An in-depth analysis on how renewable energy can be more competitive in India
Renewable energy is picking up rapidly in India. Be it wind, solar, small hydro or biomass – all the segments are putting best of its efforts gear up renewable sector. The business sentiment is upbeat and the market conditions conducive for accelerated growth, backed by the government’s favourable policies and its proactive stance. Here, we will discuss the ways that can help in making India’s renewable energy more competitive.
1. Increase focus on technology advancement & innovationPower requirement in India is expected to grow by 200 per cent in the next 15 year as per 18th Electric Power Survey of India. The increasing demand for power to meet the ever increasing needs in various industries will lead to investments in technologies that can manage power more efficiently and more reliably. There is a growing trend towards energy efficient technologies that further help in conserving energy, optimising cost and reducing carbon footprints. The shift towards green energy sources will lead to more innovations in effectively managing power.In addition to policies and schemes that make help make the renewable segment more competitive a major focus has to be on technology advancements that make renewable energy more efficient, said Syed Sajjadh Ali, managing director – India, Electrical Sector, Eaton. He points out, “Infrastructure development to integrate this energy into the grid and transmit it effectively and a strong technology adoption roadmap that makes the transition from traditional energy sources seamless.”
Innovation plays a major role in creating a healthy competition notes Arun Bhalla, Executive Director at Dalmia Bharat Ltd. He says, “India has the potential to be the global hub for renewable energy and to support this, the industry and government needs to look into innovation not only in technology, but also in finance.” He adds, “The renewable energy sector needs more financing than it currently receives and it needs this in a timely and inexpensive manner.”
“To take renewable energy sector to the next level,” a senior spokesperson from Waaree Energy said, “we have to ensure sufficient manufacturing growth and more investment in R&D in order to make room for innovative technology. Since this industry is mainly driven by innovation, the need of the hour is to capitalise on available sources and create something that can benefit this industry in the long run, and thus, help it become more competitive.”
2. Improve financeAccording to Tulsi Tanti, Chairman and Managing Director of Suzlon Group, “Renewable energy needs large-scale funding, so banks and financial institutions should earmark at least 20 per cent finance for renewable energy projects and finance should be available for longer period of 20-25 years. This will ensure lower cost of energy which will benefit the end consumer.”
Subir Pal, President, Discrete Automation and Motion, ABB India observes, “Technology innovations originate from the ability of long-term players to invest strongly in R&D. Stability of the sectors and returns from installed base further boosts confidence among the financial community and more projects are considered bankable at affordable rates of interest.”Kunwer Sachdev, Founder and MD, Su-Kam urges, “Loans for installing solar or other renewable energy for power generation should be made simpler.” He further observed, “Policies that the government has made to buy back the surplus electricity generated by households through grid tie solar installations looks good on paper, but it has not been implemented properly.”
3. Continue subsidies Though Ramdas Shenoy, Director – Marketing at GIBSS agrees that technological development will make solar panels economical but he still feels that the sector needs subsidies. He urges, “Technological innovation has significantly reduced the cost of solar panels, wind turbines and other equipment, but renewable energy still needs continuous support in terms of subsidies.” He further suggests that the sector could be made commercially viable with the help of innovative business models like ‘Pay from Savings’ model which could help the business owner to have a long-term perspective with regards to investments.
Tanti adds, “SMEs should be supported by 5 per cent interest rebate for using renewable energy for captive requirement.”
However, Peddiraju Bhupathiraju, Managing Director, Akshaya Solar Power (India) Pvt Ltd said, “Government should come out with plans and see that in long-run solar sector will sustain on its own and not on subsidy schemes. As solar sector is going to drive Indian energy requirements to a comfortable level, government should exempt all solar energy products from VAT/CST/GST.”
4. Strengthen RPO mechanismAnil Sardana, CEO and Managing Director at Tata Power notes that the renewable resources are not evenly distributed and also it is necessary to strengthen Renewable Purchase Obligations (RPO) in the country. He opines, “The real boost to the renewable sector including wind energy would come by strengthening the RPO mechanism. Since the renewable resources are not evenly distributed in the country, the RPO encourages setting up of large generation capacities at resource rich locations, and through a process of certification, it can be traded on CERC approved power exchanges, to obligated entities or voluntary buyers. The tariff structure can then be decided to compete in the power sector. This will help in making renewable energy competitive in India.”
5. Increase ambit of small hydro projectsIn hydro power, small dams, with capacities up to 25 MW, come under the ambit of renewable energy. Small hydro capacity increased from 4,025 MW at the end of March 2015 to 4,273.47 MW at present. There is a proposal to increase the small dam size limit from 25 MW to 100 MW to encourage their growth, since that will make them eligible for tax benefits. “If hydro projects of capacities till 100 MW are allowed under the renewable sector, this could push the sector towards involvement of various global technology players who have so far stayed away due to inherent problems coming from red-tapism and complex bureaucracy,” says Neelav Samrat De, Assistant General Manager-Marketing, ANDRITZ India Pvt Ltd. The government aims to enhance SHP installed capacity to 7,000 MW by the end of 12th Plan.
6. Revisit the DCR issuesWith the raw material for solar products getting cheaper every month, affordable solar PVs are already on their way. And although we are close to reach grid parity with traditional energy, issues like spending billions to import raw materials for solar are blocking the country to control/reduce the manufacturing cost of the modules.Ivan Saha, President and Chief Technical Officer of Vikram Solar observes, “Producing solar PV modules at feasible rates is impossible without using fully integrated manufacturing bases and efficient supply chain network. In that perspective, imposing domestic content requirements (DCR) mandate in cell and module provided domestic manufacturers much needed support for growth. Indian cell manufacturing capacities are about one-fifth of the module manufacturing capacities. Therefore, introducing DCR mandate for module only would offer Indian manufacturers a level-playing field. So, the government should seriously consider revisiting this issue.”
7. Storage may be a game-changerEnergy storage solutions and high efficiency energy transmission and distribution network are crucial to unlocking the full potential of renewable energy. According to Tomohiko Okada, Managing Director, Toshiba India Pvt Ltd (TIPL), “The real pain point for energy sustenance and reliance is power fluctuations.” He said, “Using energy management system (EMS) and batteries for efficient power storage, India can stabilise its power fluctuations.”
8. Set a sustainable growth strategyThe Indian renewable sector is already in a competitive mode, believes Hartek Singh, CMD, Hartek Power. While explaining on how to make renewable energy more competitive in India he says, “In the long-term, the focus should be on making the renewable energy sector and its growth sustainable. Solar power, in particular, is becoming more and more financially viable with each passing day. Solar projects are becoming increasingly cheaper as reflected in the sharply declining bidding prices and solar panel costs. With foreign developers and investors entering the market and funding readily available, the market forces are set to make a bigger difference by encouraging healthy competition.”
An in-depth analysis on how renewable energy can be more competitive in India