India: Energy Resources

Extend network

According to the World Coal Institute, India is the sixth largest electricity generating country as well as the sixth largest electricity consumer. Despite this, the electrification rate is only 75% as of 2009. The population estimated to have no access to electricity is 288.8 million. Some 140,000 Indian villages out of 586,000 remain to be electrified and in many of the officially electrified ones, quality of service is such that they do not resemble true electrification. About 625 million people do not have access to modern cooking fuels and traditional fuels still provide 80–90% of the rural energy needs.

Geographic distribution of power generation capacity in India is unevenly dispersed with a mismatch in supply and demand in different regions. In India, the transmission and distribution (T&D) system is a three-tier structure comprising of distribution networks, state grids, and regional grids. The central transmission utility, PowerGrid India, operates approximately 98,368 km of transmission lines at 800/765kV, 400kV, 220kV & 132kV, as well as at over 500kV HVDC. Below are the different regional grids and the states in each of the grids.

Northern region: Delhi, Haryana, Himachal Pradesh, Jammu and Kashmir, Punjab, Rajasthan, Uttarakhand and Uttar Pradesh.

Eastern region: Bihar, Jharkhand, Orissa, Sikkim, and West Bengal.

Western region: Dadra and Nagar Haveli, Daman and Diu, Chhattisgarh, Goa, Gujarat, Madhya Pradesh and Maharashtra.

Southern region: Andhra Pradesh, Karnataka, Kerala, Puducherry and Tamil Nadu.

North-eastern region: Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura.

Energy procedure

The policies and plans are developed on a five-year basis, apart from the annual plans. Each department/ ministry prepares plans, which go as inputs to the ‘Five Year Plan’ prepared by the Planning Commission of India. By 2017, the Indian government is planning to add an extra 30 GW of renewable sources. In its 10th Five Year Plan, the Indian government had set itself a target of adding 3.5 GW of renewable energy sources to the power generation mix. In reality, however, nearly double that figure was achieved. In this period, more than 5.4 GW of wind energy was added to the generation mix, as well as 1.3 GW from other renewable energy sources. The target set for the period from 2008 to 2012 was increased to 14 GW, 10.5 GW of which is to be new wind generation capacity.

The government is also developing a scheme for energy efficiency trading as part of its National Action Plan on Climate Change. Under the proposed scheme of Perform, Achieve, Trade (PAT), specific industries would be required to commit to energy-intensity reductions, and the government will give trading certificates to entities successful in meeting their goals. Penalties for non-compliance are mentioned under the proposed plan, but not mandated.

Ultra Mega Power Projects (UMPP), are a series of ambitious power projects planned by the Government of India. The ultra-mega-power projects, each with a capacity of 4,000 MW or above, are being developed with an aim to bridge the current supply gap. The UMPPs are seen as an expansion of the Mega Power Projects (MPP) that the government undertook in the nineties, but which met with limited success. The Ministry of Power, in association with the Central Electricity Authority and the Power Finance Corporation Ltd., has launched an initiative for the development of coal-based UMPP's in India. These projects will be awarded to developers on the basis of competitive bidding. The Ministry of Power had envisaged setting up nine such projects which would help meet the electricity generation target of 100,000 MW in the 12th Plan period (2012-17).

In the solar energy sector, some large projects have been proposed, and a 35,000 km2 area of the Thar Desert (Rajasthan), has been set aside for solar power projects, sufficient to generate 700 GW to 2100 GW. India is ready to launch its Solar Mission under the National Action Plan on Climate Change, with plans to generate 1000 MW of power by 2013. India is planned to generate 1000 MW of solar power every year by 2013. A complete package has been proposed to propel the power sector into ‘solar reforms’ that could lead to annual production of 20,000 MW by 2020 if phase 1 of the solar mission goes well. The country currently produces less than 5 MW every year. In the first phase, between 2010 and 2013, the government is also proposing to generate 200 MW of off-grid solar power and cover 7 million m2 with solar collectors. By the end of the final phase in 2022, the government hopes to produce 20,000 MW of grid-based solar power, 2000 MW of off-grid solar power and cover 20 million m2 with collectors.

Energy debates

India is setting up a company with initial capital of 20 billion rupees (approximately USD406 million) to build federal solar projects and help the country reach a target of 20GW of solar energy capacity by 2022. The decision to create the company comes at a time when some solar and renewables experts are worrying that due to a shortage of funds and a relative lack of interest by commercial companies, India might miss solar energy targets set under a federal program.

India was planning to launch road shows in the U.S. and Europe in May 2012, to attract investment in renewables, especially the solar energy sector, for the next phase of the solar program, which is scheduled to be launched in the financial year that begins April 1, 2013. The country aims to add 4-7 GW of solar capacity in that phase, which ends in 2017.

Following the largest power system failure in history on July 30-31, 2012, caused by numerous failures in load balancing and detection systems in the Northern grid of the country, led to a number of recommendations to prevent such an event occurring again. These included an immediate audit and review of grid protection schemes and measures, the implementation of islanding schemes for key services and industries, and the strengthening of the inter-state transmission system.

Energy sources

Total Installed Electricity Capacity (2012): 211,766 MW Coal: 57.4% Hydro-electric: 18.6% Renewable Sources: 12.2% Natural Gas: 8.9% Nuclear: 2.3% Oil: 0.6%

Total Primary Energy Supply* (2011): 675,830 ktoe Coal/Peat: 42.3% Hydro: 1.4% Natural Gas: 7.2% Renewable (Geothermal, Solar and Wind): 0.3% Nuclear: 0.7% Oil: 23.6% Biofuel and Waste: 24.5% *Share of TPES excludes energy trade

Total Electricity Generation (Apr 2012 – Jan 2013): 762.6 TWh Thermal: 82.8% Hydro-electric: 13.0% Nuclear: 3.6% Imports: 0.6%

Total Electricity Generation (2009): 899,389 GWh Coal: 68.6% Natural Gas: 12.4% Hydro-electric: 11.9% Oil: 2.9% Nuclear: 2.0% Wind: 2.0% Biofuels: 0.2%

With 1.1 billion inhabitants in 2006, India is the second most populous country in the world and is expected to be the most populous in 2050. It is the world’s fourth highest energy consumer after the USA, China and the Russian Federation. India is also one of the world’s top five GHG emitters in absolute terms. In per capita terms, however, an average Indian citizen uses about 15 times less energy than the average US citizen, produces about 17 times less GHG emissions, and uses about 30 times less electricity.

Renewable energy sources (excluding large hydro) accounted for 12.2% of India's overall power generation capacity in 2012. The MNRE estimates that there is a potential of around 90,000 MW for power generation from different renewable energy sources in the country, including 48,561 MW of wind power, 14,294 MW of small hydro power and 26,367 MW of biomass. A capacity addition of 14,000 MW is targeted during the 11th Plan period that would take the renewable power generating capacity to nearly 25,000 MW by 2012. As of 2012, current installed renewable capacity was 24,503 MW. This momentum is likely to be sustained and it is envisaged that the renewable power capacity in the country will cross 87,000 MW by 2022. Electricity is the largest consumer of primary energy and in 2006, 81% of power was produced from coal. Indian policy makers look favourably at coal, given its high domestic availability and security of coal supplies globally.

In terms of power generated from conventional energy sources in 2009, out of total electricity generation of 899.4 terawatt hours (TWh), thermal power contributed 755.8 TWh (84%), hydro power 106.9 TWh (12%) and nuclear power contributed 18.6 TWh (2%).

Regulatory roles

The CERC has passed regulations to promote growth in the renewable sector, such as the regulation on certificates for generation of RE, the regulation designating the National Load Despatch Centre as the implementing agency, and regulations on renewable energy tariff-determination. The Indian administration has passed laws to promote renewable energy. The National Electricity Policy of 2005 and the Tariff Policy of 2006 promote RE investment by pricing it competitively with conventional energy. The Electricity Act of 2003 requires state electricity boards to facilitate the supply and distribution of RE, along with traditional electricity.

The CERC has notified tariff regulations for the determination of tariffs for RES projects. The regulations are formulated to promote the development of RE projects, to remove ambiguity on project returns, debt repayment assurance, etc. The regulations complement the National Action Plan on climate change, which specifies that minimum renewable purchase standards be set at 5% for total power purchases for FY10, and should be increased by 1% each year for ten years.

SERCs roles include tariff regulation and promotion of co-generation, and electricity generation from renewable.

Competition

The electricity consumers in India have long been served by vertically integrated SEBs. The reform model adopted by a number of states resulted in the restructuring of some of the SEBs, leading to separation of the generation, transmission and distribution segments, and their corporatisation. Regulatory reform included the establishment of the Central Electricity Regulatory Commissions (CERCs) and State Electricity Regulatory Commissions (SERCs). The monopoly of bulk supply as well as retail supply has been abolished, with the enactment of the Electricity Act 2003. The new Act provides for non-discriminatory open access to the transmission network, and the de-licensing of generation, including captive power generation. The Act also recognises trading as a distinct activity. Such provisions provide an enabling environment for development of the bulk power market in India. Phased open access of the distribution network by respective state utilities provides consumer choice, subject to open access regulations, including the cross-subsidy surcharge.

Energy efficiency

India’s EE is the fifth lowest in the world, but there is the potential for substantial energy savings. The industrial sector consumes roughly 30% of the total commercial energy available in India, 70% of which is in energy-intensive sectors, for example fertilisers, aluminium, textiles, cement, iron and steel, and paper. 15-25% of this consumption is avoidable;

5 - 10% energy saving possible by better “housekeeping” measures.

Another 10-15% saving is possible with small investments, such as low cost retrofits, the use of energy efficient devices and controls etc.

As of 2009, the residential sector contributed 37.5% to total final energy consumption, followed by the transport (11.4%), agriculture (3.9%) and commercial/public services (3.3%) sectors. Miscellaneous usage was 13.5%, notably for petrochemical feedstocks.

The quantum of saving is much higher if high cost measures are included (major retrofits, process modifications etc.).

Industry

National Energy Conservation Awards.

Intensive EE programs, in particular for energy intensive SME clusters.

Energy data reporting for large units.

Certification of energy managers and auditors.

Utilities

Promotion of ESCOs.

Pre-paid electricity metering.

Transport

Indian Railways Vision 2020: EE measures and train corridors (25,000km of new lines).

Promotion of public transport and fuel-economy standards.

Fuel-Switch: Initiatives on Bio-diesel.

National Transport Action Plan and Low Carbon Mobility Plan.

Residential

Mandatory building codes for new commercial buildings from 2010 onwards: Energy Conservation Building Codes (ECBC).

Mandatory standards and labels .

CFL program (replacement of 400 million light bulbs) harnessing the Clean Development Mechanism. Programme: Bachat Lamp Yojana (BLY).

Public

Conservation inclusion in school curriculum.

Mandatory EE in public procurement.

EE in municipalities through ESCOs.

DSM programs for municipalities and agriculture.

Energy Conservation Act 2001.

Establishment of State Designated Agencies (SDAs): statutory bodies to implement energy conservation at the state level.

Capacity concerns

India’s rapidly growing economy and population leads to a relentless increase in electricity demand. The IEA predicts that by 2020, 327 GW of power generation capacity will be needed, which would imply an addition of 16 GW per year. This urgent need is reflected in the target the Indian government has set in its 11th Five Year Plan (2007–2012), which envisages an addition of 78.7 GW in this period, 50.5 GW of which is coal. The 12th Five Year Plan (2012-2017) projects major increases in energy imports, with import dependence on coal and oil set to increase to 22.4% and 78% respectively. Renewable capacity is also projected to increase to 54,503 MW by the end of the 12th Plan.

State electricity boards (SEBs) have significant financial problems. A major issue is theft of electricity by end-users: in 2006-07 the aggregate technical and commercial (AT&C) losses stood at 30%, i.e., no revenue generation for about a third of the supplied electricity. In addition, a large number of farmers across India are provided with free (or very low cost) electricity, a clear manifestation of the political importance of this group. As stolen and freely supplied electricity has no price tag, there is little incentive to economise on its use. Thus, irrespective of the cost of electricity generation, consumer demand remains very strong. The increasing demand-supply gap for electricity was mainly responsible for initiating the reforms in the power sector. The Electricity Act 2003 envisaged massive restructuring of the SEBs and wider participation of the private sector. While a few states have made commendable progress with reforms, most states still have much to do.

Government agencies

Indian Renewable Energy Development Agency (IREDA) The IREDA was established in 1987 as a non-banking financial company under the administrative control of the Ministry of Non-Conventional Energy Sources (MNES), to provide loans for renewable energy projects. Subsequently energy efficiency and energy conservation projects were added to its portfolio.

Bureau of Energy Efficiency (BEE) The BEE, established under the Energy Conservation Act of 2001, has introduced labelling requirements and building codes to reduce the energy intensity of GDP growth. For instance, the Energy Conservation Building Code (ECBC) is aimed at maximising energy utilisation in commercial buildings, by using Leadership in Energy and Environmental Design (LEED) certification standards, and customising buildings based on location temperatures. The BEE is comprised of ministers from Central and State energy-related agencies. The BEE is working with key industries, including cement, aluminium, and paper and pulp, to establish voluntary EE practices. It is also drafting standards for energy-labelling, building codes, and certification programs, among other initiatives.

In February 2011, India’s Bureau of Energy Efficiency (BEE) adopted new quality standards for solid state lighting, a process greatly accelerated as a result of SEAD, facilitated technical exchange between BEE and the United States Department of Energy. These standards are in the process of being notified through the Bureau of Indian Standards. In March, India also launched new internationally harmonized efficiency labels for laptops, drawing from the Energy Star programme .

Energy regulation role

The role of government departments is to prepare policies and legislations in the energy sector. No government department takes an active role in energy regulation.

Ownership

Electricity market The power sector is dominated by government utilities both at the central and state level. Central and state sector dominate electricity generation with 39% and 45% shares respectively. In contrast, private sector contributes only 18.74% of all grid connected capacity.

Major central and state sector utilities involved in power generation include the National Thermal Power Corporation (NTPC, www.ntpc.co.in), the National Hydroelectric Power Corporation (NHPC, www.nhpcindia.com) and the Nuclear Power Corporation of India Limited (NPCIL, www.npcil.nic.in).

Besides these operators, several state-level corporations or boards (SEBs), such as the Maharashtra State Electricity Board (MSEB, www.msebindia.com), the Kerala State Electricity Board (KSEB, www.kseb.in), the MGVCL, PGVCL, DGVCL, and UGVCL (four distribution companies), one controlling body (the Gujarat Urja Vikas Nigam Limited, GUVNL), and one generation company (GSEC) in Gujarat are also involved in generation and intra-state distribution of electricity.

Power Grid Corporation of India Limited (PGCIL, http://www.powergridindia.com/) has the monopoly status for transmission of electricity in India. Similarly, in distribution, the SEBs own nearly 95% of the distribution network. Privatization in the distribution segment is limited to a few states viz. Delhi, Orissa and some cities of Gujarat, Maharashtra, Uttar Pradesh and West Bengal.

Oil and gas market The Indian Oil Corporation (IOC, www.iocl.com) is the largest company, by sales, in India, and is responsible for the refining, transmission, research into, and marketing of petroleum products in the country. The IOC is a state-owned enterprise.

Degree of independence

The CERC was set up as an Independent Regulatory Commission. The central commission consists of a Chairperson and three other members, appointed by a central governmental committee. The Chairman of the Central Electricity Authority is an ex-officio member. The Central Electricity Regulatory Commission Fund was established under the same act, to function as the funding mechanism for the Commission, and to administer all funds received by the Commission under the Electricity Act, as well as all loans and grants dispensed from the government.

Energy debates

India is part of the South Asian Regional Initiative for Energy under USAID (SARI/E), a program that promotes energy security in South Asia through three focus areas:

(1) cross border energy trade, (2) energy market formation, and (3) regional clean energy development.

Through these activities SARI/E facilitates more efficient regional energy resource utilisation, works toward transparent and profitable energy practices, mitigates the environmental impacts of energy production, and increases regional access to energy. SARI/E countries also include: Afghanistan, Bangladesh, Bhutan, Nepal, the Maldives, Pakistan, and Sri Lanka.

The Energy and Resources Institute (TERI) on energy security: Energy Security insights

http://bookstore.teriin.org/docs

Energy Conservation Building Code

www.beeindia.nic.in/ecbc.php

Energy framework

Electricity Act (2003) It consolidates the laws relating to generation, transmission, distribution and trading, and use of electricity. It also promotes rural electrification through renewable energy sources stand alone systems.

National Action Plan on Climate Change (2008)

It addresses the critical concerns of the country through directional shift in the development pathway, including the enhancement of both current and planned programmes.

Jawaharlal Nehru National Solar Mission (JNNSM) (2009)

The programme goals include creating an enabling policy framework for the deployment of 20,000 MW of solar power by 2022.

National Mission for Enhanced Energy Efficiency

Apart from creating an energy efficiency market, the mission aims to cut down the country’s annual energy usage by 5% by 2015, and carbon dioxide emissions by 100 million tonnes every year. The goal of the mission is to reduce energy usage of 10,000 MW by 2012.

India Energy Policy (IEP)

The IEP, adopted by the Indian government in 2006, is India’s comprehensive energy road map. Prepared by the Planning Commission of India, the IEP identifies multiple energy challenges, including meeting energy demands, securing supply, mitigating climate change, and promoting renewable and alternative energy. The IEP sets forth several policy choices to address these challenges. These choices comprise four strategies: energy diversification and efficiency; catalysing investment in energy diversification by competitiveness, regulatory intervention, energy pricing changes, and effective subsidies; strengthening diplomacy; and accountability for environmental externalities.

India has been running a RE program, excluding large hydro, for more than two decades, and has policies that support RE at the central and state level. These domestic policies have been combined with participation in the Clean Development Mechanism (CDM) by renewable project developers with reasonable success. However, given the overall size of the energy system, the contribution of renewables is still small, for example, electricity from RES excluding large hydro in 2008 was 13 GW, out of a total of 168 GW.

The government is making efforts to increase renewable energy supply. It has launched over 2000 RE projects under the CDM. The government has also adopted policies to promote RE. For example, the National Policy on Biofuels, adopted by the Ministry of New and Renewable Energy, furthers the IEP recommendation to substitute traditional fuels with biofuels. Biofuels are especially critical for achieving energy sufficiency in the transportation sector.

The government has established specialised centers on technology development to promote solar and wind energy projects. It has also been advised by the National Biofuel Coordination Committee and the Biofuel Steering Committee to achieve at least a 20% ethanol blend in petroleum and diesel by 2017. Toward this end, the government has proposed a Union government tax exemption goal, and a uniform 4% state tax on biofuels.

The benefits of electricity efficiency have been recognized in the 10th and 11th Five-Year Plans that outline measures for its implementation. Schemes for promoting EE during the 11th Plan include the Bachat Lamp Yojana (promoting the uptake of CFLs), the Standards and Labeling Scheme (covering all basic household appliances, as well as motors, variable speed drives and agricultural pump sets), Energy Conservation Building Codes (for new commercial construction), Agricultural and Municipal Demand-Side Management (DSM) Schemes. The 11th Plan recognises that restructuring incentives and support by shifting from supply driven programs to demand driven programs and technologies would be beneficial. The India Planning Commission has recognised the strengthening of the Bureau of Energy Efficiency (BEE) as a priority, and regulatory commissions in many states are considering demand-side options. Hence, aggressive steps for the promotion of EE measures are expected in the 12th Plan as well.

Energy conservation Act 2001 The Energy Conservation (EC) Act, signed in 2001, provides the legal and institutional framework for the government of India to promote energy efficiency across all sectors of the economy. A coordinating body called the Bureau of Energy Efficiency (BEE) was created to implement the EC Act. Furthermore, the Energy Conservation Act was amended (2010) to empower BEE to accredit energy auditors, to hire its own staff, and to empower the Central Government to issue energy savings certificates. The need to improve energy efficiency was further emphasized in the National Action Plan on Climate Change (NAPCC), adopted in 2008.

National Mission for Enhanced Energy Efficiency (NMEEE) Recognizing the importance of addressing issues related to climate change, as well as considering economic and social developmental as priorities, India outlined domestic actions towards climate change mitigation in its National Action Plan for Climate Change in 2008. The National Action Plan contains 8 National Missions that represent multi-pronged, long term and integrate strategies for achieving key goals in the context of climate change. These Missions are:

National Solar Mission,

National Mission on Enhanced Energy Efficiency,

National Mission on Sustainable Habitat,

National Water Mission,

National Mission for Sustaining the Himalayan Eco-system,

National Mission for a Green India,

National Mission for Sustainable Agriculture and

National Mission on Strategic Knowledge for Climate Change.

Each National Missions is institutionalized by a respective Ministry. The National Mission for Enhanced Energy Efficiency (NMEEE) operates under BEE. The Prime Minister’s Council on Climate Change approved draft principles of the NMEEE on August 2009 and the Union Cabinet approved its implementation framework on 24th June 2010, with dedicated funds to the tune of Rs. 235.35 crores (USD53 million).

The draft of the 12th Five Year Plan (2012-2017) was published in 2012.The energy sector is covered in extensive detail, beginning with the achievements of the 11th Plan, including the total number of electrified villages increasing to 560,000, capacity additions of 54,964 MW, and the installation of a further 70,286 circuit km of transmission lines. A total capacity addition of 118,536 MW is planned for the 12th Plan period, including 30,000 MW of grid-connected renewable capacity, comprising of 15,000 MW wind, 10,000 MW solar, 2,100 MW small hydro and 2,900 MW of biomass/fuels. In addition, the 12th Plan targets the creation of a National Grid, through the development of a HVDC connector to the country's Southern electricity grid, as well as increasing HVDC and 765 kV links throughout the grid to improve capacity. Extensive energy policy reforms are recommended in the 12th Plan, including the strengthening of provisions for increasing renewable energy capacity, and incentives for low-cost transmission development to connect new renewable capacity. Finally, the plan sets notable new targets for energy efficiency in all sectors of the economy, with a projected yearly energy saving of 11,430 ktoe, compared to a business-as-usual scenario, as of 2016-17.

Reliance

Net Indian energy imports in 2009 were 181,973 ktoe. Net electricity imports in 2009 totalled 10,014 GWh, or 1.1% of total domestic supply.

India’s fast-growing economy and rapidly increasing population tend to raise serious concerns about the nation’s energy security. The fuel production from indigenous resources has failed to keep pace with the continuously rising demands and is being met increasingly by imports. This is making India more dependent on, and vulnerable to, foreign energy supplies.

Role of the government

Ministry of Power (www.powermin.nic.in) The Ministry is responsible for: i) General Policy in the electricity sector and issues relating to energy policy; ii) Matters relating to hydroelectric (except small/mini/micro hydro projects of and below 25 MW capacities) and thermal power, and the transmission system network; iii) Research, development and technical assistance relating to hydro-electric and thermal power, and the transmission system. iv) Administration of the Electricity Act, 2003, the Damodar Valley Corporation Act, 1948 and the Bhakra Beas Management Board as provided in the Punjab Re-organisation Act, 1966; v) Matters related to both the Central Electricity Authority and the Central Electricity Regulatory Commission; vi) (a) Rural Electrification, (b) Power Schemes in Union Territories, and issues relating to power supply in the States and Union Territories; vii) Administrative control of Public Sector Undertakings, Statutory and Autonomous Bodies functioning under the Ministry; viii) Other Public Sector Enterprises in energy except projects specifically allotted to any other Ministry or Department; ix) All matters concerning energy conservation and energy efficiency pertaining to the sector.

Ministry of New and Renewable Energy (MNRE, www.mnre.gov.in) MNRE is the nodal Ministry of the government of India for all matters relating to new and renewable energy and the administrative ministry for policies and programs in this area. The Ministry itself is organised into several divisions dealing with different technologies and applications.

The programme of the ministry is largely implemented through State Nodal Agencies. All major States have set up energy agencies for the non-conventional energy programme.

Ministry of Coal It is responsible for policies and strategies with respect to exploring and developing coal reserves, sanctioning important projects and deciding related issues.

Ministry of Oil and Gas It has the overall responsibility of exploration and production of oil and gas, along with their refining, distribution and marketing, import, export, and conservation.

Planning commission The Power and Energy, Energy Policy and Rural Energy Division of the Planning commission guides the energy policies of the country.

Central Electricity Authority (CEA) The CEA assists the Ministry of Power in all the technical and techno-economic matters.

Regulatory framework

In keeping with its aim of having a holistic, sustainable energy policy, the government of India is encouraging investment in non-conventional energy sources. In the 11th Plan the government has proposed a financial outlay of $44.79 million on R&D in the wind energy sector. The government does not want to focus its energies on actually setting up wind power projects. Instead it wants to concentrate only on R&D, developing small projects in remote areas and setting up demonstration projects.

Wind energy power projects are capital intensive and hence investors have to be provided continuous support. The average pay back period for wind power projects is 25 years. However the bright side to this scenario is that unlike other sectors, technology changes very slowly in this area, hence manufacturers do not have to worry about technological obsolescence. Keeping all these considerations in mind the government has formulated a strategy of providing incentives to private manufacturers in this sector. The Indian Government is giving income tax holidays, concessional custom duty, duty free import, and accelerated depreciation, to investors in this field. The various State Governments are providing support in the form of energy buy back, power wheeling and banking facilities, sales tax concession benefits, electricity tax exemption and capital subsidy.

The government has also come up with a Generation Based Incentive (GBI) Scheme. The features of the scheme are as follows: 1. The GBI Scheme is applicable only for those power producers who do not avail of the accelerated depreciation benefits under the Income Tax Act. 2. All grid integrated projects of capacity of more than 5 MW are eligible for this scheme. The project has to be synchronized with the grid and certified by the utility. 3. Wind site has to be validated by C-WET. 4. Electricity generated from the project should be sold to the grid. 5. The MNRE will provide the GBI of Rs. 0.50 per unit for a period of ten years to the eligible project promoters through IREDA. This scheme is currently valid for wind farms installed before March 31, 2012. This incentive shall be in addition to the tariff determined by the State Electricity Regulatory Commission (SERC). 6. The IREDA will disburse the generation based incentive to the generator on half yearly basis through e-payment. 7. Not applicable for those who have set up capacities for captive consumption, third party sale, or merchant plants. 8. The component of the scheme will be reviewed when projects aggregating to 49 MW, which are estimated to generate around 0.9 billion units of electricity, will get registered by IREDA.

The scheme will be reviewed in the last year of the 11th Plan and if the response is good this scheme can be further upgraded. The SERCs in Andhra Pradesh, Gujarat, Haryana, Kerala, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu, and West Bengal have announced preferential tariff for purchase of power from wind power projects. Many States have also announced renewable energy purchase obligations, which catalyses the growth in the wind power generation. The Rajasthan State Electricity Regulatory Commission (RERC) issued the modified tariff policy for renewables during the year. As per this policy, a tariff of Rs. 4.28 per unit for Jaisalmer, Jodhpur and Barmer districts and tariff of Rs. 4.50 per unit for other districts is available. The Tamil Nadu Electricity Regulatory Commission also announced the modified tariff rate during the year for wind power projects. The new rates are Rs. 3.39 per unit .

In 2007, BEE issued the Energy Conservation Building Code (ECBC) which provides minimum energy performance standards for design and construction of commercial buildings with a connected load of 500 kW and above. ECBC takes into account the five major climatic regions of India and is currently a voluntary programme. However, a number of states have recently announced that they will adopt it as a mandatory requirement.

Regulatory barriers

Maintaining stable grid operation while increasing renewable power generation to meet renewable obligation quotas.

Although the central government intends to promote RE, its efforts are hampered by inconsistent implementation by the States and by the lack of a central RE law. Some States have set relatively high renewable portfolio standards (RPS – renewable energy targets), some have set low targets, and some have not yet set any targets. Enforcement could also be stronger. The co-existence of RPS schemes and feed-in tariffs needs to be well-managed. A misalignment of state targets with national objectives has also been identified as a key barrier, as well as the limited framework for regulation of inter-state renewable power transmission, based on resource availability.

Energy regulator

The government created the Central Electricity Regulatory Commission (CERC, www.cercind.gov.in) vested with jurisdiction by incorporating the Electricity Laws (Amendment) Act 1998, to regulate the tariff of bulk electric power, i.e. the generation and inter-state transmission of power, with effect from May 15, 1999.

It has been followed by the institution of 24 other State Electricity Regulatory Commissions (SERCs) in the states, excepting Nagaland and Arunachal Pradesh, with the authority to decide intra-state transmission and distribution/retail tariffs. This step was a key outcome of process of reform in the power sector.

The Petroleum and Natural Gas Regulatory Board (PNGRB), was established in June 2007.

Renewable energy

Hydropower The hydropower installed capacity as of March 31, 2011, was approximately 37,367.4 MW.

The estimated small hydro power potential in India is around 15,000 MW. Of this estimated potential only 16% has been developed so far for power generation. In India, 5415 sites with a capacity of 14,305.47 MW have been identified by Ministry of New and Renewable Energy (MNRE) for the establishment of small hydroelectric projects. The largest numbers of sites have been identified in Arunachal Pradesh with a total capacity of 1333.04 MW, but the richest state in SHP potential is Himachal Pradesh with 547 sites of total capacity 2268.41MW.

Wind Energy India’s wind resources have been mapped by the Centre for Wind Energy Technology (CWET). Sites are classified based on wind speeds (higher average wind speeds having higher class numbers). Most of the Indian wind sites are in Class 2 (200–300 W/m2 at 50 MAGL) and some are in Class 3, with relatively few sites in Classes 4 and 5. Despite the relatively low wind regimes by international standards, India has made significant progress in wind based power generation.

The potential areas for generating power through wind mills are in the states of Tamil Nadu, Karnataka, Kerala, Gujarat, Andhra Pradesh, Kerala, Maharashtra, Rajasthan and Madhya Pradesh. As of August 31, 2011 the installed capacity of wind power in India was 14,989.89 MW, mainly spread across Tamil Nadu (6286.02 MW), Maharashtra (2400.05 MW), Gujarat (2337.31 MW), Karnataka (1773.25 MW), Rajasthan (1678.62 MW), Madhya Pradesh (275.89 MW), Andhra Pradesh (199.15 MW), Kerala (35.30 MW), and West Bengal (1.1 MW).

During the 2010-11 financial year, India added 2349.50 MW of wind capacity for a total installed capacity of 14,156.39 MW, which is represented a 19.9% annual growth rate. More recent data showed that India’s wind capacity totalled 14,989.89 MW at the end of August, 2011, which represented 70.96% of India’s total renewable energy capacity. India’s robust domestic market has transformed the Indian wind industry into a significant global player.

Geothermal Energy The geothermal resources in India have not been exploited commercially for heat or power generation. The geothermal resources, however, have been mapped, and the Geological Survey of India estimates the power generation potential to be in the order of 10,000MW. Most of the current usage of geothermal energy is for direct use, for example bathing and swimming. Dr Chandrasekharam estimates an installed capacity of 203MW (thermal), with an annual energy use of 1607 TJ/year and a capacity factor of 25%.

Solar Energy The annual solar radiation over India ranges from 1,200 to 2,300 kWh/m2, with most of the country having radiation greater than 1900 kWh/m2/year, with about 300 clear sunny days. For comparison, in Germany, annual solar radiation ranges from 800 kWh/m2 to 1200 kWh/m2. The area required to meet India’s power energy needs (620 billion kWh in 2005) with solar photovoltaics (at an efficiency of 10%) is about 3,000 km2 (60 km by 50 km) which is 0.1% of the land area of the country. The amount of solar energy produced in India is less than 1% of the total energy demand. The grid-interactive solar power as of December 2010 was merely 10 MW. In 2009, solar power contributed approximately 27 GWh to the national electricity supply.

Biomass Energy Being an agrarian nation, India has considerable potential to use many forms of biomass. The total potential for biomass-based power generation is estimated to be 21,000 MW. Current utilisation amounts to approximately 2,735.2 MW, with various technologies and projects currently in development to increase this. For example, Singapore-based AllGreen are investing in 10 biomass gasification plants in the country, expected to be completed within the next two years.