CEE Jan-Mar 2012

development or rural areas, etc. Beyond all this, the overarching concern needs to be future energy security. Given the volatility and long-term risks associated with the trodden path of energy generation, it would be prudent for the states to now think 'green '. It is time for the states to have their tryst with green energy. Courtesy: Green Energy, Vol.8, No.1, Jan-Feb.2012, Pp13-14. RENEWABLE ENERGY POLICY Need to redefine goals Prabir Purkayastha, Energy Analyst and Vice President, Delhi Science Forum Any policy, to be successful , needs a clear articulation of objectives. In the current renewable policy of the government, there is a confusion about whether the focus should be on decentralized electricity generation or on reducing carbon emissions. The second problem is the way it focuses almost exclusively on the market as the instrument of policy - a kind of a market fundamentalism that has resulted in the Indian power and telecom markets boosting Chinese manufacture. If we are looking at renewables only for decentralized generation taking electricity to places where the grid cannot reach - then the focus has to shift from the current route we are adopting. Looking at the current targets and policies, it is clear that while decentralized generation is being talked about to make high costs of renewables more acceptable, the focus is really on grid-connected plants. The renewable policy in India is driven by the requirement laid down in the renewable purchase obligation (RPO) under the Electricity Act, 2003, the National Electricity Policy, 2005 and the Tariff Policy, 2006. Under this, it is obligatory that the state electricity regulatory comm1ss1ons fix a certain percentage of power to be purchased from renewable energy sources in the area of a distribution licensee. By 2022, this is likely to be in the range of 15 per cent for renewable energy and about 2.5 per cent for solar. This way of introducing renewable energy in the grid means that the tab for the higher cost of renewables is picked up by the consumers of electricity. The tariffs set for electricity will have to factor in the higher cost of renewables, resulting in a higher cost of electricity for the consumer. This leads to the question - what will this extra burden be, considering the higher cost of renewables? If we consider the extra burden due to solar, 2.5 per cent of solar power in 2022 would mean supplying roughly 45,000 MUs to the grid. With current solar prices at Rs 12 per unit, and assuming that the cost of coal increases by 100 per cent, the additional cost to the distribution companies would be around Rs 360 billion per annum. This will mean that the distribution companies and the state-owned power companies, which are already facing a loss of Rs 530 billion per annum (Power Finance Corporation Limited: Performance of State Power Utilities for the Years 2006-07 to 2008-09), will sink further into the red or need larger subsidies from the state governments, which are already starved of funds. If we consider the average life of these plants, we are taking of astronomical sums as subsidies from consumers for inducting high– cost solar power into the grid. The cost of renewables, apart from solar, may not prove to be such a burden. If the cost of coal rises, as is likely, then wind and biofuels may become comparable in price. With biomass-based plants, the problems lie elsewhere. It either competes with food or its availability is quite restricted - biowastes are already used for other purposes. Any new demand would increase the costs of such materials or would lead to a diversion from existing agriculture. With increasing food prices already creating a crisis for people, large-scale diversion of resources (human and financial) f rom food crops can only exacerbate this crisis. The policy for renewables therefore, has to be seen in a larger framework and policymakers need to be clear about what its goals are. If electricity and energy are the prime goals, forcing renewables in this fashion on the grid can only add to other crises related to food or the electricity sector as a whole. So, we come back to the initial question, what is the goal for the renewable programme, particularly its most expensive component, the solar programme? In 2010, the Government of India announced the Jawaharlal Nehru National Solar Mission with target of 22,000 MW of solar capacity by 2022. In the first phase, the mission has a target of setting up 500 MW of solar thermal (ST) plants and photovoltaic (PV) plants each . A number of bids were received through the reverse auction route asking the bidders to quote the lowest tariffs. With this, in the first phase, the tariffs were found to be about Rs 12 per unit for ST 50