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Renewable Energy in India – Past,Present and Future

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Renewable Energy in India is growing at a rapid pace increasing its share of the total capacity from 2% in 2003 to around 10% in 2010.However the share of electricity generation is still quite low at 3% due to the lower capacity load factors of Green Energy Sources compared to Fossil Fuel Sources.The Total Installed Capacity of Renewable Energy in India is around 16 GW with Wind Energy taking the Lion’s share at almost 70% followed by Small Hydro at 15% and Biomass Energy at 12%.Solar Energy in India till now has a capacity of just 6 MW which is estimated to grow to 22 GW by 2022 making Solar Energy one of the Biggest Growth Opportunities in the Field of Indian Energy.

Renewable Energy Capacity in India

1) Wind power has seen a phenomenal growth of  around 33% CAGR in the last 5 years and the total capacity at end of 2009 was 10,892 MW with most of the capacity installed in the state of Tamil Nadu which is the largest state in terms of Alternative Energy Capacity in India
2) Small hydro power Plants of less than 25 MW size are the second largest Green Energy Source in India though with a slow growth rate of around 9% CAGR and has around 2520 MW of Capacity
3) Biomass Energy has been showing a sharp growth of 27% CAGR in recent years and almost 2.1 GW of Biomass Energy Capacity has been installed.

Supply Demand Picture of Electricity –  Huge Deficit with Areas of Prolonged Blackouts

India is a Electricity Deficient Country with an estimated 15% deficient in supply during peak demand.According to CEA,India had a peak demand of around 116 MW in Apri-Dec 2009 with 101 GW of Supply resulting in a 12.5% Demand Deficit.The Fast Growing Economy has resulted in even higher demand for power which has not been met by increased demand

Total Installed Capacity By Energy Source

India’s Electricity comes mostly from Coal and Hydro Based Energy.Almost 50% of Energy Requirements and 53% of the Electricity is generated from Coal.Despite Coal being the the Dirtiest Form of Energy,India has got little choice in the matter.Most of India’s upcoming Electricity Plants are based on Coal.Hydro Energy is generated mostly from India’s Northern Himalayan States.State Run Companies NHPC and SJVN are responsible for most of the Hydro Capacity.Some private players like the JP Group are also entering the picture.India’s Nuclear Energy Capacity is quite low,however the recent India USA Nuclear Deal should improve that with India planning around 2 GW of Nuclear Capacity addition per year.Renewable Energy forms only 7.7% of the Capacity with around 11 GW of the 16 GW from Wind Energy.

Source Capacity (in MW) Percentage
Total Thermal 106517 64.6%
Coal 87,943 53.3%
Gas 17,374 10.5%
Oil 1,199 0.9%
Hydro 37,328 24.7%
Nuclear 4,560 2.9%
RES 16,429 7.7%
Total 1,64,835

Source – Indian Ministry of Power

Renewable Energy Incentives,Subsidies and Regulations

India like other countries has enacted a number of measures to promote Renewable Energy in India.There are a number of ministries which are involved in the process of regulation and providing subsidies to the Green Energy Sector in India.Here is a list of various Incentives provided to the Alternative Energy in India.

    1. Tax incentives – Indian renewable energy companies are entitled to take 80.0% accelerated depreciation on assets employed in renewable energy power generation and benefit from a 10-year tax holiday.
    2. Generation Based Incentives (GBI) –  The Federal Government gives an  incentive of 50 paisa per unit of wind power supplied to the grid by independent wind power producers. The incentive is limited to wind farms with a maximum aggregate installed capacity of 4,000 MW.This is over and above the state fixed electricity tariffs for Wind Energy Generation.
    3. Preferential Tariffs –  State electricity regulatory commissions (SERCS) are encouraged to set preferential tariffs for power produced from renewable energy.

Tariffs for FY2010 for certain key locations and technologies:

Biomass Energy

State                            Technology                         Tariff (Rs./kWh)

Andhra Pradesh       Biomass                                        4.15

Gujarat                      Cogeneration                                 5.17

Madhya Pradesh        Biomass                                      3.93

Wind Energy

Wind Zone                                                                 Tariff (Rs./kWh)

  • Wind Zone 1  (200-250 W/m2) Wind             5.63
  • Wind Zone 2 (250-300 W/m2) Wind              4.90
  • Wind Zone 3 (300-400 W/m2) Wind              4.17
  • Wind Zone 4 (above 400 W/m2) Wind            3.75

Small Hydro Energy

All states except HP, Uttarakhand and NE States Hydroelectric (5-25 MW) get a Tariff of Rs 4.62

  1. Renewable Purchase Obligations – This is the Indian name for RPS which means the obligation to purchase a fixed amount of electricity generation from renewable energy sources.Each state in India has coordinated with the Central Regulator (CERC) to fix a RPO level.
  2. Renewable Energy Certificates (REC) –  On January 14, 2010, CERC issued the Central Electricity Regulatory Commission Terms for recognition and issuance of Renewable Energy certificate for Renewable Energy Generation.You can read more about REC.
  3. CDM/Kyoto Protocol – Indian Renewable Energy Plant Operators can also benefit from the CERs issued under the Kyoto Protocol’s Clean Development Mechanism (CDM).This improves the project returns and is a form of developed country funds transfer to developing countries in reducing carbon emissions.

Renewable Energy  Potential

1) Wind Energy has a potential of around 49 GW in the country with around 12 GW of its having been already been utilized.Note this does not include offshore wind energy or future advances in wind energy leading to additional capacity.

2) Solar Energy has enough potential to meet India’s current and future energy needs by multiple times

3) Mini Hydro Plants are supposed to have a 15 GW potential out of which 2.5 GW has been realized

4) Biomass Energy has 25 GW of potential out of which  around 2.1 GW has been realized.

Renewable Energy Target

India has set up ambitious targets of meeting 15% of its Energy Needs from Renewable Sources up from around 5.5-6% in 2010.WIth India’s Electricity Capacity expected to rise to 450 GW from around 165 GW,this would imply that around 67.5 GW of Electricity Capacity would be needed up from around 16 GW.This would mean around 5 GW of Capacity addition every year in the next decade which is a very tall order.20 GW could be met by Solar Energy according to the Jawaharlal Nehru Solar Mission (JNNSM).Most of the rest would have to met by Wind Energy.Biomass Energy has high costs and reliability problems which mini hydro potential is only 1 GW.Note this is just the capacity I am talking about,for meeting the electricity generation,capacity additions would have to be greater as Solar Energy and Wind Energy have only 20-30% Load Factor compared to  60-80% for Fossil Fuel Energy Sources.Nuclear Energy can contribute another 20 GW.

India’s Renewable Energy Policy and Laws

  1. Green Energy in India gets unexpected boost as Central Electricity Regulatory Commission (CERC) mandates 6% Renewable Energy generation
  2. Indian Renewable Energy Ministry (MNRE) gets criticized for missing Green Energy Targets
  3. “Renewable Energy Certificate” Policy Starts in India – What you need to Know and Who will Benefit
  4. Renewable Energy in India Biggest Hurdle is the Poorly Managed Electricity EcoSystem
  5. Green India Funding by Annual Billion Dollar Coal Tax a Good Move
  6. Why does India’s Electricity Regulator need a Minimum Renewable Energy Plant Size for Grid Connection
  7. Indian Power Exchanges set the ball rolling in Renewable Energy Certificates Trading

Indian Renewable Energy Companies

  1. How to make Green Investments in India – Renewable Energy Focused Power Utilities
  2. Solar Power Companies in India Growing by the Day but a Long Way to Go
  3. List of Wind Energy Companies in India – Pretenders or World Beaters
  4. Green Investing in India – ADB forms JV with NTPC and Japanese Kyuden to develop 500 MW of Renewable Energy
  5. “Orient Green Power” IPO Analysis- Focused Renewable Energy Utility with Fast Growth Plans however Execution is the Question
  6. Renewable Energy in India – Siemens establishes a beachhead to sell Solar Thermal Plants and Wind Turbines
  7. Indian Wind Energy Company Suzlon – Fallen Angel or Falling Knife
  8. India’s Tata Power looks to become a Geothermal Energy Leader,Targets 25% from Renewable Sources by 2017
  9. Green Investing in India – State Run Companies make big plans for Solar Energy Generation

Renewable Energy in Different Indian States

  1. Green Investing in India – Favorable government policies make Gujarat a top Renewable Energy destination
  2. Solar Energy in India Imperative for Rich State of Haryana But Desperately Poor in Renewable Energy
  3. Green Investing in India – Largest Electricity Producing State Maharashtra looks to boost Renewable Energy through Subsidized Grid Connection and Grants
  4. Green Investing in India – Economically Backward Orissa remains backward in Renewable Energy as well
  5. Why Solar Power in India will be led by Sunny,Western States of Gujarat and Rajasthan
PG

Abhishek Shah