Renewable Energy and Long Term Energy Security of India

In 2005-06 India issued its Integrated Energy Policy with a view to provide a long term strategy for Energy Security. It set up a target of 50% energy from Renewable Energy over long term. The Electricity Act, 2003 provided a backdrop for development of such long term strategic policy.

India has made progress since then for achieving the policy goals. In line with this India has rightfully set an ambitious target of achieving 175 GW installed capacity addition from Renewable energy by 2022. Main contributors will be wind energy & solar energy.

Wind and solar are complementary in nature as one is available in day and other can be harnessed in the evening and night too. Solar can be developed off grid where as wind is developed as grid connected power.

Due to favorable climatic conditions for solar energy, it can be harnessed in many states, however wind energy is available in mostly 7 to 8  western and southern states.

Till now western and southern states have done a commendable job in harnessing wind energy through state level policy with support and help from centre in the form of concessional taxation and GBI. However this effort needs to be augmented with participation of all the states in order to fulfill long term strategic objective of energy security. However for this we need to think of creating some regulatory mechanism as it will be difficult to  obtain participation of non windy states in the current scenario. One such mechanism is setting up RPO targets for each state, which is being done by the centre. But we need to go beyond and set up a mechanism to enable investment in wind energy generation and its consumption by non wind states discoms.

Wind energy cost differs from state to state depending on wind velocity.

One idea can be to set up a Central Wind Power Trading Company (Central Wind PTC) which can buy wind power from generators in windy state and distribute it to discoms in non windy states in the ratio of power consumed by them from all sources of energy. However the Central Wind PTC will need some legal back up to collect its dues on time from state discoms. And also there need to be some legal back up to enforce state discom to buy power from Central Wind PTC.

The tariff for power purchased & distributed by Central Wind PTC can be decided by CERC to ensure no tariff distortions as wind power cost will differ from state to state depending on wind velocity. Since wind power gets single part tariff and any power not evacuated is direct loss to wind Project Company, a tariff set up by CERC will provide a fair play, as CERC can handle these matters when they arise. This will also attract investment in the sector and provide visibility to bankers to provide debt for the projects.

“A centralized mechanism for power purchase ensuring timely payment to wind generators will go a long way for wind power IPPs” says Deepak Kochhar, founder & CEO of NuPower Renewables.