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CHALLENGES AND OPERTUNITIES IN RENEWABLE ENERGY

CHALLENGES AND OPERTUNITIES IN RENEWABLE ENERGY. Dr. S.M.Ali Professor, Electrical Engineering KIIT University Bhubaneswar. Power Scenario in India.

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CHALLENGES AND OPERTUNITIES IN RENEWABLE ENERGY

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  1. CHALLENGES AND OPERTUNITIES IN RENEWABLE ENERGY Dr. S.M.Ali Professor, Electrical Engineering KIIT University Bhubaneswar

  2. Power Scenario in India Country’s power generation capacity -160,000 MW ( Per capita consumption of energy - 704.2 kWh per annum (2007-08) Peak Electricity Demand exceeds Supply by 13.3% (March 2010, Provisional data by CEA) India’s commercial energy supply needs to grow by about 6% per annum to sustain 8% GDP growth 11th plan targets addition of 78,700 MW spending Rs 6.67 L Crores ( as per mid plan review, 50,000 MW is expected to be added) Private sector contribution on the rise (from 25% in 10th plan to 36% in 11th plan) Over 65% of power from Thermal sources

  3. Renewable Energy- Why We Need It? Imperatives for Renewable Energies Sustenance of energy demand can’t be achieved through fossil fuel as the limited reserves are fast depleting (vers abundant supplies of sun shine ,water and garbage) Global warming and Clean Development drive forcing countries to reduce polluting industries Carbon Credits encouraging companies to go in for captive renewable energy investments

  4. Renewable Energy in India – Current Status Grid-interactive power installed capacity from renewable energy sources as of Oct 31, 2009: Total capacity : 15,542 MW Wind – 10,891 MW ( 70%) Bio-mass – 2125 MW ( 13%) Small Hydro (less than 25 MW) – 2,520 MW ( 16%) Solar – 6 MW ( less than 1 %) Off-Grid (distributed power) as on Oct 31, 2009– mostly captive Total capacity – 331 MW Bio-mass – 328 MW Solar- 3 MW

  5. By March 2012, total capacity from renewable sources is expected to reach 24,000 MW, accounting for nearly 12% of the total envisaged capacity from all sources (vers 10 % as of Oct 2009) • Capacity addition of 30,000 MW is envisaged during 12th Plan for renewables, raising the total capacity to 54,000 MW by 2022, which would comprise 40,000 MW wind power, 6,500 MW from small hydropower and 7,500 MW from biomass • Potential from renewables energy sources is estimated to be approximately 85,000 MW

  6. Indian Solar Energy Sector Overview India - among top 5 countries in the world with potential for solar energy day time production peak coincides with peak electricity demand making solar ideal supplement to grid High Capital Costs of solar power plants ( Rs 17 cr /MW vers Rs 4 Cr for thermal ) and generation cost ( Rs 13.45 – Rs 18.44 /KWH) historically restricted its growth versus thermal power; however things are changing in the last few years Solar energy generation in India broadly falls into three categories namely––Solar Thermal Energy, Solar Photovaltic (SPV) Systems and Solar Cookers

  7. Indian Solar Energy Sector Overview • More than 700,000 Photovaltic systems generating 44 MW have been installed all over India • As of 31.03.2008, over 33 grid interactive solar photovoltaic power plants, with aggregate capacity of 2.12 MW, estimated to generate 2.55 million units of electricityannually,installed in the country with financial support from the Government.

  8. Indian Solar Energy Sector Overview • In addition, around 1.45 million decentralized off-grid solar photovoltaic systems aggregating to about 125 Megawatt capacity installed in the country, which is capable of generating about 150 million units in a year • In India, solar water heaters are the most popular of all renewable energy devices. As of 31.03.2008, a collector area of about 2.15 million square meters has been installed for solar water heating applications 1

  9. Indian Solar Energy Sector –Investment Opportunity The Union Government announced the Jawaharlal Nehru National Solar Mission, aiming to make India a global leader in solar energy. The mission envisages an installed solar generation capacity of 20,000 MW by 2020, of 100,000 MW by 2030 and of 200,000 MW by 2050. Total funding from the government for the 30-year period will be approximately Rs850 billion to Rs1,050 billion ,which includes : Investment of Rs50-60 billion during 11th Five Year Plan Investment of Rs150 billion during 12th Plan period

  10. Opportunities for Manufacturers and Users of Solar Products Government is encouraging investments in solar energy by providing various incentives and duty concessions Capital subsidy in case of semi conductor based units Provisions for accelerated depreciation for solar manufacturers Low import duty for several raw materials and components required for solar projects 100% EOU is permissible and also permitted to import raw materials and component duty free Soft loans to users, intermediaries and manufacturers

  11. Wind Energy Sector - Overview • In terms of wind power installed capacity, India is ranked 5th in the World after the US, Germany, Spain and China with a wind power installed capacity (cumulative) of about 10,242 MW (vers potential of 48,000 mw) • A targeted addition of 10,500MW out of 14,000 MW for renewable energy for 11th Plan • Top states in India with wind power capacity : Tamil Nadu, Maharashtra, Karnataka, Gujarat and Rajasthan • Capital cost : Rs 5.5 – 6 Cr/ MW

  12. Wind Energy – Opportunities Total potential for wind power in India was estimated by the Centre for Wind energy technology (C-Wet) at 48.5 GW Government of India has announced generation-based incentive of Rs0.50 / unit of electricity from wind power projects, subject to maximum of Rs6.2 million per MW to increase investor base The study, Wind Energy Outlook 2009, also indicates that wind energy can provide up to 24 percent of India’s power needs by 2030, while creating 213,000 green jobs and cutting 5.5 billion tons of CO2 emissions Government of India is planning to infuse around Rs600 billion in next few years under 11th five year plan in this industry, which will boost the growth of this sector and help reach this estimated installed capacity

  13. Hydro Power in India - Overview • India ranks 8th in the world in terms of hydro power generation • Hydropower contributes only 24% of the total power capacity (overall capacity 156,092 MW) as on 31st December 2009 • India plans to increase it to 40% in next eight years time • As per the assessment of Central Electricity Agency (CEA), the country has the potential to harness 148,700 MW of hydro power installed capacity from the identified basins & rivers • Hydro power investment is attractive on various counts – proven technology, low O&M costs; high energy conversion efficiency of around 70%

  14. Biomass in India - Overview • Currently, globally, biomass contributes 14% of the total energy supply worldwide and 38% of this energy is consumed in developing countries, predominantly in the rural and traditional sectors of the economy • Main driver for growth for biomass energy in India - growing concern of indoor air pollution within houses, especially in village houses, where large emission of toxic waste due to burning of wood for domestic uses • Today, over 100 million households are using biomass for cooking

  15. Biomass in India - Opportunity • Investment Opportunities Existing in Biogas: • Manufacture of biogas burners • Manufacture of high quality biogas lamps • Production of dual-fuel and biogas engines

  16. Challenges for Renewable Energy • Optimal pricing of power generated from the renewable energy sources • Quality and consistency issue of renewable power arising from the intermittent nature of electricity from wind and small hydropower, • The costs of technology development and production need to be reduced significantly from current levels • Availability of financing especially project finance for Renewable • Creditworthiness of counterparties has posed challenges • Slow pace of rural electrification and pace of reforms in the rural electricity sector

  17. Emerging Scenario in Renewable Energy Sector • So far, grid connected renewable energy generation was the main attraction for investors. • However, recently State Bank of India has set up wind farm project for 15 MW, covering TN, Gujarat and Maharashtra , for captive consumption • Besides, SBI will be eligible now to get carbon credit also due to its clean energy initiative • Suzlon Energy was the supplier of wind turbines for this project which was completed in 4 months . • As a corporate social initiative for clean energy drive this is the first initiative in the country • This sets a new trend in terms of clean energy projects in India and more corporates may follow the footsteps of SBI

  18. Challenges for Renewable Energy • Optimal pricing of power generated from the renewable energy sources • Quality and consistency issue of renewable power arising from the intermittent nature of electricity from wind and small hydropower, • The costs of technology development and production need to be reduced significantly from current levels • Availability of financing especially project finance for Renewable • Creditworthiness of counterparties has posed challenges • Slow pace of rural electrification and pace of reforms in the rural electricity sector

  19. Key Challenges - Indian Solar Market • Policy • National Solar Mission announced. However even after 9 months uncertainty prevails • Feed-in-Tariff versus Bidding (for high cost power never succeeded) • Each state has unique policy and tariffs whereas the solar resource is vastly different. Tariffs not linked Generation potential

  20. Key Challenges - Indian Solar Market • Manufacturing • Available of Inadequate manufacturing capacity to meet the demand of National Solar Mission and state plans. • Currently the manufacturing capacity is only around 600-700 MWp per annum for Solar PV Modules. • High Cost of Made in India Solar modules/projects

  21. Key Challenges contd… • Finance • Currently only IREDA, REC,PFC and very few banks are supporting NSM projects. • Land availability • Financial Health of State Discoms • Evacuation Availability • Non Availability of Ground Solar data

  22. Obstacles for the Development of Projects • Large costs associated with the assets required to start up projects. • Higher costs than those based on renewable energy. • Little interest for acquiring renewable energy versus traditional energy (fossil-fuel based energy) • Administrative requirements for project start-up. • Interconnection costs. • Cost analysis under current conditions

  23. Key Factors for Success • Regulatory Policy certainty with long term horizon both at center and state level • Credible developers with long term focus on this sector • Economies of Scale(in manufacturing/projects) for progressive cost reduction • Development of domestic system integration capabilities. • Reliable After Sales Services • Attractive Long term Project Finance Options • Coal cess to support Solar projects for payment Guarantee.

  24. Actions implemented to promote the generation of renewable energy

  25. Tax Incentives • Article 40 of the ITL (LISR) provides for the accelerated depreciation of the machinery and equipment related to the generation of renewable energy sources. This is subject to a 5 year minimum operation term. • There are several bills in Congress that are being discussed which grant additional incentives for the development of projects related to renewable energy: • Bill of Law for the use of Renewable Energy Sources (“Renewable Energy Law”); and • Bill of Law to amend several provisions included in the Electric Energy Public Service Law and the Income Tax Law.

  26. Tax Incentives • Bill of law to amend article 227 of the Income tax law. 4) Bill of law to amend several provisions of the income tax law, the assets tax law, the value added tax law and the new Car tax Law (“Amendment to tax laws”).

  27. Renewable Energy Law Installed Capacity Specific Goals Electric Energy Generation • Obligation to increase the participation of renewable energy sources in the development of the Ministry of Energy’s National Electricity System. • The National Electricity System should be able to accept energy generated from Intermittent Renewable Energy Sources whenever such is generated.

  28. Renewable Energy Law • Constitute a Trust for the promotion of Renewable Energy Sources. • Create a “Green Fund”, same which will be an incentive for the generation of new renewable energy sources for the CFE, LyFC and for Independent Generators. • “Bi-Fuel Fund”, same which will grant incentives for its commercialization and will cover the difference between the costs of production and commercialization. • Rules for the constitution and access of funds from the Trusts.

  29. Amendment to Tax Laws Tax Incentives are for: • Consumers • Producers • Renewable energy generators. • Distributors of products that work based on renewable energy. • Production, investigation and development of new technologies in Mexico.

  30. Benefits for Consumers • Obtain a tax credit. • Obtain tax exemption for the use of this technology. • Reduction in expenses regarding the use of energy. • Use of more efficient technology. • Protect the environment.

  31. Benefits for Consumers • Substitute of sources of energy in the national market. • Create an environmental culture that recognizes the environmental and economic benefits in the use of new renewable energy technology. • Promote Mexico in order to become Latin America’s leader in the generation and use of renewable energy.

  32. Benefits for Producers • Create incentives for the development of a “renewable energy market”. • Penetrate an important market. • Introduce technologies for the preservation of the environment. • Tax incentives for the production of vehicles that use renewable energies. • Attract new investors for the development of these technologies in Mexico.

  33. Benefit for the National Environmental Economy • There will be no negative impact in the budget because this market has yet to be developed. • Preserve the country's natural resources. • Attract environmental-friendly investors. • Diversify the type of available energy sources in the country. • Develop an environmental-economy culture.

  34. ResearchDevelopmentDemonstration - Commercialization Up to 80 % federal cost share Up to 50% federal cost share GRANTS COOPERATIVE AGREEMENTS TECHNOLOGY INVESTMENT AGREEMENTS LOAN GUARANTEES Equity Contribution Debt Participation

  35. Concluding Remarks • Sufficient Demand generated in India through NSM & States programmes • PV technology to have mandatory domestic content • Present Manufacturing Capacities are insufficient to meet this demand, resulting in huge gap. • Indian manufacturing base needs to be expanded to fill this gap and global players to be incentivised to set base in India

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