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'Universalizing access to energy requires innovative institutions'

One of the principal development challenges confronting humankind today is ensuring that each person has affordable access to electricity. Lack of access to electricity deprives millions of people from basic minimum standard of living.

twitter-logo Anilesh S Mahajan        Last Updated: April 18, 2014  | 20:11 IST
'Universalizing access to energy requires innovative institutions'
Manoj Kumar Upadhyay, Chairman & Managing Director, ACME Group.

After 66 years of Independence, India is still reeling under hours of power cut. Roughly one third of the country does not even have access to electricity. Business Today's Anilesh S Mahajan, spoke to Manoj Kumar Upadhyay, Chairman & Managing Director, ACME Group, to understand solutions in hand.

Q. After decade long reforms, India is not able to provide 24X7 electricity access to its citizens. And this is on the election agenda in 2014. Your opinion?

A. Despite the fact that India has 75 million households without access to electricity, per capita consumption in rural households was only 8 units per month as compared 24 units in urban households, according to an expert report submitted to Prime Minister Manmohan Singh in the month of January.

One of the principal development challenges confronting humankind today is ensuring that each person has affordable access to electricity. Lack of access to electricity deprives millions of people from basic minimum standard of living. The problem is particularly acute for people living below poverty line. There are many villages in the country which don't even have access to electricity. At night, there is a complete black-out in such remote areas.

The links between access to energy and the various National Development Goals are now well established and well documented. Meeting these goals that are fundamental to an existence of minimum dignity and well-being requires access to affordable power.

For the nation, access to electricity is vital for inducing rapid development, reviving GDP growth, reducing inequality and making the economic growth processes more inclusive. It is the backbone for development for our developing economy-to forge a common and effective path to move forward.

The true progress of a nation lies in the manner it deals with its energy needs.   

The hope for 24x7 electricity is therefore one of the influencing factors for the voters during this election.

Q. What steps can be taken to improve the condition of power sector in the country which is reeling under roughly 2000 hours of power cut annually?

A. India needs to add huge energy generation capacity to meet its growing demand. Disruption in tilt in energy basket towards fossil fuels, reduction in losses at various levels from generation up till distribution of power and raising the share of renewable energy is the only way forward to improve this situation.  

India today stands among the top five countries of the world in terms of renewable energy capacity.

In the Indian context, while renewable energy is important from the twin perspectives of energy security and environmental sustainability, its greatest plus lies in its decentralized character. In its distributed, decentralized form, it is the most appropriate, scalable and optimal solution for providing power to thousands of remote and hilly villages and hamlets at affordable prices.

Millions of decentralized energy systems, solar lighting systems, irrigation pumps, aero-generators, biogas plants, solar cookers, biomass gasifiers, and improved cook stoves are being used in remotest and inaccessible corners of the country. Renewable energy is the biggest driver of growth as this can provide energy access to the disadvantaged and remote communities of the country.

For India, solar is the most promising alternate source of energy  because of availability of more than 300 sunny days in a year. India can learn from other countries that energy generation without considering environment may create pollution hazards. By using solar, the nation can achieve energy security, climatic commitment and meet energy demands of the growing economy. Last few years, cost reduction in solar and cost increase in conventional power has shown significant potential for solar to compete with grid. If the same scenario continues, we can achieve grid parity by the end of the year.

Through continuous improvement in technology through research and development, solar power develops.  ACME is aiming to fill the gap by using solar power comparable to grid-connected electricity and highly efficient Li-Ion storage systems at grid-level to bridge the demand-supply gap and ensuring no power cuts till last-mile connectivity and the areas that are not connected with the grid.

Q. What reforms do you think are required?

A. Universalizing access to energy will require innovative institutions and defined policies including appropriate subsidies with defined disbursement mechanisms, single window clearance mechanism and suitable financing arrangements. the government and the industry need to be encouraged to engage with the National Cooperation in this area on an enlarged scale and work to harness the potential of renewable energy in the country.

There is a need to explore suitable and sustainable mechanisms that will provide incentives for deployment of renewable energy technologies and also facilitating them at affordable cost.

At present, there are many business models in the country. But still, a lot of work is to be done for deployment of kW solutions at a large scale - Renewable Energy Certificates (REC) mechanism, captive and open access users and rural electrification. There is a need to develop robust policy and regulatory framework including a penal mechanism for organizations not meeting the renewable purchase obligations; this facilitates deployment of renewable energy technologies in the country.  

Then there is the challenge of financial closure of power projects faced by private developers more specifically for small scale systems of kW or few MW.  The situation also reflects the condition of the financial health of state utilities.  

As on date, financial institutions are not comfortable with funding renewable power generation projects under other routes like REC as RECs is an unpredictable market.  

We believe that in order to boost them, an appropriate framework should be put in place.  There is a need to develop a common platform where policy makers, regulators, financial institutions, developers and the end user would interact and discuss the issues/ challenges faced, as it would facilitate in understanding the concerns of the industry and provide a way to mitigate the issues.

Q. Which reforms have been successful in giving impetus to the power sector?

A. Renewable energy has been an important component of India's energy planning process for quite some time.

India has a pragmatic policy and regulatory framework to support and promote renewable capacity addition. The primary aim of renewable energy policy has been to increase the attractiveness of the sector to private investors.

There have been a number of reforms that have given impetus to facilitate the growth of renewable energy sector. They have mainstreamed the use of new and renewable energy sources in furtherance of energy security and energy independence, with attendant positive impact on local, national and global environment.

India is the only country to have a full-fledged Ministry of New and Renewable Energy (MNRE). The broad aim of the Ministry has been to develop and deploy new and renewable energy for supplementing the energy requirements of the country.

Today, India is fast becoming one of the world's most attractive markets for renewable energy investments. India's rise has been due to the effective policy and regulatory support for development of Renewable Energy Technologies (RETs).

One of the most influential plans in India is the National Action Plan for Climate Change, under which the Jawaharlal Nehru National Solar Mission (JNNSM) is playing a key role for most of the solar power investments in the country. Most of the states have come up with Renewable Energy Tariff Regulations,  Feed-in-Tariff Mechanisms, benefit of Accelerated Depreciation (AD) for renewable power developers, Generation Based Incentives (GBI), Renewable Purchase Obligations (RPO) issued by various State Electricity Regulatory Commissions,  and Renewable Energy Certificates (RECs) have also helped in the rapid growth of renewable energy deployment in the country.

Along with above demand and supply side measures to promote renewable energy growth in India, various states have come up with their state solar policies to provide an enabling framework for growth of renewable energy in India.

Q. How can India improve its uptake of renewable energy?

A. The policy and regulatory framework at the state and central level is highly favorable in the country at this time. However, a lot of work needs to be done for segments like kW solutions, REC mechanism, captive and open access users and rural electrification.  There are few reforms which are necessary to change the shape of the Indian solar sector such as introducing stringent regulatory framework towards implication of RPOs in order to promote solar power development under the national solar mission. The central government is providing support viz. bundling scheme for solar power plants, Viability Gap Funding (VGF), etc. for a few more years until solar power achieves grid parity; providing comfort to financial institutions to support renewable power market particularly solar; enforcing amicable land acquisition laws for renewable as this poses a great threat for the private developers; information and awareness creation by the government in the sector etc.

Renewable power projects ensure the security of energy supply by both reducing the need for expensive and imported fuel, and by increasing the diversity of a country's energy portfolio. The deployment of renewable power plants must be incentivized to encourage investments. Relaxation in stringent renewable energy policies, introduction of penal mechanisms for obligated entities for purchase for renewable power and introduction of feed in tariff mechanisms for renewable power plants, etc. will facilitate large scale deployment of renewable power plants in the country.

Q. Which parts of India has seen good work in the field of renewable energy and why?

A. The state of Gujarat has been on the forefront of the solar sector and has taken several initiatives for sustainable progress in solar power generation. A state specific policy dedicated to solar was first envisioned by Gujarat in 2009 to address growing environmental concerns. Gujarat has been a leader in solar power generation with the installed capacity of around 900 MW power generated in the country. The Gujarat solar policy was the first solar specific policy introduced in the country predating the National Solar Mission.

Other states like Madhya Pradesh, Punjab, UP, Karnataka, Rajasthan etc. are also following the same path to achieve the objectives of the National Solar Mission and significantly contribute towards making India an energy independent nation. Madhya Pradesh and Rajasthan are now becoming preferred states for solar developers for development of solar power plants. Governments of both states are aggressive and understand the need of solar power which can mitigate the issue of 24X7 electricity to all parts of the country. Rajasthan and MP have also come out with very conducive state solar policies which are facilitating solar power developers to invest and develop power plants.

Q. Do you believe that renewable resources can offer a concrete solution to bridge the deficit of demand and production?

A. The markets that led the solar revolution in the world are now approaching maturity. These markets are now cutting incentives and focusing on parity driven demand. Emerging markets such as India, China and Middle Eastern and North African (MENA) countries that are expected to see high growth and present expansion opportunities to suppliers in the market.

India currently has a grid-connected solar-power capacity of 2208 MW. The nation-wide solar policy, National Solar Mission (NSM), targets to install 20 GW of solar by 2022. The growth in the Indian solar market is driven by central and state incentives and individual solar policies rolled out by states. The power deficient southern states of the country such as Tamil Nadu and Kerala are gradually shifting to solar to find long-term solutions for their power needs. Until now, the Indian solar market has been primarily driven by utility scale projects. However, the country is paying increasing attention to distributed generation as well. Moreover, solar is becoming financially viable for commercial and industrial consumers in some states with rising costs of conventional power.

With solar becoming increasingly competitive in many parts of the country, the Indian solar market is geared for accelerated growth.

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