The Indian renewable energy industry is on the cusp of a major transition. The new government, under Prime Minister Narendra Modi, has charted a vision for clean and affordable energy with emphasis on renewables. Thus, renewables will play a significant role in achieving the energy security objective, promising to offer 24x7 energy access to all by 2019. The foundation for this role will be laid in 2015.
Following the passage of the Electricity Act, 2003, renewables have been an integral and growing part of the energy mix in the country. Currently, renewables account for 13 per cent of total power generating capacity, leading the transition in the energy system away from an overly dominant fossil fuel mix. Wind leads the pack with over 22,000 MW, contributing 67 per cent of all modern alternatives. The wind market witnessed a short period of decline, caused by policy uncertainties and the macroeconomic slowdown. However, a conducive policy framework coupled with ambitious targets of the new government is set to reverse the trend.
The Indian renewables sector will witness a quantum leap in 2015-2016 in terms of market size and growth. Now that accelerated depreciation in also in place, the wind market size is likely to surge by 80 per cent in the next financial year. The government has ambitions to add 10,000 MW in capacity every year from wind. With a stable government and policy framework, the industry can achieve these targets over the next five years. I am confident that by 2015, the government will put in place a robust foundation for offshore wind farms. The government is also equally ambitious on the solar energy front, aiming for 100 GW by 2022.
The government’s renewable energy targets can easily be achieved if it addresses the key issues faced by the private sector. Availability of grid and land infrastructure at the state level is a concern; state governments need to invest in that area well in advance based on available wind resources in the state. Renewable energy needs large-scale funding, so banks and financial institutions should earmark at least 20 per cent finance for renewable energy projects and, the finance should be available for a longer period of 20-25 years. This will ensure lower cost of energy, which will benefit end-consumers. Renewable energy is the key catalyst for economic growth of our country; development of renewable energy such as wind is vital to attract domestic manufacturing in the country.
Industry players also need to scale up and raise the bar should they wish to leverage growing and emerging opportunities and the increased thrust on renewables. Further, it is imperative for the industry to raise quality standards and asset value optimisation efforts. Wind and solar industries in India must adopt the best global practices to leverage the next phase of growth. From the wind energy perspective, we need to introduce many more innovative products that can harness energy from low-wind sites at competitive costs. Turbines with advanced control systems, improved scheduling and forecasting, digitally controlled smart grids and storage systems are also required.
We have numerous opportunities to further bring down the lifecycle cost of energy from wind by leveraging technology and optimising the supply chain. Going forward, the industry must endeavour to transform renewables as a base load. India being a hub for most wind turbine and component manufacturers, I am confident that the industry will drive this change on a par with global standards.
Similarly, the solar industry requires a huge change in approach to bring down the cost per unit to achieve grid parity and improve capacity. While the first phase of the solar mission was successful in bringing the market to a gigawatt size, there is a long way to go in terms of innovation, manufacture of quality modules on the required scale and achieving efficiency in installation and maintenance. There is enormous scope for indigenising the solar value chain in India. We need to make India a manufacturing and technology hub for solar. Having unlimited growth potential, the Indian solar industry can clearly aim for a quantum leap.
Another fundamental change would be in the fossil fuel-dominated energy systems. As the share of renewables in the energy mix grows, the systems and stakeholders have to realign to these new realities. Power evacuation and intermittency are major obstacles to the growth of the renewables industry. We need to speed up the execution of the green energy corridor and encourage massive investments in upgradation and creation of new transmission and grid infrastructure. Let us create the infrastructure required to transit to a new energy architecture, including digitally controlled smart grids, interconnection of regional grids at the national level and establishment of storage systems.
I see 2015 as a watershed year. The journey towards a new energy architecture needs a long-term and integrated-policy approach. In order to sustain the momentum in the renewables sector, the government needs to initiate specific actions. First, the National Action Plan on Climate Change (NAPCC) target for electricity from renewables by 2020 needs to be raised to 20 per cent along with adherence to renewable portfolio obligations. Second, land regulations and power evacuation issues have to be addressed expeditiously. Third, we need speedy clearances under a single window. Fourth, the alignment of power tariffs to markets is needed to improve the health of discoms. Finally, the creation of a national market for power along with more open access is required. I am confident that Indian renewables from all sources will grow manifold in the next five years, revolutionising the Indian energy system and making India a manufacturing and innovation hub.
Tulsi Tanti, The author is chairman, Suzlon Group
(This story was published in BW | Businessworld Issue Dated 26-01-2015)
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