Renewable Energy in India Dr P C Maithani

Renewable Energy in India Dr. P. C. Maithani Director Ministry of New and Renewable Energy 21 February 2013

Energy is a vital to our way of life- Global energy mix has changed over period Source: Nakicenovic, N Grubler, A , Mc. Donald, A (1998) IIASA

World commercial energy demand is on the rise Global energy demand rises by over one-third in the period to 3 2035 Source: IEA, World Energy Outlook 20112

Where India Stands - Energy Demand (mtoe) Source: IEA key energy Statistics 2012

Indian Power Sector Total Installed Capacity: 2, 11, 772 MW (December 2012) –Shortage met by fossil fuels –Peak deficit –Energy access –Kerosene for lighting –Diesel for power –Furnace oil for process heat etc 5 Source: Ministry of Power & MNRE

Renewable Installed capacity (26677 MW)

Renewable Energy Drivers Import dependence for coal – to increase from 17. 1% in 2011 -12 to 22. 4% by the 2016 -17 and around 26% by 2021 -22 80% oil import by 2016 -17 - set to further increase

Renewable energy costs are still higher than existing energy prices Source Small Hydro Power Wind Power Biomass Power Bagasse Cogeneration Solar Power Estimated initial capital cost (Rs. in crore/ MW) 5. 50 -7. 70 5. 75 4. 0 -4. 45 4. 20 10. 00 -13. 00 Estimated cost of electricity generation(Financial) (Rs. / k. Wh) 3. 54 -4. 88 3. 73 -5. 96 5. 12 -5. 83 4. 61 -5. 73 10. 39 -12. 46 Source: IPCC 2011 & CERC 27 March 2012

Renewable Energy in the legal Context • Indiahasabicameralparliamentarysystem-Parliamenthassupreme law-making powers • the Union and State governments • Electricity is a concurrent subject (Entry 38 in concurrent list) • Panchayats. Major States has already declared State Renewable Energy Policy

Policy Framework Electricity Act (EA), 2003 1. Section 86 - promotes RE by ensuring grid connectivity & sale of RE. 2. Section 3 - Central Government to develop a national policy for optimal utilization of resources including RE. 3. SERC’s to: • Section 86 - fix a minimum percentage energy purchase from RE sources (RPO). • Section 61 – determine tariffs for the promotion of RE National Electricity Policy (NEP), 2005 1. Section 5. 2. 20 of NEP promotes private participation in RE. 2. Section 5. 12. 1 of NEP targets capital cost reduction in RE through competition. 3. Section 5. 12. 2 of NEP states that SERCs should specify appropriate tariffs to promote RE and specify targets for RE. National Tariff Policy (NTP), 2006 1. A minimum percentage procurement should be made applicable latest by April 1, 2006 2. A preferential tariff to be determined by SERC to enable RET’s to compete 3. Procurement of RE by distribution licensee through competitive bidding 2011 Amendment in Tariff Policy : 0. 25% Solar RPO by 2013 and 3% by 2022 Integrated Energy Policy (IEP), 2008 1. Design of incentive structures that are linked to energy generated 2. Regulators to mandate feed-in laws for RE, where appropriate. 3. Environmental subsidy for RE through cess on conventional energy generation 4. FI’s should be encouraged to set-up Capital Funds for RE entrepreneurs. 5. Need to auction sites on public property for wind energy development 6. To encourage solar thermal a higher premium of feed-in tariff needs to be provided National Action Plan on Climate Change Paragraph 4. 2. 2 : Starting 2009 -10, Renewable Purchase Obligations be set at 5% of total grids purchase, to increase by 1% each year for 10 years. 10

Policy and regulatory framework for Renewable Energy(RE) Central Govt. Electricity Act, 2003 National Electricity Policy National Tariff Policy NAPCC State Govt. RE policies CERC RE Tariff regulations REC regulations and implementati on framework IEGC, SERC • Almost all the states have issued technology wise RE tariff regulations • About 25 states have specified RPO obligations, including separate obligation for solar (including draft RPO regulations) • Over 24 states have issued REC regulations. RE tariff regulations RPO regulation s REC regulation s RRF regulatio ns Grid connectivity regulations 11

Growth of Renewables & Regulation Ø Renewable Energy development in India has been aided by strong policy and regulatory backing Preferential Tariffs – SERCs State Renewable Energy Policies 12

RPO Trajectory SERC Notified Regulations States 11 -12 12 -13 13 -14 14 -15 TAMILNADU 9% KARNATAKA 7% 7% MAHARASHTRA 7% 8% 9% 9% 3. 30% 3. 6% 3. 9% 4. 2% GUJARAT 6. 0% 7. 0% RAJASTHAN 6. 0% 7. 1% ANDHRA PRADESH 5. 0% 5% 6% 10. 01% 10. 25% KERALA UTTAR PRADESH HIMACHAL PRADESH 13

RPO Trajectory SERC Notified Regulations STATE CHHATISGARH FY 12 FY 13 FY 14 5. 25% 5. 75% 2. 4% 2. 9% 5% 6% 2. 50% FY 15 3. 5% 4% 4. 00% 5. 50% 7. 00% 3% 4% 5% 6% 1. 5% 2. 0% 3. 0% DELHI 2% 3. 4% 4. 8% 6. 2% BIHAR 2. 50% 4% 4. 50% 5% 3% 4% PUNJAB UTTARAKHAND MADHYA PRADESH WEST BENGAL HARYANA JHARKHAND 14

RPO Trajectory. . SERC Notified Regulations States FY 12 FY 13 3% 5% ASSAM 1. 50% 2% MANIPUR 3. 00% 5. 00% MEGHALAYA 0. 75% 1. 00% NAGALAND 7. 0% 8. 0% MIZOROM 6. 0% 7. 0% TRIPURA 1. 0% 2% 3% JAMMU & KASHMIR GOA AND UTs FY 14 2% FY 15 2. 50% 15

Feed-in Tariff -Wind CERC/State CERC (FY 12 -13) Andhra Pradesh Gujarat Karnataka Madhya Pradesh Maharashtra Orissa Rajasthan Tamil Nadu West Bengal Tariff (Rs/k. Wh) Wind power density Tariff(Rs /k. Wh) <200 5. 96 200 -250 5. 42 250 -300 4. 77 300 -400 3. 97 >400 3. 73 For first 10 years-Rs. 3. 5 For next 10 years-determined thereafter Gross Tariff - Rs 4. 23, Depreciation- Rs 0. 38, Net Tariff-Rs 4. 23 Average tariff for first 10 years from signing of PPA= Rs 3. 70/k. Wh Rs. 4. 35 Wind power density Tariff(Rs /k. Wh) 200 -250 5. 67 250 -300 4. 93 300 -400 4. 20 >400 3. 78 Rs 5. 31 (Without AD) & Rs 4. 48 (With AD) Rs. 5. 18 (without AD), Rs. 4. 90 (with AD)-for projects in Jaisalmer, Jodhpur and Barmer districts. Rs. 5. 44 (without AD) 5. 14 (with AD)-for other districts Rs. 3. 51 k. Wh Tariff cap of Rs. 5. 70 for 10 years from effectiveness of Regulations 16

Regulatory Issues 1. Renewable Purchase Obligation Only a few States have taken RPO in accordance with NAPCC- rest much lower It create uncertainty in volume and market - investment in renewable energy get hampered Renewable energy being in-firm, the States have to create spinning reserve, equivalent to the renewable capacity addition, which again results in extra cost 2. Renewable energy certificate (REC) mechanism In absence of compliance regime REC market is not growing REC does not provides for transfer of electricity Entire burden of grid stability & higher grid system cost remains with home state They are not separately compensated 3. Transmission Infrastructure Infirm nature of renewable power resource causes perturbation in the local grids Creation of power evacuation infrastructure require substantial funding 17

The Future direction § State-wise Renewable Resource Specific Portfolio Obligations enforcement development of a compliance regime through penalties § Development of spinning reserve at regional level § Creation of renewable power evacuation infrastructure § Development of Smart Grid for renewable power § Incentive to resource rich State to facilitate development and exploitation of potential – as under 13 th Finance Commission an incentive to States to achieve full purchase obligation 18

Energy Access in India- Renewable Energy Potential § Renewable energy offers sustainable solutions § Solar and biomass technologies are most promising technological options, with minihydro wherever it is available § Examples: § Solar § Rice husk gasifier system for Village Electrification § Mini/Micro-Hydel based Village Electrification

Solar Lighting Systems Through Bank Loans Funded through a mix of debt and incentives- 20 % cost by user Financial support -30 % subsidy and 5% interest for consumer for 50% cost – Government refinancing banks Each household saves US $ 1 per month even on subsided kerosene- Total kerosene cost per household with out subsidy is US $ 4 -5 per month ( Average income level of rural areas is US 20 cents per day person ) 0. 6 million solar home lighting Systems have been set up in the country Under National Solar Mission 20 million lighting systems are aimed by 2020 Back

Rice husk gasifier system for Village Electrification §One 32 k. We rice husk gasifier system provides electricity to about 400 households in one village. §About 150 villages / Hamlets are benefiting in East and West Champaran, Bihar §Villagers pay US cent 3. 33 - 4. 40 per day (US $ 11. 25 per month) for 1 -2 CFL of 15 Watt, §Saving on kerosene cost- US $ 1 per month ( US $ 4 -5 with out subsidy) §Farmers pay US $ 1 /hr from saving of diesel cost used in irrigation pump sets §Government meet 40% of total cost besides support for training of O&M Technicians, entrepreneurs etc §Viable Model if demand is 15, 000 to 20, 000 watt in the village Aimed to cover 4 Million Households in 10000 villages by 2020

Mini/Micro-Hydel based Village Electrification • Largely for Himalayan and sub-Himalayan Region • KW size power generation systems- to caters to cluster of villages Owned, Built and Managed § Average financial support is around US $ 2200/KW by Rural Community § Serves multiple purpose –lighting and productive activities § Focus on Community Participation/Cluster Approach Aimed to cover 100, 000 households in 2000 villages by 2020 Productive Applications

Energy Access in India- Challenges and Tasks ahead § Identification and training of village level Entrepreneurs –best suited § Enabling Policy Regime- low cost fund, viability gap funding § Access to financing -Developing resource and location specific bankable business models- banks must lend § Providing adequate funds § Involvement of industry - under Corporate Social Responsibility -take up as business-faster solution User friendly and product development- Rural industries like Charkha, milk chilling centres, potters wheel, lentil grinding etc to use renewable energy for productive application

Western Ghat Ecology Expert Panel Report 2012 § As of now EIA guidelines in India do not include renewable energy projects. This should be corrected as it is increasingly well established that they do have several impacts especially wind farms. § Need for greater environmental and social impacts studies and anticipatory planning for renewable energy projects as these are poised to take off. § The study highlighted the urgent need for supposedly green technologies such as windmills to also undergo a comprehensive cumulative impact assessment before their clearance, as currently such technologies being considered ‚green‛ are exempt from requiring an EIA. § It recommended that a moratorium be placed on all wind energy farm proposals until comprehensive EIA studies are conducted. In any case, § WGEEP has recommended that no windmills be allowed in ESZ 1. 24

Status of Global CDM projects: December 2012 Status of CDM projects Number At validation 4107 Request for registration Registered 229 4685 Source: Jørgen Fenhann, UNEP Risø Centre, December 2012 25

India: CDM Projects Around 75% of total Registered are Renewable Energy Projects At Validation Request Registration Registered Renewable Energy Hydro Wind Biomass Solar Waste to energy Others Total 1243 23 877 653 98 315 207 18 15 224 2143 Source: Jørgen Fenhann, UNEP Risø Centre 26

Schumpeter’s Innovation Wave Accelerate Water power Textiles Iron FIRST WAVE 1785 Wave 5 th (1991 -2020) Electricity Petrochemicals Chemicals Electronics Internal combus- Aviation engine SECOND WAVE 1845 60 years Steam Rail Steel 1900 55 years FOURTH WAVE THIRD WAVE 1950 50 years FIFTH & SIXTH WAVE 1990 40 years ? Innovation Digital networks, Biotechnology, Software information technology 6 th ( has already started having Sustainability, radical resources productivity, Whole overlap with the 5 th wave) system design, Biomimicry, Green Chemistry, Industrial ecology, Renewable Energy, Green nanotechnology

Thank You 28