,we find i t unli kely to happen based on GS battery cost curve forecast.We forecast BESS backed RTC RE to achi eve cost pari ty wi th PSP backed RTC RE on

142、ly by FY31-32E,post whi ch i ts accelerated deployment can be expected.Further,the Exhibit 48:Significant capacit y ramp up required t o meet our est imat e of c.600GWhr st orage demand by FY32E 393 152 62 607 10 16 33 72 374 102 -100 200 300 400 500 600 700Grid storagedemand+GH2 storagedemand+C&I s

143、toragedemandFY32E totalstorage demand-operational PSPcapacity-non-operationalPSP capacity-PSP underdevelopment-BESS storageest.-PSP at MoU/pre-DPRIncrementalstoragerequirement(FY23-32E;GWhr)Less likely that all projects under-survey/MoU will be executed given the technical difficulties inherently as

144、sociated with hydro projects.Also expect bulk of these to be commissioned by the end of this decade or later,by when peak demand would have gone up further Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch Exhibit 49:Our Global Bat t eries t eam expect s bat t ery pack price t o decline at c.9

145、%annually bet ween FY23-30E,making it compet it ive against pumped hydro st orage only by t he end of t his decade 17614611210096949189020406080100120140160180200FY23FY24EFY25EFY26EFY27EFY28EFY29EFY30EGS battery pack price est.(USD/kWhr)Sour ce:Gol dman Sachs Gl obal Investment Resear ch18 July 2023

146、 29Goldman SachsIndia Clean Energygovernments central transmi ssi on capex plan for accommodati ng 500GW RE capaci ty by 2030 envi sages a c.24%battery storage attachment rate on 180GW RE capaci ty requi ri ng new transmi ssi on i nfra-2x that of GSe for Chi na(avg.basi s)by the same ti me.I ncreasi

147、ng government coal capacity targets corroborates our thesis:The government has revi sed i ts FY32E coal capaci ty target upward by 11GW i n the final Nati onal Electri ci ty Plan document over the draft,along wi th an i ncrease i n planned PSP capaci ty whi le reduci ng battery storage targets.We vi

148、 ew thi s move as a rei nforcement of our thesi s of hi gher than expected coal capaci ty addi ti on to meet peak shortages as BESS deployment mi ght underwhelm at i ts expected cost traj ectory.Exhibit 50:Bat t ery backed RTC RE expect ed t o achieve cost parit y vs.PSP backed RTC RE only by FY32E

149、3.1 4.2 4.9 13 6.0 2.1 4.1 7.4 2.0 2.6 4.9 10.0 5.6 6.0 5.3 5.1 0246810Coal-pithead(old)Coal-pithead(new)Coal-non-pitheadGas-LNGGas-APMHydro-oldHydro-newNuclearSolar-lowest bidWind-lowest bidRTC RE-PSPRTC RE-BESSRTC RE-PSPFY27RTC RE-Li-ionbatteryFY27RTC RE-PSPFY32RTC RE-Li-ionbatteryFY32Cost of elec

150、tricityC&I green tariff-avg.(Rs/kWhr)Grid green tariff-avg.*LNG-Li qui fied Natur al Gas,APM-Adj usted Pr i ce Mechani sm,BESS-Batter y Stor age,PSP-Pumped Hydr o Stor age,RTC RE-Round-the-Cl ock Renewabl es;as of Jun 23 Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch Exhibit 51:RE is expect

151、 ed t o flat t en t he average power cost curve over t ime but managing peaks will become cost lier Exhibit 52:Government s 2030 t ransmission plan envisages 24%bat t ery at t achment rat e-2x t hat of GSe for China 0.01.02.03.04.05.06.07.08.09.010.002505007501000125015001750200022502500LCOE Rs/kWhT

152、otal power generation(BUs)HydroNuclearSolarCoalGasSolarCoalGasOnshore windFY22FY32EFY17NuclearOther REOtherRERTC RE PSPRTC RE PSPRTC RE BESSRTC RE BESS-5 10 15 20 25 30 35-5 10 15 20 25 30 35 40 45 50North ZoneWest ZoneSouth ZoneAll IndiaBESS capacityBESS attach rate-RHSGSe:China 2030 avg.BESS attac

153、h rate-RHS(GW)(%)Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 30Goldman SachsIndia Clean Energy Buil ding 320GW+capacity addition over FY24-32E,wi th 80%of i t comi ng from renewable sources(200GW+solar,48GW wi nd,43GW co

154、al,10GW hydro and 9GW nuclear).However,our RE capaci ty esti mates are 24%lower than government figures as we expect i nadequate power storage capaci ty to li mi t DI SCOMs appeti te for i nfirm RE power.Our coal capaci ty addi ti on esti mate i s also 6GW lower than that of the government,as we awa

155、i t planni ng and executi on clari ty.On the storage front,we factor pumped storage capaci ty of only c.3GW whi ch i s under constructi on or has recei ved clearance to commence executi on vs.the governments target of 27GW and 18GW battery storage(10%attachment rate assumpti on FY25E-32E).Exhibit 53

156、:Increase in government s FY32E coal and pumped st orage capacit y t arget s indicat ive of declining confidence on bat t ery st orage cost viabilit y by t hen 239 7-235 7 9 249 19 52 260 27 47 -50 100 150 200 250 300CoalPSPBESSCoalPSPBESSCoalPSPBESSCoalPSPBESS(Installed capacity;GW)Draft NEP-FY27EF

157、inal NEP-FY27EDraft NEP-FY32EFinal NEP-FY32E Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch Exhibit 54:UP Elect ricit y Regulat or comment ing on decision of set t ing up Bat t ery st orage vs.Thermal power plant in it s order dat ed 09/07/2019 Sour ce:UPERC18 July 2023 31Goldman SachsIndia

158、 Clean Energy Exhibit 55:Est imat ing solar t o drive bulk of capacit y addit ion over t he next 9 years.Exhibit 56:.t hough we are below government t arget s -5 10 15 20 25 30 35 40 45 50 Thermal Hydro Nuclear Solar Wind Other RE(Annual capacityaddition;GW)-100 200 300 400 500 600 700 800 900 1,000

159、 Draft NEP-FY27E Final NEP-FY27EGS est.-FY27E Draft NEP-FY32E Final NEP-FY32EGS est.-FY32E(Installed capacity;GW)Coal&lignite Gas Hydro Nuclear Solar Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch Exhibit 57:Government s 500GW clean ca

160、pacit y t arget by 2030E require 29GW solar&7GW wind capacit y addit ion annually.Exhibit 58:.which will result in 2/3rd of inst alled capacit y being from non-fossil sources 43 100 66 293 -50 100 150 200 250 300 350 400 450FY232030 Govt.TargetWindSolar(Installed capacity;GW)57 36 43 64 0%20%40%60%8

161、0%100%FY232030 Govt.Target(Share in installed capacity)FossilNon-fossil Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch Exhibit 59:Our FY27E&FY32E RE capacit y est imat es are 22-24%below government t arget s as DISCOM demand for non-fi

162、rm RE capacit y could underwhelm Exhibit 60:Government mandat ed Renewable Purchase Obligat ion(RPO)t o cross 40%of overall consumpt ion by FY30E but we est imat e overall RE penet rat ion t o lag behind -100 200 300 400 500 600GS est.-FY27E Draft NEP-FY27E Final NEP-FY27EGS est.-FY32E Draft NEP-FY3

163、2E Final NEP-FY32E Solar Wind Other RE(Installed capacity;GW)05101520253035404550FY17FY19FY21FY23FY25EFY27EFY29ERenewable Purchase ObligationIndia RE penetration(%of overall consumption)Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch Sour ce:Mi ni str y of Power,Gol dman Sachs Gl obal Invest

164、ment Resear ch18 July 2023 32Goldman SachsIndia Clean EnergyEstimating 23GW coal capacity addition above government targets:We esti mate 23GW i ncremental coal capaci ty addi ti on requi rement above the governments target of 48GW(30GW above GSe of 42GW)by FY32E,to meet peak shortages.Our esti mates

165、 factor a lower BESS attachment rate of 10%vs.governments plan of 24%on c.180GW RE capaci ty requi ri ng transmi ssi on i nfra upgrade,consi deri ng the GS battery cost curve forecast.Also,our pumped hydro capaci ty addi ti on esti mate accounts for executi on ti meli nes and competi ng demand from

166、corporate decarboni sati on and green hydrogen proj ects.I n our opi ni on,thi s i ncremental coal capaci ty needs to be ordered over the next 3-4 years for i ts ti mely completi on to meet the proj ected peak shortages.Exhibit 61:We est imat e 23GW coal capacit y addit ion requirement beyond govern

167、ment t arget s t o avoid peak deficit s by FY32E 66 6 19 18 23 010203040506070FY32 peak shortageless:govt coal additiontarget not in GSeless:incremental PSPcapacity addition for gridless:BESS capacity at10%attach rateAdditional coal capacityrequirement(GW)*peak shor tage number i ncl udes BESS capac

168、i ty as wel l Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 33Goldman SachsIndia Clean Energy#6 Demand growth underperf ormance key risk to our thesis We foresee demand growth underperformance as the largest ri sk to our thesi s,gi ven the repercussi ons of demand mi sesti mati

169、 on under the 18th Electri c Power Survey.Planned large-scale thermal capaci ty addi ti on based on potenti ally ambi ti ous demand growth esti mates pushed the sector i nto a decade long downcycle between FY10-21,and excess capaci ty led to a seri ous stressed asset si tuati on.However,we draw comf

170、ort from the followi ng:Demand esti mati on by government has been much more conservati ve si nce the 1.18th EPS mi ss.I n fact,19th EPSs FY17 peak demand esti mates were i n li ne,whi le FY22 esti mates mi ssed due to Covi d i mpact.Achi evement of uni versal electri ficati on under the SAUBHAGYA s

171、cheme and secular 2.ri se i n appli ance penetrati on(especi ally ai r condi ti oners)should dri ve a structural i ncrease i n peak power demand.Lastly,emergence of new demand from EV chargi ng,datacenters,rai lway 3.electri ficati on,and uni versal tap water supply under the governments Nal se Jal

172、program wi ll provi de new demand dri vers.Exhibit 62:18t h Elect ric Power Survey(EPS)overest imat ed peak demand growt h,pot ent ially influenced by t he st rong prevailing economic growt h sent iment;however,19t h EPS forecast s much closer t o act uals 200 283 401 542 162 226 299 370 448 277 366

173、 466 575 160 203 272 353 -100 200 300 400 500 600FY17FY22FY27FY32FY37FY4218th EPS19th EPS20th EPSActualGSe(GW)Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 34Goldman SachsIndia Clean Energy Exhibit 63:Sharp decline in coal PLF indicat ive of oversupply condit ion during t he pr

174、evious decade but sit uat ion reversing FY22 onwards.Exhibit 64:.as highlight ed by spot market liquidit y and price movement s 71 73 75 75 76 76 72 68 65 62 62 58 57 58 59 56 54 59 64 65 65 65 65 67 68 69 70 71 50556065707580FY05FY06FY07FY08FY09FY10FY11FY12FY13FY14FY15FY16FY17FY18FY19FY20FY21FY22FY

175、23FY24EFY25EFY26EFY27EFY28EFY29EFY30EFY31EFY32ECoal PLF-calculated(%)-1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0-100102030405060Surplus LiquidityWt MCP-RHS(BUs)(Rs/kWhr)Sour ce:CEA,Gol dman Sachs Gl obal Investment Resear ch*BU-bi l l i on kWhr,MCP-Mar ket Cl ear i ng Pr i ce Sour ce:IEX,Gol dman Sachs Gl obal

176、 Investment Resear ch Exhibit 65:Air-condit ioner penet rat ion rat es Exhibit 66:Refrigerat or penet rat ion rat es 12.713.513.914.314.61010.51111.51212.51313.51414.51520182019202020212022Air Conditioners(%of households)30.332.934.736.538.1202224262830323436384020182019202020212022Refrigerators(%of

177、 households)Sour ce:Eur omoni tor,Gol dman Sachs Gl obal Investment Resear ch Sour ce:Eur omoni tor,Gol dman Sachs Gl obal Investment Resear ch Exhibit 67:Washing machine penet rat ion rat es Exhibit 68:Television penet rat ion rat es 17.618.619.219.920.71516171819202120182019202020212022Washing mac

178、hines(%of households)27.332.938.142.947.52025303540455020182019202020212022Televisions(%of households)Sour ce:Eur omoni tor,Gol dman Sachs Gl obal Investment Resear ch Sour ce:Eur omoni tor,Gol dman Sachs Gl obal Investment Resear ch18 July 2023 35Goldman SachsIndia Clean EnergyExhibit 69:Rise in co

179、nt ribut ion from new demand t o aid overall elect ricit y demand growt h 02468101214161820051015202530FY23FY24EFY25EFY26EFY27EFY28EFY29EFY30EFY31EFY32E EV Data center Railway traction Water&sewage Contribution to overall demand growth-RHS(Incrementaldemand;BUs)(%)Sour ce:CEA,Gol dman Sachs Gl obal

180、Investment Resear ch18 July 2023 36Goldman SachsIndia Clean EnergyDisclosure Appendix Reg AC We,Apoorva Bahadur and Ni khi l Bhandari,hereby certi fy that all of the vi ews expressed i n thi s report accurately reflect our personal vi ews about the subj ect company or compani es and i ts or thei r s

181、ecuri ti es.We also certi fy that no part of our compensati on was,i s or wi ll be,di rectly or i ndi rectly,related to the speci fic recommendati ons or vi ews expressed i n thi s report.Unless otherwi se stated,the i ndi vi duals li sted on the cover page of thi s report are analysts i n Goldman S

182、achs Global I nvestment Research di vi si on.GS Fact or Profile The Goldman Sachs Factor Profile provi des i nvestment context for a stock by compari ng key attri butes to the market(i.e.our coverage uni verse)and i ts sector peers.The four key attri butes depi cted are:Growth,Fi nanci al Returns,Mu

183、lti ple(e.g.valuati on)and I ntegrated(a composi te of Growth,Fi nanci al Returns and Multi ple).Growth,Fi nanci al Returns and Multi ple are calculated by usi ng normali zed ranks for speci fic metri cs for each stock.The normali zed ranks for the metri cs are then averaged and converted i nto perc

184、enti les for the relevant attri bute.The preci se calculati on of each metri c may vary dependi ng on the fiscal year,i ndustry and regi on,but the standard approach i s as follows:Growth i s based on a stocks forward-looki ng sales growth,EBI TDA growth and EPS growth(for financi al stocks,only EPS

185、 and sales growth),wi th a hi gher percenti le i ndi cati ng a hi gher growth company.Financial Returns i s based on a stocks forward-looki ng ROE,ROCE and CROCI (for financi al stocks,only ROE),wi th a hi gher percenti le i ndi cati ng a company wi th hi gher financi al returns.Mul tipl e i s based

186、 on a stocks forward-looki ng P/E,P/B,pri ce/di vi dend(P/D),EV/EBI TDA,EV/FCF and EV/Debt Adj usted Cash Flow(DACF)(for financi al stocks,only P/E,P/B and P/D),wi th a hi gher percenti le i ndi cati ng a stock tradi ng at a hi gher multi ple.The I ntegrated percenti le i s calculated as the average

187、 of the Growth percenti le,Fi nanci al Returns percenti le and(100%-Multi ple percenti le).Fi nanci al Returns and Multi ple use the Goldman Sachs analyst forecasts at the fiscal year-end at least three quarters i n the future.Growth uses i nputs for the fiscal year at least seven quarters i n the f

188、uture compared wi th the year at least three quarters i n the future(on a per-share basi s for all metri cs).For a more detai led descri pti on of how we calculate the GS Factor Profile,please contact your GS representati ve.M&A Rank Across our global coverage,we exami ne stocks usi ng an M&A framew

189、ork,consi deri ng both quali tati ve factors and quanti tati ve factors(whi ch may vary across sectors and regi ons)to i ncorporate the potenti al that certai n compani es could be acqui red.We then assi gn a M&A rank as a means of scori ng compani es under our rated coverage from 1 to 3,wi th 1 rep

190、resenti ng hi gh(30%-50%)probabi li ty of the company becomi ng an acqui si ti on target,2 representi ng medi um(15%-30%)probabi li ty and 3 representi ng low(0%-15%)probabi li ty.For compani es ranked 1 or 2,i n li ne wi th our standard departmental gui deli nes we i ncorporate an M&A component i n

191、to our target pri ce.M&A rank of 3 i s consi dered i mmateri al and therefore does not factor i nto our pri ce target,and may or may not be di scussed i n research.Quant um Quantum i s Goldman Sachs propri etary database provi di ng access to detai led financi al statement hi stori es,forecasts and

192、rati os.I t can be used for i n-depth analysi s of a si ngle company,or to make compari sons between compani es i n di fferent sectors and markets.Disclosures The rating(s)for NTPC Ltd.,SJVN Ltd.and Tata Power is/are rel ative to the other companies in its/their coverage universe:NTPC Ltd.,SJVN Ltd.

193、,Tata Power Company-specific regulat ory disclosures The followi ng di sclosures relate to relati onshi ps between The Goldman Sachs Group,I nc.(wi th i ts affili ates,“Goldman Sachs”)and compani es covered by Goldman Sachs Global I nvestment Research and referred to i n thi s research.Goldman Sachs

194、 has recei ved compensati on for i nvestment banki ng servi ces i n the past 12 months:Tata Power(Rs221.50)Goldman Sachs expects to recei ve or i ntends to seek compensati on for i nvestment banki ng servi ces i n the next 3 months:NTPC Ltd.(Rs187.20)and Tata Power(Rs221.50)Goldman Sachs had an i nv

195、estment banki ng servi ces cli ent relati onshi p duri ng the past 12 months wi th:NTPC Ltd.(Rs187.20)and Tata Power(Rs221.50)There are no company-speci fic di sclosures for:SJVN Ltd.(Rs45.80)Dist ribut ion of rat ings/invest ment banking relat ionships Goldman Sachs I nvestment Research global Equi

196、 ty coverage uni verse As of July 1,2023,Goldman Sachs Global I nvestment Research had i nvestment rati ngs on 3,008 equi ty securi ti es.Goldman Sachs assi gns stocks as Buys and Sells on vari ous regi onal I nvestment Li sts;stocks not so assi gned are deemed Neutral.Such assi gnments equate to Bu

197、y,Hold and Sell for the purposes of the above di sclosure requi red by the FI NRA Rules.See Rati ngs,Coverage uni verse and related defini ti ons below.The I nvestment Banki ng Relati onshi ps chart reflects the percentage of subj ect compani es wi thi n each rati ng category for whom Goldman Sachs

198、has provi ded i nvestment banki ng servi ces wi thi n the previ ous twelve months.Rating DistributionInvestment Banking RelationshipsBuyHoldSellBuyHoldSellGlobal48%36%16%63%56%47%18 July 2023 37Goldman SachsIndia Clean EnergyRegulat ory disclosures Disclosures required by Unit ed St at es laws and r

199、egulat ions See company-speci fic regulatory di sclosures above for any of the followi ng di sclosures requi red as to compani es referred to i n thi s report:manager or co-manager i n a pendi ng transacti on;1%or other ownershi p;compensati on for certai n servi ces;types of cli ent relati onshi ps

200、;managed/co-managed publi c offeri ngs i n pri or peri ods;di rectorshi ps;for equi ty securi ti es,market maki ng and/or speci ali st role.Goldman Sachs trades or may trade as a pri nci pal i n debt securi ti es(or i n related deri vati ves)of i ssuers di scussed i n thi s report.The followi ng are

201、 addi ti onal requi red di sclosures:Ownership and material conflicts of interest:Goldman Sachs poli cy prohi bi ts i ts analysts,professi onals reporti ng to analysts and members of thei r households from owni ng securi ti es of any company i n the analysts area of coverage.Anal yst compensation:An

202、alysts are pai d i n part based on the profitabi li ty of Goldman Sachs,whi ch i ncludes i nvestment banki ng revenues.Anal yst as officer or director:Goldman Sachs poli cy generally prohi bi ts i ts analysts,persons reporti ng to analysts or members of thei r households from servi ng as an officer,

203、di rector or advi sor of any company i n the analysts area of coverage.Non-U.S.Anal ysts:Non-U.S.analysts may not be associ ated persons of Goldman Sachs&Co.LLC and therefore may not be subj ect to FI NRA Rule 2241 or FI NRA Rule 2242 restri cti ons on communi cati ons wi th subj ect company,publi c

204、 appearances and tradi ng securi ti es held by the analysts.Distribution of ratings:See the di stri buti on of rati ngs di sclosure above.Price chart:See the pri ce chart,wi th changes of rati ngs and pri ce targets i n pri or peri ods,above,or,i f electroni c format or i f wi th respect to multi pl

205、e compani es whi ch are the subj ect of thi s report,on the Goldman Sachs websi te at https:/ ional disclosures required under t he laws and regulat ions of jurisdict ions ot her t han t he Unit ed St at es The followi ng di sclosures are those requi red by the j uri sdi cti on i ndi cated,except to

206、 the extent already made above pursuant to Uni ted States laws and regulati ons.Austral ia:Goldman Sachs Australi a Pty Ltd and i ts affili ates are not authori sed deposi t-taki ng i nsti tuti ons(as that term i s defined i n the Banki ng Act 1959(Cth)i n Australi a and do not provi de banki ng ser

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209、 i f Goldman Sachs Australi a consi ders i t i s appropri ate and reasonable i n the speci fic ci rcumstances relati ng to the si te vi si t or meeti ng.To the extent that the contents of thi s document contai ns any financi al product advi ce,i t i s general advi ce only and has been prepared by Go

210、ldman Sachs wi thout taki ng i nto account a cli ents obj ecti ves,financi al si tuati on or needs.A cli ent should,before acti ng on any such advi ce,consi der the appropri ateness of the advi ce havi ng regard to the cli ents own obj ecti ves,financi al si tuati on and needs.A copy of certai n Gol

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212、s avai lable at https:/ de/brazi l/area/gi r/i ndex.html.Where appli cable,the Brazi l-regi stered analyst pri mari ly responsi ble for the content of thi s research report,as defined i n Arti cle 20 of CVM Resoluti on n.20,i s the first author named at the begi nni ng of thi s report,unless i ndi c

213、ated otherwi se at the end of the text.Canada:Thi s i nformati on i s bei ng provi ded to you for i nformati on purposes only and i s not,and under no ci rcumstances should be construed as,an adverti sement,offeri ng or soli ci tati on by Goldman Sachs&Co.LLC for purchasers of securi ti es i n Canad

214、a to trade i n any Canadi an securi ty.Goldman Sachs&Co.LLC i s not regi stered as a dealer i n any j uri sdi cti on i n Canada under appli cable Canadi an securi ti es laws and generally i s not permi tted to trade i n Canadi an securi ti es and may be prohi bi ted from selli ng certai n securi ti

215、es and products i n certai n j uri sdi cti ons i n Canada.I f you wi sh to trade i n any Canadi an securi ti es or other products i n Canada please contact Goldman Sachs Canada I nc.,an affili ate of The Goldman Sachs Group I nc.,or another regi stered Canadi an dealer.Hong Kong:Further i nformati o

216、n on the securi ti es of covered compani es referred to i n thi s research may be obtai ned on request from Goldman Sachs(Asi a)L.L.C.I ndia:Further i nformati on on the subj ect company or compani es referred to i n thi s research may be obtai ned from Goldman Sachs(I ndi a)Securi ti es Pri vate Li

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218、es(as such term i s defined i n clause 2(h)the I ndi an Securi ti es Contracts(Regulati on)Act,1956)of the subj ect company or compani es referred to i n thi s research report.Japan:See below.Korea:Thi s research,and any access to i t,i s i ntended only for“professi onal i nvestors”wi thi n the mean

219、i ng of the Fi nanci al Servi ces and Capi tal Markets Act,unless otherwi se agreed by Goldman Sachs.Further i nformati on on the subj ect company or compani es referred to i n thi s research may be obtai ned from Goldman Sachs(Asi a)L.L.C.,Seoul Branch.New Zeal and:Goldman Sachs New Zealand Li mi t

220、ed and i ts affili ates are nei ther“regi stered banks”nor“deposi t takers”(as defined i n the Reserve Bank of New Zealand Act 1989)i n New Zealand.Thi s research,and any access to i t,i s i ntended for“wholesale cli ents”(as defined i n the Fi nanci al Advi sers Act 2008)unless otherwi se agreed by

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222、on,but are i nformati on and analysi s not havi ng product promoti on as thei r mai n purpose and do not provi de apprai sal wi thi n the meani ng of the Russi an legi slati on on apprai sal acti vi ty.Research reports do not consti tute a personali zed i nvestment recommendati on as defined i n Rus

223、si an laws and regulati ons,are not addressed to a speci fic cli ent,and are prepared wi thout analyzi ng the financi al 18 July 2023 38Goldman SachsIndia Clean Energyci rcumstances,i nvestment profiles or ri sk profiles of cli ents.Goldman Sachs assumes no responsi bi li ty for any i nvestment deci

224、 si ons that may be taken by a cli ent or any other person based on thi s research report.Singapore:Goldman Sachs(Si ngapore)Pte.(Company Number:198602165W),whi ch i s regulated by the Monetary Authori ty of Si ngapore,accepts legal responsi bi li ty for thi s research,and should be contacted wi th

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226、i dual i nvestor.United Kingdom:Persons who would be categori zed as retai l cli ents i n the Uni ted Ki ngdom,as such term i s defined i n the rules of the Fi nanci al Conduct Authori ty,should read thi s research i n conj uncti on wi th pri or Goldman Sachs research on the covered compani es refer

227、red to herei n and should refer to the ri sk warni ngs that have been sent to them by Goldman Sachs I nternati onal.A copy of these ri sks warni ngs,and a glossary of certai n financi al terms used i n thi s report,are avai lable from Goldman Sachs I nternati onal on request.European Union and Unite

228、d Kingdom:Di sclosure i nformati on i n relati on to Arti cle 6(2)of the European Commi ssi on Delegated Regulati on(EU)(2016/958)supplementi ng Regulati on(EU)No 596/2014 of the European Parli ament and of the Counci l(i ncludi ng as that Delegated Regulati on i s i mplemented i nto Uni ted Ki ngdo

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231、ment Research.Japan:Goldman Sachs Japan Co.,Ltd.i s a Fi nanci al I nstrument Dealer regi stered wi th the Kanto Fi nanci al Bureau under regi strati on number Ki nsho 69,and a member of Japan Securi ti es Dealers Associ ati on,Fi nanci al Futures Associ ati on of Japan Type I I Fi nanci al I nstrum

232、ents Fi rms Associ ati on,The I nvestment Trusts Associ ati on,Japan,and Japan I nvestment Advi sers Associ ati on.Sales and purchase of equi ti es are subj ect to commi ssi on pre-determi ned wi th cli ents plus consumpti on tax.See company-speci fic di sclosures as to any appli cable di sclosures

233、requi red by Japanese stock exchanges,the Japanese Securi ti es Dealers Associ ati on or the Japanese Securi ti es Fi nance Company.Rat ings,coverage universe and relat ed definit ions Buy(B),Neutral (N),Sel l (S)Analysts recommend stocks as Buys or Sells for i nclusi on on vari ous regi onal I nves

234、tment Li sts.Bei ng assi gned a Buy or Sell on an I nvestment Li st i s determi ned by a stocks total return potenti al relati ve to i ts coverage uni verse.Any stock not assi gned as a Buy or a Sell on an I nvestment Li st wi th an acti ve rati ng(i.e.,a stock that i s not Rati ng Suspended,Not Rat

235、ed,Coverage Suspended or Not Covered),i s deemed Neutral.Each regi on manages Regi onal Convi cti on li sts,whi ch are selected from Buy rated stocks on the respecti ve regi ons I nvestment li sts and represent i nvestment recommendati ons focused on the si ze of the total return potenti al and/or t

236、he li keli hood of the reali zati on of the return across thei r respecti ve areas of coverage.The addi ti on or removal of stocks from such Convi cti on li sts are managed by the I nvestment Revi ew Commi ttee or other desi gnated commi ttee i n each respecti ve regi on and do not represent a chang

237、e i n the analysts i nvestment rati ng for such stocks.Total return potential represents the upsi de or downsi de di fferenti al between the current share pri ce and the pri ce target,i ncludi ng all pai d or anti ci pated di vi dends,expected duri ng the ti me hori zon associ ated wi th the pri ce

238、target.Pri ce targets are requi red for all covered stocks.The total return potenti al,pri ce target and associ ated ti me hori zon are stated i n each report addi ng or rei terati ng an I nvestment Li st membershi p.Coverage Universe:A li st of all stocks i n each coverage uni verse i s avai lable

239、by pri mary analyst,stock and coverage uni verse at https:/ Rated(NR).The i nvestment rati ng,target pri ce and earni ngs esti mates(where relevant)have been suspended pursuant to Goldman Sachs poli cy when Goldman Sachs i s acti ng i n an advi sory capaci ty i n a merger or i n a strategi c transac

240、ti on i nvolvi ng thi s company,when there are legal,regulatory or poli cy constrai nts due to Goldman Sachs i nvolvement i n a transacti on,and i n certai n other ci rcumstances.Rating Suspended(RS).Goldman Sachs Research has suspended the i nvestment rati ng and pri ce target for thi s stock,becau

241、se there i s not a suffici ent fundamental basi s for determi ni ng an i nvestment rati ng or target pri ce.The previ ous i nvestment rati ng and target pri ce,i f any,are no longer i n effect for thi s stock and should not be reli ed upon.Coverage Suspended(CS).Goldman Sachs has suspended coverage

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257、holm branch),to a li mi ted extent,subj ect to local supervi si on by the Swedi sh Fi nanci al Supervi sory Authori ty(Fi nansi npekti onen)di ssemi nates research i n the Ki ngdom of Sweden.General disclosures Thi s research i s for our cli ents only.Other than di sclosures relati ng to Goldman Sac

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