Government sets target of increasing contribution of renewable energy sources to power generations to ten percent by 2015

As part of the National Action Plan on Climate Change, the government has set the target of increasing contribution of renewable energy sources to power generations to ten percent by 2015. Although the installed renewable energy capacity is more than the ten percent – at 16.8 GW – of the total generation capacity of 161.4 GW, the contribution of renewable energy to real power power generated is only four percent.

Wind energy leads all the renewable energy sources in terms of installed capacity. Wind energy resources are concentrated in a handful of Indian states like Tamil Nadu, Andra Pradesh, Gujarat, Maharashtra, Karnataka and Rajasthan. But given the rapidly evolving wind energy technology and the presence of the world’s third largest wind turbine manufacturer as a domestic player has resulted in consistent increase in wind energy capacity expansion. The tariff rates of wind energy generated power are also much more competitive with the power generated from conventional fuels as compared to solar energy.

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During 2009-10, the wind energy capacity grew up 15.3 percent with an addition of 1565 MW. The state of Karnataka is planning to add 4000 MW of wind energy capacity in the next four years.

The solar energy sector which is in its nascent stage of development is also set to receive massive investments and incentives in the short and medium-term. The Indian government aims to add 1100 MW of solar energy capacity by 2013 and eventually increase it to 20,000 MW by 2022. In order to achieve this seeming impossible goal the government has announced a battery of financial incentives to attract private investors and reward the existing investors.

The government now offers project developers tax breaks and option to form power purchase agreements with power exchanges to provide financial flexibility. All state electricity boards will have to reach get 10 percent of their power supply from renewable energy sources by the end of 2010 and then increase the share of power produced by clean energy sources by one percent every year till 2020. Most of this power is likely to come from wind and solar energy plants.

The government has also set an attractive power tariff of Rs. 17.91 per kWh for power generated from solar PV plants. This tariff is about three to five times of the tariff for power generated from conventional sources like coal and gas. To assure returns to investors the government has also set up a security fund which would pay the project developers in case the state utilities default on their payments. The government is also looking to launch feed-in tariff schemes which would allow homeowners to instal solar PV systems and sell surplus power to the utilities at premium.

These incentives in the wind and solar energy sector in addition to policy push in various other sectors such as small hydro and biomass will help India reach closer to its target, it now accomplish it. These policy initiatives will most definitely attract private as well as international financial aid targeted at promoting clean energy. India is taking the right steps to kick start a renewable energy revolution which, if it is able to sustain would bring it successes limited not only to environment and energy.