SOLAR POWER-Need of the hour

Need of the hour


Light from the sun is the most abundant source of energy available. And India has plentiful energy at its disposal. The government has now woken up to the fact that it can make rightful use of this renewable energy. Shyamal Asangi explains the pros

The wild oscillation in the price of oil in 2008 from $147.27 a barrel to close to $40 a barrel at the time of writing (prices went as low as $30 a barrel in late 2008) is a grim reminder of the fact that economies can be held to ransom simply by the price of oil. The International Energy Agency, Outlook 2007, estimated a significant growth in global energy use from 447 quadrillion British thermal units (Btu) in 2004 to 559 quadrillion Btu in 2015 going up to 702 quadrillion Btu in 2030. However, blatant use of energy has also come at a price: greenhouse gas emissions, global warming, depletion in the ozone layer, and climate change apart from the fact that fossil fuel sources are rapidly depleting.

To control the use of oil and in an effort to create a healthy and natural environment for future generations, governments worldwide are now turning towards generating energy from natural resources like the sun, wind, water and biofuels.

The Indian government is in the forefront of generating energy from natural and renewable sources. In 1981 it established the Commission for Additional Sources of Energy for formulating energy policy. The Indian Renewable Energy Development Agency (Ireda) was created to finance renewable energy projects.

According to Malini Mehra, founder and director of advocacy group, The Centre for Social Markets: “India has the distinction of the being the first country in the world to establish a ministry of non-conventional energy sources.”

During the 11th five-year plan the government aims to generate at least 14,500 MW out of the total expected capacity of 70,000 MW through renewable energy sources. The Ministry of New and Renewable Energy (MNRE) in its 2008 report said that India has generated 12.6 GW of power from renewable resources. According to the ministry the government aims to be able to generate 20% of India’s total energy needs through renewable energy in the next decade.

Let’s discuss investments

The 11th New and Renewable Energy five-year plan (2008-2012) envisages the renewable energy market to be worth US$19 billion. Approximately US$15 billion will be needed to generate 15,000 MW of renewable energy.

However, the government cannot make the entire investment and has decided on the participation of the private sector in the renewable energy sector.

 To fulfill this objective, Malini Mehra says: “The government has incentivised investment into alternative energy in a number of ways — through feed-in tariffs promoting renewable energy to its staunch support for the Clean Development Mechanism (CDM). Largely as a result of government support, India now accounts for a third of all registered CDM projects worldwide. This has been a win-win so far for the government and private sector as it has accelerated investment in renewables and clean technology in the country.”

Says Ravi Soparkar, vice-president (India), with US-based WaterSmart Environmental Inc: “India has abundant renewable energy sources and I am confident that the country will attract foreign direct investment in renewable energy business ventures in the near future.”

Private investments

• 100% accelerated depreciation for tax purposes in the first year of the installation of projects.
• No excise duty on manufacture of most finished products.
• Low import tariffs for capital equipment and most of the materials and components.
• Soft loans to manufacturers and users for commercial and near commercial technologies.
• Five-year tax holiday for power generation projects.
• Remunerative price under alternate power purchase policy by state government for the power generated through renewable energy systems, fed to the grid by private sector.
• Facility for banking and wheeling of power.
• Facility for third party sale of renewable energy power.
• Financial incentives/subsidies for devices with high initial cost.
• Involvement of women not only as beneficiaries but also for their active contribution in implementation of renewable energy programs.
• Encouragement to NGOs and small entrepreneurs.
• Special thrust for renewable energy in North-Eastern region of the country. 10% of plan funds earmarked for North-East towards enhanced and special subsidies.
• Allotment of land on long term basis at token lease rent and supply of garbage free of cost at site by state governments, in respect of projects on energy recovery from municipal waste.
(Source: MNES)