1

Renewable Energy in India

Report Prepared by

Western Australia Trade Office India

Mumbai

93, Jolly Maker Chambers 2

Nariman Point

Mumbai - 400 021

Phone: 91-22- 6630 3973 76 Fax: 91-22- 6630 3977 January 2012

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Index

Sr.

No.

Description Page

No.

1. Overview 3

2. Types of Renewable Energy 4

3. Biomass Energy 5

Overview

Biomass Gasifier Manufacturers in India - (Key Players)

Biomass Research Centers

Current Projects - Biomass Power Plants in India

4. Wind Energy 9

Overview

Current projects - State-level wind power

Current Projects in India

Barriers for Wind Energy in India

Opportunities

5. Geothermal Energy 15

Overview

Technology

Potential

Current Projects

Challenges (Cost and Price)

Barriers to Geothermal Energy in India

Geothermal Companies in India

Apex Bodies

6. Hydro Energy 20

Overview

Technology

Potential in India

Current Projects

Barriers

Hydro Research Centers

Apex Bodies

7. Solar Energy 26

Overview

Annual Insolation

Installed Capacity

Applications of Solar Energy

Challenges and Constraints

Latent Potential

Government Support

8. Opportunities in Renewable Energy in India 30

9. Risks 31

10. Regulatory Environment 32

11. Financing the Renewable Energy Sector in India 33

12. Conclusion 34

13. Sources of Information 35

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Overview Emission of greenhouse gases leading to climate changes is a major concern globally. India

is among the top six contributors to green house gas emission, though per capita emission

is substantially low compared with other developed countries. Under the Kyoto Protocols terms, industrial country parties will be obligated to limit their greenhouse gas emissions by

2008-12. India has also signed the treaty and under the protocol India focuses now to drive

a clean development mechanism aimed at protecting the environment by reducing carbon

emissions. Indias energy demand is increasing with the robust growth in economy. A steady forecasted growth for manufacturing sector would need more power generation in

future. However, power generation through fossil fuels raises serious concern over the

depleting resources and environmental pollution. In light of this concern, renewable energy

is a major option in India.

Looking at the Indian economic scenario, the Indian economy continues to sustain high

growth momentum as the real GDP picked up in the year 2010-11. As per the latest

estimates released by the CSO, the real economy expanded by 8.9% during the second

quarter (July to September) of 2010-11, compared to 8.7 percent during the same period of

2009-10. Robust economic fundamentals and stringent financial measures allowed the

Indian economy to regain growth momentum quickly after the global economic meltdown.

This growth was mainly driven by the manufacturing sector with a growth rate of 16.3% in

Q4 of 2009-10 where as mining output grew by 14.0% in March, 2010 while manufacturing

grew by 10.8 % in the fiscal year 2009-10. Basically, these sectors are the major energy

consumers in any economy. The Indian economy is likely to grow at an average rate of 8

percent in the next decade led by manufacturing and service sectors, which are the major

consumers of energy. The industrial sector alone accounts for 52% of India's commercial

energy consumption.

The current status of renewable energy in India is highlighted below.

There is a lot of scope for investments in solar energy sector and Government of India is taking all the necessary measures to promote the solar energy generation in the country.

Wind energy, the fastest growing renewable energy source, accounts for over 70% of the total installed renewable energy generation capacity. A cumulative capacity of 10,891 MW

has been set up so far (as on October 31, 2009). This makes India as the fifth largest

producer of wind energy in the world.

50,000 MW Hydro Initiative was launched by the government in 2003 as a part of the energy security program. Out of the proposed 162 projects, 77 projects totaling a capacity

of about 37,000 MW were undertaken. All these projects are likely to be operational by the

end of 12th plan (2012-17).

India has been able to utilize only around 35% of the potential of biomass energy and has a future potential for almost 12 million biomass plants.

Globally, India ranks 5th, in terms of exploitable hydro-potential and 4th in wind power generation. Hence, there is a huge potential capacity ready to be explored in this sector by

entities like manufacturers and project consultants.

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Types of Renewable Energy

1. Biomass Energy

2. Wind Energy

3. Geothermal Energy

4. Hydro Energy

5. Solar Energy

5

Biomass Energy

Overview

Being an agrarian country there is easy availability of agricultural based mass which can

be used to generate energy burning this biomass is the easiest and oldest method of

generating energy and also the least efficient.

Over 70% of the population of India is in villages but it is these villages which receive

neither electricity nor a steady supply of water-crucial to survival and economic and

social development and growth. No educational facilities for higher studies exist in these

villages and neither can we find sophisticated hospitals or industries, all because of lack

of electricity and water.

Biomass exists in these villages and needs to be tapped intelligently to provide not only

electricity but also water to irrigate and cultivate fields to further increase production of

biomass (either as a main product or as a by-product), ensuring steady generation

of electricity. An added bonus is the availability of waste biomass from the biomass gasifier plant to be used as fertilizer.

Most common source of biomass is wood waste and agricultural wastes. In India

development of biomass gasification has received serious attention with establishment

of biomass research centers and gasifier action research centers at various locations

spread all over the country. These institutions have played a key role in upgradation and

adaption of suitable technologies, testing, monitoring and development of biomass

gasification systems. Studies reveal that the low grade of land suitable only for

scrub vegetation can be turned to advantage and form an excellent source of biomass fast growing trees and shrubs.

In India more than 2000 gasifiers are estimated to have been established with a

capacity in excess of 22 MW and a number of villages have been electrified with biomass

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gasifier based generators. MNES has actively promoted research and development programs for efficient utilization of biomass and agro wastes and further efforts are on.

Biomass gasification offers immense scope and potential for:

Water pumping

Electricity generation : 3 to 1 MW power plants

Heat generation : for cooking gas smokeless environment Rural electrification means better healthcare, better education and improved

quality of life.

Biomass Gasifier Manufacturers in India - (Key Players) Ankur Scientific Energy Technologies Private Limited

Near Old Sama Jakat Naka

Baroda 390009

http://www.ankurscientific.com/

M.M. Fabricators & Engineers

248, 3rd Phase, III Cross

Peenya Industrial Area

Bangalore 560058

Associated Engineering Works

P B 17 Chivatam Road

Tanuku 534211

http://www.aewgasifiers.com/

Orissa Renewable Energy Development Agency

S 559 Mancheshwar Industrial Estate

Bhubaneswar 751010

http://www.oredaorissa.com/

Power Waves Industries

E 17 Industrial Area

Phase VII

Mohalli 160066

Electrotech

E 61, Industrial Area, Phase VIII

SAS Nagar

Mohalli 160066

Universal Electricals

D 156 Industrial Area

Phase VII

Mohalli 160066

Biofuel Techniques

1974 gali No 14

7

Dasmesh Nagar, Gill Road

Ludhiana 141003

Cosmo Products

Ashoka Complex, Pachpedi Naka

Dhamtari Road

Raipur 492001

Grain Processing India Pvt. Ltd.

29 Strand Road

Kolkata 700001

Confabs Thermos Systems Pvt. Ltd.

14 Cambridge Road

Ulsoor

Bangalore 560008

Girnar Chemicals & Gas India Pvt. Ltd.

8 Pushpak, New Girdhar Park Society

Ambawadi

Ahmedabad 380006

Biomass Research Centers National Botanical Research Institute

Rana Pratap Marg

Lucknow 226001

http://www.nbrienvis.nic.in/

High Altitude Plant Physiology Research Centre

Garhwal University

Srinagar 246174

School Of Biological Sciences

Madurai Kamaraj University

Madurai 625021

http://www.genomicsmku.org/

College Of Technology & Agricultural Engineering

Rajasthan Agriculture University Campus

Udaipur 313001

http://www.ctae.ac.in/

Regional Plant Resource Centre

Nayapalli

Bhubaneswar 711012

http://www.rprcbbsr.com/

Tata Energy Research Centre

7 Jorbaugh

Lodhi Road

New Delhi 110003

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http://www.teriin.org/index.php

Department of Botany

University of Calicut

Calicut University PO

Kerala 673635

http://www.universityofcalicut.info/index.php?option=com_content&task=view&id=49&Item

id=129

School Of Life Science

Ravishankar University

Rakpur 492010

Department Of Botany

Vishwa Bharti

Ratnapalli

Santiniketan 731235

Current Projects - Biomass Power Plants in India

Power Plant Producer Location State Total Capacity

(MW)

Akaltara Power

Ltd.

KVK Energy &

Infrastructure

Ltd.

Janjgir Champa

District Chhattisgarh 1 X 20 MW

Malavalli Power

Plant

Ambience

Management

Services Pvt.

Ltd. and the

Karnataka

Renewable

Energy

Department.

Malavalli Karnataka 1 X 4.5 MW

Samalkot Mill

Nava Bharat

Ventures Ltd. Samalkota Andhra Pradesh 1 X 9 MW

Satya Maharshi

Power

Corporation Ltd.

Velcan Energy

India Ltd. Hyderabad Andhra Pradesh 1 X 7.5 MW

Thoothukkudi

Ind-Barath

Energies Ltd. Thoothukkudi Tamil Nadu 1 X 20 MW

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Wind Energy

Overview

The Indian wind energy sector has an installed capacity of 11807.00 MW (as on March 31,

2010). In terms of wind power installed capacity, India is ranked 5th in the World. Today

India is a major player in the global wind energy market.

The potential is far from exhausted. Indian Wind Energy Association has estimated that with

the current level of technology, the on-shore potential for utilization of wind energy for electricity generation is of the order of 65,000 MW. The unexploited resource availability has

the potential to sustain the growth of wind energy sector in India in the years to come.

The worldwide installed capacity of wind power reached 157,899 MW by the end of 2009.

USA (35,159 MW), Germany (25,777 MW), Spain (19,149 MW) and China (25,104 MW) are

ahead of India in fifth position. The short gestation periods for installing wind turbines, and

the increasing reliability and performance of wind energy machines has made wind power a

favored choice for capacity addition in India.

Suzlon, as Indian-owned company, emerged on the global scene in the past decade, and by

2006 had captured almost 7.7 percent of market share in global wind turbine sales. Suzlon

is currently the leading manufacturer of wind turbines for the Indian market, holding some

52 percent of market share in India. Suzlons success has made India the developing country leader in advanced wind turbine technology.

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Current projects - State-level wind power

There is a growing wind energy installations in a number of states across India.

Tamil Nadu (4906.74 MW)

India is keen to decrease its reliance on fossil fuels to meet its energy demand. Shown here

is a wind farm in Muppandal, Tamil Nadu.

Tamil Nadu is the state with the most wind generating capacity: 4906.74 MW at the end of

the March 2010. Not far from Aralvaimozhi, the Muppandal wind farm, the largest in the

subcontinent, is located near the once impoverished village of Muppandal, supplying the

villagers with electricity for work.[13][14] The village had been selected as the showcase for

India's $2 billion clean energy program which provides foreign companies with tax breaks

for establishing fields of wind turbines in the area. In february 2009, Shriram EPC bagged

INR 700 million contract for setting up of 60 units of 250 KW (totaling 15 MW) wind turbines

in Tirunelveli district by Cape Energy.

Enercon is also playing a major role in development of wind energy in India. In Tamil Nadu,

Coimbatore and Tiruppur Districts having more wind Mills from 2002 onwards,specially,

Chittipalayam, Kethanoor, Gudimangalam, Poolavadi,Murungappatti (MGV

Place),Sunkaramudaku,KongalNagaram,Gomangalam, Anthiur are the high wind power

production places in the both districts.

Maharashtra (2077.70 MW)

Maharashtra is second only to Tamil Nadu in terms of generating capacity. Suzlon has been

heavily involved. Suzlon operates what was once Asia's largest wind farm, the Vankusawade

Wind Park (201 MW), near the Koyna reservoir in Satara district of Maharashtra.

Gujarat (1863.64 MW)

Samana & Sadodar in Jamanagar district is set to host energy companies like China Light

Power (CLP) and Tata Power have pledged to invest up to $189.5 million in different

projects in the area. CLP, through its India subsidiary CLP India, is investing close to $111

million for installing 126 wind turbines in Samana that will generate 100.8 MW power. Tata

Power has installed wind turbines in the same area for generating 50 MW power at a cost of

$70 million. Both projects are expected to become operational by early next year, according

to government sources. The Gujarat government, which is banking heavily on wind power,

has identified Samana as an ideal location for installation of 450 turbines that can generate

a total of 360 MW. To encourage investment in wind energy development in the state, the

government has introduced a raft of incentives including a higher wind energy tariff.

Samana has a high tension transmission grid and electricity generated by wind turbines can

be fed into it. For this purpose, a substation at Sadodar has been installed. Both projects

are being executed by Enercon Ltd, a joint venture between Enercon of Germany and

Mumbai-based Mehra group.

ONGC Ltd has commissioned its first wind power project. The 51 MW project is located at

Motisindholi in Kutch district of Gujarat. ONGC had placed the EPC order on Suzlon Energy

in January 2008, for setting up the wind farm comprising 34 turbines of 1.5 MW each. Work

on the project had begun in February 2008, and it is learnt that the first three turbines had

begun production within 43 days of starting construction work. Power from this $68.5

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million captive wind farm will be wheeled to the Gujarat state grid for onward use by ONGC

at its Ankleshwar, Ahmedabad, Mehsana and Vadodara centres. ONGC has targeted to

develop a captive wind power capacity of around 200 MW in the next two years.

Karnataka (1472.75 MW)

There are many small wind farms in Karnataka, making it one of the states in India which

has a high number of wind mill farms. Chitradurga, Gadag are some of the districts where

there are a large number of Windmills. Chitradurga alone has over 20000 wind turbines.

The 13.2 MW Arasinagundi (ARA) and 16.5 MW Anaburu (ANA) wind farms are ACCIONAS first in India. Located in the Davangere district (Karnataka State), they have a total installed

capacity of 29.7 MW and comprise a total 18 Vestas 1.65MW wind turbines supplied by

Vestas Wind Technology India Pvt. Ltd.[

The ARA wind farm was commissioned in June 2008 and the ANA wind farm, in September

2008. Each facility has signed a 20-year Power Purchase Agreement (PPA) with Bangalore

Electricity Supply Company (BESCOM) for off-take of 100% of the output. ARA and ANA are

Accionas first wind farms eligible for CER credits under the Clean Development Mechanism (CDM).

ACCIONA is in talks with the World Bank for The Spanish Carbon Fund which is assessing

participation in the project as buyer for CERs likely to arise between 2010 and 2012. An

environmental and social assessment has been conducted as part of the procedure and

related documents have been provided. These are included below, consistent with the

requirement of the World Bank's disclosure policy.

Rajasthan (1088.37 MW)

Gurgaon-headquartered Gujarat Fluorochemicals Ltd is in an advanced stage of

commissioning a large wind farm in Jodhpur district of Rajasthan. A senior official told

Projectmonitor that out of the total 31.5 mw capacity, 12 mw had been completed so far.

The remaining capacity would come on line shortly, he added. For the INOX Group

Company, this would be the largest wind farm. In 2006-07, GFL commissioned a 23.1-mw

wind power project at Gudhe village near Panchgani in Satara district of Maharashtra. Both

the wind farms will be grid-connected and will earn carbon credits for the company, the

official noted. In an independent development, cement major ACC Ltd has proposed to set

up a new wind power project in Rajasthan with a capacity of around 11 mw. Expected to

cost around $13.3 million, the wind farm will meet the power requirements of the

company's Lakheri cement unit where capacity was raised from 0.9 million tpa to 1.5 million

tpa through a modernisation plan. For ACC, this would be the second wind power project

after the 9-mw farm at Udayathoor in Tirunelvelli district of Tamil Nadu. Rajasthan is

emerging as an important destination for new wind farms, although it is currently not

amongst the top five states in terms of installed capacity. As of 2007 end, this northern

state had a total of 496 mw, accounting for a 6.3 per cent share in India's total capacity.

Madhya Pradesh (229.39 MW)

In consideration of unique concept, Govt. of Madhya Pradesh has sanctioned another 15 MW

project to MPWL at Nagda Hills near Dewas. All the 25 WEGs have been commissioned on

31.03.2008 and under successful operation.

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Kerala (27.75 MW)

The first wind farm of the state was set up at Kanjikode in Palakkad district. It has a

generating capacity of 23.00 MW. A new wind farm project was launched with private

participation at Ramakkalmedu in Idukki district. The project, which was inaugurated by

chief minister V. S. Achuthanandan in April 2008, aims at generating 10.5 MW of electricity.

The Agency for Non-Conventional Energy and Rural Technology (ANERT), an autonomous

body under the Department of Power, Government of Kerala, is setting up wind farms on

private land in various parts of the state to generate a total of 600 mw of power. The

agency has identified 16 sites for setting up wind farms through private developers. To start

with, ANERT will establish a demonstration project to generate 2 mw of power at

Ramakkalmedu in Idukki district in association with the Kerala State Electricity Board. The

project is slated to cost $4.7 million. Other wind farm sites include Palakkad and

Thiruvananthapuram districts. The contribution of non-conventional energy in the total

6,095 mw power potential is just 5.5 per cent, a share the Kerala government wants to

increase by 30 per cent. ANERT is engaged in the field of development and promotion of

renewable sources of energy in Kerala. It is also the nodal agency for implementing

renewable energy programmes of the Union ministry of non-conventional energy sources.

West Bengal (1.10MW)

The total installation in West Bengal is just 1.10 MW as there were only 0.5 MW additions in

2006-2007 and none between 20072008 and 20082009

Suzlon Energy Ltd plans to set up a large wind-power project in West Bengal Suzlon Energy

Ltd is planning to set up a large wind-power project in West Bengal, for which it is looking at

coastal Midnapore and South 24-Parganas districts. According to SP Gon Chaudhuri,

chairman of the West Bengal Renewable Energy Development Agency, the 50 MW project

would supply grid-quality power. Gon Chaudhuri, who is also the principal secretary in the

power department, said the project would be the biggest in West Bengal using wind energy.

At present, Suzlon experts are looking for the best site. Suzlon aims to generate the power

solely for commercial purpose and sell it to local power distribution outfits like the West

Bengal State Electricity Board (WBSEB).

Suzlon will invest around $55.5 million initially, without taking recourse to the funding

available from the Indian Renewable Energy Development Agency (Ireda), said Gon

Chaudhuri. He said there are five wind-power units in West Bengal, at Frazerganj,

generating a total of around 1 MW. At Sagar Island, there is a composite wind-diesel plant

generating 1 MW. In West Bengal, power companies are being encouraged to buy power

generated by units based on renewable energy. The generating units are being offered

special rates. S Banerjee, private secretary to the power minister, said this had encouraged

the private sector companies to invest in this field.

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Current Projects in India

India's Largest Wind power production facilities (10MW and greater)

Power Plant Producer Location State

Total

Capacity

(MWe)

Vankusawade

Wind Park Suzlon Energy Ltd. Satara Dist. Maharashtra 259

Cape Comorin Aban Loyd Chiles

Offshore Ltd. Kanyakumari Tamil Nadu 33

Kayathar Subhash Subhash Ltd. Kayathar Tamil Nadu 30

Ramakkalmedu Subhash Ltd. Ramakkalmedu Kerala 25

Muppandal Wind Muppandal Wind Farm Muppandal Tamil Nadu 513

Gudimangalam Gudimangalam Wind

Farm Gudimangalam Tamil Nadu 21

Puthlur RCI Wescare (India) Ltd. Puthlur Andhra

Pradesh 20

Lamda Danida Danida India Ltd. Lamda Gujarat 15

Chennai Mohan Mohan Breweries &

Distilleries Ltd. Chennai Tamil Nadu 15

Jamgudrani MP MP Windfarms Ltd. Dewas Madhya

Pradesh 14

Jogmatti BSES BSES Ltd. Chitradurga

Dist Karnataka 14

Perungudi Newam Newam Power Company

Ltd. Perungudi Tamil Nadu 12

Kethanur Wind

Farm Kethanur Wind Farm Kethanur Tamil Nadu 11

Hyderabad

APSRTC

Andhra Pradesh State

Road Transport Corp. Hyderabad

Andhra

Pradesh 10

Muppandal Madras Madras Cements Ltd. Muppandal Tamil Nadu 10

Poolavadi

Chettinad

Chettinad Cement Corp.

Ltd. Poolavadi Tamil Nadu 10

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Barriers for Wind Energy in India

Initial cost for wind turbines is greater than that of conventional fossil fuel generators per

MW installed. Noise is produced by the rotor blades. This is not normally an issue in the

locations chosen for most wind farms and research by Salford University shows that noise

complaints for wind farms in the UK are almost non-existent.

Despite the high installed capacity, the actual utilization of wind power in India is low

because policy incentives are geared towards installation rather than operation of the

plants. This is why only 1.6% of actual power production in India comes from wind although

the installed capacity is 6%. The government is considering the addition of incentives for

ongoing operation of installed wind power plants.

Opportunities

The Ministry of New and Renewable Energy (MNRE) has fixed a target of 10,500 MW

between 200712, but an additional generation capacity of only about 6,000 MW might be available for commercial use by 2012.

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Geothermal Energy

Overview

Geothermal energy is the earths natural heat available inside the earth. This thermal energy contained in the rock and fluid that filled up fractures and pores in the earths crust can profitably be used for various purposes.[i]Heat from the Earth, or geothermal Geo (Earth) + thermal (heat) energy can be and is accessed by drilling water or steam wells in a process similar to drilling for oil. Geothermal energy is an enormous, underused heat

and power resource that is clean (emits little or no greenhouse gases), reliable (average

system availability of 95%), and homegrown (making us less dependent on foreign oil).

Geothermal resources range from shallow ground to hot water and rock several miles below

the Earth's surface, and even farther down to the extremely hot molten rock called magma.

Mile-or-more-deep wells can be drilled into underground reservoirs to tap steam and very

hot water that can be brought to the surface for use in a variety of applications.

India has reasonably good potential for geothermal; the potential geothermal provinces can

produce 10,600 MW of power. But yet geothermal power projects has not been exploited at

all, owing to a variety of reasons, the chief being the availability of plentiful coal at cheap

costs. However, with increasing environmental problems with coal based projects, India will

need to start depending on clean and eco-friendly energy sources in future; one of which

could be geothermal.

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Technology

Mile-or-more-deep wells can be drilled into underground reservoirs to tap steam and very

hot water that drive turbines that drive electricity generators

Four types of power plants are operating today:

Flashed steam plant: The extremely hot water from drill holes when released from the

deep reservoirs high pressure steam (termed as flashed steam) is released. This force of

steam is used to rotate turbines. The steam gets condensed and is converted into water

again, which is returned to the reservoir. Flashed steam plants are widely distributed

throughout the world.

Dry steam plant: Usually geysers are the main source of dry steam. Those geothermal

reservoirs which mostly produce steam and little water are used in electricity production

systems. As steam from the reservoir shoots out, it is used to rotate a turbine, after sending

the steam through a rock-catcher. The rock-catcher protects the turbine from rocks which

come along with the steam.

Binary power plant: In this type of power plant, the geothermal water is passed through a

heat exchanger where its heat is transferred to a secondary liquid, namely isobutene,

isopentane or ammoniawater mixture6 present in an adjacent, separate pipe. Due to this double-liquid heat exchanger system, it is called a binary power plant. The secondary liquid

which is also called as working fluid should have lower boiling point than water. It turns into

vapour on getting required heat from the hot water. The vapour from the working fluid is

used to rotate turbines. The binary system is therefore useful in geothermal reservoirs

which are relatively low in temperature gradient. Since the system is a completely closed

one, there is minimum chance of heat loss. Hot water is immediately recycled back into the

reservoir. The working fluid is also condensed back to the liquid and used over and over

again.

Hybrid power plant: Some geothermal fields produce boiling water as well as steam,

which are also used in power generation. In this system of power generation, the flashed

and binary systems are combined to make use of both steam and hot water. Efficiency of

hybrid power plants is however less than that of the dry steam plants.

Enhanced geothermal system: The term enhanced geothermal systems (EGS), also

known as engineered geothermal systems (formerly hot dry rock geothermal), refers to a

variety of engineering techniques used to artificially create hydrothermal resources

(underground steam and hot water) that can be used to generate electricity. Traditional

geothermal plants exploit naturally occurring hydrothermal reservoirs and are limited by the

size and location of such natural reservoirs. EGS reduces these constraints by allowing for

the creation of hydrothermal reservoirs in deep, hot but naturally dry geological

formations.EGS techniques can also extend the lifespan of naturally occurring hydrothermal

resources. Given the costs and limited full-scale system research to date, EGS remains in its

infancy, with only a few research and pilot projects existing around the world and no

commercial-scale EGS plants to date. The technology is so promising, however, that a

number of studies have found that EGS could quickly become widespread.

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Potential

It has been estimated from geological, geochemical, shallow geophysical and shallow drilling

data it is estimated that India has about 10000 MWe of geothermal power potential that can

be harnessed for various purposes.

Rocks covered on the surface of India ranging in age from more than 4500 million years to

the present day and distributed in different geographical units. The rocks comprise of

Archean, Proterozoic, the marine and continental Palaeozoic, Mesozoic, Teritary, Quaternary

etc., More than 300 hot spring locations have been identified by Geological survey of India

(Thussu, 2000). The surface temperature of the hot springs ranges from 35 C to as much as

98 C. These hot springs have been grouped together and termed as different geothermal

provinces based on their occurrence in specific geotectonic regions, geological and strutural

regions such as occurrence in orogenic belt regions, structural grabens, deep fault zones,

active volcanic regions etc., Different orogenic regions are Himalayan geothermal province, Naga-Lushai geothermal province, Andaman-Nicobar Islands geothermal province

and non-orogenic regions are Cambay graben, Son-Narmada-Tapi graben, west coast, Damodar valley, Mahanadi valley, Godavari valley etc.

Potential Sites:

Puga Valley (J&K) Tatapani (Chhattisgarh) Godavari Basin Manikaran (Himachal Pradesh) Bakreshwar (West Bengal) Tuwa (Gujarat) Unai (Maharashtra) Jalgaon (Maharashtra)

Current Projects

There are no operational geothermal plants in India.

Challenges (Cost and Price) Unlike traditional power plants that run on fuel that must be purchased over the life of the

plant, geothermal power plants use a renewable resource that is not susceptible to price

fluctuations.

New geothermal plants currently are generating electricity from 0.05$ to 0.08$ per kilowatt

hour (kwh).Once capital costs .Once the capital costs have been recovered price of power

can decrease below 0.05$ per kwh. The price of geothermal is within range of other

electricity choices available today when the costs of the lifetime of the plant are considered.

Most of the costs related to geothermal power plants are related to resource exploration and

plant construction. Like oil and gas exploration, it is expensive and because only one in five

wells yield a reservoir suitable for development .Geothermal developers must prove that

they have reliable resource before they can secure millions of dollar required to develop

geothermal resources.

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Drilling

Although the cost of generating geothermal has decreased by 25 percent during the last two

decades, exploration and drilling remain expensive and risky. Drilling Costs alone account

for as much as one-third to one-half to the total cost of a geothermal project. Locating the

best resources can be difficult; and developers may drill many dry wells before they

discover a viable resource. Because rocks in geothermal areas are usually extremely hard

and hot, developers must frequently replace drilling equipment. Individual productive

geothermal wells generally yield between 2MW and 5MW of electricity; each may cost from

$1 million to $5 million to drill. A few highly productive wells are capable of producing 25

MW or more of electricity.

Transmission

Geothermal power plants must be located near specific areas near a reservoir because it is

not practical to transport steam or hot water over distances greater than two miles. Since

many of the best geothermal resources are located in rural areas, developers may be

limited by their ability to supply electricity to the grid. New power lines are expensive to

construct and difficult to site. Many existing transmission lines are operating near capacity

and may not be able to transmit electricity without significant upgrades. Consequently, any

significant increase in the number of geothermal power plants will be limited by those plants

ability to connect, upgrade or build new lines to access to the power grid and whether the

grid is able to deliver additional power to the market.

Barriers to Geothermal Energy in India

Finding a suitable build location.

Energy source such as wind, solar and hydro are more popular and better

established; these factors could make developers decided against geothermal.

Main disadvantages of building a geothermal energy plant mainly lie in the

exploration stage, which can be extremely capital intensive and high-risk; many

companies who commission surveys are often disappointed, as quite often, the land

they were interested in, cannot support a geothermal energy plant.

Some areas of land may have the sufficient hot rocks to supply hot water to a power

station, but many of these areas are located in harsh areas of the world (near the

poles), or high up in mountains.

Harmful gases can escape from deep within the earth, through the holes drilled by

the constructors. The plant must be able to contain any leaked gases, but disposing

of the gas can be very tricky to do safely.

Geothermal Companies in India

Panx Geothermal

LNJ Bhilwara - http://www.lnjbhilwara.com/

Tata Power - http://www.tatapower.com/

NTPC - http://www.ntpc.co.in/

Avin Energy Systems - http://www.avinsolar.com/Geothermal.htm

GeoSyndicate Power Private Limited - http://www.geosyndicate.com/

19

Apex Bodies

1. Geological Survey of India

Postal address

27, Jawaharlal Nehru Road,

Kolkata 700016

Telephone 91-33-22861641/65/73/72

Fax 91-33-22861656

http://www.gsi.gov.in

2. National Geophysical Research Institute, Hyderabad

Council of Scientific & Industrial Research

Uppal Road

Uppal, Hyderabad 500007,

India

Tel: +91 40 23434600

http://www.ngri.org.in/

20

Hydro Energy

Overview

Hydropower is a renewable energy resource because it uses the Earth's water cycle to

generate electricity. Water evaporates from the Earth's surface, forms clouds, precipitates

back to earth, and flows toward the ocean. The movement of water as it flows downstream

creates kinetic energy that can be converted into electricity. 2700 TWH is generated every

year. Hydropower supplies at least 50% of electricity production in 66 countries and at

least 90% in 24 countries. Hydropower is by far the single largest renewable energy source

in India, accounting for over 10% of total electricity generation. . While most of this energy

is from large hydro-electric plants, small hydro plants (up to 25 MW capacities) have also

started making a dent in India.

Technology

A hydroelectric power plant consists of a high dam that is built across a large river to create

a reservoir, and a station where the process of energy conversion to electricity takes place.

The first step in the generation of energy in a hydropower plant is the collection of run-off of

seasonal rain and snow in lakes, streams and rivers, during the hydrological cycle. The run-

off flows to dams downstream. The water falls through a dam, into the hydropower plant

and turns a large wheel called a turbine. The turbine converts the energy of falling water

into mechanical energy to drive the generator After this process has taken place electricity

is transferred to the communities through transmission lines and the water is released back

into the lakes, streams or rivers. This is entirely not harmful, because no pollutants are

added to the water while it flows through the hydropower plant.

21

Potential in India

India is blessed with immense amount of hydro-electric potential and ranks 5th in terms of

exploitable hydro-potential on global scenario. As per assessment made by CEA, India is

endowed with economically exploitable hydro-power potential to the tune of 1 48 700 MW of

installed capacity. The basin wise assessed potential is as under:-

Basin/Rivers Probable Installed Capacity (MW)

Indus Basin 33,832

Ganga Basin 20,711

Central Indian River system 4,152

Western Flowing Rivers of southern India 9,430

Eastern Flowing Rivers of southern India 14,511

Brahmaputra Basin 66,065

Total 1,48,701

In addition, 56 number of pumped storage projects have also been identified with probable

installed capacity of 94 000 MW. In addition to this, hydro-potential from small, mini &

micro schemes has been estimated as 6 782 MW from 1 512 sites. Thus, in totality India is

endowed with hydro-potential of about 2 50 000 MW.

Current Projects

Major Hydropower generating units

NAME STATE CAPACITY (MW)

BHAKRA PUNJAB 1100

NAGARJUNA ANDHRA PRADESH 960

KOYNA MAHARASHTRA 920

DEHAR HIMACHAL PRADESH 990

SHARAVATHY KARNATAKA 891

KALINADI KARNATAKA 810

SRISAILAM ANDHRA PRADESH 770

Small Hydro

In India, hydro power projects with a station capacity of up to 25 megawatt (MW) each fall

under the category of small hydro power (SHP).

Potential

India has an estimated SHP potential of about 15 000 MW.

Installed Capacity

The total installed capacity of small hydro power projects (upto 25 MW) as on 31.03.2009 is

2429.77 MW from 674 projects and 188 projects with aggregate capacity of 483.23 MW are

under construction.

22

Existing SHP Projects in India

State Wise Numbers And Aggregate Capacity Of Shp Projects (Upto 25 Mw)

Installed & Under Implementation (AS ON 31.3.2009)

Sl.

No.

State Projects Installed Projects under Implementation

Nos. Capacity

(MW)

Nos. Capacity (MW)

1 Andhra Pradesh 59 180.83 12 21.50

2 Arunachal Pradesh 81 61.32 43 25.94

3 Assam 4 27.1 4 15.00

4 Bihar 12 54.60 4 3.40

5 Chattisgarh 5 18.050 1 1.00

6 Goa 1 0.050 - -

7 Gujarat 2 7.000 2 5.60

8 Haryana 5 62.700 1 6.00

9 Himachal Pradesh 79 230.915 9 26.75

10 J&K 32 111.830 5 5.91

11 Jharkhand 6 4.050 8 34.85

12 Karnataka 83 563.45 14 85.25

13 Kerala 19 133.87 2 3.2

14 Madhya Pradesh 10 71.16 4 19.90

15 Maharashtra 29 211.325 5 31.20

16 Manipur 8 5.450 3 2.75

17 Meghalaya 4 31.030 3 1.70

18 Mizoram 18 24.470 1 8.50

19 Nagaland 10 28.670 4 4.20

20 Orissa 8 44.300 6 23.93

21 Punjab 29 123.900 2 18.75

22 Rajasthan 10 23.850 - -

23 Sikkim 16 47.110 2 5.20

24 Tamil Nadu 15 90.050 4 13.00

25 Tripura 3 16.010 - -

26 Uttar Pradesh 9 25.100 - -

27 Uttarakhand 93 127.92 33 40.35

28 West Bengal 23 98.400 16 79.25

29 A&N Islands 1 5.250 - -

Total 674 2429.77 188 483.23

23

SHP Projects Installed in the Private Sector

Sl. No. State Total

Number

Total capacity

(MW)

1 Andhra Pradesh 41 96.93

2 Assam 1 0.10

3 Himachal Pradesh 33 134.45

4 Karnataka 66 520.80

5 Kerala 2 33.00

6 Madhya Pradesh 1 2.20

7 Maharashtra 4 21.00

8. Orissa 1 12.00

8 Punjab 10 16.65

9 Tamil Nadu 1 0.35

9 Uttaranchal 9 43.30

10 West Bengal 5 6.45

Total 174 887.23

Barriers

The energy of running water has been exploited for very many years. However, traditional

approaches have suffered disadvantages due to environmental factors. For example:

Building a dam across a river floods the land that would otherwise be available for

use, alters the landscape, affects the local community that would have lived and

worked on the flooded land, alters the character of the river, and prevents the free

movement of fish;

Diverting a river affects the nature of the countryside and does not lend itself to use

on a large scale.

Permanent complete or partial blockage of a river for energy conversion is adversely

affected by variations in flow.

Building large-scale hydro power plants can be polluting and damaging to

surrounding ecosystems. Changing the course of waterways can also have a

detrimental effect on human communities, agriculture and ecosystems further

downstream.

Hydro projects can also be unreliable during prolonged droughts and dry seasons

when rivers dry up or reduce in volume.

24

Hydro Research Centers

Alps Power Technologies (P) Limited

The company is manufacturing small turbines and genset up to 1000 KW, complete with

microprocessor based static excitor system, microprocessor based digital governor, remote

operation and telemetry and telecontrol system, chartless recorder for data etc. The

company has its own manufacturing and testing facilities at its works, in Ghunna industrial

area, Saharanpur, India.

Flovel Mecamidi

Flovel Mecamidi Energy Private Limited (FMEPL) is a joint venture between Flovel MG

Holdings Private Limited, India and Mecamidi S.A., France. Promoters of Flovel MG Holdings

Private Limited along with its core team have decades of experience in marketing, design,

manufacture, supply, erection, commissioning & servicing of hydro power projects of all

types both for local as well as export markets

Karshni Intertech Pvt.Ltd.

Karshni Intertech Pvt. Ltd. is a manufacturer, wholesale supplier, exporter of hydro energy

products. Their range of products include hydro energy system components (small),

hydroelectric turbines (small), solar charge controllers, water pumping windmills, wind

energy system components (large), backup power systems, 100% renewable energy

farming , fully integrated systems.

Multitek Consortium

Multitek Consortium is a hydro energy based company located in Delhi, India. Their range of

products hydro energy system components (small), water pumps, turbine machines, gates

and hoists, penstock etc.

Nagalaxmi Industries

Nagalaxmi Industries are manufacturers of industrial structures for thermal, hydel, nuclear

power station, food industries, pharmaceutical, chemical, cement etc.

SBA Hydro Systems Pvt. Ltd

SBA Hydro Systems Pvt. Ltd is a manufacturer, wholesale supplier, exporter of hydro energy

products. Their range of products include hydro energy system components (small), hydro

energy system components (large), hydro energy systems (large), hydro energy systems

(small), hydroelectric turbines (small), hydroelectric turbines (large).

25

Apex bodies

International Association for Small Hydro (IASH)

CBIP Building Malcha Marg,

Chanakyapuri, New Delhi - 110021

Tel: 91-11-26115984 / 26882866

Fax: 91-11-26116347

http://www.iash.org/

Indian National Hydropower Association

NHPC Office Complex,

Sector 33, Faridabad-121003

Haryana, India

Phone: +91-9312009243

Fax: +91-129-2271913

http://www.nhpcindia.com/

Alternate Hydro Energy Centre

Indian Institute of Technology

Roorkee - 247 667

Uttarakhand, India

Contact Numbers:

Fax: + 91 1332-273517, 237560

Phone: + 91 1332-274254, 285213

http://ahec.org.in/

26

Solar Energy

Overview

India is densely populated and has high solar insolation, an ideal combination for using solar

power in India. India is already a leader in wind power generation (Wind power in India).

Suzlon Energy, based in India is one of the pioneering industries in the world generate non-

conventional energy, in this case, wind energy. In the solar energy sector, some large

projects have been proposed, and a 35,000 km2 area of the Thar Desert has been set aside

for solar power projects, sufficient to generate 700 GW to 2,100 GW (gigawatt).

In July 2009, India unveiled a US$19 billion plan, to produce 20 GW of solar power by 2020.

Under the plan, the use of solar-powered equipment and applications would be made

compulsory in all government buildings including hospitals and hotels. On November 18,

2009, it was reported that India was ready to launch its National Solar Mission under the

National Action Plan on Climate Change, with plans to generate 1,000 MW of power by

2013.

Annual Insolation

With about 300 clear, sunny days in a year, India's theoretical solar power reception, on

only its land area, is about 5 Peta Watt-hour per year or PWh/year (i.e. 5 trillion kWh/yr ~

600 TW). The daily average solar energy incident over India varies from 4 to 7 kWh/m2 with

about 15002000 sunshine hours per year, depending upon location. This is far more than current total energy consumption. For example, even assuming 10% conversion efficiency

for PV modules, it will still be thousand times greater than the likely electricity demand in

India by the year 2015.

27

Installed Capacity

The amount of solar energy produced in India is merely 0.4% compared to other energy

resources. The Grid-interactive solar power as of December 2010 was merely 10 MW.

Government-funded solar energy in India only accounted for approximately 6.4 megawatt-

years of power as of 2005. However, as of October 2009, India is currently ranked number

one along with the United States in terms of installed Solar Power generation capacity.

Number of solar street lighting systems: 55,795

Number of home lighting systems: 342,607

Solar lanterns: 560,295

Solar photovoltaic power plants: 1566 kW

Solar water heating systems: 140 km2 of collector area

Box-type solar cookers: 575,000

Solar photovoltaic pumps: 6,818

Name of Plant DC

Peak Power (MW) Notes

Sivaganga Photovoltaic Plant 5 Completed December 2010

Azure Power - Photovoltaic Plant 2 2009

Jamuria Photovoltaic Plant 2 2009

NDPC Photovoltaic Plant 1 2010

Thyagaraj stadium Plant-Delhi 1 April, 2010

Gandhinagar Solar Plant 1 January 21, 2011

Still Unaffordable

Solar power is currently prohibitive due to high initial costs of deployment. To spawn a

thriving solar market, the technology needs to be competitively cheaper i.e. attaining cost parity with fossil or nuclear energy. India is heavily dependent on coal and foreign oil a phenomenon likely to continue until non-fossil / renewable energy technology becomes

economically viable in the country. The cost of production ranges from $0.33 to $0.67 per

unit compared to around $0.11 to $0.18 per unit for conventional thermal energy.

Solar engineering training

The Australian government has awarded UNSW A$5.2 million to train next-generation solar

energy engineers from Asia-Pacific nations, specifically India and China, as part of the Asia-

Pacific Partnership on Clean Development and Climate (APP). Certain programs are

designed to target for rural solar usage development.

Applications of Solar Energy

Rural electrification

Lack of electricity infrastructure is one of the main hurdles in the development of rural

India. India's grid system is considerably under-developed, with major sections of its

populace still surviving off-grid. As of 2004 there are about 80,000 unelectrified villages in

the country. Of these villages, 18,000 could not be electrified through extension of the

conventional grid. A target for electrifying 5,000 such villages was fixed for the Tenth

National Five Year Plan (20022007). As on 2004, more than 2,700 villages and hamlets had been electrified mainly using SPV systems. Developments on cheap solar technology

28

are considered as a potential alternative that allows an electricity infrastructure comprising

of a network of local-grid clusters with distributed electricity generation. That could allow

bypassing, or at least relieving the need of installing expensive, and lossy, long-distance

centralised power delivery systems and yet bring cheap electricity to the masses. 3000

villages of Odisha will be lighted with Solar power by 2014.

Agricultural support

Water pumping

Solar PV water pumping systems are used for irrigation and drinking water. The majority of

the pumps are fitted with a 2003,000 watt motor that are powered with 1,800 Wp PV arrays which can deliver about 140,000 liters of water/day from a total head of

10 meters. By 30 September, 2006, a total of 7,068 solar PV water pumping systems have

been installed and it can change over a period of time.

Harvest processing

Solar driers are used to dry harvests before storage.

Cooling

Another e.g. is the cost of energy expended on temperature control a factor squarely influencing regional energy intensity. With cooling load demands being roughly in phase

with the sun's intensity, cooling from intense solar radiation could be an attractive energy-

economic option in the subcontinent.

Solar water heaters

Bangalore has the largest deployment of rooftop solar water heaters in India that will

generate energy equivalent to 200 MW every day and will be the country's first grid

connected utility scale project soon.

Bangalore is also the first city in the country to put in place an incentive mechanism by

providing a rebate, which has just been increased to $1.1, on monthly electricity bills for

residents using roof-top thermal systems which are now mandatory for all new structures.

Pune, another city in the western part of India, has also recently made installation of solar

water heaters in new buildings mandatory.

Challenges and Constraints

Land scarcity

Per capita land availability is a scarce resource in India. Dedication of land area for exclusive

installation of solar cells might have to compete with other necessities that require land. The

amount of land required for utility-scale solar power plants currently approximately 1 km2 for every 2060 megawatts (MW) generated could pose a strain on India's available land resource. The architecture more suitable for most of India would be a highly distributed,

individual rooftop power generation systems, all connected via a local grid. However,

erecting such an infrastructure which does not enjoy the economies of scale possible in mass utility-scale solar panel deployment needs the market price of solar technology deployment to substantially decline so that it attracts the individual and average family size

29

household consumer. That might be possible in the future, since PV is projected to continue

its current cost reductions for the next decades and be able to compete with fossil fuel.

Slow progress

While the world has progressed substantially in production of basic silicon mono-crystalline

photovoltaic cells, India has fallen short to achieve the worldwide momentum. India is now

in 7th place worldwide in Solar Photovoltaic (PV) Cell production and 9th place in Solar

Thermal Systems with nations like Japan, China, and the US currently ranked far ahead.

Globally, solar is the fastest growing source of energy (though from a very small base) with

an annual average growth of 35%, as seen during the past few years.

Latent Potential

Some noted think-tanks recommend that India should adopt a policy of developing solar

power as a dominant component of the renewable energy mix, since being a densely

populated region in the sunny tropical belt, the subcontinent has the ideal combination of

both high solar insolation and a big potential consumer base density. In one of the analyzed

scenarios, while reining on its long-term carbon emissions without compromising its

economic growth potential, India can make renewable resources like solar the backbone of

its economy by 2050.

Government Support

The government of India is promoting the use of solar energy through various strategies. In

the latest budget for 2010-11, the government has announced an allocation of US $217

million towards the Jawaharlal Nehru National Solar Mission and the establishment of a

Clean Energy Fund. It's an increase of US$82.5 million from the previous budget. Also

budget has also encouraged private solar companies by reducing customs duty on solar

panels by 5 percent and exempting excise duty on solar photovoltaic panels. This is

expected to reduce the roof-top solar panel installation by 15- 20 percent. The budget also

proposed a coal tax of USD 1 per metric ton on domestic and imported coal used for power

generation. Additionally, the government has also initiated Renewable Energy Certificate

(REC) scheme which is designed to drive investment in low-carbon energy projects.

30

Opportunities in Renewable Energy in India India is the fifth largest generator of power in the world (170 GW) however per capita

consumption is 30% of the world average - this will change following the growth trajectory

of the country and new capacity will be needed at unprecedented rates.

Renewable energy can supply a large part of this capacity, offering greater energy

security, access to those who currently lack it and create a vibrant new industrial

sector.

India is emerging as a world leader in this sector with a total installed capacity of 17

GW and has set a target to achieve 74 GW of grid-connected renewable energy

capacity by 2022.

The market in India for the renewable energy business is growing at an annual rate

of 15%. The scope for private investment in renewable energy is estimated to be

about USD 34 billion. Wind, solar and biomass all have huge potential.

Energy generation and transmission efficiency are also critical to India's long-term

energy security. There are opportunities all along the power sector value chain, as

only 25% of the primary energy used in coal-fired power plants reaches the end

user.

Lucintel's new market study, "Indian Energy Sector: Macro-Economic & Risk Analysis-Risk,

Potentialities and Opportunities", analyzes and identifies India's energy sector and outlines

its areas of opportunity in the coming decade.

India's coal production is expected to grow at a CAGR of 4% from 2009 to 2020. The

natural gas sector has gained increased importance in India, especially over the last decade.

The share of natural gas in the energy mix for India is expected to be approximately 25%

by 2025. The oil segment is also a major contributor of the primary energy mix. India

already imports over 75% of its crude oil requirements. Energy consumption from all

sources is expected to increase significantly in the coming years. According to Lucintel's

analysis, the Indian energy sector is likely to grow fourfold by 2020. The Working Group on

Power for the ninth Five Year Plan (2007-12) has estimated a total investment of $170

billion in the Indian electricity sector.

During the nineteenth and twentieth century economic growth was basically driven by

technology, though energy played a major role. Now, in the age of science and information

technology, the world is once again exploring alternative sources of energy and trying to

manipulate various energy sources to produce economic outputs. Availability of energy is

the key to sustaining economic development. The availability of commercial energy has a

direct impact on the quality of services in the fields of education, health and food security.

Macroeconomic health of a country requires long-term supplies of energy that are reliable,

sustainable and affordable.

Coal energy is the major contributor to the Indian energy mix. However, the relative

percentage of the consumption of coal and oil is likely to fall in energy mix, as the

consumption of natural gas, nuclear energy and renewable energy is likely to increase at a

more rapid rate by 2020. The total primary energy consumption is 514 Mtoe (Million Tonnes

Oil Equivalent) while it is likely to grow to about 1000 Mtoe by 2020.

If we look at the pattern of energy production, coal and oil account for 54% and 34%

respectively with natural gas, hydro and nuclear contributing to the balance. In power

generation, coal contributes nearly 62%, while 70% of the coal produced every year in India

is used for thermal generation. Looking at the past trend and future optimistic view on

31

economic growth, it is estimated that the consumption of primary energy is likely to grow

faster than expected. More specifically, the growth rate of electricity consumption is likely to

grow faster than the growth of GDP. If one considers the correlation between GDP growth

and electricity consumption in the country, it is less than one at present. However, this

correlation may not likely to hold true with a higher growth projection for GDP. When the

economy grows at a faster rate, the industrial sector is bound to increase at a faster pace

and thus, demand for electricity is likely to grow at a much faster rate than expected.

Approximately 400 million people are still living without electricity, which will boost

investment in this segment to fulfill the dream of providing electricity to all.

Risks The next ten years will see an economic transformation, with India's growth rate expected

to surpass that of China as soon as next year. Growing its economy at this rate under a

business-as-usual (BAU) scenario means India's demand for energy will continue to increase

exponentially, and by 2030 energy production could need to expand six-fold to keep pace.

Even today, India spends 45% of export earnings on energy imports. By 2020 over 35% of

the energy it consumes is expected to come from outside the country, making it vulnerable

to external price changes.

Climate security is a further hurdle with India being the most vulnerable of all the G20

nations to climate change, not to mention the rising levels of local pollution associated with

fossil fuel consumption. Climate change presents all countries with risks and opportunities.

But given India's size and current rate of growth, these are amplified enormously on both

the upside and the downside.

India is directly affected by climate change, which is increasingly posing a threat to

livelihoods that are already faced with the costs of adaptation. However, the risks of climate

change are far outweighed by the opportunities that arise. It is important for the country's

government and business leaders to seize the opportunities for clean growth. These

opportunities will improve local air quality, bolster energy security and save costs, while

contributing to global efforts to mitigate climate change. A clean industrial revolution will be

the only way to maintain growth while addressing these concerns.

By 2020 global markets for low carbon goods and services are expected to be worth USD 1

trillion with exponential growth thereafter. In the next decade, India's share of the global

low carbon market could balloon to USD 135 billion. Its compound annual growth rate of

17% is predicted to outstrip Europe, North America, China and the rest of the world. Only

China and the US are likely to attract more clean energy investment in the next ten years

but the rate of increase of India's private investment (763%) will be three times the rate of

either of these two competitors8. Such rapid increases in the rates of investment underline

India's current stage of industrial development but show the enormous potential of its

burgeoning economy.

However, given current levels of energy inefficiency in India the biggest opportunities are

likely to be in India's energy efficiency market which will treble to USD 77 billion in the next

10 years driven by demand in industry, buildings, energy storage and transport. The short

payback periods and negative net abatement costs for energy efficiency measures will

underpin economic growth. Investments in energy efficiencies are expected to provide

higher returns per unit of investment than any other part of India's low carbon economy.

With an investment of USD 10 billion in energy-efficiency improvements, India's economy

would benefit from its potentially vast annual energy savings of 183.5 billion kWh hours

32

equivalent to USD 25 billion at 5/kWh (-USa o.l/kWh) and 148.6 million tons of avoided

carbon dioxide (CO2) emissions per annum.

India is in a good position to reap the benefits of a possible 10.5 million green jobs. Large,

small and medium scale enterprises in India are also increasingly realizing the opportunities

presented by clean development. But there is potential for business to be much more

involved and for India to grow business leaders who will play an important global role in the

new low carbon economy.

By acting now, India can get ahead of the curve and provide technology solutions which will

benefit business and industry, support foreign investment, improve global competitiveness,

reduce reliance on dwindling and imported resources, save energy costs and reduce the

impact of capital spending on installations that will be around for a long time. Remarkable

progress has already been made and India has all the ingredients to benefit from the

opportunities offered by addressing climate change. The Government of India recognizes

these advantages and is taking a leading role in driving low carbon development in both

international and domestic arenas, with the 2008 National Action Plan on Climate Change

and its constituent Missions providing a range of key regulations and incentives for low

carbon growth.

Regulatory Environment The Government of India has introduced the Integrated Energy Policy, which aims to bridge

the prevailing gap in the demand and supply of energy for the short, medium and long term

perspectives. The Government has started promoting competition between private and

public players wherever possible in the energy market. The motivation behind this Energy

Policy is to meet the demand for energy services for all sectors at competitive prices, while

ensuring that all households are provided with electrical power. The demand should also be

met through safe, clean and convenient forms of energy at the least-cost in a technically

efficient, economically viable and environmentally sustainable manner.

With the Electricity Act 2003, the government of India is making it mandatory for the State

Electricity Regulatory Commissions (SERC) to set targets for distribution companies to

purchase a certain percentage of their total power requirement from renewable energy

sources called Renewable Purchase Obligation (RPO) However, this RPO is not clear about

the interstate transfer of renewable energy.

The RPO doesn't provide proper guidelines to the states to bridge the gap between surplus

and deficit energy as per required RPO targets.

To overcome this problem, the government of India devised a new policy in 2010 entitled

the Renewable Energy Certificate (REC) Mechanism. The REC Mechanism will enable and

recognize interstate renewable energy transactions which will further promote and develop

renewable energy sources.

The REC Mechanisms is a new policy in India which will address the mismatch between

availability of standard renewable energy resources in state and the requirement of the

obligated entities to buy renewable energy for meeting the renewable purchase obligation

(RPO). The policy is a market based instrument designed to promote renewables in India,

which will help renewable energy producers sell electricity to power distribution companies

other than those that are in their own state. The REC demonstrates that an electricity

generator has produced a certain quantity of power from a renewable energy source such as

wind, solar, biomass, waste to energy etc. Technically one REC is treated as equivalent to 1

MWh. Under this mechanism, the states with RPO targets requiring the purchase of

33

renewable energy can obtain an REC to satisfy its RPO target requirements. This mechanism

is also present in numerous other countries, including Italy and the USA, though these

policies are structured differently to meet the needs of their respective local economies. This

mechanism will clearly benefit India's renewable energy companies, such as Suzlon Energy,

Vestas, and TATA-BP Solar. This mechanism may also prove helpful in providing support in

meeting the 15% renewable energy target, established by the Central Electricity Regulatory

Commissions (CERC), by 2020.

Business and investment activities in the energy sector are likely to grow substantially in

India. International investors are looking for opportunities to invest in the Indian energy

sector. Considering the energy demand, the sector needs an investment of approximately

160 billion US dollar in the next five years. India has been trying to improve its efficiency in

all segments of the energy sector, regardless of whether it is conventional or renewable

energy. As a result, India's energy sector is witnessing a steady increase in foreign

investment and business arrangements for the import, licensing and use of energy-related

technologies from other parts of the world.

Financing the Renewable Energy Sector in India The global market for low carbon goods and services could be worth some USD 2.2 trillion

by 2020 with India's share rising to USD 135 billion.

India's Clean Revolution will attract billions of dollars of fresh investment, offering

opportunities for the country's public and private financial institutions to create new

products and services.

USD 60 billion will need to be invested to meet India's renewable energy targets with

banks acting as conduits for both domestic and international investors.

Unique models of funding have emerged: private-equity funds have already invested

more than USD 300 million in dedicated renewable-energy-based platform

companies. The challenge now is to scale them up with public-private partnerships

likely to be center-stage.

Financing of ESCOs to advance energy efficiency and conservation has faced

difficulties with scalability but increasing awareness and regulatory impetus is

expected to make the financing of energy efficiency a significant business

opportunity.

Success in achieving a Clean Revolution will depend on the availability of adequate financing

to mobilize investment in renewable technologies and energy efficiency. This challenge

running into the trillions of dollars presents a huge opportunity for banks, insurers, asset

managers and other investors in what is already a rapidly growing market. HSBC, for

example, estimates that the global market for low carbon goods and services could be worth

about USD 2.2 trillion by 2020.

Unique models for funding renewable energy and energy efficiency are emerging in pursuit

of the opportunities but considerable development of these will be needed for India to be

able to fund and capitalize on all the potential which the Clean Revolution has in store. With

its relatively mature financial markets, entrepreneurial spirit and access to both domestic

and global markets, India is particularly well positioned to take advantage of this growth. In

this chapter we see the potential opportunity which a clean industrial revolution offers to the

Indian financial-services industry and how some pioneers are already leading the way.

34

Conclusion The government and businesses leaders in India are moving increasingly quickly towards a

Clean Revolution in their country.

This is a revolution that will help achieve India's energy, economic, environmental and

developmental objectives in a way that is sustainable. This is not easy given the enormous

size of India's population and the scale at which its economy is currently developing.

But by focusing on energy efficiency and renewable energy India's climate leaders are

demonstrating that economic, social and environmental objectives are not mutually

exclusive.

India's size, stage of economic development and entrepreneurial business community mean

that it is well placed to leapfrog along the high growth, low carbon development pathway.

The reward for success includes energy savings for businesses and households, improved

international competitiveness, increased energy security, improved local air quality and the

possibility to provide off-grid electricity to its vast unconnected rural population. With its

eye on a Clean Revolution, the government of India hopes to reap these benefits, as

follows:

Ample renewable energy sources are available and can contribute to the long-term

energy security of the country - the country has a long-term renewable energy policy

in place which will ensure significant opportunities for the technology, business and

financing sectors of the country.

The developmental need of supplying power to remote areas overlaps with low-

carbon power generation, for example through off-grid renewable energy.

By promoting energy efficiency, India will be able to maximize the availability of

electricity and simultaneously reduce its carbon intensity.

The government's policy includes the goal of shifting away from importing

technology and know-how towards local production, further benefiting the economy.

India's world class ICT sector is particularly well placed to support energy efficiency

in other sectors through the application of 'smart' technologies.

Meeting India's target of adding approximately 40-55 GW of renewable energy capacity, as

set out in its 13th Five Year Plan; will result in a financing opportunity worth USD 60 billion

over the next decade. In addition, there is the potential for market-based approaches to

unlock energy efficiency opportunities amounting to around USD 16.5 billion.

This indicates the enormous advantages in being part of India's clean revolution - whether

on the financing side, in the development of renewable technologies, in the provision of

energy efficient measures or in the development of clean applications in transport,

buildings, appliances, lighting and the ICT sector.

What are needed now are not so much new technology options, but rather good business

models with functioning marketing and distribution channels, service and maintenance

networks as well as financing options. There remains a lack of awareness in India with

regard to various clean technologies and there is a perceived risk in the regulatory

environment, ranging from the continued provision of subsidies and incentives to the value

of COM in the post-2012 environment. Other challenges are the typically smaller project

sizes in energy-efficiency projects and the longer payback periods for renewable-energy

projects. Finally, constant technological evolution carries accompanying risks of

obsolescence. All these challenges are frequently cited as barriers to low carbon financing.

35

But considerable progress has already been made thanks to government policies and

favorable subsidy and fiscal incentives. Significant steps are being taken by government and

the private sector. India is well-placed by virtue of the stage of its development to reap the

rewards of its high growth, low carbon goals. It increasingly has the infrastructure and

resources as well as the technological, financial and human capacity that are needed to

ensure success. Technological advances have resulted in competitive production costs,

innovative financing mechanisms are emerging and numerous examples of best practice

exist as this report has demonstrated.

With advances at all levels, particularly in resolving financing needs, the country's Clean

Revolution is set to take off in a way that will benefit the global community, both through

mitigating emissions and through developing clean solutions that are useful everywhere.

Sources of Information

1. Indias Clean Revolution The Climate Group 2. EQ International.

3. Reports by Ernst & Young and McKinsey.

4. Various sources from the internet.

http://www.ibef.org/

http://www.wikipedia.org/

http://www.indiasolar.com/index.htm

http://www.eai.in/ref/ae/geo/geo.html