Maharashtra Economic Development Council
Renewable Sources : Key to Energy Security
A
ccording to National Action Plan on Climate
Change, By 2015, India will need to source at
least 10% of its energy from solar, wind, hydro
power and other renewable energy sources and 15% by 2020.
Coupled with this is the mammoth solar mission, which
mandates 20GW of solar energy in the country by 2022.
Broadly, the required energy security strategy has two strands.
At one level the country needs to secure stable supplies of
energy to meet growing demand. At another, India needs to
evolve fuel efficiency standards that will not only ensure
efficacy in consumption but also incentivize alternative forms
of energy such as solar power.
India is a rapidly growing economy and the Indian government
is already facing difficulties in facing the growing demand.
In this respect, renewable energy starts making more and
more sense. At this point, carbon reduction is sort of an add-
on.
At present, clean energy reduces dependency on coal and oil
and is a domestic resource, which reduces this dependency.
Moreover, it has the potential to add a lot of jobs in India
internally.
India has huge potential for renewable energy sources,
especially solar energy. Theoretically, India has solar
potential of 5 trillion kWh per year. The potential for non-
November 2010 Maharashtra Economic Development Council, Monthly Economic Digest
Energy & Infrastructure
Mr. Hemant Yadav
MEDC
solar resources is another 85,000MW, according to a recent
Crisil Infrastructure Advisory report. Of that, only around
17,220MW has been tapped. This includes 69% from wind
energy, 16% from small hydropower units and 8% from co-
generation. The remaining 7% covers solar energy and other
sources, according to Crisil.
India is still in its developing phase in terms of installation
of solar energy projects and solar photovoltaics (PV) are still
very far behind. According to Sarasin Sustainable Investment,
a branch of Bank Sarasin and CIE AG, which focuses on
sustainable investments over the next 5-10 years, there will
be 100% annual average growth in terms of PV. It makes
more sense, especially in rural Indian areas, who don’t have
access to electricity.Weaning rural households way from the
use of diesel and kerosene as power sources will enable better
indoor air health.
Last year saw wind capacity of 1200MW of being installed,
while solar was way behind at 80MW. The decentralized use
of solar, as well as biomass energy plants, is the most touted
solution to millions of households, mostly rural, lacking
access to power.
Still, transmission in remote areas remains a challenge
because of the low and dispersed capacity of renewable
energy plants.
According to Ratnesh Yadav, an entrepreneur in Bihar’s
hinterland in biomass energy, the bottlenecks are somewhere
else, the ministry of new and renewable energy has been
trying a lot to promote clean energy, they have been giving
subsidy but they lack foresight. There is need for policy,
which will promote entrepreneurs but if they want to scale
up, are there enough manufacturers? And lack of gensets is
also biggest problem.
According to Vivek Gupta, director, Saran Renewable
Energy Pvt Ltd, which is another Bihar-based biomass energy
company, raising capital is the biggest problem. Capital is a
constraint. The normal banker is reluctant. It is not an easy to
raise capital.
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 Maharashtra Economic Development Council
The Central Electricity Regulatory Commission (CERC)
has already asked state counterparts to notify Renewable
Energy Certificate (REC) regulations in order for utilities to
meet their renewable purchase obligation (RPO). The CERC
had issued guidelines on issuing RECs from September to
promote green energy. Those who hold the certificates will be
able to sell green energy to states, individuals or other trading
entities.
Among states, however, only Gujarat, Himachal Pradesh,
Maharashtra, Manipur and Mizoram have already notified
final regulations. Uttar Pradesh, Uttarakhand, Tamil Nadu,
Orissa, Madhya Pradesh and Kerala have notified draft
regulations. Some states such as Delhi, Andhra Pradesh,
Bihar, Chhattisgarh, West Bengal, Punjab and Karnataka are
yet to make a move.
Some of the SERCs (state electricity regulatory commissions)
haven’t said a specified RPO guidelines so far primarily
because of three reasons. Firstly, yes, there is relatively lower
potential in some states and the SERCs need to ensure that
the RPO trajectory specified by them is achievable. Secondly,
the SERCs need to assess the impact of the RPO on the retail
tariffs. Thirdly, the delay is also due to the REC mechanism,
which is in the final stage of implementation.
The REC mechanism is expected to be an effective tool for
meeting RPO and to some extent this tool will also address
the problem of renewable energy potential being specific to
certain states and regions. States have been allotted different
renewable energy purchase obligations because of differences
in potential. While Gujarat met its target for 2009-10, states
such as Tamil Nadu came close.
Sixteen state electricity regulatory commissions have
specified the RPOs for their licensee distribution companies.
They have also notified regulations to determine the tariff
of energy generated from renewable sources, according to
the Forum of Regulators, a platform which consists of the
chairpersons of CERC and SERCs.
Solar Power gets its day in the sun with national mission
support
After the release of the guidelines to operationalise the
Jawaharlal Nehru National Solar Mission, the solar energy
industry is shining bright with optimism. As new players
scramble to make the first moves, the incumbents are
November 2010 Maharashtra Economic Development Council, Monthly Economic Digest
Energy & Infrastructure
determined to stay ahead. While some industry players are
scouting overseas for technology, others are hunting for land
back home. Every company seems keen to stake a claim to its
share of the limelight. All eyes are on the first grid-connected
5-mw solar thermal plant by Acme Tele Power, expected to
come up in Rajasthan by September.
The solar mission envisages setting up of 1,300 mw of solar
power, including 1,100 mw of grid-connected solar power,
100 mw small-grid and 200 mw off-grid power generation,
by 2013. The overall target is to set up 20,000 mw by 2022
in three phases, up from 12 mw of grid connected interactive
solar power as on end-June 2010.
Government support has fuelled a spate of initiatives in this
sector. RPG Group’s power utility CESC is developing a
200-mw solar power project for Rs 2,000 crore near Bikaner
in Rajasthan, for which it has acquired 300 acres. Kalyani
Group flagship Bharat Forge is planning to install 100 mw of
solar power. 40 mw of solar power is being set up by Adani
Power in Gujarat. Yash Birla Group’s Birla Power Solutions
is targeting 125 mw of solar power in Haryana, Uttarakhand,
Andhra Pradesh and Rajasthan. Meanwhile, public sector
NTPC has targeted generating 300 mw solar power by March
2014.
Committed to help the industry achieve grid parity by 2022,
the mission has named NTPC Vidyut Vyapar Nigam to buy
power from private developers. For the first year (2010-2011),
the Central Regulatory Electricity Commission has fixed
the rate for photo-voltaic at Rs 17.91 per unit and for solar
thermal at Rs 15.31 per unit. Besides, the power ministry will
contribute “relatively cheaper” 1,000 mw of thermal power
for bundling with “relatively expensive” solar power to be
sold to distribution utilities in order to reduce its cost for end-
consumers.
Source: Financial Express
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 Maharashtra Economic Development Council Energy & Infrastructure
Rajasthan is a favourite destination for solar power producers. additional power. The government’s integrated energy policy
Rajasthan is scoring not only because of good solar radiation (IEP) estimates that electricity demand will grow 4-5 times
and the number of sunny days, but also because of availability by 2030. Power projects are causing social stress across
of unutilised land in desert areas at cheap rates. Eleven India due to their conflicting demands on scarce water and
projects with a total capacity of 66 mw cleared by the Centre land resources, displacement of people and local pollution.
are expected to come up in the state in the next year and a Limited coal resources in India and the increasing threat
half. of climate change will limit the total coal capacity we can
aspire for. This necessitates a critical relook at our energy
Existing solar players are consolidating and expanding.
policy. Rather than pursuing energy security through elusive
While Tata BP Solar is planning to increase its photo-voltaic
options such as nuclear power, it is important to concentrate
cell manufacturing capacity to 180 mw from 84 mw, Moser
on quick implementation of energy efficiency, people-centric
Baer is expanding capacity to 190 mw from 100 mw. Each
decentralized use of renewable energy and reducing the cost
company is charting its own course. SunBorne Energy, a
of such grid-connected power through competition while
solar thermal power developer planning solar power plants of
addressing governance issues.
50 mw each in Andhra Pradesh and Rajasthan
As the first step, there is need to ensure adoption of energy
It’s not only manufacturers and developers who are getting
efficiency to the fullest extent. The adoption of the National
their act together. Services providers too are working overtime
Mission on Enhanced Energy Efficiency, with an aim of
to tap into the emerging opportunity. While Germany’s TUV
reducing demand by 20GW over the next four years, is a good
Rheinland is setting up its seventh worldwide lab for testing
start. The efficiency resource, over the next 10 to 15 years
solar modules and systems in Bangalore at an investment
is much greater than the combined supply potential of large
of 2 million euros, 3TIER, a renewable energy information
hydro and nuclear power. In spite of the full utilization of
provider, has launched its proprietary solar prospecting and
efficiency resources, we will need to augment supply through
assessment tools for developers to assess availability and
renewable energy.
variability of solar radiation in India.
This is the fastest growing energy sector in the world today,
Solar energy events in the country, too, are witnessing
with investments in its capacity having overtaken fossil-
renewed interest from industry players from across the world.
fuel capacity addition in the last two years. India has a grid-
The recently concluded three-day Solarcon India 2010 in
connected renewable energy capacity of 17GW, which is
Hyderabad attracted the who’s who of the solar PV industry.
one-tenth of total power generation capacity. The bulk of this
The sentiment has improved a lot since the event and industry
comes through wind power.
players want the government to set even more ambitious
targets. Going ahead, India needs a multi-pronged strategy for
renewable energy promotion. First, there is need to utilize
While older conferences get better global traction, first-
relatively low cost (non-solar) renewable energy resources,
timers too are riding the optimistic sentiment to book their
which are estimated by MNRE to be around 85GW. The
slot in the newly expanded space. Seeing the kind of draw
largest of this is wind power, whose present cost is 50%
solar energy is getting, even renewable energy events like the
higher than that of coal-based power without considering
International Congress on Renewable Energy (ICORE-2010)
the externalities of coal. While the National Action Plan on
to be held in December in Chandigarh are focusing more on
Climate Change has set a target of 15% energy from renewable
solar energy.
energy by 2020, such a target should be reviewed considering
Energy Policy : relook economically usable resources, and an acceptable impact
As the nation celebrates 63 years of independence, a third of on consumer tariff, while the cost burden of this expensive
our population lives without electricity and an additional one electricity should not passed on to poor and agricultural
third face power cuts. Our growing economy will demand consumers.

November 2010 Maharashtra Economic Development Council, Monthly Economic Digest | 39

 Maharashtra Economic Development Council Energy & Infrastructure

Second, renewable energy cost reduction through innovation
needs to be supported. The recently introduced National Clean
Energy Fund will generate Rs3,000 crore per year through
a small cess on coal and is a step in the right direction. To
begin with, this fund should be leveraged wisely to support
innovation in clean energy technologies, demonstration
projects and the renewable energy manufacturing industry.
Third, while the solar resource is theoretically abundant, it
is expensive. The regulated price for solar power is nearly
six times that of coal and four times that of wind power.
Competition and technology development will no doubt
lower solar costs, but they are unlikely to compete with coal
power over the next decade. But solar PV technology, even
at the present cost, is economical for applications in remote
areas and should be used for ensuring a reliable supply for
social infrastructure such as schools, primary health centres
and drinking water distribution systems.
Governments should also promote research and development
in renewable energy technologies by supplying significantly
more public funding. The private sector, aided by government
subsidies, should seek entrepreneurial opportunities in the
growing renewable energy market. The Government should
devote more attention to overcoming the cost and technology
barriers that currently limit the contribution of renewable
energy sources.
Despite this and international negotiations on climate change
practically grinding to a halt, India’s domestic clean energy
scenario is abuzz with activity. Till 2020, India has a formidable
target. The 2020 target is far but is a milestone which makes
sense. Of course, it might need some adjustments on the way
but it’s a realistic goal.
hemantyadav77@gmail.com

Governments should substantially facilitate the use—in an

environmentally sustainable way—of renewable energy
resources through adequate policies and subsidies. A major
policy step in this direction would include implementing
clear price signals for avoided greenhouse gas emissions.

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