Wednesday, September 28, 2011

India targets 72GW of renewable energy by 2022- invites international investors


Union Minister of New and Renewable Energy Dr. Farooq Abdullah has urged the international investor community to invest in the Indian Renewable Energy sector. He was delivering the closing plenary address at the US-India Economic Opportunities and Synergies Summit in Chicago organized by the Executives’ Club of Chicago, the Chicago Council on Global Affairs, and the FICCI. Dr. Abdullah said that the recent estimates by the Lawrence-Berkley National laboratory indicate that a potential of over 600 GW electric power capacity exists in India from wind energy alone. He said that in addition, the solar photovoltaic and solar thermal energy has the potential to generate around 50 MW per square km. of area while small hydro and Biomass could add another 40 GW capacity.
Highlighting that India today stands among the top five countries of the world in terms of renewable energy capacity, Dr. Abdullah said that India has an installed base of over 20 GW, which is around 11 per cent of India’s total power generation capacity and contributes over 6 per cent to the electricity mix. He said that investment in renewables in India grew by 25% last year and contributed nearly $3.8 billion. The Minister said that this is just the beginning as the National Action Plan on Climate Change mandates an increase in the share of renewable power in the electricity mix to 15 per cent by the year 2020.
Dr. Abdullah informed that India has set up a target of around 72 GW of renewable power including 20 GW solar capacity by 2022. He added that in the one year since the launch of the Jawaharlal Nehru National Solar Mission in January 2010, the Ministry of New and Renewable Energy has allotted 36 projects of 615 MW. This has helped in reducing the average tariff by about 30%. He said that besides this over 75 small projects of 1-2 MW each have been allotted for installation at the tail ends of the grid. Dr. Abdullah shared that the Batch-I projects have successfully reported arrangement of funds and that the commissioning of many of these projects has already begun. He said that 300 MW of grid connected solar power plants are expected before the end of 2012. The Minister added that solar thermal projects of about 500 MW capacities are also expected to be commissioned in 2013. Stating that the Mission has thrown open a large number of investment opportunities, Dr. Abdullah invited the US companies also to invest in manufacturing in India. He said India’s large solar demand will provide the committed market and its excellent manufacturing ecosystem, technical skills and cheap labour will help make manufacturing profitable and successful.
On the policy front, Dr. Abdullah said that the guidelines for selection of another 350 MW capacity of PV projects have been announced and it has been decided to increase the size of individual projects from 5 MW to a maximum of 20 MW per site. He said a company is allowed to bid for a maximum of 50 MW capacity in this batch and the Government will continue to directly purchase solar power from the project developers. He said an even more ambitious Phase –II of the Mission is being planned. Dr. Abdullah added that the National Tariff Policy to introduce solar specific renewable purchase obligations has been amended starting with 0.25% in the first phase of the Mission and leading to 3% by 2022. He said the RPO mechanism alone is expected to create a requirement of at least 30,000 MW of solar power by 2022. The Minister said that a system of tradeable renewable energy certificates has been initiated so that areas where surplus power is available can help fulfill the RPO requirements of areas where solar power is either difficult or more expensive to generate. He lauded the efforts of the State governments in India saying that they have not only facilitated the processes of the National Solar Mission but have also come out with their own supportive policies. The Minister said that the concept of solar parks as a major activity in Phase II of the Mission is being examined and the entire country will be mapped with the state of the art solar radiation measuring facilities.
Regarding wind energy, Dr. Abdullah said that with over 15 GW installed capacity, India competes globally in manufacturing and deployment and occupies the fifth position in the world. He said an attractive feed-in tariff, supportive regulatory regime, fiscal and promotional incentives provide a strong foundation for the growth of the sector. He added that the latest decision of the Government of India to incentivize generation of power by a generation based incentive will help create a level playing field between foreign and domestic investors and attract more investments in this sector.
Dr. Abdullah said that India’s surplus biomass material is estimated to be about 150 million tones which could potentially be used to generate about 16 GW of power. He said India is working towards a National Bio-energy Mission which will help device a policy and regulatory environment to provide a predictable incentive structure for rapid and large-scale capital investment in biomass energy applications and encourage development of rural enterprises for project development and sustainable operation of bioenergy systems.
On the challenges faced by the renewable energy sector, the Minister said that the main issue is to reduce the per-unit cost of renewable energy. He said a number of research projects at academic and research institutions have been sanctioned to address this issue. He said the renewable energy scenario in India is buoyant and promising and in the next year alone, India plans to add over 3 GW of renewable energy capacity with an investment opportunity of over US $ 6 billion. Dr. Abdullah added that to meet the 15% renewable targets by 2020 as espoused in the National Action Plan, an additional 50 GW of Renewable Energy based capacity is required with capital investments of around US $100 Billion. He said an investment opportunity of over 2 billion US $ is conservatively estimated in the rural clean energy sector alone. The Minister pointed out that a recent report by Ernst & Young in May 2011 ranked India as the 3rd best investment destination in Renewable Energy sector, next only to China and the USA and called upon the entrepreneurs and stakeholders to join together in this effort.

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