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India's policy and technology development
While Suzlon and many of its competitors in India provide full turnkey solutions through their domestic production centres, solar energy too is attaining sophisticated levels, with research being given special focus by the New and Renewable Energy Ministry. 36 R&D projects in solar thermal and PV technologies are under implementation, and a Centre for Solar Thermal Research has been set up in the arid state of Rajasthan. Among the innovations yielded is that of a 30 tonne solar air conditioning system using concentrating parabolic troughs and triple effect vapour absorption. It is a stand-alone diurnal system that can take care of intermittent clouds through small storage.
India's generally high temperatures render thin-film technologies like amorphous silicon, copper indium gallium (di)selenide (CiGS) and cadmium telluride (CdTe) more suitable than crystalline silicon-based solar PV technologies.
The country has also produced space grade solar panels. These were manufactured by India's largest public sector engineering firm, Bharat Heavy Electricals Ltd (BHEL), and deployed on the GSAT-8 (geo-stationary satellite) of the state-owned Indian Space Research Organisation (ISRO). Each of the four 5 m2 panels comprises multi-junction solar cells in series and parallel combinations, yielding a cumulative capacity of 4.5 kW.
So far, BHEL has supplied 51 such panels to ISRO and these are used to charge the batteries and provide electricity for various systems in the satellites.
Ashwin Gambhir, Senior Research Associate at Pune-based Prayas energy consultancy, says the establishment of renewable energy capacity in India has been helped by incentives such as the mandated Renewable Purchase Obligation (RPO) for each utility, captive plant and open access consumers, coupled with feed-in tariffs (FiTs). Accelerated Depreciation (AD) and Renewable Energy Certificates (RECs) have been other enabling regulatory instruments.
The AD benefit for wind power, however, lapsed on 31 March and there is a fear that this may lead to a fall in capacity additions for 2012. However, with independent power producers (IPPs) slowly gaining a foothold in the Indian market, the wind industry will see a revamp in the next two years. From 1 April this year, wind farms can claim only the standard 15% depreciation of the cost of equipment, down from 80% previously. BNEF forecasts a consequent decline in demand for wind turbines this year by almost 400 MW, or about US$540m of orders.
The tax break drove 70% of installations last year, according to MNRE, which is lobbying the Finance Ministry to reinstate the incentive introduced in 2009. Its revocation may hit Suzlon particularly severely, the wind turbine major currently beset with the challenge of repaying its Rs30,000m (US$600m) debt between June and October. The company nonetheless hopes to meet its obligations through an increasing order inflow, recovery of dues, and by selling non-core assets, comprising wind farms and land.
The Government also grants income-tax exemption on all earnings generated from a power project for any single 10-year period during the first 15 years of the project's life. IPPs, which set up units to sell electricity to state distribution companies, can avail of generation-based incentives (GBIs) that give them a benefit of Rs0.50 (US$0.0001) for every unit of electricity. The introduction of GBIs in 2009 was aimed at attracting large IPPs and foreign direct investors to the wind power sector.
Solar energy generation is also incentivised. JNNSM, for instance, subsidises standalone solar PV and CSP systems as a combination of 30% subsidy and/or a soft loan bearing 5% interest. Power producers in the special category states of the North-East, Himachal Pradesh and Uttarakhand can avail of a 90% capital subsidy. Innovative applications of solar systems can, in fact, secure subsidies that represent 100% of the real cost.
Kameswara Rao, PricewaterhouseCoopers’ Hyderabad-based Executive Director and India Leader for Energy, Utilities & Mining, says assessing wind resources is more complex and it can take over two years to assess the best possible sites for wind power. As regards the likelihood of some to foray into solar power only to benefit from the incentives for pecuniary gains, he believes the incentives are not that attractive, given the high risks and costly finance. “In fact, some projects are more of a CSR (corporate social responsibility) or pilot project format rather than purely commercial.”
In the Indian context, land acquisition and consents can prove cumbersome for setting up projects, says Rao. Transmission too is often a hurdle, as existing transmission lines may not measure up to new projects sanctioned. Besides, while there is a surfeit of secondary data – from meteorological offices and satellite studies – there is very limited primary data. “This can help [us to] perform high level analysis but we need correlation with the actual ground-level data,” notes Rao. “This is now happening with the installation of 50 measuring stations.”
Prayas's Gambhir says investments in India have averaged Rs50-60m/MW (US$1-1.2m/MW) for wind power, while they have been around Rs100m/MW (US$2m/MW) for solar. “Wind power is far more prevalent in India than solar power,” he points out. “In 2011, it was nearly 7 times that of solar.” He adds that issues of fluctuation and cyclical variations that affect on-grid solar and wind power generation are manageable with good planning and forecasting. EU countries have far higher penetration of wind power and are able to manage it well, he says.
Repowering is another segment of wind power that holds out much promise in India. Gamesa Wind Turbines Private Ltd, a wholly owned subsidiary of Spain's Gamesa Corporación Tecnológica SA, sees market potential of over US$3.8bn in repowering (see interview opposite). Gamesa, Suzlon, Vestas and Kenersys are among those companies upgrading ageing turbines in Indian wind farms.
GE and Siemens are other overseas entrants to India's renewable energy market, but have a marginal presence. Siemens India, however, has aggressive plans for the wind sector. Its Managing Director Armin Bruck says his company is in the process of setting up a factory for wind turbines with capacities of up to 2.3 MW. The Rs5bn (US$100m) facility will be located in Vadodara, in the industrialised state of Gujarat, and will commence production in 2013. “It will have an annual capacity of 250 MW, which will be scaled up to 500 MW by 2015 to meet market demand,” he says.
Renewable energy is destined to take its place alongside coal and gas in India and penetrate ever deeper into the country. Its unexploited resource availability has the potential to sustain its growth for years to come. After all, the nation's – and its 1.2 billion population's – energy security depends on it.
About: Sarosh Bana is India correspondent for Renewable Energy Focus magazine.