Opportunities and challenges for renewable energy policy in India

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Opportunities and challenges for renewable energy policy in India

  1. 1. Renewable Energy in India: Opportunities and Challenges Pallav Purohit Visiting Fellow, GCD Project, UEA University of Cambridge 27th April 2010
  2. 2. Contents Why renewable energy (RE)? RE use in developing countries RE in India – Historical perspective RE in India – Potential(s) and achievements Regulatory support for RE development in India Future growth drivers for RE in India
  3. 3. Why renewable energy? • Climate change – to reduce the emission intensity of its GDP by 20-25% by 2020 through domestic mitigation actions • Rising prices of oil and gas – India imports 70% of its crude oil requirement • Ever increasing demand for energy – 13.3% peak power shortage between April 09-Mar 10 (CEA, 2010)
  4. 4. RE use in developing countries • Low energy consumption and • Large, inexhaustible source poor quality of life • Clean source of energy • Oil import related problems • Low density: dilute source of • Availability of renewable energy energy resources (solar, wind, hydro, • High costs due to the large biomass etc.) collection areas • Low purchasing power of • Availability varies with time (i. e. potential users intermittent source of energy) • Fuel gatherers not buyers • Additional cost due to the storage requirements (i. e. PV • Unemployment and systems) underemployment
  5. 5. Macro-economic development and energy use in India 800% 80 700% 70 600% 60 50 500% Exajoules/year Relative to 2005 40 400% 30 300% 20 200% 10 100% 0 0% 1990 1995 2000 2005 2010 2015 2020 2025 2030 1990 2000 2010 2020 2030 GDP Total energy consumption Coal Oil Gas Renewables Hydro Nuclear Biomass GDP/capita Population Source: GAINS/IIASA
  6. 6. Overview of Indian power sector Renewable 10% Nuclear 3% Coal 52% Thermal Hydro 23% Gas 11% Oil 1% Coal Gas Oil Hydro Nuclear Renewable Thermal Hydro Renewable Nuclear Total 100,599 MW 36,863 MW 15,427 MW 4,340 MW 157,229 MW As on 28th February 2010 Source: Ministry of Power
  7. 7. RE in India - Historical perspective • 1972 - R&D activities initiated by Department of Science and Technology (DST) • 1981 - Commission for Additional Sources of Energy (CASE) set up as apex national policy making body • 1982 - Separate Department of Non-conventional Energy Sources (DNES) set up to provide thrust • 1987 - Indian Renewable Energy Development Agency (IREDA) - a non banking financing institution was set up • 1992 - Full fledged Ministry of Non-conventional Energy Sources (MNES) set up – resource assessment, technology development and demonstration • 2006 - Ministry renamed as Ministry of New And Renewable Energy (MNES) – Several technologies are now commercially viable
  8. 8. Organization of the energy sector G Planning Power and energy Energy Policy Rural Energy Commission O Division Division Division V E Ministry R of Coal Mining companies CIL/NLC CCO Other organizations N M Ministry E of Power Generation companies T&D companies Power finance Power trading PFC Regulatory Energy Research and CEA organizations conservation Training N NTPC/NHPC •POWERGRID PFC/REC PTC CERC/ATE BEE CPRI/NPTI T Ministry of Petroleum and E&P companies Refineries Engineering Advisory org. Financial O Natural Gas •ONGC/OIL •CPCL/BRPL Marketing companies Integrated oil companies companies CHT/DGH institutions •IBP/GAIL/IGL/MGL IOCL/HPCL/BPCL /OVL •/NRL/MRPL EIL /OISD/PCRA/PPAC OIDB F Ministry of New and Renewable I Energy Financial institution R&D, testing, certifying Supervisory organizations Institutions •IREDA •9 regional offices N •SEC, C-WET, SSS-NIRE D Department I of Atomic Research institutions Generation Input providers Other Financial Regulatory A Energy AEC BARC/IGCAR/RRCAT T&D companies •POWERGRID companies HWB/NFC organizations institutions organizations /VECC/AMD NPCIL/BHAVINI /IREL/UCIL BRIT/ECIL BRNS AERB
  9. 9. Governance of RE sector in India Secondary Stakeholders Primary Stakeholders Ministry of Power R&D support Ministry of New and Renewable Energy Financial RE Products Ministry of Environment and Forest Assistance R&D Support Financial Institutions State Nodal Agencies Research Organizations Department of Science and Technology (GEDA, MEDA, TEDA, (SEC, C-WET, NIRE) (IREDA) PEDA, UREDA etc.) Universities/IIT’s) Implementation Implementation support R&D support Support Central and State Regulators Implementing Agencies and NGOs Multilateral Agencies RE Products Financial Assistance Financial Assistance Manufacturers/Vendors Educations and Research Institutes Users or Consumers
  10. 10. RE in India – Power from renewables Wind - 70%, Small hydro - 16%, Bagasse cogeneration - 8%, Biomass power - 5% S. No. Sources / Systems Unit Estimated potential Cumulative Achievements (upto 31.12.2009) A. Grid-interactive renewable power 1. Biomass Power (Agro residues) MW 16,881 835 2. Wind Power MW 48,500 10,925 3. Small Hydro Power (up to 25 MW) MW 15,000 2,559 4. Cogeneration-bagasse MW 5,000 1,302 5. Waste to Energy MW 2,700 65 6. Solar Power MW/km2 50 6 Sub Total (in MW) (A) MW 88,081 15,692 B. Off-Grid/Distributed Renewable Power (including Captive/CHP Plants) 7 Biomass Power / Cogen.(non-bagasse) MW 5,000 211.0 8. Biomass Gasifier MWeq. 16,000 110.0 9. Waste-to- Energy MWeq. --- 38.0 10. Solar PV Power Plants and Street MWp --- 2.4 Lights 11. Aero-Generators/Hybrid Systems MW --- 0.9 Sub Total (B) MWeq. 362.3 Total ( A + B ) MW 16,053.3 Source: Ministry of New and Renewable Energy
  11. 11. RE in India – Decentralized energy systems S. No. Sources / Systems Unit Cumulative Achievements (upto 31.12.2009) II. Remote Village Electrification Villages/ Hamlets 4997/1257 III. Decentralized Energy Systems 12. Family Type Biogas Plants Mln. 4.20 13. SPV Home Lighting System Mln. 0.51 14. Solar Lantern Mln. 0.77 15. Solar Cookers Mln. 0.67 16. Solar Water Heating - Collector Area Mln. m2 3.25 17. SPV Street Lighting System No. 82,384 18. SPV Pumps No. 7,247 19. Wind Pumps No. 1347 IV. Other Programmes 20. Energy Parks No. 511 nos. 21. Akshay Urja Shops No. 284 nos. Source: Ministry of New and Renewable Energy
  12. 12. Wind energy in India • Current Scenario – 5th largest producer of wind energy in the world with a capacity of >11 GW – Tamil Nadu, Gujarat, Maharashtra and Karnataka are the leaders in wind capacity. • Key Issues Sea coast + Desert Areas (Av. PLF – Short construction period and of 18-20%) low O&M cost make it an attractive proposition – Some regulatory /institutional Forest & Mountainous hurdles exist for wheeling region (Av. PLF of 18-30%) • Future Potential – Cumulative installed capacity is Mountainous, Sea expected to reach 12GW by coast areas (Av. PLF of 25-30%) December 2010 (22% CAGR over the last 10 years) – Reassessment of true wind potential of India. (C-WET: 48 GW, IWTMA: 65-70 GW, WISE: Source: C-WET 100 GW, GWEC:250 GW).
  13. 13. State-wise break-up of wind power potential and achievements so far (as on March 31, 2009) 12000 11531 10645 10000 8968 >78% 8000 >42% MW 6000 5530 4584 4858 4305 4000 <2% 1939 2000 1567 1327 1171 1019 738 123 27 213 0 t la a n u tr a sh h a ak ha ad es ra ar e h at Ke st uj ad ad il N as rn ja G Pr ar Pr m Ra Ka ah Ta a ra hy M dh ad An M Source: MNRE
  14. 14. No. 1 along with US in terms of solar energy yield as per survey conducted by McKinsey & Co. (1700 to 1900 kWh/kWp per Solar energy in India annum) Among the top 5 in terms of overall country attractiveness for RE as per E&Y’s report (Ranking based on regulatory environment, • Natural availability fiscal support, unexploited resources, suitability to – Many parts of India have technologies etc.) 300~330 sunny days in a year • Current potential – Daily solar radiation 4 - 7 kWh per sq. m. which translates into a potential for 600 GW • Potential to meet future demand – 5000 trillion kWh solar radiation incident in a year which is a thousand times greater than the likely demand in electricity in the year 2015 • Environmental footprint – High solar insolation and yield results in lesser land Source: MNRE requirement
  15. 15. •Increasing solar capacity to 20GW by 2020, 100GW by 2030 and 200GW by 2050 National solar mission – targets •Solar power cost reduction to reach grid parity by 2020 •Solar power cost reduction to reach parity with coal based thermal generation by 2030 MNRE till Phase I Phase II Phase III Total 2009 2010-2013 2013-2017 2017-2022 Grid-connected solar (MW) 6 1,100* 3,000 16,000 20,000 (331) (750) (3,200) Off-grid solar (MW) 2.4 200 800 1,000 2,000 (66) (200) (200) Solar thermal collectors (million m2) 3.1 7 8 5 20 (1.3) (2) (1) Solar lighting systems (million) 1.3** no phase-wise targets 20*** (1.6) Note: Figures in parentheses indicate the implicit annual targets in each phase, assuming that MNRE achievements to date are a part of the NSM targets. * The NSM document mentions a target of 1000 to 2000 MW for Phase I. ** Solar lighting systems to date include solar lanterns and solar home lighting systems. *** Phase-wise targets are yet to be provided.
  16. 16. Regulatory support for RE development • Electricity Regulatory Commissions Act, 1998 – The state commissions became the key player for regulating the electricity sector including determining tariffs • Electricity Act, 2003 – Promoted generation of electricity from RE. • Section 3: National Electricity Policy and Plan including optimal utilization of RE • Section 4: National policy permitting stand alone system (including those based on RE sources of energy) for rural areas • Section 61: The appropriate commission while determination of tariff shall be guided by promotion of co-generation and generation of electricity from RE • National Electricity Policy, 2005 – The Policy emphasized on the full development of feasible hydro projects and laid down procedures for the speedy implementation of the same.
  17. 17. Regulatory support for RE development • Integrated Energy Policy, 2006 – Emphasized use of RE for reducing dependence on energy imports. • Rural Electrification Policy, 2006 – The Policy recognized that non-conventional energy sources can be appropriately and optimally utilized to make available reliable supply of electricity to each and every household. • National Tariff Policy, 2006 – SERCs to fix minimum percentage for purchase of energy from RE sources taking into account availability of such resources in the region and its impact on retail tariffs
  18. 18. Preferential tariff orders declared by SERCs for different technologies Source: Respective SERC orders
  19. 19. Snapshot of state-wise policies (minimum RPO obligation numbers for FY09) Snapshot of policy decisions of different SERCs Maharashtra Karnataka Gujarat RPO (FY09) 5% 5% 2% Maximum purchase specified No Yes No RPO on CPP and OAC Yes No No Penalty levied (Rs/kWh) 5 No No Penalty paid to MEDA NA NA Obligation trading mechanism Yes No No (REC) Andhra Rajasthan Madhya Pradesh Pradesh RPO (FY09) 5% 6.25% 10% Maximum purchase specified No Yes No RPO on CPP and OAC Yes Yes No Penalty levied (Rs/kWh) Yes 3.59 No Penalty paid to – STU NA Obligation trading mechanism No No No (REC) Source: Respective SERC tariff orders
  20. 20. National Action Plan on Climate change • Target for RE purchase may be set at 5% of total grid purchase – To be increased by 1% each year for 10 years. • SERCs may set higher target than this minimum at any point in time. • Central & State Governments may set up a verification mechanism to ensure that RE power is actually procured. • Appropriate authorities may issue certificates that procure RE power in excess of the national standard – Such certificates may be tradable, to enable utilities falling short to meet their RPS. • Penalties as may be allowed under EA 2003 may be levied – If utilities are still falling short in RPS.
  21. 21. Future growth drivers for RE in India • Demand supply gap and natural resource scarcity – Supply regularly being over stripped by demand – Limited amount of fossil-fuel resources • Large RE potential – Abundance of sites for tapping RE • Availability of new forms of capital – India emerging as a dominant player in CDM • Fiscal incentives provided by government – Various incentives provided by the govt. to make RE projects attractive • Increasing state level initiatives – Punjab, Haryana, AP taking the lead in development of RE projects
  22. 22. Thank you! For further information: purohit@iiasa.ac.at
  23. 23. CDM statistics Annual Average Expected CERs until CERs* end of 2012** CDM project pipeline: > 4200 of which: N/A > 2.9 billion --- 2143 are registered 354 million > 1.8 billion --- 72 are requesting registration 12 million > 20 million * Assumption: All activities deliver simultaneously their expected annual average emission reductions ** Assumption: No renewal of crediting periods
  24. 24. CO2 mitigation potential of RE in India 250 500 200 400 CO2 emissions (Mt) CO2 emissions (Mt) 150 300 100 200 50 100 0 0 2012 2016 2020 2012 2016 2020 Solar Wind Biomass Small hydro Solar Wind Biomass Small hydro BAU Scenario Optimistic Scenario Source: Own estimates

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