Renewable energy (RE) has become pivotal to the movement against the risks of climate change.India’s commitment at COP21 to reduce 33-35% carbon emissions by 2030 and increase share of renewables to 40% of the energy mix by 2030, will truly expand the country’s RE portfolio. The government target of 175 GW by 2022 including 60 GW wind energy, is closer to becoming a reality propelled by technology and conducive policy environment for renewables.
Looking back at 2016
With ~28.5 GW, India attained 4th position in global wind power installed capacity. We now have ~31.5 GW to achieve by 2022 i.e. ~5000 MW annually and I am confident the wind sector can deliver the 60 GW target. FY16, India recorded its highest wind energy installation with 3415 MW. Wind and solar energy capacity combined exceeded hydro capacity and now these are second only to coal-based capacities. In FY17, the industry will set new records and grow by over 30% and surpass all previous records of installations.
The government’s thrust on renewables was supported by policy actions in 2016 such as; approval on the repowering policy, the draft wind-solar hybrid and revised RPO trajectory. Further, policy impetus included, 1 GW under Inter-state transmission scheme (ISTS) across various states and investments in Green Energy Corridor project. During the Union Budget 2016, the coal cess was doubled to Rs. 400/tonne, thereby, creating the resources to achieve the 175 GW target. The government’s commitment to improve grid infrastructure also reflected in the proposed additional depreciation for the plant and machinery acquired, installed for transmission activity.
Way forward 2017
RE costs are steadily reducing and will soon reach grid parity across PV cells, solar installations, wind energy generation and storage solutions. Additionally, India’s increased energy requirement, the government’s vision of energy security and commitment to reducing carbon emission, translates into enhanced RE demand.
In 2017, proactive policy recommendations should be ensured so that momentum is maintained:
- Long-term policy predictability: Accelerated Depreciation (AD) and Generation Based Incentive (GBI) should continue till 2022
- Banks and financial Institutions should earmark at least 20% finance for RE projects and provide finance for longer period of 20-25 years.
- SMEs should be supported by 5% interest rebate for harnessing RE for captive requirement
- Improve availability of grid and land infrastructure at State level
- GST for RE pegged at zero rate, since electricity is not subsumed under the proposed GST framework
- Provide manufacturing with support to facilitate innovative financing, increase capabilities, facilitate job creation and meet the ‘Make in India’ initiative. Wind manufacturing capacities are created in India, while Solar is imported from China. Incentives for local manufacturing and job creation in the sector should be considered.
- Implement the EXIM practices of China and USA that gives a line of credit of $1 billion and $2 billion respectively, in case of exports by local companies. In India, EXIM offering is limited to $200 million per year. RBI should remove the 10% limit imposed to one company or infuse $5 billion fresh equity to EXIM.
Technology to lead the way in 2017:
In 2017, innovation and technology will continue to be the catalyst for the wind industry growth. The wind-solar hybrid, digitization of services, smart-grids, innovation in tower and blade technologies such as Suzlon’s 120m hybrid tower, Suzlon S111 wind turbines are aimed towards making unviable wind sites available, ensuring better yield and increasing the capacity utilization factor. These disruptive technologies will continue to bring down the levelised cost of energy (LCOE).
R&D efforts in the wind sector is also focused on developing longer, light-weight blades made of carbon and other reinforced composites. By increasing wind catchment area, these blades can reduce weight and improve economies of scale, making energy harnessing more efficient. The R&D progress will enable India to become the global hub for RE technology in manufacturing.
Wind in India, has the experience, technology and reach to enable the transition from fossil fuel dominated energy architecture. We need to harness the 300 GW wind energy potential in India and seize this opportunity NOW to ensure sustainable, affordable and reliable energy for all.
As appeared in Business World, January 2017 issue