Putting wind into renewables’ sails

Prime Minister Narendra Modi wants to mainstream renewable energy (RE) and has set a target of 175 GW by 2022 .Some experts say the target is too ambitious. To an extent, they are correct that the targets are huge and pose challenge to grid operator due to inconsistent generation.

The counter argument is that even the demand is inconsistent and governments and utilities do very little on demand-side management. Further, with improved technologies, renewable generation can be predictable with reasonable accuracy.

The other important aspects to consider are pollution from fossil fuels, their finite availability, and the cost of imports. Renewable energy is abundant and domestic. Even if the targeted capacity is not fully achieved, the resultant successes will be better than meeting small targets. Therefore, the Prime Minister’s decision is precise and significant.

These targets imply renewable additions at about seven times the current rate. This in turn will require a serious overhaul of the systems and processes. Inadequate grid infrastructure, open access issues, poor fiscal health of utilities, inconsistent policy processes at the State levels and lack of quality consciousness resulting in the creation of bad assets are the major issues blocking investments into renewable energy sector.

Of late, wind and solar are unnecessarily discussed as competition. Both the sectors have a successful global track record. The benefits and drawbacks for each depend on the application and location.

Wind power growth has declined from an addition of 3,000 MW in 2011to only 1,600 MW in 2015-16 so far, against a target of 2,400 MW. This slowdown is mainly due to inadequate evacuation, refusal to enter into power purchase agreements by some States, political interference at local levels and cumbersome land acquisition processes

It is also not out of place to state that notwithstanding public posturing by centre and States, the regulatory regime is strongly weighted against wind energy.

In contrast with the various land and evacuation bottlenecks for wind, the government is bullish in promoting solar. State governments are de-risking large solar projects by acquiring land and creating evacuation facilities. For smaller projects, when the investor acquires land directly, the processes of land alienation is exempted. Solar projects are also let off from inter-State transmission and cross subsidy charges. Currently, they are exempted from forecasting and scheduling.

The Prime Minister’s vision will benefit, if wind is given the same treatment. In particular, national renewable purchase obligation (RPO) must be announced immediately. The wind-rich States should be allowed to sell surplus wind energy generated to deficit States.

Areas near green corridor can be designated as manufacturing hubs to absorb power near source, reducing capital costs in transmission, and cutting T&D losses. India also needs to invest in gas-based spinning reserves along the green corridor for grid stability.

While the government has much to do, the industry can also contribute by rationalising excessive manufacturing capacity, and passing on the benefits of higher hub height and larger rotor diameter trend towards lower capital cost per kWh.

Quality must be a key focus. Wind turbine manufactures design their products to meet IEC standards and every turbine model that gets installed in India passes the qualifying criteria of NIWE. This requirement eliminates substandard products from the Indian market.

The same can’t be stated for solar panels. There are many technologies and unheard names making solar cells and panels in India with no quality standards.

The government cannot ignore quality and will be compelled to issue quality guidelines for all solar projects. It is surprising that the positive learning from strict quality control in wind has not been mapped to solar. There appears to be an unseemly hurry to get on to the bandwagon of solar farming.

This would ultimately lead to higher costs and tariffs. It is also possible that the solar bubble will burst because we are not paying enough attention to quality and technology related issues.

Further, we should also revisit the tariff process. For wind, State regulators fix feed-in-tariff after due consultations with stakeholders and public hearings. However, for solar, tariffs are decided through bidding. It is perceived that bidding has contributed to reduction in tariffs. The recent low bids in Andhra Pradesh are also used to showcase this argument.

We think it is too early to celebrate. While aggressive bidding in power sector has led to low bids, it has often not led to realistic capacity additions. For solar, global oversupply of panels and slowdown in China are actually the major contributors to cost reduction. These can be factored into tariffs. If India is to achieve material renewable growth, we need objective and realistic tariffs based on capital cost, lending rates and capacity utilisation.

In summ, India needs all sources of renewable energy and the government must promote every source on equal terms. Land acquisition, power evacuation, local political interference, tariff process, and quality are the key areas that need attention. It is also necessary to reconsider the policy without the blinkered approach from purely commercial application of mind.

The writer is Managing Director, Enerfra Projects (India)