No Wind Under Our Wings

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[<p><div align="justify"><span class='dropthecap'>H</span>ere's an interesting fact. countries with well-endowed fossil fuels such as Nigeria (37 billion barrels of oil reserves) and Iran (150.31 billion barrels) are developing renewable energy at a faster pace than India. "We do not want to be dependent on a single source of energy howsoever large it is today," says Adeola Elri, senior scientific officer, renewable energy department, Energy Commission of Nigeria.<br /><br />Both Nigeria and Iran have set a target of 10 per cent of their energy demand being met by renewable energy in the next five years, up from the present 3 and 7 per cent, respectively. In India, renewable energy accounts for nearly 11 per cent of total grid-installed capacity, but contributes just over 4 per cent of that to the total electricity generation mix. The reason: the per unit cost of renewable energy runs very high.<br /><br />As a consequence, enhancing use of renewable energy is hard, particularly through decentralised distribution grids. "Access to capital, technology development, innovation and strategies are not keeping pace with global development," says V. Subramanian, former secretary at new and renewable energy ministry (MNRE).<br /><br />Oddly enough, nearly $3.1 billion has been invested by the private sector in renewable energy till 2009, according to a Ernst &amp; Young report, which ranked India the fourth most attractive destination for investment in renewable energy behind the US, China and Germany. One reason for the disinterest is purely economic. "Traditionally, alternatives have been explored when cost of an existing product is beyond the reach of people," says Farooq Abdullah, minister for new and renewable energy. That is both realistic and pragmatic.<br /><br />The other is regulatory policy. Given high costs, renewable energy generation needs well-targeted fiscal incentives: that implies some mix of tax benefits and subsidies. So far, existing policy has failed to generate private sector excitement. Which begs the question: are policy objectives aligned with the interests of those who could build the required generating capacity?<br /><br /><img src="http://www.businessworld.in/bw/image/Business/EnergyAndPower/power_chart_250x200.jpg" alt=" " width="250" height="200" align="right" />Analysts say incentives do not appear to be aimed at promoting the use of renewable energy. For instance, they have failed to reduce the cost of consumer durables using renewable energy that can be used by masses of people. Instead, the government has imposed directives on distribution companies. The stipulation that power distributors should procure 5 per cent of total energy demand from renewable sources is a diktat, not a market-based mechanism. <br /><br />Then, companies in the renewable energy business could well use the tax write-offs without adding to enlarging the market meaningfully. "There is a need for serious players to promote renewable energy, who can tap the benefits offered by government," says Vinayak Mavinkurve, group head, project finance and principal investments at IDFC.<br /><br />Progress will continue to be slow, said leaders from more than 85 countries participating at the Delhi International Renewable Energy Conference, 2010, if political leadership views renewable energy as an alternative source of energy rather than as the main energy source for the present and the future.<br /><br />"It is imperative that India looks at other alternatives within renewable sources seriously for its energy security," says Edward Norrena, sector practice lead (environment and infrastructure) at global business opportunities bureau in foreign affairs and international trade, Canada. "It can exploit its vast coast line and huge biomass and not just focus on wind and solar alone." MNRE should be the facilitator and not the regulator of a few renewable sources of energy. But is anyone listening?<br /><br /></div> <script type="text/javascript"> var intro = jQuery.trim(jQuery('#commenth4').text()) var page = jQuery.trim(jQuery('#storyPage').text()) if (page.indexOf(intro) < 0) { jQuery('#commenth4').attr('style', 'display:block;') } </script> (This story was published in Businessworld Issue Dated 08-11-2010)