Climate change and its effects on future generations is a growing global concern. The year 2015 saw many nations come together at various events such as Re-Invest in India and COP21 at Paris to address this concern. Nations voiced their concerns towards limiting the rise in the earth’s temperature to 2°C by outlining specific targets and actions at COP21.
India, too, committed to establishing an increasingly industrial economy with a reduced carbon footprint.
India currently uses 270 gigawatt (GW) of energy. This, when over 350 million people in the country still lack proper access to energy. With manufacturing set to grow as more companies align themselves with the government’s ‘Make in India’ initiative, the energy requirement is likely to touch 1,000 GW or more in the next few years.
India, however, does not possess adequate quality or quantity of fossil fuel resources to meet the demand. In fact, it remains dependent on imports, causing a heavy strain on the national financial. Hence, the need for non-fossil fuel resources.
The government has put forth multiple targets and policies to foster growth in the renewable energy sector and facilitate energy security and affordability to all. India has committed to reducing its carbon emission by 30 per cent and increasing renewable energy to 40 per cent of the energy mix by 2030. By 2022, it will have installed renewable energy of 175 GW compared to the present installed capacity of 35 GW. This means an annual target of about 24 GW and a market opportunity of around $150 billion.
Renewable Energy In 2015
Renewable energy made up approximately 13 per cent of India’s energy basket in 2015. But with the new positive policy framework at play, it is expected to grow.
The Reserve Bank of India’s inclusion of renewables in the priority lending sector will greatly benefit the SME sector, and lead to easier financing with longer amortisation periods. This will provide the much-needed access to affordable funding to industry players.
The Supreme Court’s ruling on Renewable Purchase Obligation, which now requires each state to obtain a certain percentage of its electricity from renewable sources or procure Renewable Energy Certificate, primarily applicable to power distribution companies (DISCOMS), captive power plants and open access consumers, will also help the renewable energy sector. The recently launched Ujwal DISCOM Assurance Yojana will help member states cover 90 per cent of their DISCOM losses. Approval of the National Off-shore policy has opened up 7,600 km of coastline in the country as a viable platform for off-shore wind energy generation projects.
The evidence of the positive outlook resulting from the government thrust on clean energy can be seen in the large number of independent power producers that have already entered the segment.
Challenges & Solutions
In spite of the many positive changes in 2015, there remain certain challenges that should be overcome if 2016 is to be as successful for renewable energy.
Some states invest in renewable energy only to the extent required by the government. Grid infrastructure has always been a concern and it is imperative that states take up the onus of bringing about development at the ground level, thereby giving the renewable energy sector a strong base. The problem of excessive time spent on obtaining clearances can be resolved by bringing relevant requirements under a single window. Easy and adequate financing is another problem. Debt financing of Rs 25,000 crore a year is required to install 5,000 MW of wind power. Thus, it is important to establish rules for a Green Bond market and facilitate inflow of affordable off-shore funds into the sector. Indian corporate houses face problems mainly due to project delays or economic slowdown. Relaxing the sectoral and group exposure by RBI can help renewable energy funding immensely. Most importantly, the government needs to allow for the high cost of capital within the country by looking into an interest subvention scheme to provide interest relief up to 5 per cent till 2022.
The Year Of Renewable Energy
Technological advancement will play a key role in 2016. With high wind sites already being saturated, players need to find new methods to achieve desired energy generation. Advancements such as a higher hub height and larger rotor diameter enable higher yield even at low wind sites. Predictions state that technology, if harnessed well, can bring about an increase in the industry plant load factor level, from the current average of 25 per cent. Further, lifetime service of assets, as offered by some wind energy players, lead to better product development that meet real needs. This can be a powerful tool for re-powering wherein outdated components of old WTGs can be replaced with newer, compatible ones, thereby increasing generation capacity without requiring additional land.
Solutions such as wind-solar hybrids will tap multiple resources to bring about uninterrupted energy generation, resulting in maximum utilisation of available resources and resolution of the energy security problem. Energy storage solutions are also being explored as a solution to the stability problem. While there is still much progress required before it can become a commercially viable solution, the current year is expected to see positive movement in this regard.
By leveraging technology, expertise, experience and the increased demand resulting from the Make in India initiative, India can become a global hub for renewable energy technology and production. Securing the supply chain for wind, solar and other renewable technologies in India will not only lead to a reduction in cost of these technologies that can be passed on to customers, but will also create value addition and employment in the country.
The author is chairman of Suzlon Group
(This story was published in BW | Businessworld Issue Dated 25-01-2016)
_20240527192124_original_image_21.webp)
_20241113193842_original_image_31.webp)
