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Green energy grows, but not much finds its way to the grid

Sushmi Dey, The Economic Times

Despite the growth of renewable energy - solar, wind and biomass - in the country, not much of it reaches the power grid, which transfers electricity across long distances.

The reason: Only 14 out of 28 states have set quotas for sourcing renewable energy for their grids. This, despite the Electricity Act, 2003, specifically mentioning that states must set a certain proportion of power consumed from renewable sources.

In grid-interactive renewable energy systems, the power generated is transferred to the power grid and back according to requirement and output.

According to estimates from the ministry of new and renewable energy (MNRE), India generated 12,403 mw of cumulative grid-interactive renewable power by the end of March 2008, and is now planning to achieve a target of 20,000 mw by 2020. However, the use of renewable energy through power grids is negligible. Renewable energy accounts for only 8% of the total installed power capacity in India, said a ministry official.

In an effort to make use of more renewable energy and minimise dependence on conventional sources, the Electricity Act, 2003 asks state commissions to "promote cogeneration and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution licensee."

The Act wants each State Electricity Regulatory Commission (SERC) to make it mandatory for distribution companies to use a certain percentage of renewable energy. SERCs are also directed, under the Act, to set preferential tariff for purchase of electricity from a renewable source. However, not every SERC has followed the Act in spirit. "There is a sheer need of regulatory commission's inclination to push the intent of the Act," said TERI director and senior fellow Amit Kumar.

According to Mr Kumar, there is no time-frame to put things in order and no minimum quota allocated. This creates uncertainty in tariff pacts with the suppliers of renewable energy. "While promotion of renewable energy has been the responsibility of both the Central Electricity Regulatory Commission (CERC) and various SERCs, it is the latter, which is required to set percentage quotas for sourcing green energy," said the official. CERC plays a vital role as it provides the guidelines to SERCs.

While some states have not yet taken the first step towards fixing tariff, some are doing it actively. Tamil Nadu set the trend even before the legislative requirement. Gujarat, Chhattisgarh, Tamil Nadu, Haryana, Jammu & Kashmir, Karnataka and others are among SERCs that have set percentage quotas and tariff rates for purchase of different renewables.

Orissa has also recently joined the race.

Wind seems to be the cheapest bet in Tamil Nadu, Rajasthan and Gujarat with the tariff range being 2.70/kwh to 3.37/kwh. Gujrat and Tamil Nadu also have fixed tariffs. As estimated by MNRE, Tamil Nadu, Madhya Pradesh and Karnataka have set the highest quota of 10% - most of which is sourced from biomass and cogeneration bagasse and wind energy. UP and Rajasthan have set a 7.5% quota, whereas Andhra Pradesh has a 5% quota.

While wind and biomass are the most preferred sources, MNRE recently launched a new incentive scheme for grid connected solar power projects. "Under this scheme, MNRE will provide a generation-based incentive of a maximum of Rs 12 kwh for the electricity generated from solar photo voltaic and the maximum of Rs 10 for the electricity generated through solar thermal power plants. The project is set up on a demonstration basis in order to promote solar energy," said the official. "Such incentives from the government are important to popularise solar power since these are often not picked up because of cost," said Mr Kumar.

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