According to you, what kind of opportunities will generate for Indian renewable energy sector with the government’s intention of producing 175 gigawatts of clean energy?
More than anything than these ambitious targets have accomplished, they have given immense confidence in the Indian renewable energy sector. It has proven that the current Indian government is dedicated to pushing renewable energy and has made it a prime focus. Investors now have a policy certainty that has not always been there for this sector with changing patterns of subsidies and ad-hoc policy intervention.
Given the government push, renewable energy sector has made strides in achievement. However, it is really hard to imagine that the sector can achieve its 175 GW target by 2022. The economies of scale had made solar tariff and wind tariffs to be competitive with any thermal power plant, but going from a small base to the heights that have been set, would be difficult for the country.
The potential of the country is immense and the target is only miniscule compared to this potential. There is opportunity of job creations but most of the jobs are temporary and usually gets over after the construction of the plant is finished. These renewable energy projects do not create many permanent jobs. Also, the space for small and medium entrepreneurs is also very limited in large scale installations because bidding is so competitive that they do not have financial advantage over much larger firms.
The benefit that Indian renewable energy sector has gained from the massive ambition is opportunity to diversify the electricity mix in the country and taking away share from fossil fuel especially coal. However, it is important that we assess the share of electricity through generation and not just installed capacity. So, targets have given a direction, but there is still a long way to go.
What are the initiatives taken by the government for generating the momentum in the sector?
There are many initiatives that have contributed to the surge of renewable energy in the country. The National Solar Mission did more for the solar sector than any other push. What made the giant leap possible was reverse bidding for solar installation under the central government. The tariff has been reduced from over `17 per unit to `2.44 per unit in the last bids that happened this year. Reverse bidding has also been responsible reducing tariff of wind power to its lowest this year `2.64 per unit just last month. It is historical that competitive reserve bidding has pushed the tariffs at levels where coal looks more expensive compared to renewable energy.
The solar parks initiative, under the solar mission, has also contributed to this reduction in tariffs. In the last year itself, thanks to the solar park, the installation has jumped to 13 GW of solar capacity from a sheer 2 MW in 2010. This initiative has reduced the developer’s task of acquiring land and also reduced the costs to some extent. The solar park bidding showed government trying to remove all uncertainties for a solar developer including guaranteed purchase of power. Many solar and wind developers were being asked to shut down the supply of electricity when there was excess power in the grid, thereby, reducing the revenue that a developer can make. The ‘must run’ status that has been accorded to the renewable energy project is a step to remove this uncertainty.
For ease of development and learning from the wind sector, the government established the Wind Resource Assessment Programme through the National Institute of Wind Energy (NIWE). They were also responsible for setting up network of solar radiation resource assessment stations all over the country to provide investors with ground measured solar radiation data essential for implementation of solar power projects. Ministry of New and Renewable Energy has been responsible for spreading awareness regarding development of the sector and ensuring that this sector develops, in some sense it has succeeded. Today any major development about renewable energy sector is front page news in most of the newspapers.
Do you think that India can become a renewable energy hub with these government steps?
These initiatives have already made India a renewable energy hub. In any given bidding for solar and wind, investors from all over the world participate and win projects. India garnered an investment of $10.2 billion from across the globe ranking fifth in the world. This is the result of a stable government policy and commitment to renewable energy. China might be the manufacturing hub for solar PV, but India is certainly one of the biggest markets for both solar and wind.
What challenges does the Indian Renewable Energy need to overcome for achieving this target?
The roadblock in achievement of this sector would not be why we could not reach the target; it would be by when we can reach it. India is capable of installing 175 GW, we might not be able to achieve it by 2022, may be in another 10 years from that, but we can certainly achieve it. What is more important is that we make sure that the rapid development that is happening in this sector is not at the cost of our environment. There are constraints about availability of land and regarding agricultural and forest land being diverted for these power plants.
Another developmental fear is of skewed progress where one segment is being scaled up at an enormous rate; the focus has been on large scale solar and wind projects. Decentralised or distributed generation is not being promoted – energy access has become about grid extension and not about decentralised mini-grids. Rooftop solar targets are being curtailed because of the slow progress. LPG is being pushed for cooking energy, another foreign produced fossil fuel.
The western world looks at renewable energy as consumption at source of generation. Individuals producing and consuming electricity at the same place with highly efficient products that causes little damage to the environment. But, the conversation of renewable energy has become large giga-watt scale projects only. Electricity is being fed into the same leaking grid and we are losing electricity in transmission and distribution. We are not taking advantage of the modular nature of solar for instance.
The solutions are complicated and I guess the government after making claims about 175 GW sees that there is need for much more work in decentralised solutions. Decentralised solutions would require more policy focus, right now there is no central level policy for either rooftop solar or energy access through renewable energy. MNRE produces benchmarks and gives subsidies to these segments, but there is no coordinated target or any policy to promote such efforts. Both these causes have been left to state government and some states have shown initiatives, but they require more effort to spread awareness in the first place. For rooftop segment, there is certainly a lot of policies promoting installation, but there is very little monitoring of this happening, its lack of mandate and enforcement, where there are any. People who can afford to have home solar systems have not installed it because they do not know the benefits or are still dependent on diesel generators and grid for electricity, both of which is expensive compared to solar in many states.
Energy access is a convoluted problem that the government is trying to address. Grid expansion has been the answer for electricity access and LPG is a solution promoted after years of previous government focusing on cleaner use of biomass. Renewable energy is not what the government is focusing on for energy access. Given the modular nature of solar, electricity from renewable energy makes perfect sense for issues of both electricity access and clean cooking energy. MNRE has not done anything for development of mini-grid since the draft was announced in June 2016. No steps have been taken to ensure that the people with less means do not pay highest prices, which currently many people who do not have access to electricity are paying to DG sets operators or solar projects that are not under any regulatory framework. This needs to change.
What is the position of India on the global map in terms of generation of renewable energy?
Contribution of renewable energy in the electricity generation has been only seven per cent in the financial year 2016-17. In comparison, in 2015-16, the share was a little higher – 8.36 per cent. Some estimates show that even 175 GW of renewable energy would only translate to 32 per cent of the total installed capacity and 17 per cent of electricity generation in the country. If we include large hydro as well, 2016-17 share does up to 17.61 per cent.
Many other countries across the globe have more or less all their power coming from renewable energy primarily because countries like Norway, Iceland and Costa Rica have used largely hydropower to meet its electricity needs. But most countries in the world have announced some targets for renewable energy under the Paris Accord and have targets less than 50 per cent and countries like United States have no national targets. Currently, Germany produces around 30 per cent and France produces almost 20 per cent of its electricity from renewable energy. China on the other hand, barring large hydro, renewable energy forms five per cent of its electricity generation.
How can India rapidly scale up renewables without any wastage or curtailment like other countries?
India can learn a lot from other countries regarding increasing its share of renewable energy. For instance, focus of renewable energy in Germany was the decentralised model for solar. Everyone in Germany was encouraged to install solar rooftop system and that forms the largest set of owners of solar plants in the country. This reduces transmission and distribution losses in the system. India loses around 22 per cent of its electricity during transmission and distribution.
Countries in Europe also have an advantage of connected grid, because this helps them manage the supply with least amount of wastages. Like when wind power in Germany produces excess power than anticipated, it sells the power to its neighbouring countries to manage the grid. This is also what happens in Scandinavian countries.
Countries that have high amount of hydropower plants, have also invested in pumped storage, for instance China. Energy storage is also something that India should invest in as this would help integrate the renewable energy better in the longer run for the country. Investments should also be made in upgrading the grid and investing in more green corridors and smart grid because this would be the next step for the government to intervene and integrate the large amount of renewable power that is being curtailed.
What is your outlook for the renewable energy sector for 2017-18 fiscal?
Renewable energy sector in 2017-18 would be functioning in the same way. There are almost 15 GW of solar projects in pipeline and very little wind projects. The most interesting development would be how the lowering in tariffs of both solar and wind power would impact the already tendered projects. We have seen states like Andhra Pradesh, Karnataka, Telangana and Uttar Pradesh have projects that have tariffs much higher than the recent bids for both solar and wind projects. CRISIL has reported that `48,000 crore worth of 7 GW capacity is in question.
According to MNRE, none of the renewable energy segment has even met the half of the targets in the six months of FY 2017-18, so it seems achieving the yearly target would be very difficult.
