Renewable energy in India: status and future prospects

Introduction
India is a developing and fast-growing large economy and faces a great challenge to meet its energy needs in a responsible and sustainable manner. India's task is to provide energy to over 600,000 human settlements, spread over 300,000 square km of territory, with a population of over one billion which is still growing, but expected to stabilise at around 1.6 billion during the next 40 years. The total primary energy supply in India has grown at a compound rate of around 3.4 per cent since independence to reach 537.7Mtoe (million tonnes of oil equivalent) in the year 2005 (IEA 2007). While commercial primary energy grew at 5.3 per cent over the period, non-commercial energy grew at only 1.6 per cent, which is a reflection of industrialisation. As a result, the share of commercial energy grew from 28 per cent in 1950 to around 70 per cent in 2004 with an associated decline of non-commercial energy.
In 2005, India accounted for 4.7 per cent of the world's primary energy supply. Per capita energy consumption was just 27 per cent of the world average at slightly over 500kg oil equivalent.
Electric power
India accounted for 3.1 per cent of the world's electricity consumption in 2005 with an installed capacity of 135,780 MW as of September 2007. Of this, 87,200 MW is accounted for by thermal power plants, 34,200 MW by large hydro plants, 4,100 MW by nuclear, and the balance from renewable sources. The consumption of electricity in India rose from 4,157 GWh in 1950 to 38,6134 GWh in 2004/05. The per capita consumption was 612 kWh in 2004/05 as against 329 kWh in 1990 (CEA). Despite the significant growth in electricity generation, shortage of power continues to exist primarily due to the growth in power demand outstripping the growth in generation and generating capacity addition. In May 2007, the country experienced an estimated eight per cent energy shortage and 12.3 per cent shortage of peaking power. Even so, the 2001 census recorded 12 .5 per cent of urban households and 56.5 per cent of rural households as still unelectrified.
Modern energy provision
One of India's major challenges is to provide a large proportion of the country's population with access to modern energy sources. Around 86 per cent of rural households and more than 20 per cent of urban households still rely primarily on traditional fuels, such as firewood, wood chips or dung cakes, to meet their cooking needs. The use of traditional fuels can cause health problems arising from indoor air pollution. Only five per cent and 2.7 per cent of rural households use LPG and kerosene respectively as a primary cooking fuel whereas 44 per cent and 22 per cent of urban households uses LPG and kerosene respectively. With low standards of living, ie below the per-person-a-day International Poverty Line of US$2, at Purchasing Power Parity (PPP) rates of about 75 per cent population, the task of providing modern energy services becomes severely compounded. This has resulted in low levels of per capita energy and electricity consumption on account of low levels of purchasing power.
Projections made by the Integrated Energy Policy Committee of the Planning Commission have estimated that in order to meet the projected GDP growth of eight per cent per annum by 2031-2032, the demand for primary energy will increase to 1,836Mtoe representing almost a four fold increase since 2003-04. Commercial energy requirements would also be around 1,651Mtoe, which is an approximate five fold increase since the year 2003-04.
Renewable energy
India intends to provide a reliable energy supply through a diverse and sustainable fuel mix that addresses major national drivers. These include security concerns, commercial exploitation of renewable power potential, eradication of energy poverty, ensuring availability and affordability of energy supply and preparing the nation for imminent energy transition.
The country has an estimated renewable energy potential of around 85,000 MW from commercially exploitable sources: Wind, 45,000 MW; small hydro, 15,000 MW and biomass/bioenergy, 25,000 MW. In addition, India has the potential to generate 35 MW per square km using solar photovoltaic and solar thermal energy.
Grid-interactive renewable power
By March 2007, renewable electricity, excluding hydro above 25 MW installed capacity, has contributed 10,243 MW representing 7.7 per cent of total electricity installed capacity. There has been phenomenal progress in wind power and, with an installed capacity of over 7,100 MW, India occupies the fourth position globally.
Decentralised and stand alone renewable electricity systems
Over 3,000 remote and inaccessible villages and hamlets have been provided with basic electricity services through distributed renewable power systems. In addition, over 75 MW biomass based gasification systems in the capacity range of 10-100 kW are in use for small scale industrial applications and electrification purposes. Finally, over 1.3 million solar home lighting systems, including lanterns and street lights have been set up in different parts of the country.
Heat energy for cooking purposes
Since the 1970s, around 3.9 million family-type biogas plants have been set up to provide clean cooking energy options in rural areas. Biogas based cooking in rural areas has made cooking a pleasure with associated social and environmental benefits including zero indoor pollution.
Process heat for domestic, industrial and commerical purposes
Use of solar thermal systems has started gaining momentum, with a solar collector area of 1.9 million sq metres already installed to meet these needs.
Liquid biofuels for transport applications
The large scale development of biofuels, including straight vegetable oil (SVO), biodiesel and bioethanol is still in its infancy. In 2004 around 0.1Mtoe ethanol was used for blending with petrol. Biodiesel use is still negligible. However, a policy framework for blending five per cent ethanol with petrol and the development of a biodiesel programme, based on non-edible oil, has been developed.
Renewable outlook
The Integrated Energy Policy Report of the Planning Commission of India has observed that the contribution of modern renewables to India's energy mix by 2031-32, excluding large hydro, would be around five-six per cent. However, our estimates indicate that by 2032, renewable power capacity, excluding large hydro could contribute up to 10 per cent of the total electricity generation in the country. About 25,000 remote villages could be provided with basic electricity services through renewable and seven per cent of the rural population would meet its cooking energy needs through biogas and other modern renewable energy systems. With focused biofuel programme, around seven to 10 per cent of oil needs could be met through biofuels. While this figure appears small, the distributed nature of renewables can provide many socioeconomic benefits. Further, its impact in abating greenhouse gas emissions would be significant. Widespread deployment of renewable systems would also create significant employment potential for unskilled and semi-skilled workers.
Regulatory framework
India has been pursuing a three-fold strategy for the promotion of renewables:
Providing budgetary support for research, development and demonstration of technologies.
Facilitating institutional finance from various financial institutions.
Promoting private investment through fiscal incentives, tax holidays, depreciation allowance and remunerative returns for power fed into the grid.
India's renewable energy programme is primarily private sector driven and offers significant investment and business opportunities. A large domestic manufacturing base has been established in the country for renewable energy systems and products. The annual turnover of the renewable energy industry, including the power generating technologies for wind and other sources, has reached a level of over US$10 billion. Companies investing in these technologies are eligible for fiscal incentives, tax holidays, depreciation allowance and remunerative returns for power fed into the grid. Further, the Government is encouraging foreign investors to set up renewable power projects on a ‘build, own and operate' basis with 100 per cent foreign direct investment.
The most important legislative development which has stimulated the recent growth in renewable power is the Electricity Act of 2003. The Act recognises the role of renewable energy technologies for supplying power to the utility grid as well as in stand alone systems. The Act also has several provisions favourable for renewable power, including rural electrification. Its most important feature, however, is its empowerment of the State Electricity Regulatory Commissions (SERCs) to promote renewable energy and to specify a percentage of the total consumption of electricity in the area of a distribution licence that will be purchased from renewable energy sources. This is considered a major boost for renewable energy promotion in India.
Renewable energy and climate change
India's first National Communication (2004) reveals that the energy sector accounts for around 61 per cent of total national emissions. For fossil fuels, coal combustion had a dominant share of emissions, amounting to around 64 per cent of all energy emissions. With regard to India's emissions trajectory, the Integrated Energy Policy Report of the Planning Commission has observed that "Since GHG emissions are directly linked to economic activity, India's economic growth will necessarily involve increases in GHG emissions from the current extremely low levels. Any constraints on the emissions of GHG by India, whether direct, by way of emissions targets, or indirect, will reduce growth rates, and impair pollution abatement efforts."
Due to its vast market potential for renewable energy projects, and a relatively well developed industrial, financing and business infrastructure, India is perceived as an excellent country for developing Clean Development Mechanism (CDM) projects. As such, India has emerged as one of the most favoured destinations for CDM projects globally, with renewable energy projects having the major share. National renewable energy plans offer ample opportunity for CDM projects and technological innovations, such as biogas for transport application, offer new areas for project development.
Technology concerns
The feasibility of a larger application of renewable energy, to that of the present assessments, would depend on how rapidly costs decline and efficiencies increase. As a result, research and technology development have been accorded high priority in the national renewable energy programme and mission mode research has been planned for developing solar, bioenergy and hydrogen technologies. India encourages international cooperation in renewable energy R&D, through well defined projects with proper division of labour and responsibilities for specific tasks with equitable financial burden and credit sharing arrangements. Bilateral, as well as multilateral, scientific and technological cooperation agreements could provide a framework for such R&D activities.
Technology plays a central role in addressing climate change issues. In this context there is a need to treat renewable energy technologies as a ‘global common' in the medium term. To begin with these technologies could be placed in the public domain and joint research and development projects could be taken up between the institutions of developed and developing countries. Technology transfer costs could be fixed at no-profit level and the expenditure to be incurred in these acquisitions could be made from a global funds under climate change mechanisms.
Conclusion
Indian efforts for promoting renewable energy are in harmony with global concerns. India's strategies focus on:
Working towards lowering the relative price of new and renewable power technologies through a continuous and focused research and development effort.
Improving access to reliable, affordable, economically viable, socially acceptable and environmentally sound energy services and resources.
The approach in India matches the global aim of ushering in a carbon free economy; an economy based on a fuel mix mainly provided by the green or renewable energy technologies.
For India, new and renewable energy development and deployment is of great importance from the point of view of long term energy supply security, decentralisation of energy supply particularly for the benefit of the rural population, environmental benefits and sustainability. In this context, the Indian renewable energy programme is a goal-oriented effort to meet the country's energy requirement in an environmentally sound way.
Author
Presently, Secretary to the Government of India since February 2006, Shri Subramanian was a commerce graduate of the University of Madras and a qualified banker who started his career as the Sub-Divisional Magistrate at Kalna and Barrackpore in the State of West Bengal. He moved to the Government of India in 1983 as Deputy Secretary, Department of Expenditure and was a Director in the Department of Economic Affairs during 1985-89. In 1990 he went on a Commonwealth assignment as Adviser on Loan and Grant Management to the Government of Mozambique. On his return to West Bengal, he was Power Secretary and Labour Secretary in the State Government.
Organisation
The Ministry of New and Renewable Energy (MNRE) is the nodal Ministry of the Government of India at the Federal level for all matters relating to new and renewable energy. The Ministry has been facilitating the implementation of broad spectrum programmes including harnessing renewable power, renewable energy to rural areas for lighting, cooking and motive power, use of renewable energy in urban, industrial and commercial applications and development of alternate fuels and applications. In addition, it supports research, design and development of new and renewable energy technologies, products and services.
Enquiries
Ministry of New and Renewable EnergyBlock-14, CGO ComplexLodhi Road, New Delhi-110 003India