(Article published in www.sustainabilityoutlook.in on April 17th 2012http://www.sustainabilityoutlook.in/content/review-go...
political and volatile market risks. Developing renewable sources of energy and substituting the share offossil fuel in th...
Intervention areasThe plan talks about a number of areas that need strategic intervention. Five of them are highlightedbel...
5.    Finally, the plan recognizes the current inadequacy of manpower capacity to meet the future          expansion targe...
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Review of mnre budget for 2011 2017


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A review article on the Govt. of India's budget allocation and strategic plan for the renewable energy sector till 2017.

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Review of mnre budget for 2011 2017

  1. 1. (Article published in www.sustainabilityoutlook.in on April 17th 2012http://www.sustainabilityoutlook.in/content/review-government-india%E2%80%99s-strategic-plan-new-and-renewable-energy-2011-17-1 )Review of Government of India’sStrategic Plan for New and RenewableEnergy for 2011-17This article reviews the strategic plan of the Ministry of New and Renewable Energy, Government ofIndia particularly in context of the underlying drivers and highlights the key areas which will define thesuccess of the plan going forward.ContextThe strategic plan of the Ministry of New and Renewable Energy (MNRE), Government of India capturesthe Government’s views on: 1. Vision, Mission and Objectives of the MNRE to achieve by the year 2022 2. Specific, measurable, achievable, realistic andtime-bound target of installation that comprises both grid based and off-grid renewable energy systems 3. Aspiration of the MNRE and aligning them with strategic areas such as research and development (R&D), human resource development, financing and marketing channels for renewables 4. An implementation plan for the targets and monitoring and measuring process of its successThe ministry engages a multitude of stakeholders before firming up the strategic plan. In this article wesummarize the underlying drivers of the strategic plan and the broad areas it includes.Key drivers of renewablesMore than 40% of India’s population does not have access to energy. The plan specifically notes thataccess problem is as much due to conventional resource scarcity and shortage of delivery as to costs ofenergy services. It is expected that India, which is a country endowed with renewable resources, candevelop them to address both delivery (small scale renewable resources such as solar, wind are oftenlocalized and offer a good solution to last mile delivery problem to remote locations) and scarcityproblems to energy access. Also going forward, technological advancement of new and renewableenergy systems is likely to make them cost effective compared to depleting fossil fuel resources.The other imperative of indigenous renewable sources of energy is achieving energy security. More than80% of India’s oil consumption is import based. This exposes an oil dependent economy to various geo-
  2. 2. political and volatile market risks. Developing renewable sources of energy and substituting the share offossil fuel in the country’s energy mix is a key long term strategy that the Government of India wishes topursue.With this backdrop, the strategic plan has defined the vision of the MNRE as “to upscale andmainstream the use of new and renewable energy sources in furtherance of the national aim of energysecurity and energy independence, with attendant positive impact on local, national and globalenvironment.” Technical R&D, substitution of fossil fuel and increasing the contribution of renewablesto India’s electricity mix by 10 percent are identified as the Ministry’s mission till year 2022. The MNRE’sdesire to create an industrial manufacturing base for renewable technologies has also manifested in theplan.Targets and budgets for 2011-17 additionFigure 1 and 2 illustrate the target addition of off-grid and grid based renewable energy applicationsenvisaged by the MNRE by 2017.Solar PV, solar lighting and micro hydel systems of electrification seem most promising amongst varioustechnologies for off-grid application. 69% of total fund allocation requirement of INR13,711 crores isenvisaged for off-grid Solar PV based rural electrification systems.Solar (both PV and thermal) dominates the targets for grid based addition too, with 65% of total fundbeing earmarked for it. It is noted that the MNRE’s fund requirement for grid based renewables iscomparable to the off-grid applications, if not less.
  3. 3. Intervention areasThe plan talks about a number of areas that need strategic intervention. Five of them are highlightedbelow – 1. Accurate and detailed assessment of renewable resources is identified as one key area for the Ministry. The plan lays out a medium term priority objective to create/ update/ validate database on renewable energy resources through a systematic approach in association with expert institutions. 2. New R&D efforts and spending will be encouraged with an aim of reducing the cost of renewable technologies. Solar PV, biomass gasification, energy storage and fuel cell are specifically highlighted under it. 3. Opening new market channel and business models are regarded as the most pertinent for scaling up renewables. The strategic plan notes current institutional framework around State Nodal Agencies (SNA) and the lack of standardized process to avail government support for renewable as bottlenecks for businesses to operate. Therefore the plan advocates strengthening the SNAs and other elements of the delivery chain (for e.g. channeling of the financial assistance) through capacity building and communication program. The plan has also hinted that depending on programs, access to Government support will be made simpler under a single handling authority (for e.g. Program Administrators (PA) will manage the various initiatives under the National Solar Mission) rather than the traditional SNA mechanism. 4. The plan talks about a number of financial instruments in order to address the market risk of renewables such as introducing a risk guarantee fund, reducing cost of debt by offering tax rebates and increasing term loan period. Besides it refers the role of a National Clean Energy Fund (NCEF) with an initial outlay INR3000 crores per annum to support the clean energy sector.
  4. 4. 5. Finally, the plan recognizes the current inadequacy of manpower capacity to meet the future expansion target. To address the human resource need, the MNRE is currently formulating sector-wise human resource development strategies with various academic and industrial institutions. Among above, deploying new financial instruments, opening new market channels and reducing renewable system costs are set as “high” and “near term” priority areas by the Ministry.Strategy 2011-17 Having established the areas of intervention, the plan discusses concrete issues that are being adopted as strategy for 2011-17 periods to achieve the target capacity of renewable energy in the country. Some of these are related to existing programs such as the National Solar Mission and Rural Electrification that already gained momentum in the past few years. In addition, there are number of specific strategies that could be significant for the industries in the near term. These are enumerated below. 1. Promoting the concept of small power plants at tail-end of grid for both solar and biomass and developing financial support structures for the same 2. Encouraging entrepreneurship for rural electrification, facilitating new industries such as agri- residues, solar components and enabling availability of banks/ grant funds for such ventures 3. Identifying niche areas for application of off-grid renewable technologies and reducing consumption of diesel 4. Developing new financial instruments including a ‘Risk Guarantee Fund’ 5. Capacity building and awareness generation in green buildings and campuses 6. Pursuing the compliance of renewable energy purchase obligations (RPO) with regulatory authorities and statesWhile promoting small power plant as tail-end generators to the centralized grid and associated RPOpossibilities may encourage physical scale up, providing platform for rural enterprises and new financialinstruments may encourage new business models in the renewable sector. The noticeable strategies arethe substitution of diesel generators in the energy mix which is only going to be more and more pressingwith rising prices of oil. Building sector is going to receive a push for cleaner source of energy for captiveuses. The last two forms of off-grid application are set to gain from the MNRE’s plan for includingrenewables as a mainstream energy source.ReferencesThe Ministry of New and Renewable Energy (2011) “STRATEGIC PLANFORNEW AND RENEWABLEENERGYSECTORFOR THE PERIOD2011-17” [Available online, http://mnre.gov.in/file-manager/UserFiles/strategic_plan_mnre_2011_17.pdf, accessed on 16th March 2012]