India's Renewable Future: Challenges and Prospects

Feb 20, 2011 - Dr. Farooq Abdullah - RenewableEnergyWorld.com

New Delhi, India -- India is perceived as a developing country, but it is developing at a pace that is not matched by many others. We have experienced significant economic growth. Yet the fact remains that our growth is constrained by energy supply and availability. Although we have seen an impressive increase in installed capacity addition, from barely about 1,350 MW at the time of independence (1947) to about 160,000 MW today, over 90,000 MW of new generation capacity is required in the next seven years. A corresponding investment is required in transmission and distribution.

The increasing appetite for energy that has developed in the recent past has been further complicated by rapidly diminishing conventional sources, like oil and coal. To further add to the problems of increased demand and constrained supply, there are serious questions about pursuing a fossil fuel-led growth strategy, especially in the context of environmental concerns. The challenge facing a developing nation such as ours is to meet our increasing energy needs while minimizing the damage to the environment.

This is why, while striving to bridge our energy deficit, we want to increase the share of clean, sustainable, new and renewable energy sources. Whether or not renewable energy completely replaces fossil fuel, we are determined to develop renewable energy to its fullest potential.

Driving inclusive growth

India today stands among the top five countries in the world in terms of renewable energy capacity. We have an installed base of over 15 GW, which is around 9% of India’s total power generation capacity and contributes over 3% in the electricity mix. While the significance of renewable energy from the twin perspectives of energy security and environmental sustainability is usually well appreciated, what is often overlooked, or less appreciated, is the capacity to usher in energy access for all, including the most disadvantaged and the remotest of our habitations.

In its decentralized or stand alone avatar, renewable energy is the most appropriate, scalable, and optimal solution for providing power to thousands of remote and hilly villages and hamlets. Even today, millions of decentralized energy systems, solar lighting systems, irrigation pumps, aero-generators, biogas plants, solar cookers, biomass gasifiers, and improved cook stoves, are being used in the remotest, inaccessible corners of the country. Providing energy access to be most disadvantaged and remote communities can become one the biggest drivers of inclusive growth.

The National Solar Mission

The Sun is the ultimate source of energy. The National Action Plan on Climate Change in June 2008 identified the development of solar energy technologies in the country as a priority item to be pursued as a National Mission. In November 2009, the Government of India approved the Jawaharlal Nehru National Solar Mission. This is a unique and ambitious transformational objective that aims to establish India as a global leader in solar energy by creating the policy conditions for its diffusion across the country, as quickly as possible.

The Mission aims to enable 20,000 MW of solar energy to be deployed in India by 2022 by providing an enabling policy framework. By leveraging domestic and foreign investments, this framework will facilitate and provide the foundation for the private sector to participate whole-heartedly and to engage in research and development (R&D), manufacturing and deployment, making this sector globally competitive. This is the largest and the most ambitious programme of its kind anywhere in the world. The Mission is technology-neutral, allowing technological innovation and market conditions to determine technology winners. The Mission is not merely an effort at generating grid-connected electricity. Rather, two of its major objectives are to encourage R&D and encourage innovation, thereby facilitating grid-parity in the cost of solar power, and to establish India as the global hub for solar manufacturing. This is what makes it a uniquely ambitious and game-changing programme.

In the very first year of its existence, the Mission has succeeded in catalyzing investments in 200MW of grid-connected solar power plants, with another 500 MW expected to roll in shortly.

Wind, Biomass and Hydro Energy Generation

Though solar energy is the future, wind energy is where India competes globally in manufacturing and deployment in the present scenario. India has an installed capacity of over 11,000 MW of wind energy, and occupies the fifth position in the world, after USA, Germany, China and Spain. Our policy framework in wind energy generation is extremely investor-friendly, and an attractive tariff and regulatory regime provide a strong foundation for the growth of the sector. My ministry has recently taken the decision to introduce generation-based incentives, a scheme whereby investors, as well as getting the tariff as determined by the respective state regulatory commissions, will also receive a financial incentive per unit of electricity generated over ten years. The decision to incentivize the generation of power will create a level playing field between foreign and domestic investors, and I hope this will catalyze more investments in this field by large independent power producers and foreign investors.

Biomass, which is an eco-friendly source for production of electricity, also holds considerable promise for India. Our estimates indicate that, with the present utilization pattern of crop residues, the amount of surplus biomass materials is about 150 million tones, which could generate about 16,000 MW of power.

Hydro projects up to 25 MW capacities are termed as small hydro, and this energy stream has a potential of over 15,000 MW. At present, a capacity addition of about 300 MW per year is being achieved from small hydro projects – about 70% is coming through the private sector. So far, hydropower projects with a capacity of over 2,700 MW have been set up in the country, and projects for about 900 MW are in various stages of implementation. The aim is to double the current growth rate, and take it to a capacity addition of 500 MW per year in next two-three years.

Reducing Costs

The challenge before us in the renewable energy sector generally, and in India particularly, is to reduce the per-unit cost of renewable energy. Hence, there is a continuous need to innovate to increase efficiencies and bring down costs. Innovations can be brought about in various ways – it is possible to harness lower wind speeds; the energy of tides and waves can be channeled to produce electricity; alternate transport fuels can make our journeys less carbon intensive; hydrogen can be an ideal energy storage and carrier; and it is possible to have a larger grid with lower losses of electricity.

Innovations need not always be technology-based. Insightful policy interventions can also significantly increase the use of renewable energy. For instance, in India we are working with the regulators to lay down the framework for tradable renewable energy certificates. While this will enable us to achieve a larger share of renewable energy in our electricity mix, the federal regulator’s recent announcement of normative guidelines for provincial regulators to fix tariffs for renewable energy will provide a mechanism for better returns for renewable energy developers. We are confident that all these policy interventions will further boost investments in the sector. We are also working towards closer engagement with the banks and lending agencies to help developers gain access to easy and cheaper sources of finance.

Immense Opportunities

For centuries, the Indian tradition has worshipped the sun, the wind, the earth, and water, as sources of life, energy and creation. Today’s technology provides us with a real opportunity to transform the promise of boundless and clean energy into reality. From rooftop solar power in urban agglomerations, to decentralized and off-grid solutions in remote rural communities – the opportunities in renewable power are immense. We believe that governments, in their facilitative role, have to create enabling ecosystems, which will, in turn, in facilitate the healthy unleashing of the entrepreneurial spirit of the private sector and lead to the rapid development and deployment of renewable energy.

My vision is to see that every citizen of the world has access to reliable and affordable clean energy. It is for us to rise up together to take advantage of these opportunities and translate the vision of a better world for all mankind into reality.

Dr. Farooq Abdullah is the Union Minister of New and Renewable Energy in the Government of India. He is best-known for his energetic leadership of the groundbreaking and transformational initiative in renewable energy — The Jawahar Lal Nehru National Solar Mission. He is also known for a number of other initiatives in the renewable energy space in India — notably the introduction of generation-based incentives, and the move towards the introduction of renewable energy certificates.