India’s move to boost rural power supplies is expected to focus on decentralized energy with renewables in the vanguard, but diesel gensets will also play a crucial part, writes Raghavendra Verma
|A rooftop solar plant installed by Mera Gao Power in Uttar Pradesh Credit: Anna da Costa|
India’s decentralized power generation industry is expected to be boosted by a central government initiative to bring electricity to thousands of villages, while investing in renewable power sources and strengthening urban power networks through an Integrated Power Development Scheme (IPDS). The scheme includes financing for installing solar power panels on government buildings, as well as rolling out smart meters.
‘The government is committed to achieving 100% village electrification by 1 May 2018,’ said Arun Jaitley, the Indian finance minister, on February 29, while presenting the national government budget for the financial year 2016-17. He noted that more than 18,000 Indian villages still do not have access to electricity, and he therefore allocated $1.25 billion for rural electrification and integrated power development schemes.
A focus on renewables
According to India’s Ministry of New and Renewable Energy (MNRE), renewable energy technologies currently used for rural electrification include family-sized biogas plants supplying power to a single home, solar street lighting and home lighting systems, standalone solar- and biomass-based power generators and micro-hydro plants.
A ‘rural electrification programme with 50 kW to 100 kW of power in distant villages would require an investment of over $1.76 billion, and 15% to 20% of it could go into decentralized power generation,’ said Himansu Sekhar Rauth, executive director of the National Solar Energy Federation of India. Rauth told Decentralized Energy that with the central government pushing rural electrification, multinational companies, Indian banks and international donor agencies are very eager to develop and finance such projects.
Much of this will be renewable energy. Last year, Prime Minister Narendra Modi announced a target of generating 175 GW of renewable electricity within India by 2022. Solar power could be particularly useful for India, which receives a significant amount of sunshine for most of the year. Under current plans, 100 GW of this 175 GW will be solar; and 40 GW of this solar energy will come from rooftop solar panels, said Reji Kumar Pillai, president of the India Smart Grid Forum (ISGF), a public-private partnership initiative set up by India’s power ministry. Around 20 million buildings or pieces of infrastructure will host panels, he said.
Initiatives from various state governments are also driving developments, said Pillai. For example, in 2014, the southern state of Tamil Nadu made it mandatory for all schools, colleges and government offices to have rooftop solar plants.
According to documents from the MNRE, at the end of January 2016 India’s installed grid-interactive solar power capacity was 5248 MW, compared to 25,188 MW of wind power capacity, 4187 MW of small hydro capacity and 4760 MW of biomass capacity. In off-grid captive power, solar photovoltaic (PV) had an installed capacity of 302 MW, biomass cogeneration 602 MW, biomass gasifier 178 MW and waste-to-energy 178 MW.
In the next three to five years, solar power is expected to increase, said Rauth. ‘Next year alone, more than 12 GW are going to come in solar grid mode,’ he said.
While certain policies are making solar power more attractive, other factors include greater technological innovation, concern for climate change and the availability of low interest financing, said Rauth. ‘The market is very right, as the electricity cost from solar power has come down to almost the level of conventional grid,’ he said. ‘Delhi alone can generate more than 1000 MW from rooftop solar,’ he added.
The highest grid power tariffs in New Delhi are $0.13/kWh of electricity consumed above 800 units. ‘This cost will go up in the future, while the cost of electricity from rooftop solar (excluding the cost of storage) will continue to remain less than $0.1 for next the 20 years,’ said Pillai. For those households that consume more than 1000 units, rooftop solar will return the investments in four years, he said.
Avenues for funding are also increasing as, according to Pillai, the cost of installing a solar PV system is now being wrapped up in housing loans. ‘If you are taking a house loan for $100,000 and want to put a 2 kW rooftop PV system worth $3000, you can take a $103,000 housing loan and repay it over the period of 20 to 30 years at a lower interest rate,’ he said.
New business models have also been introduced to utilize India’s vast farmlands for generating solar power without disturbing agricultural production. ‘Six-metre high structures are erected in the fields with solar panels on the top, even as the crops are grown on the ground,’ said Sanjiv Saraf, executive director of the Energy Development Company Ltd. Generally, 20% of the power from these solar plants is utilized on farms operating irrigation pumps, while 80% is sold to utility companies via the grid, Saraf told Decentralized Energy. ‘Companies are coming forward with Special Purpose Vehicles involving a group of 30 to 40 farmers,’ he said. ‘It has generated lot of enthusiasm among the farmers.’
Meanwhile, metering policies guiding the sale of electricity from rooftop solar plants to power utility companies have been adopted in 27 of the 29 Indian states. These policies state that in any particular locality, only 20% of the main transformer capacity can be installed though net metering, which monitors how power drawn from the grid is reduced by the amount of electricity supplied by a household’s rooftop solar plants, said Pillai. ‘In some states it is 30% and requests are approved on a first-come, first-served basis,’ he said.
Furthermore, in August 2015, the Bureau of Indian Standards issued the IS-16444:2015 standard for smart meters, which will facilitate the sale and operation of meters for net metering of power purchased and sold to the utility company.
As a result of these initiatives, rooftop solar power generation is expanding so quickly that there is a shortage of trained technicians to install these devices. ‘Thousands of technicians are required in each town to install rooftop PV,’ said Pillai. ‘This is a huge employment opportunity which can be tapped by the training institutions, government agencies and industry associations.’
In rural areas, too, solar plants can be very small. ‘Our basic service provides two LED light points and a mobile phone charger,’ said Nikhil Jaisinghani, co-founder of Uttar Pradesh-based Mera Gao Power (MGP). The firm has 1500 projects providing power to 1.5 million people in the state for seven hours per day. It is currently running a pilot project to increase this to 10 hours a day, Jaislinghani told Decentralized Energy. The solar plants cost $900 and the installation can be completed within a single day, he said.
However, India’s new goods and services tax, which could be introduced as early as April, could affect the profitability of solar power plants as it will increase the cost of solar panels. According to Rauth, the industry estimates that solar panel prices may rise by as much as 20%. However, he said this cost increase could potentially be cushioned or even eliminated by tax breaks and subsidies offered by India’s state and central governments.
|Diesel gensets will continue to play an important role Credit: Raghavendra Verma|
Saraf stressed that the central government will ensure solar power costs remain low: ‘It is necessary in the alternate energy industry to have 15% return on investments,’ he said. ‘Cutting down on interest by just 0.5% increases the ROI very substantially.’
In addition to developing solar power, the MNRE has said that distributed/decentralized renewable power projects using wind, biomass, hydropower and hybrid systems are all being established ‘to meet the energy requirements of isolated communities and areas which are not likely to be electrified in [the] near future.’
Sunil Natu, senior vice president of the power division of MITCON Consultancy & Engineering Services Ltd in Pune, Maharashtra, said the government should prioritize developing sugarcane-based biomass power plants: ‘The load factor from solar and wind plants is only 20% to 30%, in comparison to 80% in biomass-based plants.’
Natu said that there are about 850 sugar factories in the country and only 300 of them generate power. The 200 sugar factories in the western state of Maharashtra are largely run by co-operative societies with poor finances, which restricts their ability to invest in modern power generation capacities, he noted. Natu suggested that such co-operatives should consider the use of ‘build and transfer’ schemes by outside developers to expand capacity.
However, he claimed that Indian banks have been cautious, only extending loans to energy projects based on available mortgages or the financial strengths of the promoters rather than on schemes’ techno-commercial viability.
Power generation from biomass plants costs only $0.037/kWh and in India’s state of Uttar Pradesh, there are 40 sugar factories generating such power from sugar cane waste bagasse, said Saraf.
Some energy sector entrepreneurs find bagasse power generation so lucrative that they are delinking it from the costly and complicated process of manufacturing sugar. To ensure the steady supply of bagasse, they purchase sugarcane and boil it, selling the resulting sugary juice (called ‘gur’) to local markets, said Saraf.
The only key difficulty of bagasse-based plants is challenges with the seasonal availability of raw materials – sugarcane is processed only between October and March, according to Natu. But when the cane waste runs out, these plants can run on other biomass substances such as rice husk, he suggested.
According to Rauth, biomass power generation already contributes 10% to 15% of the total renewable generation in India, while wind and solar power continue to dominate supplies. And with 7500 nautical miles of coastline, offshore and low-capacity wind generators may continue to grow the country’s wind sector, he suggested.
Hydropower technologies are also being propagated but, according to Saraf, the government has not pushed hydropower because of the engineering challenges posed in constructing plants.
A continuing role for diesel generators
Despite the focus on renewables for growing decentralized power generation, systems running on diesel will continue to play an important role according to Saraf. He said about 150 GW of diesel generating systems are already running off-grid even in the centre of large cities because of unreliable grid supply. ‘In the entire NCR [National Capital Region], most of the industries are running on 24-hour DG [diesel generator] sets as the three phase voltage difference is so high that no machine could work,’ he said. There are also thousands of standby DG sets installed in various institutions and buildings across India with a capacity of more than 80 GW, which could also be utilized, said Pallai.
Meanwhile, the ISGF has started an initiative that would make it possible for local utility companies to use these diesel generators for mitigating peak hour shortages. ‘These DG sets will be connected to the grid and could be made operational from the control room of the utility company to balance the grid,’ said Pillai.
When rising power demand is about to surpass available power, distribution companies often resort to load shedding to save the grid from collapsing, said Pillai. With online access enabling grid operators to start these DG sets, the blackouts could be avoided.
According to Pillai, the technology for such operations exists and business models to incentivize owners of DG sets to lease them to the power utility companies have been used in other countries. However, in India, the enabling policies and regulatory systems are still lacking – they need to be adopted at the state government level, he said.
The cost of generating power from these generators would be $0.20/kWh and ISGF is already developing a pilot project with a 500 kW DG set, to be located at an as-yet-undisclosed location, which would be operational by April, said Pallai.
Simply put, decentralized power generation is the fastest way to provide energy access to people, said Piyush Goyal, minister of state for power, coal and new and renewable energy. While inaugurating the National Biogas Convention in September 2015 in New Delhi, he said: ‘Through these biogas plants, we can demonstrate that India’s efforts to leave behind a greener planet are the results of our age-old heritage of discouraging wasteful consumption.’
Raghavendra Verma is a New Delhi-based journalist