Picture Courtesy - U-Solar Clean Energy Solutions Pvt Ltd
Picture : Courtesy SUZLON
Back home, in a recent report by Ernst & Young, India has been placed on the fourth rank on its 'renewable attractiveness index' following China, US and Germany and has been ranked second and third on the solar and wind index respectively. India's renewable energy industry while adhering to an essential role in the environment sustainability also assures energy security. The sector saw efforts being initiated as early as in the 1970s and today while being considered as more than a mere climatic change obligation, the renewable energy industry is being seen as a necessity driven by globalisation and urbanisation. The energy needs are incessantly on the rise and cannot be adequately compensated by fossil fuels with their mounting costs and infrastructural constraints.
A number of recent deals and collaborations have cemented India's growing aggression towards this sector. The World Bank has recently committed to a loan of Rs.1,100crore to the India Infrastructure Finance Company Ltd (IIFC) for solar projects in India. Reports suggest that India has witnessed the highest growth rate (62%) for any single country (post 2010) as far as investment in renewable energy worldwide is concerned.
Picture Courtesy - Airier Natura
India has also signed up a number of MoU (Memorandum of Understanding) with countries like Malaysia, Italy and Belgium towards this cause. Collaborations with Germany, Switzerland, Chile and Africa have also happened. The US thin film photovoltaic cell and module manufacturer, First Solar is keen on forming joint ventures in India for putting up Solar Power Projects. France is assisting the setting up of two solar power plants in Bikaner. Companies from Finland are also showing interest. More recently US and India have also had talks of setting up a panel to deliberate on financing renewable energy.
All this indicates to a huge potential of renewable energy that India possesses. However this potential of the copious amount of sunlight, water, biomass and biofuel resources still remains untapped. Reports validate that this sector if developed more voraciously could become one of the prime factors in transforming India to a developed country from a developing one. While till a decade back renewable energy was accounted for just 2% of the country's total installed capacity of power production, today the figure has reached to a little over 12%.
All the states are coming forward to support this sector - as many as 41 cities will be developed as model solar cities out of which the Ministry has already approved the master plans for 28 cities following which the project installations have already started in a few cities. While the Meghalaya government through its Meghalaya Renewable Energy Policy wants to counter the power deficiency in the state, Varanasi, Shimla and Agartala are getting solarised with solar energy via solar street lights and solar water heating systems. The West Bengal Government has started issuing renewable energy certificates (RECs) for those who set up renewable energy projects in the state. RECs are generation-based certificates awarded to those producing electricity from renewable sources, if at all they opt not to sell the electricity at a preferential higher tariff. Madhya Pradesh is looking to become the pioneer state in generation of solar, wind, small hydel and biomass energy in the country. Schemes are being chalked out for Arunachal Pradesh as well as Bhubaneshwar. Tamil Nadu is all set to generate around 40% of the solar energy produced in the country by 2015. With ample availability of paddy husk and other biomass in Bihar, the state is being seen as having a good potential for setting up biomass-based energy generation plants.
Many new investments by companies like BOSCH and CIAL (Cochin International Airport Limited) in the renewable energy sector are the good signs.
This sector has also opened many employment opportunities - as much as 50,000 direct jobs are estimated to have been created in the last three years in off-grid and other applications.
The Market Statistics
According to reports by Confederation of Indian Industry (CII), an apex body playing a proactive role in India's development process, the Grid Interactive Renewable Energy installed capacity in India is around 28068.45MW which includes 19051.45MW of wind power, 3632.25MW of Small Hydro, 1686.44MW Solar power and close to 3600 MW of biomass based power. Renewable Energy power generation contributes around 13% to the total grid interactive power generation in India.
Subansiri Hydro Power Project in Arunachal Pradesh
Most of the latent potential for small hydro power (hydro power projects with station capacity of up to 25MW) is in the Himalayan states. The total installed capacity of small hydro power projects as on March 31, 2012, was 3200MW. Biogas production is emerging as a method of power production and India's climatic conditions offer an ideal environment for biogas production. India has an estimated potential of over 30,000MW of power from biomass, but only around 3000MW has been exploited and 90% of potential capacity lies untapped.
The development of wind power began in the 1990s. With the current installed wind capacity, India is planning to install 30GW by 2017. The Wind energy sector though having undergone a slowdown last year, has a better investment proposition than solar energy due to its faster project development times, cost-effectiveness and the maturity of the Indian sector.
Mr Rajesh Menon, Deputy Director General, CII terms the overall investment outlook for this sector as extremely positive. He states, "This is clearly evident from the fact that the private sector accounts for the bulk (over 80% of the investment); this sector is a key thrust area for the Government, India's rural electrification needs and finally the increasing price of fossil fuels. All these factors will encourage the deployment of on-and off-grid electricity generation through renewable energy sources in the next five years. In fact, India has amongst the most ambitious renewable energy programmes in the world and is targeting a capacity addition of 30,000MW of Grid connected renewable power in the current five year plan. This represents a huge opportunity for investors, developers, technology providers etc. 15,000MW is envisaged to come from wind power, 10,000MW from solar capacity and 5000MW from other types of renewable sources."
Players in the Indian Market
The Suzlon Group, the world's fifth largest wind turbine supplier and Delhi-based Orange Renewable Power, an emerging IPP actively developing wind projects in India have recently agreed on a 50.4MW wind energy project, scheduled for completion this year in Jaisalmer. Tata Power, one of the leading companies with an operating capacity of 397MW in wind energy, spread across states like Maharashtra, Gujarat, Tamil Nadu, Rajasthan as well as Karnataka has committed to its plans to expand its renewable power capacity to 6000MW by 2020. The company has recently commissioned a 21MW wind power project in Rajasthan and has signed an agreement to install another 30MW in the state.
Picture : Courtesy SUZLON
Bengaluru headquartered U-Solar Clean Energy Solutions Pvt Ltd provides clean and renewable energy solutions to institutional, retail and residential customers. Their customised solutions in the solar photo voltaic space range from 1KW to 500KW or more. The product and service offerings include Energy Audits, implementation of Energy Cost Reduction programs, supply and installation of Solar Power plants and Energy Efficient Lighting solutions. The firm offers both battery-based and local grid connected systems. Battery-based systems are best suited for residences and small offices while local grid connected systems help large consumers of electricity such as factories, IT companies, SEZ's, large hospitals, educational Institutes etc to reduce their EB and DG power usage.
Gamesa, one of the global technological leaders in providing wind energy solutions is headquartered in Spain and manufactures wind turbines (on-shore & off-shore), provides Operation & Maintenance (O&M) services and can develop entire wind farms for customers. It is directly present in India and has a local manufacturing unit here besides regional operating centre to provide O&M services.
Bengaluru based Airier Natura is one of the leading manufacturers of Wind Turbine Ventilators with a market share of 75% in India. They are now developing Solar Thermal Power, Concentrated Solar Power (CSP) and Bio-mass energy. The firm manufactures a wide range of Turbo Ventilators, Industrial Ventilators, Rooftop Ventilators, Eco Ventilators, Solar Water Heaters, Solar steam for cooking, Process heating, Industrial Steam generation using Solar energy, Scheffler Solar Concentrator & Parabolic Trough. AirierVent wind turbine ventilators are robust, lightweight, and corrosion resistant and provide optimized air ventilation while being almost maintenance-free. They come in a wide range of models and in nine different sizes which further can be customized to suit one's exact needs. The company has also recently invested heavily into R&D. In all the projects related to solar power, the firm trains the local people extensively for the O&M, considering it as a pre-requisite for the project. By training local people they create job opportunities and reduce the time of service required in case of any break down in the system.
Hurdles in the Development of the Sector
In case of solar power, there have been noticeable challenges in setting up of solar photo voltaic-based micro grids for electrification in rural areas of India. Solar power that is expensive has few takers due to lack of steady returns.
A research (conducted in December 2012) by the Climate Policy Initiative (a global policy effectiveness analysis and advisory organization) and the Indian School of Business indicates that 'high interest rates and relatively short-term loans for renewable energy projects in India add 24-32% to the cost of renewable energy compared to similar projects in the U.S. and Europe'.
New Delhi headquartered Headway Solar is a solar consultancy, services and products firm. Passionate about Solar energy, the firm provides consultancy to organisations on solar project development, market intelligence and financing. Mr Raveesh Budania, Head - Business Development of the firm lists down the major hurdles in the development of this sector in India as High initial capital expenditure (which could be lowered by more focus on research and commercialisation of technology as the economies of scale will bring the cost down), support from financial institutions, lack of technical expertise on ground and need for more supportive policies. On funds, he elaborates, " Funding solar projects is a big hurdle and funding institutions have started opening up to financing solar projects. At smaller scale, we think of funding solar PV systems by banks in a manner similar to financing vehicles, etc".
There have also been talks of collaborations between India and Nepal on Hydropower for the past five years; but however nothing fruitful has come up which has been blamed by the CII to the lack of co-ordination between government agencies on both sides, lack of pace and direction in the co-operation dialogue, complexities arising due to power-water nexus, absence of private participation in the process and non-availability of physical infrastructure.
Six months back when news reports of Haryana having missed its renewable energy target (as aimed till 2012) surfaced, the low tariffs in Haryana (for players setting up renewable power projects) and high land prices were termed as the major stumbling block for biomass projects in the state. Also the absence of single window clearance mechanism was termed as another hindrance. Enercon and Suzlon were roped in for setting up the wind power projects but they also pulled out due to lack of desired wind velocity in the state.
In fact many states like Rajasthan, Gujarat were unable to meet their targets and the reasons believed were those of poor policy enforcement and lack of awareness. The lack of support from the State Government and the lack of clarity over long-term commitments by States for buying renewable energy has also been treated as a dampener in some cases.
For a new entrant in the equipment manufacturing and/or the services market, the major obstacles counted are those of lack of technological know-how to undertake such projects, huge amount of capital costs involved in procurement and installation and the ability to attract and retain skilled manpower.
Dr Prashanth Bhat, Senior Vice President, Airier Natura remarks, "Anything tangible or intangible, that costs money is evaluated very carefully and used equally in India. This means expenses are controlled and kept as low as possible. Any renewable energy product will have substantial upfront cost; to invest such an amount in an energy which is variable, people do think twice. Secondly, there is lack of awareness with respect to renewable energy in our masses. For example if we talk of solar, people will only expect us to give a solution for electricity whereas solar energy can solve a lot of other problems of energy, like saving expensive fossil fuel in mass cooking or process heating. People are not aware of such solutions. With the subsidy given by the Ministry of New and Renewable Energy (MNRE) the system has now become affordable to a large community in our country. Our society should change their mentality of getting things in an easier way; if we continue in the same way we will have acute shortage of fuel in the near future. Same is the story with wind and other forms of renewable energy."
In a recent report, the Parliamentary Panel on Energy has requested for a 'better planning, co-ordination, and execution in the renewable energy sector'.
Policies and Regulatory Changes by the Government
Picture Courtesy - Airier Natura
The Indian Government launched its incentives for renewable energy in the 1990s and then generation-based incentives (GBI) for wind and solar power in 2007. While it is encouraging states to increase the use of renewable energy, a number of incentives in the form of tax benefits, finance, duty cuts, monitoring and supervision, expert technical assistance and aiding of technology transfer have been introduced. Financial incentives like accelerated depreciation, capital / interest subsidies, nil/concessional excise and customs duties have also been added. FDI upto 100% under the automatic route is permitted in Renewable Energy Generation and Distribution projects subject to provisions of Electricity Act, 2003.
The Jawaharlal Nehru National Solar Mission introduced in 2010, the most important initiative of the Central and State Governments envisages a 20,000MW solar capacity addition by 2022. With the phase 1 completed, the phase 2 is going to aim at the creation of 3000MW of solar power capacity in batches as well as encourage off-grid solar applications.
A Solar Energy Industry Advisory Council (SEIAC) was recently set up by the MNRE to advise it on a range of technology related issues, in order to make the Indian solar industry internationally competitive.
The Government has also recently planned to offer low-interest loans for wind projects through the National Clean Energy Fund (NCEF). The GBI that had been cancelled by the Government in April 2012 was reinstated this February. Around eight billion INR ($147 million) is being going to be allocated for the incentive in the 2013-14 budget. The reintroduction has been done to revive the wind sector which had been suffering for more than a year which many believe was due to policy issues.
To tread on the path of renewable energy, the Government of India under its Special Area Development Programme is planning to switch to green energy at Rashtrapati Bhavan and Raj Bhavans of all the States. The Raj Bhavan complex in Imphal is already relying on solar energy for its requirements through a 40MW solar energy power plant and installation of 20 high intensity LED street lamps, and a battery operational vehicle.
Mr K.R Harinarayan, CEO & Founder, U-Solar Clean Energy Solutions opines, "One policy initiative which will boost Solar acceptance and adoption across the country will be the net metering facility in every state. Imagine a state where every house/office/enterprise is capable of generating its own power, exporting excess power to the grid during the day time and importing power during the night for their use. This will not only decentralize power generation and thus reduce distribution losses but will also bring about a culture of sustainable and optimal management of our energy resources into our day-to-day lives. Net metering at this point in time has only been adopted by Tamil Nadu. We hope for a pan-India implementation of such a policy which needs to be driven by the government. Net metering provides financial benefits to customers who are willing to set up solar PV plants, thus driving the adoption of the technology."
In order to encourage development of the renewable energy sector, the private sector companies are also partnering with the government and co-investing in R&D and technology development.
What the Future Holds!
Mr Menon avers that Renewable Energy is no longer 'alternate energy', but will increasingly become a key part of the solution to India's energy needs. "India is on the way of laying foundation of a new economy that is inclusive, sustainable and aspires for decarbonisation of energy in a definite timeframe," he concludes positively.
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- Solar Energy Liveweek, Bengaluru
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- Power Industry India, New Delhi
- Renewable Energy India, Greater Noida
- Renewable Energy Technology Congress and Expo-2013, New Delhi
- Intersolar India, Mumbai