Spearheading the country’s neo-green revolution until recently, as secretary, Ministry of New and Renewable Energy, Upendra Tripathy has successfully led the design and development of renewable energy policies during his tenure. At the recently held Wind Power in India conference, organised by Renewable Watch, Tripathy talked about the renewable energy sector, its challenges, solutions and the achievability of the 2022 targets. Following are the key highlights of his address…
The wind energy segment in our country is akin to the philosophical blank canvas, the perception and development of which is specific to each eye. Undoubtedly, there are challenges that plague the industry; varied feed-in tariffs being one. I believe, the wind industry must articulate these issues to the policymakers. The segment should borrow from the prime minister’s rule of seven by seven by seven to provide an insightful yet precise deck of challenges. Also, one must provide three solutions for each challenge.
As the former secretary, I found the wind power segment to be highly organised. During the time of reintroduction of accelerated depreciation (AD) benefit, this industry was the most helpful as complete statistics were available. Having said that, we should realise that we are at a critical stage at the moment as 60,000 MW of wind power installation is to be achieved; a record capacity addition of over 3,300 MW was witnessed in the previous year; AD was reintroduced; and the generation-based incentive (GBI) policy is due for renewal in end-March 2017. The industry stakeholders should ensure that positive policies continue, for which they need to reach out to the policymakers.
I am extremely optimistic about the country’s renewable energy targets set for 2022. When the 175 GW target was announced, including 100 GW of capacity installation from solar, we were asked to assess its feasibility. It seemed like a particularly easy job, given that the country has 3 million hectares of wasteland and 200,000 square km of barren desert land in Rajasthan. The prices were constantly falling and that made us even more optimistic. However, we later discovered the challenges as it is not easy to take a quantum leap in the solar power target from 20 GW (declared earlier) to 100 GW, with the rest of the parameters remaining constant. One simple solution could be to install 1 MW solar power plants near each of the 66,000 substations available in the country. That would give 66,000 MW in a distributed manner, open the market for small and medium enterprises as well as be socially beneficial for the substation area. Also, we have the solar parks to augment capacity additions.
The wind industry will face the biggest challenge from solar. There are, however, lessons to be learnt from solar that can be applied to the development of wind energy in the country. A case in point is Chile’s renewable industry. When the targets for Chile were declared, policymakers made it clear that they were resource-agnostic when it came to achieving the targets. However, in India, we have solar and non-solar renewable purchase obligations (RPO), which is likely to blur the lines dividing the two. It will be interesting to see how the wind sector competes with solar in this situation. Certain solutions and measures will have to be taken by the segment to be able to sustain and not lag behind in such a competitive environment.
Fortunately, the world is increasingly moving into a pro-renewable phase due to environmental, social and financial reasons. In 2015, the largest investment to the tune of $354 billion was in the global renewable energy sector. Banks have stopped financing thermal power projects and are now going green with renewable energy projects. All this translates into a favourable climate for the sector globally. Of the 189 countries that have submitted their intended nationally determined contributions (INDCs), 147 have mentioned the development of their renewable energy sources.
Putting together the renewable energy targets of all countries in the world, the financing required will be to the tune of $5,000 trillion. The Green Climate Fund has only about $100 billion. The World Bank, Asian Development Bank, New Development Bank, Asian Infrastructure Investment Bank and many other such multilateral banks are increasingly under pressure to divert 15 per cent of their credit exposure towards renewables, from where the money will flow into the coffers of the wind segment. The World Bank has pledged a $300 billion macro-level fund to derisk projects, whether solar or wind, through credit investment mechanisms and other innovative instruments for encouraging banks to fund the projects.
The wind power segment in India must collectively put a think tank in place and look at classical challenges such as capital and land. For capital, there will be an increasing influx of money into the global renewable energy market. In India, banks undertook the responsibility at RE-Invest 2015 to fund 77,000 MW of projects in the country, essentially translating into a domestic funding of about $77,000 million in the sector including wind. The challenge for wind here is to ensure that the inflow of capital is cheaper, which can be done through wind bonds raised either in other countries or masala/wind bonds raised in India till the capital cost reduces. Solar is getting significant amount of funding — the World Bank has given $1 billion and KfW has promised Euro 1 billion for the rooftop sector. It must be seen that such funds find their way to the wind sector as well, which will require the industry to not only be active but also intellectually proactive. For capital issues, AD is a pivotal
factor. When it is removed, the capacity addition falls, whereas when reintroduced, we have record additions as in the past year. This nature of the policy along with other challenges must be clearly communicated to the policymakers. The social and environmental benefits also must not be forgotten and these should further encourage the industry to smoothen any regulatory and policy-based wrinkles.
As far as land issues are concerned, we could have a ”land bank” for the development of 302 GW of wind power potential, of which only about 10 per cent has been realised so far. The land bank would be in the form of a transparent online database, giving specific details about the suitable land available for wind projects. This will help financiers, technology professionals and developers enable reduction in transaction costs and also give a clear roadmap for the growth of the industry. Increasingly, states will demand technology-agnostic RPOs and renewable energy targets, irrespective of the source of energy. In that context, land and capital availability will play crucial roles in preparing the wind industry.
There is an acute dearth of skilled labour for the erection, and operations and management of new wind projects as the technology becomes increasingly complex. Innovation in manufacturing is essential to better harness the wind potential as well as to create export-oriented products for exploiting the international markets. The industry should partner with the academia of the country for better research and develop the best possible technology solutions like bladeless windmills that work on vibration and are being seen in the global space.
India is unique in the sense that it is the only country that has increased carbon tax from Rs 50 per tonne of coal to Rs 400, even as most countries usually stay away from the subject, given its political sensitivity. Most of the carbon tax finds its way into the development of renewable energy. The Ministry of New and Renewable Energy budget that was Rs 150 million in 2014-15 is now Rs 900 million, most of which comes from carbon tax.
The wind power segment has to become more competitive to achieve its targets. The industry feels that the phasing out of AD and GBI benefits will reduce capacity additions as seen before. However, this time, competitive bidding has been introduced, which will offset the former’s effects. The industry must also look at a top-down approach for achieving the 60 GW target and trace its way back to the present day to find ways of achieving it instead of going bottom up from whatever is available.
Upendra Tripathy is Secretary, Ministry of New and Renewable Energy.