Problems for JNNSM Phase 2

India’s JNNSM federal solar subsidy plan Phase 2 has gotten delayed by more than a year because of funding issues and regulatory confusion. Phase 1 of JNNSM was led by NVVN, which is the trading arm of India’s large state owned utility NTPC. Funding was relatively easy as the expensive solar power was bundled with cheap unallocated coal based power and solar to state utilities. However, now all funding and development is being done by the newly formed Solar Energy Corporation of India (SECI). There is less clarity on how this will work because this time there is no cheap unallocated thermal power to give away.

Read more about JNNSM Solar Policy Phase 2.

Developers are wary about getting timely payments from bankrupt distribution utilities. They are not sure how they will get the Rs. 5.45/Kwh promised to them for selling solar power to utilities. While SECI will provide the viability gap funding (VGF) of upto 30% of the capital cost of Rs 7.5 crores, the payment will be done in tranches. 75% of the payment will be done only after completion, which means that the effective IRR for the developers will decrease as well as increase the risks. The government had released the draft regulations for auctioning 750 MW of solar PV more than 3 months ago, but the closing of the bids has been repeatedly extended as developers are wary of the payment security.

Note India is not a lucrative market for solar energy developers because there are bigger markets with higher returns. Japan has become the best market, with IRR in the 25-30% range and it is expected that Japan might install 6-8 GW (compare to India’s 1 GW). China again is giving decent subsidies and is a huge market. International developers might not find the returns lucrative enough, given the big risks that they face in India in terms of payments. I think India solar developers such as Welspun, Azure, Essel will be the main participants as they have been in case of state solar auctions.

MNRE or Ministry of New and renewable Energy is a Government body formed to develop and promote the Renewable Energy usage in India. MNRE has designed and implemented different programs under grid connected, off grid and decentralized system to mainly enable grid competitive prices to use the clean and green energy as power source. These programs also include research and development of the different sources of energy.

Read Pros and Cons of Renewable Energy – A Detailed Explanation on GWI.

Grid Connected Power

These involve private investment with favorable tariff policies. The different programs implemented by the MNRE under Grid connected power are:

1) Wind Power

2) Bio-Power – which further includes:

i) Biomass power / bagasse cogeneration

ii) Non-bagasse cogeneration

iii) Biomass gasifier

iv) Urban & Industrial wastes

3) Small Hydro Power – upto 25 MW station capacity

4) Solar Power – including both Thermal and Photovoltaic solar power.

Off- Grid Power

Off grid power programs have been mainly implemented to support the energy requirements of communities isolated from electricity. These include rural and remote areas, areas where grid electricity is not available and for meeting captive needs. The different programs implemented by the MNRE under Off-Grid power are:

1) Biomass based heat and power projects and industrial waste to-energy projects

2) Biomass Gasifiers

3) Watermills/micro hydro projects

4) Small Wind Energy & Hybrid Systems

5) Solar PV Roof-top Systems.

Decentralized System

MNRE also provides various renewable energy technologies in rural areas without any electricity. These are the areas which are the most benefited by the use of renewable energy as their source of power. Some such technologies that are being increasingly used in Indian villages and rural areas are solar lanterns, solar home lighting systems, solar street lights, solar cookers and water heating systems under the solar energy; biogas plants for a family, biomass based power generators under biomass energy; Wind pumps and Micro-Hydal plants.

Source: MNRE

Why Nuclear Energy is on a secular decline

Nuclear Energy provides more than 15% of the world’s electricity requirements and is much cheaper than other renewable sources of power such as solar and wind energy (at least the old plants).  The developed countries account for most of the nuclear power reactors with France getting more than 80% of its power from nuclear power plants. However, things have been pretty bad for nuclear energy in the last couple of decades. The costs for building new power plants have escalated and protests against them by local communities have increased. The Fukushima disaster highlighted the disadvantages of nuclear energy and many countries such as Germany, Switzerland and Belgium have either shut all their nuclear power plants or are in the process of doing so. The tail risks of nuclear power plants are enormous as a fault or a problem with a nuclear reactor can lead to extremely large losses for life and property. Radioactive leaks can destroy a huge area for many years and lead to billions of dollars in losses.

Read about Nuclear Energy Advantages vs Disadvantages.

India and China are powering the Nuclear plant growth

Now local communities have started to protest vigorously against new plants. India and China are the 2 countries having the greatest nuclear expansion plans and both are facing huge opposition. The new Indian nuclear energy plant as Kudankulam has seen many protester deaths and huge delays. It took the combined might of the Indian federal government and the Supreme Court to browbeat the protesters who have not given up. Other nuclear plant locations in India such as Jaitapur have also seen huge protests. One wonders whether the government would not be better off spending its financial and political capital on other safer forms of renewable energy.

China’s Guagndong province has become the world’s biggest industrial cluster and forms the nucleus of China’s position as the world’s greatest industrial nation. The fertile Peal River Delta has flourished in the last two decades and both Hong Kong and Macau have benefited from the tremendous growth in the region. However, the region suffers from a big unappreciated tail risk. There are already 5 nuclear reactors in this fertile densely populated region and many more are being planned in the next decade. China plans to multiply its nuclear power capacity by almost 5 times from the 10-12 GW currently. However, it may not be a good idea as it will also multiply the risk of a nuclear accident. There has already been a couple of incidents in the past. China is not known for its safety and disclosure standards. Major industrial pollution  accidents have taken place in the past. A $6 billion uranium processing facility in the region saw huge protests by locals forcing two Chinese nuclear heavyweights to back down. It was surprising that the nuclear facility plan was abandoned so quickly.

China has been pushing ahead with nuclear energy as it desperately needs to find alternative sources for thermal power. China consumes almost half of the worlds’ coal, to power hundreds of polluting thermal power plants. China has been pushing hard for increased wind and hydro power capacities. It also needs gigawatts of nuclear power to reduce the pollution from thermal power. I don’t think it’s a good idea for China to build more nuclear power plants in the densely populated region. An accident here could throw China’s whole industrial sector into disarray and cause so many losses that it will make Fukushima look like a picnic.

HK protests against China’s Nuclear leak

There are some clouds on the horizon with one of China’s oldest reactors located in Guangdong province near Hong Kong suffering from a minor leak raising concerns. Though the leak was reported as minor, it reminds people of the extreme hazards of Nuclear Accident like the Chernobyl Incident which has a continent wide affect. It would again strengthen the NIMBY protests by local residents.

Kudankulam Protests in India

Recently protestors were killed by police in Andhra Pradesh as well. The Government has blamed foreign NGOs for fomenting the violence in Kudankulam but the fact is that nuclear power protests are being seen everywhere in India where citizens are not enamored of nuclear power like the country’s PM. In fact even with all the planned expansion of nuclear energy, the contribution of nuclear energy to India’s electricity will still be in the low single digits. Besides the cost of nuclear energy in recent times has risen prohibitively, making nuclear power plants uneconomical in the developed countries where the emphasis on safety is much greater.

Sustainable energy is the provision of sustainable use of energy resources. It ensures that the energy need and demand of the present generation is met without compromising the need of future generations. Renewable source of energy is one of the few technologies which help in promoting the concept of sustainable energy. Renewable energy includes the energy generated from renewable sources like hydro electricity, tidal electricity, solar energy, wind, geothermal etc. Energy efficiency and renewable energy together are regarded as the building blocks of sustainable energy. Sustainable energy is concept of laying dynamic harmony between the present and future generation. It is important that we find proper solution to sustainable energy sources which is more efficient. We should convert and utilize the source so that the aim of development in achieved in a better manner.

Read about Pros and Cons of Renewable Energy.

Thus we can say any energy generation source which is effective, conservative and is renewable with an ability to scale massively for long term will only help in sustainable energy. Currently there is a need of energy which is replenishable within a human lifetime and causes no damage to man and environment.

Focus to shift from Fossil Fuel to Green Energy

In order to meet the rising demand of current generation there is a need to utilize the power of renewable energy. There is a need to explore the green energy technology which can be extracted, generated and consumed without any significant negative impact to the environment. It is important that people understand their priority, understand their need and accordingly adapt to renewable energy which is an essential contributor to sustainable energy. Renewable energy has been regarded as a contributor to world energy security and thus it is important that their power is identified by the industrialists. It is a known fact the current consumption of energy is mainly dependent on fossil fuel which is anyways depleting at a faster rate. We should now reduce the dependence on fossil fuel resource and provide opportunity for mitigating greenhouse gases.

Three Phases of Energy Sources

Talking of renewable source of energy we see that we have 3 generations of energy sources developed in different phases.

i) The first generation includes hydro power, biomass, geothermal heat etc. These technologies were widely used in 19th century.

ii) Gradually second generation evolved which includes solar heating and cooling, wind, bio energy etc. These sources are currently under research and development.

iii) Third generation is new area to exploit which includes advanced biomass gasification, ocean energy, nanotechnology etc. These sources may play a major role in shaping the need and demand of energy while minimizing the burden to the environment.

The first and second generation technologies have entered the markets where as the third generation sources depend on the research and development collectively from the public and private sector.

The economy world wide has been growing at a tremendous pace and requires utmost attention when it comes pollution. Use of private vehicles has been increasing manifold which is undoubtedly a matter of pride for nation, but again is depleting the ozone layer through harmful emissions. It is thus important to identify such energy sources for vehicles which are green and low on emission. The move will definitely take us closer towards energy sustainability. However, it definitely require changes not only in the way of energy generation but also way if its use and dissipation.

Conclusion

It is important that the government take proper steps and help the private sector develop the industry. Renewable energy now requires proper commitment and is no longer niche sectors that are promoted only by government. The increased investment required in the sector is one of the reasons; it should be made open to private players. Government should make the rating of appliances in terms of energy stars mandatory which will help people get educated about environmental impact.

At last to conclude we can say, it is the time one should stop being selfish and star thinking collectively for the coming generations too. We need to act NOW as it’s always NOW or NEVER.

Need for proper utilization of Renewable Energy

Renewable energy is that form of energy which is replenished by nature on a timely basis. Such kind of energy comes from the sources such as sunlight, wind, rain, tide, etc. Only one-sixth of the total energy consumption globally comes from renewable energy. The continuous use of energy from fossil fuel is becoming a concern as the level of fossil fuel is rapidly diminishing. Of the renewable sources used for the production of energy about 16% comes from traditional sources which includes biomass, rest includes the newer form like hydroelectricity, wind, solar, etc.

Read in details the Need for Renewable Energy.

Changing climatic conditions coupled with the rising crude oil prices, increasing commercialization, etc. are major concerns for the global economy now. In order to grow sustainably, it is very important that the use of renewable energy resources is maximized while minimizing the use of non renewable energy. If proper steps are not taken now, then going by the rate of use of non renewable sources, it is expected that in 1.5-2 decades the energy sources from fossil fuel will become extinct. It is projected that if solar energy is properly put to use, it can produce most of the world’s electricity within 50 years. Also the use of solar energy will drastically reduce the emission of harmful gases to the environment.

Renewable Sector in India – Wind & Solar

Talking of India, we find that the renewable sector is still underdeveloped despite being the fact that India was the first country to set up the ministry for non-conventional energy resources. In recent times however, India has been found working collectively on the front of renewable energy resources and has set aggressive targets for itself.

One of the major challenges faced by the economy to develop the renewable source of energy is lack of infrastructure. Due to improper infrastructure, the good policy of renewable energy source gets de-railed time and again.  In a recent report it was mentioned that despite several challenges the country has seen massive growth in terms of renewable energy production. Over the last decade a growth of over 1250% was seen especially in case of wind energy. Also in 2012, India enjoyed being placed at the fourth position globally for new wind power projects. India is also working on the front of solar energy and has certain ambitious projects. The state of Gujarat has already implemented several projects related to solar energy.

Read on GWI Gujarat trailblazes solar energy growth in India with over 65% capacity and innovative 1 MW floating solar power plant. 

The Government is currently working on the policies of energy security along with the production of energy using renewable resources. It is mainly focusing on improving its domestic capacity and production so that the huge import of energy could be minimized. The step will definitely help government curb the rising current account deficit and fiscal deficit as energy forms a major share in the total import of the country.

Industrialization – one of the major reasons for more Renewable Energy Usage

It is seen that after the opening of the economy in 1990, the industrial productivity has undoubtedly tripled but the emissions too has gone up by 70%. For the country, both the power generation along with carbon emission are increasing at a rapid pace. Thus it is now important to keep a check on the carbon emission which has been rising at 8% between 2000 and 2010.

Read about Advantages of Green Clean Renewable Energy.

The policies need to be formed at the central and state level to invite the private players develop infrastructure and set up power plants. Land should be made available to the private players and a single window clearance mechanism should be implemented when the project is related to the power generation using renewable energy resources. It is important that the government help the private players get the best advisory and consultancy free of cost in lieu of subsidy. This will help in proper execution of the project.

Conclusion

Thus in a nutshell we can say, the government needs to check on the bureaucracy and approvals when it comes to power project. If proper relaxation is made and private players are encouraged, India can definitely generate its own power for the entire nation unlike being dependent on foreign nations to meet its energy requirement.

Available on GWI Free Guide on Solar Energy in India.

India’s Renewable Energy Industry

India’s renewable energy industry is already facing huge problems due to the country’s dysfunctional governance. The whole power industry is in crisis, thanks to the muddled regulation and crony capitalism. To expect green energy to have a smooth ride in such a scenario is foolhardy. The Renewable Energy Certificate (REC) Scheme inaugurated with much fanfare has already hit an insurmountable block. State utilities and firms are refusing to meet their RPOs and state electricity regulators are refusing to enforce the REC rules. This has meant that there is a huge oversupply of RECs from green energy producers which are not being bought even at the floor price. Those firms which had bought RECs are kicking themselves for spending the money, as the state regulators are not taking any action on defaulters. This means that the green support scheme has become useless for the renewable energy industry. They have to rely on other mechanisms like accelerated depreciation and GBI to make their projects feasible.

Read about Solar Power in India – All you wanted to know.

India has kept an ambitious target of generating 10% of their energy requirements from green sources, by 2020. However, the government does not have a clue on how to go about implementing it. The policy measures remain ad-hoc as the whole power industry is mired in multiple crisis. Now, the renewable energy minister (who seems more interested in watching IPL matches) has said that the transmission has to be strengthened with 8 billion dollars in investment. With the power industry operating at cross purposes, nobody knows who and why anyone will make this investment. India’s southern states have a huge power deficit, thanks to inadequate transmission links from the north to south India.

Read about Wind Power in India – What you Wanted to Know.

With no one taking the trouble of investing to meet normal power deficits, one wonders who will take up the responsibility to make the investment for green energy. The green energy industry faces huge hurdles and I don’t think that the 30 GW target over the next 5 years will be met. The only way things can change if there is a concerted reform of the whole energy industry. But with the government of India currently mostly inert and corrupt, things don’t appear to be too rosy. However one hopes for the best.

Indian Renewable Energy Mandate not Met

India’s much hyped market based renewable energy incentive system of “Renewable Energy Certificate” (REC) has crashed. The REC market which started in 2012 at two power exchanges had initially shown a lot of promise with increasing volumes. It had offered a market based remuneration system for renewable energy developers in India. The buyers were electricity consuming entities which have to meet a gradually increased green energy mandate of 15% by 2020. However the continuous lack of enforcement of Renewable Purchase Obligations (RPO) by the government has meant that the buyers are not buying the RECs despite the mandate to do so. This means that not only will the Renewable Energy mandate not be met, but green investors will face heavy losses as well. This will derail the confidence of cleantech investors in India who are not assured of sufficient returns on a risky sector. The wind energy industry in India is facing massive problems already due to the removal of federal incentives of accelerated depreciation and GBI. This comes as an additional blow.

Problems with the REC Market

1) REC Markets are notoriously difficult to set up and run– India has started a Renewable Energy Certificate (REC) Scheme recently to boost the share of Clean Energy Sources in India’s Electricity Mix. India’s Electricity Regulator (CERC) has come out with a notification making it mandatory for Electricity Utilities to buy 6% of their requirements from Green Energy Sources. However the REC Scheme still faces teething problems in its implementation. It would take a couple of years for a well developed market in RECs to develop if everything goes to plan. Note REC are notoriously difficult to implement as Italy and Australia have found out. High Prices led to Booms while Low Prices lead to a Green Bust while it is impossible to set the Perfect Right Price.

2) Volatile REC Prices  – However the market for REC remains volatile due to the fact there is a lot of uncertainty with RPO. The biggest source of this problem is the fact that RPO is not enforceable by the regulator. If the state slips in its RPO, it does not have to bear any penalty or punishment. Given the pathetic state of the electricity distributors in the state with billions of dollars in debt, it seems unlikely that they will buy expensive green energy to meet their RPO.

Hindu

Nearly, $8 billion investment would be required to strengthen and develop renewable power evacuation and transmission infrastructure for the planned renewable power capacity addition in next five years.“We are looking at various options to raise financing for implementing this important report, including through public-private partnership,” said Minister for New and Renewable Energy Farooq Abdullah.

Currently, most of the renewable electricity generated within a State has to be absorbed within that State and grid balancing issues limit addition of more renewable electricity beyond a certain limit. In Tamil Nadu, where wind penetration is around 50 per cent in terms of capacity is experiencing such constraint. The sudden addition or withdrawal of wind power from the grid is already causing difficulties in grid operation.Our 12th Five-Year Plan proposals for the period 2012-2017 seek a capacity addition of 30 GW, he added.