Gains in renewable energy
CR Bhattacharjee
Posted online: Jan 27, 2009 at 2255 hrs
The 11th Five-Year Plan envisages an addition of 78,500 MW of new capacity to arrive at a cumulative target of 2,00,000 MW by 2011-12, in order to meet peak demand needs, which will accelerate as the government implements it plans to electrify 45% of the households that are yet to be connected to the electricity grid. Though the project appears to be ambitious, the process has already been initiated.
The capacity target for renewable energy (RE) is 14,000 MW, which will add to the 8,175 MW installed by the end of 10th Plan. RE will constitute nearly 11% of total installed capacity by the terminal year of the Eleventh Plan as against only 6% by the end of last plan. Indian efforts in RE are commendable considering the 20% target set up by the developed countries for 2020. The necessity to be aggressive on RE does not need emphasis in the context of global warming resulting from fossil fuels and mankind’s search for nature’s plentiful gifts to meet the demand and avoid wastages.
Now that two years of 11th Plan have gone, it would be appropriate to evaluate the performance and take up remedial steps to achieve the targeted goal. Two segments which seem to have made some headways in the intervening period are the Solar Photovoltaic (SPV) and Solar Thermal Power, for which encouraging guidelines have been outlined.
Results are expected to be good, going by the fact that within three months of policy decision proposals for setting up 2,000 MW capacity (with an investment of about Rs 40,000 crore) has been received by government, while the policy envisaged only 50MW during plan period. Consequently, progress on SPV power, which was very discouraging for two years might turn out to be a lot better in next three years.
In two years, 40% of 14,000 MW or 5,600 MW should have been added. But actual capacity built was only 4,165 MW as there was a shortfall of 1,435 MW, which have to be made better in the next three years, over and above the stipulated 8,600 MW that has to be commissioned to meet the full targets of the plan.
However, in the case of wind power the addition to capacity has decelerated from 32.7% in 2006-07 to only 23.4% in 2007-08. And only 20% of the total wind resource assessment of 45,000 MW has been harnessed so far.
Similar is the case with power from Biomass where growth rate has fallen to 15.5% in 2007-08 from 19.2% in 2006-07. Biomass cogeneration and small hydro-electric projects have shown positive growth as compared to the previous year. However, given the small base and global trends, an annual growth of 25% would have been more appropriate.
The RE from wastes has an important significance because many hamlets and villages still remain unelectrified. Though the beginning has been good but the tempo has to be maintained. Energy from waste has a potential of 2,700 MW on grid connected type systems and deserve a boost from the sanitation perspective and also from the need for recycling of waste materials.
In the absence of private sector initiatives, the local bodies have to be persuaded to get into the business. The overall growth rate of 52% in this segment during 2007-08 upon a base of 8,157 MW should not be viewed with complacency since the achievements fall far short of the 14,000 MW target set for 2011-12.
Notwithstanding the different levels of achievements in the RE sector, a mechanism has to be there to monitor and evaluate performances of individual sectors through independent agencies for correctional measures on physical achievements, technicalities and orientation of financial packages, especially when reports of non-functional units are appearing regularly.
One reason for the overall shortfall is the high interest rate on credit, which should either be subsidised and/or compensated by pushing up the feed-in-tariff to ensure a better return on investments. This will not have any perceptible change in overall tariff structure paid by the ultimate consumers. The stimuli for the high rate of growth of RE in developed counties are low rate of interest and decent feed-in-tariff. And India would do well to match these incentives as solar and other RE power can cater to total demand of the country and also provide relief against global warming and threats of oil price rise.