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Sun shines over renewable energy in India

According to reports, the Indian renewable energy industry has never had it so good. Wind power installations in 2011-12 were the highest in a single financial year, at 3,163 MW, taking the total installed capacity to 17,320 MW.

The Centre has announced an ambitious national solar mission under which 20,000 MW of solar power capacity will be added in the next decade. The first phase of the solar mission envisages 1,000 MW of capacity, both solar thermal and solar photovoltaic.

The installed renewable energy capacity in the country at the end of March 2012 stood at 24,500 MW, about 12 per cent of the total installed power capacity of 2,00,287 MW.

Over the years, the share of Green power – wind, solar, biomass, small hydro, municipal solid waste and biogas – has definitely increased, but it still is a long way off before renewables play a significant part in the country’s overall energy basket.

Wind energy continues to be the single largest component of the RE portfolio, accounting for nearly 70 per cent of all Green power. This is simply because State power utilities such as those in Tamil Nadu have actively promoted wind energy, from the early 1990s. There are more than 15 wind turbine manufacturers in the country, with almost all the major global companies being present.

Several factors have contributed to the growth of the renewable energy sector. The main one being an enlightened regulatory mechanism that has mandated all utilities to source a portion of the electricity they distribute from renewable sources – what is called renewable portfolio standard.

Some regulators have been proactive in stipulating feed-in tariffs – special tariffs that are meant to give a fillip to investments in the sector – thereby making it attractive for investors. Besides, there was accelerated depreciation and then generation-based incentive, as incentives to spur investment in wind energy.

Then there is the renewable energy certificate, trading in which is permitted. This is basically meant to help States that do not have too much renewable energy potential to buy certificates from renewable power sources, to meet their obligations of sourcing a part of the power they distribute from Green sources. Trading in the certificates also provides an additional revenue stream, for the project developers.

The wind energy industry is vocal and well-organised, highlighting the benefits of encouraging Green power, quite often drawing global comparisons. This has helped to a large extent in creating awareness of the sector’s potential and benefits.

Of course, it still has a long way to go. China, which started off much after India did, has leapfrogged over all other countries and now leads the world in not just new additions every year, but in overall wind energy installations too.

India’s wind power potential is estimated at 45,000 MW, which the industry feels is an out-dated figure. With advanced technology and wind turbines of higher capacity, the industry feels the potential could easily be double the originally estimated figure, without even looking at offshore wind installations.

If that is the case with wind, the solar sector is looking up too. Installations under the national solar mission have started and the industry is upbeat about the prospects. The first phase of the solar mission envisages 1,000 MW of installed capacity (both thermal and photovoltaic), the second phase between 2013 and 2017, another 9,000 MW and the third and last phase between 2017 and 2022, a further 10,000 MW.

In the first phase, the average tariff for solar thermal came to Rs 11 a unit, while that for solar photovoltaic Rs 12 and Rs 9 a unit, in two batches.

For the solar power sector too, the Government offers incentives in the form of feed-in tariff, to make it attractive for investors.

However, it is still a long way off before both wind and solar power achieve grid parity. The plant load factor, or as the wind energy industry calls it capacity utilisation factor, has definitely increased over the years for wind turbines, thanks to more sophisticated technology and software. But, it is still not high enough to make it the main source of electricity. It is the same case too with solar power.

The green power debate will go on with renewable energy champions highlighting hidden environmental and other costs of conventional power while conventional energy scoffs at the high green power costs.

The reality is that both conventional and green power have to exist side by side, as the developed countries have demonstrated.

One comment

  1. Let MNRE / Central Government or State government make a provision for a low cost debt funding like Infra fund and name it as Solar Fund. kfW or such international institutions offer subsidized loan to Government depts like IREDA, REC etc at 2.5 to 3 %. Let this be converted as Solar Fund in rupee terms.

    Based on 25% equity, this Solar Fund be funded to entrepreneurs around 5 to 7 %. Thus the prices can further come down apart from quick project development. What we need to ensure is that allow new entrepreneurs to develop and operate the plan at low margins or costs, allow them to ERADICATE the Accelerate Depreciation, instead provide low cost debt fund or arrange 95% funding at low interest rate. Thus, large corporate cos can simply ask low cost new and small entrepreneurs to own and run the Solar PV plant of 25 to 100 MW plant at every Taluka place with a reduced land usage. You can refer to know how we can build solar PV within 3 acres/ MW instead of 5 to 6 Acres/ MW as is being done.

    What we need to highlight in such blogs is to share innovative ways, business plans, easy access of fund to the educated new / first generation entrepreneurs who are willing to work with reasonable margins with sustainable business case, thus, the power tariff can be minimum very affordable through with improved yield of renewable energy and hence even avoid Nuclear power radiation hazards. The Menace of Cartel to increase the power procurement from different states at higher price (which has been the habit of few states in the recent time) can also be reduced thus the state budget deficit can be reduced.

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