Issue #2: Renewable Energy Scenario in India


India’s prime minister recently launched an international solar alliance of over 120 countries (International Agency for Solar Technologies & Applications (IASTA)) with the French president, François Hollande, at the Paris COP21 climate summit. This international event has again brought the focus to the potential of renewable energy for the entire world, the tropical countries in particular.  It is all the more relevant to a country like India where approximately 360 million people lack adequate access to grid-electricity and another 20 million households receive less than four hours of electricity per day.

Why Renewable Energy?

1) Renewable energy is, well, renewable – This means it has infinity of sustainability and we will never run out of it. Other sources of energy like coal, oil and gas are limited and will run out some day. Renewable energy can reduce our dependence on fuels and energy from foreign governments.

2) Environmental Benefits – It is clean and results in little to no greenhouse and net carbon emissions. It will not deplete our natural resources and have minimal, if any, negative impacts on the environment, with no waste products of Co2 and other, more toxic take with different sources of energy.

3) Reliable Energy Source – Our dependence on fossil fuels has increased considerably in last few decades. The result is that our national security continues to be threatened by our dependence on fossil fuels which are vulnerable to political instabilities,  trade disputes, wars, and high prices. This impacts more than just our national energy policy. Also, solar and wind plants are distributed over large geographical area and weather disruptions in one area won’t cut off power to an entire region.

4) Economic Benefits – Renewable energy is also cheaper and more economically sound than other sources of generated energy. It is estimated that as a result of renewable energy manufacturing, hundreds of thousands of stable jobs will be created. Thousands of jobs have already been created in numerous European countries like the United Kingdom and Germany, who have adopted measures to manufacture renewable energy. Renewable energy amenities require a less amount of maintenance, which reduces the costs. Switching to renewable energy sources also means that the future of our energy is returned back to the people: to communities, families, farmers, and individuals.

5) Stable Energy Prices – Switching to renewable energy sources also means steady pricing on energy. Since the cost of renewable energy is dependent on the invested money and not the increasing or decreasing or inflated cost of the natural resource, governments would pay a definite price per unit rather than the ever changing commodity prices.

What are its Disadvantages?

1) Reliability of Supply – One shortcoming is that renewable energy relies heavily upon the weather for sources of supply: rain, wind, and sunshine. In the event of weather that doesn’t produce these kinds of climate conditions renewable energy sources lack the capacity to make energy. Since it may be difficult the generate the necessary energy due to the unpredictable weather patterns, we may need to reduce the amount of energy we use.

The presence of battery to store energy becomes a very expensive proposition.

2) Difficult to Generate in Large Quantity – Another disadvantage of renewable energy is that it is difficult to generate large amount of energy as those produced by coal powered plants. This means that either we need to set up more such facilities to match up with the growing demand or look out for ways to reduce our energy consumption.

3) Large Capital Cost – Initial investments are quite high in case of building renewable energy plants. These plants require upfront investments to build, have high maintenance expenses and require careful planning and implementation.

4) Large Tracts of Land Required – To meet up with the large quantities of electricity produced by fossil fuels, large amount of solar panels and wind farms need to be set up. For this, large tracts of land is required to produce energy quantities competitive with fossil fuel burning.

What is the status of renewable energy in India?

Renewable energy in India comes under the purview of the Ministry of New and Renewable Energy. India was the first country in the world to set up a ministry of non-conventional energy resources.  Indian Renewable Energy Development Agency (IREDA), is there to promote, develop and extend financial support for renewable energy and energy efficiency.

The government has taken the following initiatives to promote renewable energy in India.

a) National Clean Energy Fund – The Finance Bill 2010-11 has created a corpus called National Clean Energy Fund, which will invest in entrepreneurial ventures and research in the field of clean energy technologies. The money for this will be garnered through a so-called ‘clean energy cess’ — Rs 50 on every tonne of coal, both domestic and imported.

b) Renewable Energy Certificates (REC) –  REC is a market based instrument which enables the obligated entities to meet their Renewable Purchase Obligation (RPO). Certificates are generated on account of production of renewable energy by RE generators. These certificates can be sold and traded or bartered, and the owner of the REC can claim to have purchased renewable energy.

c) Off Grid Power Program – Distributed/decentralized renewable power projects using wind energy, biomass energy, hydro power and hybrid systems are being established in the country to meet the energy requirements of isolated communities and areas which are not likely to be electrified in near future.

d) Green Energy Corridor – India has set aside US$7.9 billion to create a ‘green energy corridor’ to facilitate the flow of renewable energy into its grid electricity. The project will be implemented with the assistance of Germany which has promised to provide developmental and technical assistance of €1 billion as soft credit.

1) Wind Power – The development of wind power in India began in the 1990s, and has significantly increased in the last few years.  Around 1986 first wind farms were set up in coastal areas of Maharashtra (Ratnagiri), Gujarat (Okha) and Tamil Nadu (Tuticorin) with 55 kW Vestas wind turbines.

As of 30 Nov 2015 the installed capacity of wind power in India was 24,759 MW, mainly spread across South, West and North regions. East and North east regions have no grid connected wind power plant as of March, 2015 end. Wind power accounts for 6% of India’s total installed power capacity, and it generates 1.6% of the country’s power. Wind power is already competitive, meaning the levelized cost of electricity from wind power is the same or lower than that from fossil fuels, and would not require any government support.

Wind is a clean source of power. It accounts for around 70% of India’s source of renewable energy. It is cost effective and can be built on existing farms.  It has also led to job creation in countries like Germany and the USA.

However wind turbines can be situated in selected location that have the required wind speeds. Normally these sites are located far from cities which are the consumption end points. Higher distance leads to transmission losses. They also occupy large tracts of land that cannot be then used for any other purpose. Turbine blades can cause damage to  local wildlife as well.

Wind Energy Initiatives in India

a) National Offshore Wind Energy Policy 2015

  • To promote deployment of offshore wind farms up to 12 nautical miles from coast.
  • To promote investment in energy infrastructure.
  • To promote spatial planning and management of maritime renewable energy resources in the exclusive economic zone.
  • To achieve energy security and reduce carbon emissions.
  • To encourage indigenisation of offshore wind energy technology.
  • To promote R&D in the offshore wind energy sector.

b) National Institute of Wind Energy (NIWE) – has been established in Chennai in the year 1998, as an autonomous R&D institution by the Ministry of New and Renewable Energy (MNRE), Government of India. It is a knowledge-based institution of high quality and dedication, offers services and seeks to find complete solutions for the kinds of difficulties and improvements in the entire spectrum of the wind energy sector by carrying out further research.

c) Excise duty exemption – Full exemption on excise duty is being provided on Pig Iron (SG grade) and ferro-silicon-magnesium for use in the manufacture of cast components of wind-operated electricity generators.

d) Accelerated Depreciation –  has been reintroduced after being withdrawn in 2012. It is as high as 80% on initial capital invested.

e) Generation Based Incentives – GBI will be provided to wind electricity producers @ Rs. 0.50 per unit of electricity fed into the grid for a period not less than 4 years and a maximum period of 10 years with a cap of Rs. 100 Lakhs per MW.

2) Solar Power – India is densely populated and has high solar insolation, an ideal combination for using solar power in India. Much of the country does not have an electrical grid, so one of the first applications of solar power has been for water pumping, to begin replacing India’s four to five million diesel powered water pumps, each consuming about 3.5 kilowatts, and off-grid lighting. Some large projects have been proposed, and a 35,000 km² area of the Thar Desert has been set aside for solar power projects, sufficient to generate 700 to 2,100 gigawatts.

As of 31 August 2015, the installed grid connected solar power capacity is 4,229.36 MW.

Solar Energy Initiatives in India

a) Solar Loan Programme – Launched in 2003, the Indian Solar Loan Programme was a four-year partnership between UNEP, the UNEP Risoe Centre, and two of India’s largest banks, the Canara Bank and Syndicate Bank. The Indian Solar Loan Programme, supported by the United Nations Environment Programme has won the prestigious Energy Globe World award for Sustainability for helping to establish a consumer financing program for solar home power systems. Over the span of three years more than 16,000 solar home systems have been financed through 2,000 bank branches, particularly in rural areas of South India where the electricity grid does not yet extend.

b) Jawahar Lal Nehru National Solar Mission – The Jawaharlal Nehru National Solar Mission was launched on the 11th January, 2010 by the Prime Minister. The Mission has set the ambitious target of deploying 20,000 MW of grid connected solar power by 2022 is aimed at reducing the cost of solar power generation in the country through (i) long term policy; (ii) large scale deployment goals; (iii) aggressive R&D; and (iv) domestic production of critical raw materials, components and products, as a result to achieve grid tariff parity by 2022. This target has been increased to 100,000 MW by 2022.

c) National Institute of Solar Energy – National Institute of Solar Energy, an autonomous institution of Ministry of New and Renewable (MNRE), is the apex National R&D institution in the field Solar Energy. The Government of India has converted 25 year old Solar Energy Centre (SEC) under MNRE to an autonomous institution in September, 2013 to assist the Ministry in implementing the National Solar Mission and to coordinate research, technology and other related works.

d)  Renewable Purchase Obligation (RPO) – mechanism is in place to drive demand for solar power in India until parity in terms of landed cost of power between renewables and other energy sources is widely reached. To comply with RPOs, electricity distributors or ‘discoms’ can either generate a minimum amount of renewable power or purchase renewable energy certificates (RECs) to make up for shortfalls.

e) Exemption from excise duties and concession on import duties on components and equipment required to set up a solar plant.

f) A 10-year tax holiday for solar power projects.

g) Generation Based Schemes for small solar projects connected to a grid below 33KV.

h) A subsidy of 30% of the project cost for off-grid PV and solar thermal projects. Loans at concessional rates for off-grid applications.

i) Special incentives for exports from India in renewable energy technology under renewable sector-specific SEZ.

3) Biomass and waste to energy – Every year, about 55 million tonnes of municipal solid waste (MSW) and 38 billion litres of sewage are generated in the urban areas of India. In addition, large quantities of solid and liquid wastes are generated by industries. Waste generation in India is expected to increase rapidly in the future. As more people migrate to urban areas and as incomes increase, consumption levels are likely to rise, as are rates of waste generation. It is estimated that the amount of waste generated in India will increase at a per capita rate of approximately 1-1.33% annually.

India has had a long involvement with anaerobic digestion and biogas technologies. Waste water treatment plants in the country have been established which produce renewable energy from sewage gas, however there is significant un-tapped potential. Also wastes from the distillery sector are on some sites converted into biogas to run in a gas engine to generate onsite power.

4) Small Hydroelectric Projects – A number of mini/micro hydro projects have been set up in remote and isolated areas, mainly in Himalayan & Western Ghat region. While these projects are developed by various state agencies responsible for renewable energy, the projects are normally maintained by entrepreneurs or by local community’s / Gram Panchayat / tea garden owners’ participation.

It has been estimated that there are more than 1.5 lakh potential water mill sites in the Himalayan regions of India. With the R&D efforts, new and improved designs of water mills have been developed for mechanical as well as electricity generation of 3-5 kW. These designs were tested at AHEC, IIT Roorkee and have been replicated by 6-7 small scale manufacturers.

To encourage and accelerate the development of water mills and micro hydel projects in the remote & hilly areas, a scheme for providing Central Financial Assistance (CFA) during 2014-2015 and the remaining period of the 12th Five year Plan for development/upgradation of watermills and setting up of micro hydel projects upto 100 kw capacity to State Governments.