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Renewable Energy can be a commercially viable solution for India

Blinded by cost

 Can renewable power be a commercially viable solution for India? The answer is, it could be soon so.

Many cities and towns across the country face power cuts of 8 to 12 hours a day. Most rural areas do not get any power at all. India still has about 100,000 villages that are not electrified.

So what does a common man do? He resorts to solutions such as DG sets (and inverters) that run on diesel, which is subsidised. In rural areas even kerosene is used in DG and pump sets. The extremely poor use biomass, and almost 23% of the country’s primary energy needs are met through biomass. The cost of generating power using subsidised diesel is more than R12 a unit. Without the subsidy, the cost would be more than R14 per unit.

The cost of producing power from micro wind-turbines (2 kw to 6 kw) is around R7 to R8 per unit depending upon wind speeds. The cost of rooftop mounted solar power is around R13 per unit. If one were to add an energy storage device along with these micro wind or solar options, so as to make power available on demand, then the cost would go up by another R2 per unit.

Further it is commonly accepted that prices of all fossil fuels, specially of oil, will only increase in the future. The cost of renewable power will, however, remain the same and over time technological advances will make the capital cost of renewable solutions even more economical. We have already seen a decline of almost 30% in the initial capital cost of solar solutions over the last two years, with a substantial improvement in efficiencies as well.

So how is renewable power ‘far more’ expensive? We make the folly of comparing the cost of renewable power with those of large, grid-connected coal-based plants and then moan about the huge subsidy burden that renewable power entails. In India, renewable power can actually meet the need on a commercial basis, without any subsidy.

Decentralised renewable power, along with energy storage, can meet the ever increasing need for peaking power. India does not have any solution now to address the peaking power requirements. While seasonal peak demand, like in summer, is addressed by hydro power, there is no planning at all to address the daily peak demand. Well, the solution adopted by the state electricity boards is to resort to load shedding.

The only viable solution to address peaking demand is to have gas-based, generation-based facilities along with suitable gas storage facilities. India does not have adequate gas and in any case building gas storage is expensive. While peaking plants on gas are likely to come up in the future, the cost of power is likely to be high and unpredictable.

Banmali Agrawala, the author is executive director-strategy and business development, Tata Power. Views are personal.

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