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Alternative Energy Sector in India

By scholfield Feb 23, 2009 5160 Words
India's energy sector is currently confronted with multiple challenges, which stem not only from supply-side constraints but also from demand pressures imposed by a buoyant economy and a growing population. As per recent Planning Commission estimates, if economic growth is sustained in the 7-8 per cent range, the energy demand would rise by at least 5.2 per cent annually.In the face of relatively inflexible supply options, the gap between energy requirement and availability can only be expected to widen in the future. This gap raises serious concerns, not only about the country's energy security but also on the sustainability of its economic growth momentum. On a more micro-level, the shortage could lead to rising incidence of power outages and greater import dependency on fossil fuels such as crude oil and coal. Let us first take a look at where we stand in terms of overall investment achievement in the energy sector. The World Bank has estimated the minimal annual investment needed for energy and related infrastructure at about 5 per cent of the GDP. New electricity generating capacity of nearly 700,000 MW would need to be added—at the rate of 140,000 MW per Five Year Plan period. Compare this with the capacity addition of 21,000 mw during the 10th Plan that just ended in 2007. To be able to sustain this level of electricity generation, we would need to import nearly one billion tonne of coal from the current level of less than 100 MT, and we would need to add nuclear capacity of 3,000 MW per year (almost equal to our total current nuclear generating capacity) from 2017 onwards, assuming a ten year gestation period. Imagine the import bills, port capacities required, transport infrastructure needed and of course the international cooperation on the nuclear issue. India is well on the path to extreme vulnerability on the energy front.

On the other hand, India is fairly well endowed with renewable energy sources such as solar, wind and biomass. Exciting research is going on in universities and research labs in the developed world—supported by their governments and industry—to harness such energy sources and bring them to work in a techno-economically efficient manner.

India should take stock of where we are in terms of our knowledge and technological capability as regards renewable energy and related technologies, draw up a strategy for taking carefully selected initiatives to the market at the earliest, prioritise future research and development efforts based on our relative advantage and interest, and allocate sufficient resources to ensure a time bound result. At the same time, we also need to take cognisance of those technologies that will hit the global market prior to our engagement with the research or development process.

The key advantage that renewable energy holds over nuclear is the potential for deploying it on a large scale in a relatively short period of time. Sceptics tend to equate renewable energy to solar energy and dismiss the option as too expensive. While this may be true for the end-user, in the long term solar energy is economically effective. The farmer who uses diesel pumps to irrigate his fields spends Rs 10-12 to generate the equivalent of one unit of electricity - almost the same as the cost of electricity from a solar system. Installing solar roof top systems in urban areas with a net metering system could improve grid performance during normal hours. A well designed programme could see a solar capacity of about 10,000 MW becoming available in the country in less than 5 years.

With a capacity of nearly 8,000 MW, India is already among the top five countries producing electricity using wind energy. The nuclear option is equally important for the country, but would see fruition only in the medium to long term. It is short- sighted to look at the contribution nuclear energy would make in the year 2030- the real potential of this form of energy would only start to emerge then. The key question is that if India needs to add nearly 700,000-800,000MW to its generating capacity by 2030 to support an 8 percent economic growth, then where does the fuel come from?

A key 'alternate' energy source that is still neglected is energy efficiency and demand-side management with which we can achieve 25-30 per cent reduction in demand. No large scale efforts are yet seen to reap the dividends from these measures. India needs clear integrated socioeconomic analysis of the choices available to it, a non-partisan discussion on long term strategy and a clear enunciation of policy that would drive investments - energy and infrastructure - in a desired direction.

Energy Efficiency

To deliver a sustained economic growth rate of 8% to 9% through 2031-32 and to meet life time energy needs of all citizens, India needs to increase its primary energy supply by 3 to 4 times and electricity generation capacity about 6 times. As a result energy service demand growth rates will keep on increasing because of accelerated industrialization, urbanization, and an emerging consumer society. On the demand side, reduction in energy usage and energy efficiency should be stressed upon.

1 Industrial Sector
Awareness campaign is focusing on this sector through the organization of workshops, seminars and holding the sector specific programmes in order to provide platform for the industry to exchange information, best practices on energy conservation and updating of the various innovative energy efficient technologies being employed in the country. Top Management of Industry has been encouraged to declare their commitment by declaring their Energy Management Policy. This would greatly help the energy conservation movement.

2 Commercial Sector

Electricity is used for the lighting as well as for heating & cooling purposes. The issue in the sector will be addressed effectively through print media through insertions on tips to save electricity, organization of small workshops, and demonstration of energy efficient lighting system in the Trade Fairs etc.

3 Agricultural Sector

Campaign to be taken up with the assistance of Agricultural pump set manufacturers and other stakeholders. Advertisement on the tips to save energy in the agriculture sector has been prepared by the Bureau of Energy Efficiency, which is being used in local languages as well.

4 Domestic Sector

Help of print media, school children and lighting equipment manufacturers is being sought in organizing the campaign. Brochures on energy efficient lighting systems and simple tips on how to save electricity are being printed and distributed.

Energy Efficiency and Conservation in School Education
The curriculum of educational institutions, boards, and universities should be prepared to include information on efficient use of energy and its conservation. For example, NCERT has revised 9th standard science book of the NCERT scheme by incorporating text on the energy conservation. Other initiatives like conducting educative programmes can also be taken up to:

• Create awareness amongst children and their parents on energy competitiveness and energy security at the individual level on a smaller scale. • Provide guidance to teachers in order to maximize excellence in energy education process. • Enhance learning of students and sensitize them on key energy issues that will impact their lives. The school education programme could also cover other activities such as promoting practice oriented programmes and projects on energy conservation, arranging competitions among schools on energy conservation, conducting essay and painting competitions for school children, instituting awards and prizes for children. An Enabling Policy Framework with Guidance from Ministry of Finance/Power/CVC is being evolved. This includes possible incentive regime of awarding/ recognizing public sector EE procurement initiatives by MOP/BEE. It will also target up scaling of Standards and Labelling programme to provide unambiguous guide to agencies for EE products. • Easy to use template including pay back periods for EE products, LCCA, etc • Amendment of procurement rules (if necessary) to explicitly mandate EE procurement • IT enabled tools for analysis of costs

• Training and capacity building of procurement officers and maintenance personnel

Single tender bidding process should be enabled for the efficient products for which there may not be many manufacturers – BEE’s labels may be the benchmark for this.

1 Implementation Strategy

• Voluntary initiative by PSUs/Central Procurement Agencies/ Government to demonstrate efficacy. • Incentive mechanisms like awards, etc
• Awareness and education amongst key stakeholders like top management, etc • Develop an action plan for promotion of energy efficiency purchase in India • Procurement process should be made mandatory in favour of 3 star and above for the products for which standards are available • In-house analysis prior to bidding will help to analyze the LCC and decide the costs • Formation of workgroup consisting of representatives from Ministry of Power, Finance, • CVC, C&AG, DGS&D, CPWD, etc under the coordination of BEE to recommend relevant modifications

2 Monitoring and Verification (M&V)

• Creation and dissemination of standard protocols for M&V • Sensitization of key stakeholders like CAG, CVC about the M&V protocols to improve post decision scrutiny for EE procurement • O&M best practices for EE products to leverage lowest economic cost • Voluntary initiative by PSU’s/ Central Procurement

3 Energy Conservation Building Code (ECBC)

ECBC aims at increasing awareness about efficient use of energy and its conservation in new commercial buildings with a connected load of 500kW or more. It defines the norms of energy per square metre of area and takes into consideration the climactic region of the country where the building is located. Norms have been developed to cater to 5 different climactic zones in India – hot and dry, warm and humid, composite, moderate and cold.

It incorporates energy efficiency factors at the design stage itself to reduce long term operating energy costs of the buildings.

If nearly all of the 21.50 million sq. meters of commercial space constructed in India every year conforms to the ECBC, energy consumption can be cut down to around 30-40%. Approximate savings resulting from this would be Rs 1000 crore which is the cost of setting up a 250 MW power plant and over 1.7 billion units of electricity every year!

Introduction to off-grid power

With so many stories emphasising the growth story of a resurgent, emergent India, one may be lose sight of the fact that India is still a developing economy. Being a developing economy there are a lot of areas where significant work needs to be done in order to make the transition to a developed economy. A 2001 Financial Express consensus showed that 519,570 villages still lack electricity. These villages can be hooked into the nearby grid and thus provided electricity. However, this process of linking the villages into the present conventional power grid network has been exorbitantly slow. Moreover, there are about 18,000 villages in remote areas which cannot be connected to any grid network. Therefore these villages need to be electrified through new renewable sources of energy.

Electrification is vital for rural economies. Without rural electrification it will be impossible to have inclusive growth and wealth distribution between the urban and rural areas. One way to achieve this objective is to get these villages connected to the already prevalent vast electricity grid network of the country. However, for a developing nation like India which is often politically instable decentralised renewable source of energy will be far more reliable compared to the conventional grid network. Decentralised electricity will also help to reduce carbon emissions and improve the standard of living. India's Ministry of New and Renewable Energy lays out its plans for rural electrification on its website. It says that the government will promote " optimum mix of both conventional and non-conventional energy," the program's first provision seems to give preference to clean technologies: "Provision of the most cost effective mix of various energy sources and options for meeting, the requirements of sustainable agriculture and rural development by giving due weighages to environmental considerations." This signifies that the government wants to take electricity to the far flung villages of the country, keeping in mind the environmental aspect as well.

In order to accomplish the task of rural electrification the Rajiv Gandhi Grameen Vidutikaran Yojana (RGGVY) was launched in April 2005. The scheme was launched in order to fulfil the promises made under the National Common Minimum programme which promised significant improvement of the rural electricity infrastructure and household electrification in the next 5 years. Specifically the RGGVY program aims to • Electrify all villages how so ever remote may be which has not been electrified

• Electrify all families currently below poverty line free of charge

The Rural Electrification Corporation is supposed to implement this scheme. The central government had agreed to set aside ninety percent of the capital cost as a grant. The technicalities planned include: • Establishment of Rural Electricity Distribution Backbone (REDB)

• Formation of Village Electrification Infrastructure (VEI) • Establishment of Decentralised Distributed Generation where grid supply is infeasible or cost ineffective

We shall be primarily looking at the Decentralised Distributed Generation as applicable in the alternative energy space.

Distributed Generation

Distributed generation consists of installation and operation of modular power generating techniques in collusion with storage and energy management systems. These systems which improve the efficiency of the electricity delivery systems may or may not be connected to the conventional power grid network. A typical distributed generation system which ranges from a kilowatt to a few megawatts can have a variety of technological alternatives to choose from. It can be renewable or non renewable. Also, it can be in a grid or off grid mode.

1 Technological options

The technologies which we can look at are
• small wind turbines (aero-generators)

• biomass gasifiers

• solar thermal and photovoltaic systems and

• small hydro-power plants.

The figure below gives a diagrammatic representation of the available options. [pic]

2 Why distributed generation?

The following are some of the chief reasons as to why distributed generation has assumed such great importance currently. • The distribution network is highly inefficient. Distributed systems can help alleviate this inefficiency

• One can store energy for later consumption

• Less pollution of the environment compared to conventional energy resources

• Only source of power to extremely remote areas within the country where grid network does not exist

• Can reduce losses and improve reliability

3 Distributed generation in India

In India distributed generation primarily has three markets namely: • Large captive power plants commissioned by power hungry industries

• Mini grids for rural and remote area electrification

• Back up to small power generation systems

4 Policy for distributed generation in India

Rural electrification was provided a major thrust by the Electricity Act of 2003 The Act mentions that in addition to grid transmission, the government should also focus upon distributed generation and supply through stand alone conventional and renewable energy systems. It speaks of a complete model where electricity is also distributed through NGOs, local government units and community groups. Moreover, in order to give an impetus to new projects it gives an exemption from licensing obligations to anyone setting up a new project or extending an existing project. The National Electricity policy mentions that by extending the existing transmission lines a Rural Electrification Distribution backbone be set up. In places where it cannot be done, decentralised distributed generation facilities together in sync with local distribution network should be provided. We shall be examining the Wind energy sector in India from this perspective.

5 Present scenario in the Wind energy sector

India is the world's fourth largest wind-power market. The country, with its thousands of miles of coastline, is suited to wind power. Its wind power potential is estimated at 45,000 megawatts (MW) -- about a third of total energy consumption. In lieu of the fact that the country will face a shortage of fossil fuels the government has been providing tax benefits to the wind energy sector for a number of years. This has made India one of the fastest growing markets for wind power.

Presently Tamil Nadu, Maharashtra and Gujarat account for the maximum energy generated from wind power in the country. As can be seen from the table below only nine states generate wind energy of some significance. Given the fact that India boasts of a considerable coastline, the situation looks disheartening. As is evident from the data below most of the coastal states can achieve a lot more in terms of wind power energy generation. However, the most encouraging aspect of the below situation is that the country has seen an annual increase of 20% in wind power generation since 2005. There is a lot more which can be done and India is slowly moving towards it albeit at a slow pace. [pic]

World Scenario

In terms of electricity generated from wind power, USA produces the maximum followed by Germany, Spain and India. China with a total capacity of around 6 GW (giga watts) is at the fifth position. Like in many other sectors, the maximum annual growth is shown by the emerging economies India and China. Infact, some experts are estimating that by 2010, the total installed capacity for wind power generation in China will reach 20 GW and that by 2020 China's installed base of wind power will total 100 GW making it the largest wind power generator in the world.

1 DDG as applicable to Wind power

The wind energy potential is directly proportional to the wind speed. Large wind turbines are used in arrays known as “Windfarms”. As they compete with the conventional sources of energy like coal, gas, oil etc they require huge wind resources. Due to economies of scale it is possible to use these windfarms in off grid uses. However, for individual retail purposes, small wind systems are used. They can be used both as an off grid as well as on grid. Their primary advantage is the fact that they can be used at places where the wind resource is not very strong. However, they are more expensive than their larger versions. The larger versions can sometimes even produce electricity at a cheaper price compared to coal or nuclear plants! For example from generations, windmills are being used for pumping water. Both wind and solar energy have matured greatly over the last few years and have shown their reliability. Now they are the most preferred mode of electricity generation in places where the power grid network does not exist. Combining two different energy producing sources leads to a hybrid system. Wind and solar energy together form such a hybrid system. It is more so as they reinforce each other on a daily and seasonal basis. In windy conditions, the sunshine is less whereas when it is bright and sunny it is unlikely to be windy. Both of them are intermittent resources, so some short term storage facility is required to deliver round the clock power. Back up generators usually serve this purpose. Usually for small loads a solar system is used whereas for a continuous load a hybrid system comprising of solar, wind and a back up generator is used. These are all stand alone systems and are in no way connected to any power grid network. These are all examples of off grid networks actively used in practice. Another major advantage of windmills is that they don’t interfere with transmission signals; often the antennas and the wind turbine share the same tower. Many of the villages are located remotely within India. As a result it is difficult if not out rightly impossible to connect these villages with the existing grid network. Also, this method proves fairly costly. Wind power systems are of considerable help in such cases. They are less expensive to install than grid-extension and less costly to operate than diesel generators. With the backup of a small generator, windmills can solve a lot of the rural electrification problems in India. Without further straining the grid network, it provides a cheap dependable source of energy which is reliable and easy to install. Moreover, it is environment and eco friendly which gives it an added edge. It is less susceptible to external factors of oil price fluctuations or the anticipated stringent climatic regulations.


Roughly 1.3 billion people in rural areas, mainly within developing countries, live without electricity. Rural electrification is therefore an issue that should be high on rural development agendas.

With the assumption of India continuing to grow at an average rate of 8 percent in the future years, the country’s power demand is likely to increase from 120 GW at present to around 400 GW by 2022 [1]. Particular reasons for this would be an increase in manufacturing sector at a rate higher than existing values, growth in residential consumption and rural electrification. This would lead to the emergence of various business models for rural electrification like Electricity Cooperatives and off-grid electrification.



2 Solutions to rural electrification

1 Electricity Cooperatives – a demand side management model Such models have started operating in certain nations of the word [2]. In this model, power in bulk will be sold to rural electricity consumer groups after putting up the distribution infrastructure. Under this program, consumer associations typically in the form of cooperatives will take the responsibility of managing, maintaining, and expanding the rural distribution of electricity. Communities would raise certain proportion of the investment cost for grid extension to their area and rest of the funds would be provided by the government. It is expected that this will reduce costs of distribution and also pilferage and wastage of electricity.

a. Off – grid solutions to rural electrification

Off-grid being a flexible and easy-to-use solution to increase electrification rates in rural areas where, due to their remoteness and low levels of population, the extension of the grid is often economically unfeasible. In addition, residential electricity prices on rural electricity grids require high levels of consumption in order to make electricity supply economically viable.

Decentralized (off-grid) rural electrification is based on the installation of stand alone systems – photovoltaic (PV), wind, small-scale hydropower, biomass – in rural households, or the setting up of electricity distribution mini-grids fed either by renewable or mixed systems.

The power is generated on site, thereby avoiding transmission losses and long distribution chains and satisfying energy demand directly. The standardization and modularity of the technology (for example PV systems) provides a high degree of flexibility to adapt to different locations and environments and at the same time allows the installed technology to be scaled up when demand increases. Furthermore, the simple installation and maintenance combined with minimal running costs facilitate local training and income generation opportunities, which in turn guarantee the sustainability of the system.

Bio Fuel Sources of Power Generation

The success of power sector reform in India will rely in part on groundwater management improvements in the agricultural sector.  Unreliable power supply and subsidized tariff structures lead to excessive water pumping by farmers who tend to pump water based on the power supply made available to them [3].  Over-pumping contributes to higher energy consumption and rapid depletion of the groundwater table.  Together these undermine development and cause higher greenhouse emissions. This situation could be addressed ensuring efficient energy and water co-management through mutually complementing interventions such as biomass-based distributed generation and energy-efficient water management activities Bio fuel would become an important source of power generation in Rural India by 2022. This is so because not only they are easily accessible (they are formed from biological wastes and raw materials), but also their use results in substantial reduction of un-burnt hydrocarbons, carbon monoxide and particulate matters.

1 Power Generation Model

A new model for the biodiesel power generation would develop involving panchayats. The P-4 model: public-private-panchayat-partnership would come into existence. This would involve the local government in identifying village wastelands and common lands for plantation, and set up systems for seed collection and local oil extraction. Production would take place either through contract farming or joint venture farming.

2 Contract Farming

It is a model where the farmer is contracted to plant the contractor’s crop on his land, harvest and deliver to the contractor, a quantum of produce, based upon anticipated yield and contracted acreage at a pre-agreed price.

3 Joint Venture Farming

The joint venture farming is an ideal business structure when an arrangement that is flexible and less formal than either a partnership or corporation is needed. The joint venture farming can be used to test a business relationship. Contract farming and Joint Venture Farming would have certain advantages in its operations. It would reduce load on the central and state level procurement system, increase private sector investment in agriculture, bring about market focus in terms of crops selection by farmers, generate steady source of income at the individual farmer level, promote processing and value addition, flatten as far as possible, any seasonality associated with such employment and promote rural self-reliance in general by pooling locally available resources & expertise to meet new challenges.

In the current scenario, few Indian corporations have started venturing into bio-diesel production by initiating a memorandum of understanding with state governments to establish Jatropha plantations on government wasteland or contract farming with small and medium farmers. Several state governments have announced policies to encourage Jatropha cultivation, setting up bio diesel plants and supply chains in their respective states. New local and foreign collaborations for production of bio-diesel are coming in some states, which could boost the country’s bio-diesel production capacity to 1.0 million tons per annum in next two to three years.

Economics of Bio-Fuel

In India, it is estimated that the cost of Bio-Fuel produced by trans-esterification of oil obtained from Curcas oil-seeds shall be approximately same as that of Petrol-diesel. The bi-products of Bio-fuel from Jatropha seed are the seed oil cake and glycerol which have good commercial value. The seed oil cake is very good compost being rich in plant nutrients. It can also yield biogas which can be used for cooking and the residue will be used as compost. Hence oil cake will fetch good price. Glycerol is produced as a bye product in the trans-esterification of oil. These bye-products shall reduce the cost of Bio-diesel to make it at par with petrol-diesel. The cost components of Bio-fuel are the price of seed, seed collection and oil extraction, oil trans-esterification, transport of seed and oil. As mentioned earlier, cost recovery will be through sale of oil-cake and of glycerol. Taking these elements into account, the price of Bio-diesel has been worked out assuming raw material cost of Rs. 3 per kg and varying prices of by-products. The cost of Bio-fuel varies between Rs. 9.37 per litre to Rs. 16.02 per litre depending upon the price assumed for the oil-cake and glycerol. The use of Bio-diesel is thus economically feasible [4].

Barriers to overcome

One of the key barriers identified in relation to the increased uptake of renewable energy in the current scenario is the lack of mature markets and favourable policy, regulatory and legal frameworks to encourage the development of, and investment in, renewable energy [3]. So promotion of legal and regulatory measures would have to take place to create the enabling environments for the uptake of renewable energy and enhancement in the capacity for emission-reduction efforts. References

[2] [3]

Small Hydel power

Small hydro projects are renewable, non-polluting and environmentally sources of energy. In India, hydro projects are categorized as Micro, Mini and Small hydro projects depending on their capacities. The estimated potential of small hydro power in India is about 15,000 MW[i]. They are used to generate power in remote hilly regions by utilizing the terrain. Being situated in remote regions, it may not be economically feasible to export excess power generated to the grid. Such projects are extremely useful in providing power to remote localities cut off from the grid. Other small hydro projects funded by the State Electricity Boards are mostly grid connected[ii]. They have been developed by identifying locations near the grid which can be used for small power systems.

Thus far about 4250 potential sites have been identified aggregating to a capacity of 10,000 MW. However, so far 466 projects in 29 states aggregating to 1530 MW have been installed and projects amounting to 610 MW are under implementation[iii].

An example implementation can be seen by an NGO called Mallanadu Development Society which set up a community based rural micro hydro project at Mallanadu in Kerala, India[iv]. It was set up with a $ 26,883 contribution from The GEF Small Grants Program in September 1999. The community invested a significant contribution to the project and run the power system. This has given rise to a lot of social responsibility from the community members. They pay their bills on time and are interested in preserving their local forest. The environmental impact of this project has mainly been in the reduction of kerosene and firewood use for heating and lighting. With electrical connections in around 200 houses, there has been a considerable reduction in greenhouse gas emissions. Also, the locals have reduced chopping trees and have begun planting trees to protect the forest to preserve their source of power. Using electricity has also resulted in reduction of respiratory illnesses due to better indoor air quality, better lighting, in some cases a cheaper source of power and a feeling of community empowerment.

An important facet of this project has been the way residents feel ownership in the project because of their investment and their necessities. It has improved their civic sense and ability to collaborate with both their fellow villagers as well as nature.

Small Hydro systems complement solar energy systems. This is because water flow is generally highest in winter when solar energy is at a minimum while solar energy is at a maximum in summers when many small streams dry up[v]. Thus, off-grid solutions like a combination of small hydro systems and solar energy systems form significant business potential for investors and equipment manufacturers. Some of the major equipment manufacturers in this are: Pune based companies Mitcon Ltd and Co –Eff Friction Brands (P) Ltd[vi].

[i] [ii]
[iii] [iv]

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