Share

Indian renewables

Purushottam Uniyal considers how renewables can boost India

Share
India has more than doubled its onshore wind capacity in the past five years. (Shutterstock)
India has more than doubled its onshore wind capacity in the past five years. (Shutterstock)

GlobalData’s Purushottam Uniyal considers how renewables can help bridge India’s power deficit

The shortage in India’s electricity supply is hindering its economic and societal growth. The country has been unable to meet its electricity requirements for the last few years and was also unable to achieve installed capacity targets for conventional generation sources.

Conventional sources are scarce and their price volatility in the international market is making it difficult to secure a fuel supply for new power plants. According to the Load Generation Balance Report (LGBR) published by the Central Electricity Authority (CEA), there were shortages of 8.5% and 9.8% in terms of both energy and peaking availability between 2010 and 2011.

Renewable energy sources are developing at an unprecedented rate and significant capacity was added during the 11th five-year plan (April 2007–March 2012). Unlike conventional sources, renewable energy growth far surpassed pre-defined targets.

This trend will continue for at least the next decade as the government is committed to increasing the size of the renewable energy share in India’s power generation mix due to energy security and environmental concerns. This will help to bridge the demand-supply gap and will also support India’s growing economy.

In March 2012 the government set up a committee to develop legislative and policy changes to speed up capacity additions from renewable power sources such as wind, biomass and solar.

The committee will be headed by a senior official from the Ministry of Power and include representatives from the Ministry of New and Renewable Energy (MNRE); power Distribution Companies (DISCOMs); the Central Electricity Regulatory Commission; state electricity regulatory commissions from renewable-rich states such as Tamil Nadir, Gujarat and Rajasthan; and power project funding agencies Power Finance Corporation and Renewable Energy Corporation.

The panel has made it mandatory for DISCOMs to comply with Renewable Purchase Obligations (RPOs), outlined measures to penalise DISCOMs if obligations are not met, suggested amendments to the Electricity Act 2003 to allow regulators to frame innovative market instruments such as Renewable Energy Certificates (REC) to facilitate development of the renewable power market, made RPO compliance mandatory for captive power generators and bulk electricity consumers, and suggested policy measures for biomass-based power projects.

As of March 31, 2012, renewable energy sources accounted for approximately 24.5 GW (12%) of the total installed capacity of 200 GW. Total renewable installed capacity will increase to 50 - 55 GW at the end of the 12th five-year plan (March 2017), contributing more than 20% to the total installed capacity.

In the 13th five-year plan (April 2017–March 2022), this growth trend will continue and total renewable capacity will cross 90 GW and is expected to approach near to the 100 GW mark.

Article continues on next page ...

Private involvement
Towards the end of the 11th five-year plan, the renewable energy sector witnessed greater participation from private entities. Many Individual Power Producers (IPPs) are emerging in the Indian renewable sector and are developing utility-scale renewable energy projects.

Foreign investment is also coming through the IPP route and is helping in the development of the sector. Foreign Direct Investment (FDI) inflow of US $1.25 billion in 319 renewable energy projects was reported during the 2009–2012 period, and CLP, Surya Charya Power, and Orient Power are emerging as key renewable energy utility companies.

The government also supports the transfer of advanced foreign technologies and FDI of up to 100% for renewable energy projects.

The state agencies responsible for renewable energy development are playing a very important role in shaping India’s renewable energy market. Renewable-rich states have formulated very supportive and transparent policies with definitive time-bound targets.

Tamil Nadu, Maharashtra, Gujarat and Rajasthan are providing a range of support mechanisms and incentives in addition to those declared by the MNRE. Gujarat and Rajasthan are focusing on solar PV development while the southern states are emphasising wind and solar. Madhya Pradesh has recently announced a policy that allows investors to install renewable projects anywhere in India with a Power Purchased Agreement (PPA) signed to the Madhya Pradesh government.

Bridging the gap
Renewable energy sources are attracting more attention due to increased electricity demand, which has led to a huge demand-supply gap. They also seem to be benefiting from the constraints affecting the development of thermal and hydro sources.

The Ministry of Power plans to install 75 GW in the 12th five-year plan, but this target seems difficult to achieve due to the problems of fuel supply linkage for thermal plants. The currently applied fuel linkage policy is insufficient for achieving these targets and the NTPC has already made shortage estimations of approximately 17.5 GW in their target for five-year plans.

Although there is no doubt that renewable energy will record high growth over the next decade, there is still room for more streamlined growth with a stable, transparent and supportive policy and regulatory environment.

This will increase investor confidence. The framework for the development of renewables has improved significantly in recent years, but still a degree of uncertainty and instability remains.

Over the last six months, there was an uncertainty over the status of accelerated depreciation and generation-based incentives for new wind projects. The RPO and Renewable Portfolio Standards (RPS) targets are mandatory, but the penalty system currently in place is
inadequate.

RECs have the potential to be a big success story for renewables, but will not be able to obtain strong legal support in the absence of an appropriate penal system.

Newsletter

You may also like

$60bn worth of nuclear energy deals signed between Egypt and Russia
Egypt has signed nuclear energy deals worth tens of billions of dollars with Russia’s State Atomic Energy Corporation (Rosatom),
Saudi Electricity, GE in partnership to boost digitalisation
As per the memorandum of understanding, SEC and GE intend to continue to work together towards accelerating the digital transformation of the Kingdom’s power sector
Kuwait targets 15% renewable energy-sourced power by 2030
The Public Authority for Housing in Kuwait is working to ensure that 15% of Kuwait's local power demand is met through renewable energy sources by 2030
Saudi Arabia receives four bids for 400GW wind power project
The bidders include ACWA Power, the renewable energy units of European utilities Electricite de France and Enel SpA, and Engie SA’s International Power.
ABB Q1 profits exceed forecasts
A surge in profits could be an indication that ABB's turnaround plan had started to gain traction.
Phoenix Contact: Threefold Growth in Turnover and Personnel over 15 years
With double-digit sales growth in 2017, Phoenix Contact has exceeded the two billion euro mark, achieving a turnover of 2.205 billion euro.

Most Popular