"Even conventional sources of energy initially required government support"

Rakesh Bakshi, managing director, Vestas RRB India Limited, an Indo-Danish joint venture manufacturing wind electric  generators, talks to Kushal Pal Singh Yadav on India's renewable energy sector and the constraints to its growth

 
Last Updated: Saturday 04 July 2015

Where do our renewables stand and how was the market earlier?
With its wide network and resource availability, India is currently well-placed. Wind energy has emerged as the best option for grid-connected power. The private sector accounts for almost 97 per cent of the total installed wind power capacity of more than 3,600 mw . Globally as well, wind is the fastest growing among renewable energy (re) sources and has an installed capacity of over 45,000 megawatts (mw)in 50 countries. More than 60,000 wind turbines power 14 million households or 35 million people.

There is a lot of propaganda that renewables are dependent on subsidies and not very cost-effective?
Fully functional independent markets for re technologies are a myth. Even conventional sources of energy initially required government support and enjoyed subtle subsidies like investments in ports, railroads, heavy industry and other public sector infrastructure. Similarly, government support to re will be needed until it can grow to better cost competitiveness.

The industry's installed capacity in 1994-1995 was about 350 mw. With direct and indirect tax concessions, the wind-generated electricity sector grew rapidly between 1995 and 1997. By the end of 1997, India achieved an installed capacity of 900 mw. But once fiscal concessions were scaled down, the growth rate came down sharply. Realising this, the government gave new incentives and installed capacity grew back to 120 mw in 1999-2000 and was over 600 mw capacity in 2003-2004. Still, given our wind power potential of 45,000 mw, this growth rate is not very satisfactory.

What are the main policy shortfalls?
Policy initiatives have tended to come in spurts. Also, power is a concurrent subject; states and the Centre have to work in tandem. Central policies have had limited implementation at the state level and even where re policies have been announced, there have been delays in their execution. Wind power installation is especially slow in states where state electricity boards -- that have set up coal or liquid fuel-based power projects -- may have to back down their own plans to accommodate cheaper wind generation. Successive state governments also change things. All this has created an unpredictable business climate and shaken investor confidence in India's re sector.

Countries like Germany began their promotional framework for renewables after we did, but the RE sector there has grown by leaps and bounds. Is India's slow growth in this sector due to lack of finances or of policy?
In India, there is a general lack of awareness about the benefits of re technologies, especially for power generation. Without this awareness being created among all stakeholders, it's difficult to introduce aggressive approaches like the feed-in-tariff system adopted by Germany. Lack in growth here is not a technology or resources problem, but more due to the lack of a national re policy. Even China has overtaken us in this aspect. Such a policy would ensure a structured and accelerated growth of this vital sector.

What changes are you looking at?
Like I said, we urgently require a national re policy or legislation. States must also simplify 'no objection certificate' procedures for installing wind power projects and expedite sanctions. The private sector is actively involved in this area, but dependent on state government agencies for transmission and distribution. These agencies need to provide better evacuation facilities. Banking and wheeling (energy transport) should also be allowed at more reasonable rates, especially as re- based power plants do not cause environmental degradation. Different states levy hugely different wheeling charges -- not a healthy trend for the re sector.

Any specific support for the industry?
Fiscal concessions as incentives to industry will bring down costs and help faster growth of power production from wind energy.

The Centre could set up an re corporation to buy power from re producers. Areas with good wind potential can be declared national resources and producers be paid a green subsidy for energy generated by them.

Will the new Electricity Act 2003 help?
It may have removed transmission or distribution bottlenecks, but there isn't much impetus for the growth of wind electric generation -- or for that matter generation from non-conventional energy sources.

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