India’s renewable push
Work speeds up on several fronts as government strives to meet target to generate 40% of its energy from new and renewable sources by 2030.
The Narendra Modi government is working at a frenzied pace to pass regulations to meet its target of generating 175 gigawatts (GW) of renewable energy by 2022, as part of India’s campaign to reduce greenhouse gases (GHG) and combat global warming.
The government has drafted a National Renewable Energy Act and a new Electricity Tariff Policy to make power generation from renewable sources an obligation even for mainstream power companies. The act, listing around a dozen types of renewables including solar, wind, biomass and industrial waste, is expected to be sent to Parliament for approval soon.
The government is also in the process of setting up a National Clean Energy Fund worth US$3 billion, apart from tapping bilateral and multilateral financial institutions and issuing tax-free bonds to help finance clean technologies. It will encourage state governments to set up state green funds on similar lines.
At the same time, it is working out a plan to ensure that equipment for solar, wind, biomass and hydroelectric projects[u1] is manufactured within the country — by foreign companies if local ones don’t have the capability or scale — under its “Make in India” programme. As well, efforts are being stepped up to produce the trained workforce required for the projects.
New Delhi plans to raise its renewable energy output to 175 GW by 2022 from about 33 GW at present. Out of this, 100 GW would come from solar energy and 60 GW from replacing small wind-power projects with large, modern ones. The remaining 15 GW would be generated from biomass and smallscale (less than 25 MW) hydroelectric plants.
The Union Ministry of New and Renewable Energy (MNRE) and various organisations working under its aegis have made several major decisions in last fortnight to speed up the development of renewables.
Actions taken so far include the drafting of a policy on geothermal energy, and the announcement of a 10-year tax holiday and other concessions for grid-connected solar rooftop and small solar power plants in residential, institutional, government and social sectors. Wind-operated electricity generators will also be exempted from special duty.
As well, the government is proposing an International Solar Alliance (ISA) among 120 countries located between the tropics of Cancer and Capricorn to create a collaborative platform for increased deployment of solar energy technologies. It is also encouraging young people to consider training in installation and maintenance of solar projects, and seeking comments on the supply, installation and commissioning of solar photovoltaic water pumping systems.
Under the Sector Skill Council for Green Jobs (SSCGJ), the government plans to train 50,000 people and certify a million students in the first year through the National Institute of Solar Energy (NISE) and other institutions. It is setting up 25 solar parks, developing 60 solar cities (defined as a city achieving a minimum 10% reduction in demand for conventional energy by using more solar power), and will distribute 100,000 solar water pumps to farmers and convert 55,000 petrol pumps to run on solar energy.
Out of the 100 GW of solar power generation planned, 40 GW will come from rooftop projects and 20 GW from solar parks. The rest will be generated from large and medium-scale power projects on canal banks and other locations. The solar parks and the large and medium-scale projects are grid-connected. Rooftop power generation can be used for individual or institutional consumption.
However, rooftop solar power, at 6.50 rupees per unit compared with 5 rupees for power from larger solar farms, may not find many buyers among the state distribution companies. The losses of the latter already exceed 600 billion rupees (323 billion baht).
“The high cost of rooftop power is a challenge and distribution companies fear losing good customers,” said Amit Kumar, a partner in the energy and utilities practice of PwC India. He identified domestic manufacturing, training and financing as the other challenges for the sector.
“On an average, 1.5 people are directly employable in the generation of one megawatt of solar power. That works out to 150,000 people for the 100 GW target set by 2022 with much more from associated facilities,” he said in an interview with Asia Focus.
Like the National Institute of Solar Energy (NISE), the National Institute of Wind Energy has also engaged universities and vocational institutes to train a workforce for the installation, operation and maintenance of wind turbines.
Mr Kumar believes that foreign companies entering solar power projects in India are in an “advantageous position” in comparison to domestic players unless the latter can obtain access to easy and cheaper financing from abroad. This comes at a price, though, because “Indian companies tapping into Exim banks will have to buy equipment from that country only,” he explained.
A report by KPMG titled “The Rising Sun: Disruption on the Horizon”, notes that the price of solar power will continue to decline (it forecasts rooftop solar will cost just 3.86 rupees per unit in 2025). As well, it says, solar power will eventually displace coal over time.
However, it also cautions that factors such as poor availability of capital, unprepared grid infrastructure and a possible steep fall in the Indian currency (solar power is import-linked) could result in the government missing some of its ambitious targets.
The KPMG report estimates that solar power generation in India will total 10 GW by 2020 and 49 GW by 2025 — 51 GW less than the 2022 target.
Vinod Kala, managing director of Emergent Ventures India, a consultancy on renewable energy projects, said India would have to upgrade its grid infrastructure (distribution and transmission networks) to scale up generation of renewable energy. Since demand for energy will only go up in India, the government can pursue renewable generation aggressively and scale it up in phases, he added.
According to an Indian government report outlining its commitments to the United Nations Framework Convention on Climate Change, per capita electricity consumption in the country is expected to rise to 2,499 kilowatt hours (kWh) in 2030 from 917 kWh today. The report puts the number of Indians who do not have access to electricity at 24%. India has expanded its renewable generation from 3.9 GW in 2002 to 33 GW in 2015, it adds.
Bloomberg New Energy Finance recently put India in fifth place (behind China, Chile, Brazil and South Africa) in a 55-country survey of the best places for renewable energy companies to do business.
India estimates that scaling up of renewable generation to 175 GW by 2022 will generate one million jobs in the country. The report to the UN says that the country will meet 40% of its energy from new and renewable generation in 2030.
This would include 4,300 MW of nuclear energy to be produced at six nuclear reactors that are currently at the construction and commissioning stages.
Foreign companies entering solar power projects in India are in an advantageous position in comparison to domestic players unless the latter can obtain access to easy and cheaper financing from abroad