CEE Jan-Mar 2012

meeting the country's power requirements. The Planning Commission's draft paper on the Approach to the Twelfth Five Year Plan lists various direct and indirect measures to enhance the capacity and contribution of renewables to the country's energy mix. As per Planning Commission estimates, demand for energy has a diminishing elastic relation with GOP. Assuming a 9 per cent GOP growth rate over the Twelfth Plan, the demand for energy is expected to increase at a rate of 6.5 per cent. The Planning Commission also estimates that a large part of the primary energy demand (about 38 per cent) will be met through imports, which can pose problems in a scenario of rising global prices. As a result, moderating growth in energy demand by promoting higher levels of energy efficiency and rationalizing energy prices while increasing domestic supplies is way forward. Increased renewable energy generation and consumption improves energy efficiency and reduces greenhouse gas em1ss1ons. The Planning Commission envisages a share of 15 per cent of renewable sources in the total energy mix by 2020. Rationalizing energy prices is also expected to help in achieving energy efficiency and increasing the penetration of renewable energy. The per unit generation cost of renewable energy sources is much higher than that of conventional sources. Parity is expected to be achieved by 2019, which is beyond the Twelfth Plan timeline. At present, there are distortions in the pricing of energy supply from conventional sources as it is subsidized indirectly due to artificially low fuel prices. For instance, despite domestic coal prices being deregulated, the government wields considerable indirect control and domestic prices continue to be low compared to international prices. Diesel prices are at least 20 per cent lower than they should be if they are to be fully aligned. Kerosene prices are as much as 70 per cent lower and liquefied petroleum gas prices are 50 per cent lower. Though the integrated Energy Policy was approved in 2009, domestic fuel prices have been aligned with global prices only to some extent. If subsidies are phased out to a rational extent during the Twelfth Plan, it will make renewables competitive. Increasing the manufacturing capacity in the renewable sector particularly in solar, is a key focus area of the envisaged National Manufacturing Plan. Under this initiative, a long-term plan will be prepared by working groups with participation from sector associations, devising strategies to bridge the manufacturing capacity gap. In the case of renewable energy, the focus will also be on the manufacturing of complementary electrical equipment, which will not only make renewable power nore affordable but will open up export potential for Indian manufacturers given the increased attention to renewables by other countries as well. Technology development must also be indigenized to bring down costs. As per the Approach Paper, encouraging innovation will be key to achieving this goal. The government's role would be to improve inter-institutional collaborations, provide a mechanism for funding innovations, especially for small and medium enterprises, and create a long-term vision. For this purpose, the National Innovation Council has been set up to formul ate a road map up to 2020. A cluster-based approach has also been proposed in this regard . This will involve the development of physical or virtual clusters connected through technology while also formulating a toolkit with guidelines and best practices. Some initiatives have already been seen in this regard in the renewable energy sector with states that have wind and solar energy policies also promoting solar energy policies also promoting solar energy parks and special zones for wind energy technology development. Such clusters will include space for setting up manufacturing facilities, ancillary service provides training institutions, and research and development institutes. Overall , the Approach Paper proposes an integrated role for the renewable energy sector in the Twelfth Plan. While the role of renewables will be important in achieving the targets for energy demand through enhancing generation capacity at rationalized costs, provisions for enhancing the sector's capacity are also envisaged by promoting manufacturing and innovations in technology. Clearly, renewable energy will continue to be of significant importance in the country's growth plans. Courtesy: Renewable Watch, Oct. 2011, P20. 52