Tamil Nadu is one of India’s most prosperous and industrially advanced states located at its southernmost extreme.The state has shown remarkable progress in the field on Wind Energy utilizing almost 80% of its Wind Power Potential with 40% of India’s total Wind Installations.With the right mix of policies,Tamil Nadu has also become the hub of Wind Energy Manufacturing with Global Heavyweights like Suzlon,Gamesa,Vestas all building plants in the State.A number of new players like Sterling Infotech and Lietner have also started manufacturing Wind Turbines in Tamil Nadu due to favorable networking effects.The state is also generates the 3rd largest amount of biomass energy with around 340 MW installed.Here are the reasons why Tamil Nadu has become the Biggest Renewable Energy State in India.
1) Tax Holidays and Subsidies – The government has given attractive subsidies to attract Wind Power Developers to the state.Rs 3.39 ( 8c/Kwh) is the tariff given to Wind Energy besides another 1c/Kwh received from the Federal Government as Generation Based Incentive (GBI).The projects in the state easily make 25-30% returns on their investment attracting a whole host of private industry developers.The Industry also gets a 10 year tax holiday,custom duty exemptions and accelerated depreciation boosting the returns even further.A 20 year PPA at fixed prices helps in building investor confidence .
Bulgaria has also now decided to cap Renewable Energy Growth with around 12.5 GW of Green Energy applications lying in the backlog.Poorly designed and implemented subsidies are the root cause for such booms and busts.Poor Governance mechanisms are behind these Green Disasters.Bulgaria is the poorest European Union Country and can ill afford higher electricity prices.The government is targeting a 16% RE target by 2020 for which it wants to fix targets for different Green Energy Sources.The power grid operator has already warned of blackouts in case even half of the 12 GW Renewable Energy applications are actually constructed.Solar and Wind Energy have been incentivized with high FITs with global heavyweights like Siemens and Suzlon rushing in to build wind farms.
Maharashtra is one of the most industrialized states in India but it lags behind other states in Renewable Energy.The recent mandate by the Central Electricity Regulator to increase the requirement of Renewable Energy to 6% of Electricity Produced found Maharashtra having a severe shortfall.Maharashtra has the largest power capacity in the country with around 21 GW but most of it is thermal based generation.Despite having the second largest Wind Power Capacity with 2 GW which is around 42% of the state’s potential.However Maharashtra is still considerably short of the 6% Renewable Purchase Obligation (RPO) set by it.With CERC set to increase the Green Energy Target to 10% by 2015,Maharashtra needs not only to meet the shortfall but also to increase the share of Renewable Energy.
Nuclear Energy Insider spoke to Kenneth Hughey, Vice President, Nuclear Business Development at Entergy Nuclear who spoke about the financing problems that lie ahead for the US nuclear industry.“With nuclear construction being a high priority for many US utilities, it is important to stop and consider financing and the costs associated with new build projects. Permitting and licensing are aspects of the construction process where utilities could easily spend $60-100million without having guaranteed financial backing to proceed with the full construction project. Consequently it is extremely important to understand the costs associated with these processes and to learn how to keep your costs down while at the same time reducing future project risk.”There are many aspects of financing that need to be understood in order to proceed with new nuclear projects.
Earthquake Vulnerability – Large Dam Construction has been linked to increased propensity of Earthquakes.Massive Earthquakes in China and Uttarakhand in India were linked to the building of Massive Dams in these countries.Building of Massive Man Made Structures along geologically sensitive areas has not been properly studied and understood till now
While Hydro Power is a necessity for an energy starved and growing economy like India,its effect have to be properly assessed and understood before going on a hydro binge.NTPC lost almost $300 million after its 600 MW project was canceled 5 years after getting permission.This was done in the face of large scale protest by local groups and NGOs.2 other projects in Uttarkhand have also been rejected leading to more losses.
Orient Green Power Ltd (OGPL) is Indias Largest Green Utility and is one of the areas that is a good way to invest in India’s Green Energy Sector.The company is owned by the Shriram Group and a couple of PE Players will issue around Rs 900 crores (~$180mm) which will result in a market cap of $450mm.OGPL is a relatively new company setting up and acquiring most of its 200 MW capacity in the last year which comprised of 152 MW of Wind Energy and the rest is Biomass Energy.The company plans to increase this capacity 4 fold to around 1000 MW in the next couple of years with Power Plants in India,Europe and Sri Lanka.The centrepiece of this expansion will be a 300 MW Wind Energy Plant in Tamil Nadu for which $10 million has been already been spent.The company’s past profits and cash flow have been negative which is not exactly a concern given that most of the capacity was set up in the last year or so.I like the company’s growth plans and the sector in which it operates.India suffers from a huge power deficit and Renewable Energy is being heavily promoted through Government Subsides and Renewable Energy Madates by the CERC.Trading of Renewable Energy Certificates (RECs) should start in a year or so giving additional revenue streams to Green Energy Producers.Here are the pros and cons of the issue