Utilities obliged to buy renewables -- India aims for 6% by 2012

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Through an obligation on utilities to buy a fixed quota of green power, increased subsides, a carbon tax and remote electrification, India is aiming to generate 6% of its energy from renewables by 2012 -- 6000 MW -- from wind energy, 3500 MW from biogas, and the rest from small hydro, waste, and solar. In 1999, 1700 MW was tapped from renewables in India -- about 1.7% of the total power generation. Awaiting cabinet approval, the new renewable energy policy proposal was announced last month by the Ministry of Non Conventional Energy Sources (MNES).

"This is only a broad framework. The success will lie in its implementation by the states," stresses N.N. Mookerjee of MNES. Once the policy is approved by the cabinet, MNES will make an action plan for and time frame for implementation, he says.

Mookerjee explains that MNES will mandate utilities to buy a minimum percentage of electricity generation from renewables -- although details must still be worked out. The government's new Central Electricity Regulatory Commission (CERC) -- which is overseeing deregulation of the power market (Windpower Monthly, July 1999) -- is counted upon to enforce the mandate, he adds. A dialogue with CERC has already begun.

In addition, the policy has called for more financial support for research and development in renewables -- today the sector receives less than 1% of total energy funding. A special tax has been recommended on coal and oil that will generate $1.47 billion for renewables development, Mookerjee says.

Liberalised approach

The new policy attempts to tackle head-on the factors that have prohibited the penetration of renewables into the Indian power market, including high initial costs, low reliability, price distortions in the conventional energy sector, absence of state policies and inadequate transmission facilities. "The contexts within which the policy has been prepared are a liberalised market environment, an emerging regulated power sector and the need for grid connectivity," according to Ajit Gupta, advisor to MNES.

Some 70% of India's rural households do not have electricity, and 18,000 villages have a dim chance of ever being connected to the grid. The new policy aims for a quarter of these to be given wind co-generation stand-alone systems.

MNES -- which will change its name to Ministry of Renewable Energy (MORE) -- also hopes to aid exports and market development through initiatives to be announced in the next few months. "For renewable energy companies to realise economies of scale, they must have access to a higher domestic market and capture a share of the international market," says the minister for non-conventional energy sources, M. Kannappan.

Many of the details have yet to be worked out, but MNES hopes to level the playing field for renewables in India in a number of other ways, such as moving towards performance-based tariffs and interest rate rebates and removing the sales tax for renewable energy.

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