POLICY FRAMEWORK STUDY FOR RENEWABLE ENERGY AND ENERGY POLICY DEVELOPMENT
RENEWABLE ENERGY IS NOT ONLY SUSTAINABLE BUT ALSO AFFORDABLE
POLICY FRAMEWORK STUDY FOR RENEWABLE ENERGY AND ENERGY POLICY DEVELOPMENT
RENEWABLE ENERGY IS NOT ONLY SUSTAINABLE BUT ALSO AFFORDABLE
By
S. ChandrasekharManaging Director
Bhoruka Power Corporation Limited#48 Lavelle Road
Bangalore 560 001India
Tel:+91 80 2227 3285Fax: +91 80 2224 5246
Email: [email protected]
By
S. ChandrasekharManaging Director
Bhoruka Power Corporation Limited#48 Lavelle Road
Bangalore 560 001India
Tel:+91 80 2227 3285Fax: +91 80 2224 5246
Email: [email protected]
BANGKOK AUG 06
ENERGY MIX DECISION ENERGY MIX DECISION
AVAILABILITY
RELIABILITY
AFFORDABILITY
ENERGY MIX DECISION
GENERAL PERCEPTION GENERAL PERCEPTION
CONVENTIONAL POWER (FOSSIL FUEL) :-
RESOURCE LIMITED – RELIABLE – AFFORDABLE
NON CONVENTIONAL POWER (RENEWABLES):-
RESOURCE UNLIMITED – NON RELIABLE – NON AFFORDABLE
ENERGY SECURITY ENERGY SECURITY
VISION OF PRESIDENT OF INDIA
H.E. MR. ABDUL KALAM
“WE CAN ACHIEVE ENERGY INDEPENDENCE BY 2030”
- IF WE FOCUS ON RENEWABLE ENERGY SOURCES
- IF WE INCREASE RENEWABLE ENERGY SOURCES IN ENERGY MIX FROM 5% TO 25%
THE FOCUS IS MORE ON ‘ENERGY SECURITY’ AND NOT JUST ‘COST ECONOMICS’
NATIONAL ELECTRICITY POLICY – GOVERNMENT OF INDIA - 2005
NATIONAL ELECTRICITY POLICY – GOVERNMENT OF INDIA - 2005
CLAUSE RELATED TO RENEWABLES
CLAUSE 5.2.20:
FEASIBLE POTENTIAL OF NON-CONVENTIONAL ENERGY SOURCES, MAINLY SMALL HYDRO, WIND AND BIO MASS WOULD ALSO NEED TO BE EXPLOITED FULLY TO CREATE ADDITIONAL POWER GENERATION CAPACITY WITH A VIEW TO INCREASE, THE OVERALL SHARE OF NON CONVENTIONAL ENERGY SOURCES IN THE ENERGY MIX, EFFORTS WILL BE MADE TO ENCOURAGE PRIVATE SECTOR PARTICIPATION THROUGH SUITABLE PROMOTIONAL MEASURES.
NATIONAL ELECTRICITY POLICY – GOVT. OF INDIA
NATIONAL ELECTRICITY POLICY – GOVT. OF INDIA
COGENERATION AND NON-CONVENTIONAL ENERGY SOURCES
CLAUSE 5.12.1:
NON-CONVENTIONAL SOURCES OF ENERGY BEING THE MOST ENVIRONMENT FRIENDLY THERE IS AN URGENT NEED TO PROMOTE GENERATION OF ELECTRICITY BASED ON SUCH SOURCES OF ENERGY. FOR THIS PURPOSE, EFFORTS NEED TO BE MADE TO REDUCE THE CAPITAL COST OF PROJECTS BASED ON NON-CONVENTIONAL AND RENEWABLE SOURCES OF ENERGY. COST OF ENERGY CAN ALSO BE REDUCED BY PROMOTING COMPETITION WITHIN SUCH PROJECTS. AT THE SAME TIME, ADEQUATE PROMOTIONAL MEASURES WOULD ALSO HAVE TO BE TAKEN FOR DEVELOPMENT OF TECHNOLOGIES AND A SUSTAINED GROWTH OF THESE SOURCES.
NATIONAL ELECTRICITY POLICY – GOVT. OF INDIA
NATIONAL ELECTRICITY POLICY – GOVT. OF INDIA
CLAUSE 5.12.2:
THE ELECTRICITY ACT 2003 PROVIDES THAT CO-GENERATION AND GENERATION OF ELECTRICITY FROM NON-CONVENTIONAL SOURCES WOULD BE PROMOTED BY THE SERCs BY PROVIDING SUITABLE MEASURES FOR CONNECTIVITY WITH GRID AND SALE OF ELECTRICITY TO ANY PERSON AND ALSO BY SPECIFYING, FOR PURCHASE OF ELECTRICITY FROM SUCH SOURCES, A PERCENTAGE OF THE TOTAL CONSUMPTION OF ELECTRICITY IN THE AREA OF A DISTRIBUTION LICENSEE. SUCH PERCENTAGE FOR PURCHASE OF POWER FROM NON-CONVENTIONAL SOURCES SHOULD BE MADE APPLICABLE FOR THE TARIFFS TO BE DETERMINED BY THE SERCs AT THE EARLIEST. PROGRESSIVELY THE SHARE OF ELECTRICITY FROM NON-CONVENTIONAL SOURCES WOULD NEED TO BE INCREASED AS PRESCRIBED BY STATE ELECTRICITY REGULATORY COMMISSIONS. SUCH PURCHASE BY DISTRIBUTION COMPANIES SHALL BE THROUGH COMPETITIVE BIDDING PROCESS. CONSIDERING THE FACT THAT IT WILL TAKE SOME TIME BEFORE NON-CONVENTIONAL TECHNOLOGIES COMPETE, IN TERMS OF COST, WITH CONVENTIONAL SOURCES, THE COMMISSION MAY DETERMINE AN APPROPRIATE DIFFERENTIAL IN PRICES TO PROMOTE THESE TECHNOLOGIES.
NATIONAL ELECTRICITY POLICY – GOVT. OF INDIA
NATIONAL ELECTRICITY POLICY – GOVT. OF INDIA
CLAUSE 5.12.3:
INDUTRIES IN WHICH BOTH PROCESS HEAT AND ELECTRICITY ARE NEEDED ARE WELL SUITED FOR COGENERATION OF ELECTRICITY. A SIGNIFICANT POTENTIAL FOR COGENERATION EXISTS IN THE COUNTRY, PARTICULARLY IN THE SUGAR INDUSTRY. SERCs MAY PROMOTE ARRANGEMENTS BETWEEN THE CO-GENERATOR AND THE CONCERNED DISTRIBUTION LICENSEE FOR PURCHASE OF SURPLUS POWER FROM SUCH PLANTS. COGENERATION SYSTEM ALSO NEEDS TO BE ENCOURAGED IN THE OVERALL INTREST OF ENERGY EFFICIENCY AND ALSO GRID STABILITY.
NATIONAL TARIFF POLCY – GOVT. OF INDIA
NATIONAL TARIFF POLCY – GOVT. OF INDIA
CLAUSE 6.4:
NON CONVENTIONAL SOURCES OF ENERGY GENERATION, INCLUDING COGEN.
(1) PURSUANT TO PROVISIONS OF SECTION 86(1)(E) OF THE ACT, THE APPROPRIATE COMMISSION SHALL FIX A MINIMUM PERCENTAGE FOR PURCHASE OF ENERGY FROM SUCH SOURCES TAKING INTO ACCOUNT AVAILABILITY OF SUCH RESOURCES IN THE REGION AND ITS IMPACT ON RETAIL TARIFFS. SUCH PERCENTAGE FOR PURCHASE OF ENERGY SHOULD BE MADE APPLICABLE FOR THE TARIFFS TO BE DETERMINED BY THE SERCs LATEST BY APRIL 1, 2006.
IT WILL TAKE SOME TIME BEFORE NON-CONVENTIONAL TECNOLOGIES CAN COMPETE WITH CONVENTIONAL SOURCES IN TERMS OF COST OF ELECTRICITY. THEREFORE, PROCUREMENT BY DISTRIBUTION COMPANIES SHALL BE DONE AT PREFERENTIAL TARIFFS DETERMINED BY THE APPROPRIATE COMMISSION
SUSTAINABLE ENERGY BASKETSUSTAINABLE ENERGY BASKET
WIND
SMALL HYDRO
BIO MASS
PHOTO VOLTAIC
SOLAR THERMAL
SOLID WASTE
AND OF COURSE NEW ONES SUCH AS FUEL CELLS, OCEAN ENERGTY, TIDAL POWER ETC.
SUSTAINABLE ENERGY BASKETSUSTAINABLE ENERGY BASKETSUSTAINABLE ENERGY BASKETSUSTAINABLE ENERGY BASKET
MOST SUITABLE TECHNOLOGIESFOR DEVELOPING ECONOMIES
WIND
SMALL HYDRO
BIO MASS
SOLAR APPLICATIONS
GIVEN THE COMPULSIONS OF CONTAINING TARIFFS
REASON: MATURE TECHNOLOGIES
MOST SUITABLE TECHNOLOGIESFOR DEVELOPING ECONOMIESMOST SUITABLE TECHNOLOGIESFOR DEVELOPING ECONOMIES
BIGGEST ADVANTGES OF RENEWABLE ENERGY BIGGEST ADVANTGES OF RENEWABLE ENERGY OTHER THAN FROM ECOLOGICAL PERSPECTIVEOTHER THAN FROM ECOLOGICAL PERSPECTIVE.
AVAILABILITY OF RENEWABLE RESOURCES MAINLY IN RURAL AREAS
IMPROVES RURAL ECONOMY – GIVES VALUE TO LOCAL RESOURCES
INCREASES EMPLOYMENT OPPORTUNITIES – NEW AVENUES IN THE RURAL AREAS
IMPROVES QUALITY OF POWER – DISTRIBUTED GENERATION
IMPROVES RURAL INFRASTRUCTURE – LOCAL FACILITIES IMPROVES RURAL INFRASTRUCTURE – LOCAL FACILITIES
BECOME BETTERBECOME BETTER
BIGGEST ADVANTGES OF RENEWABLE ENERGY OTHER THAN FROM ECOLOGICAL PERSPECTIVEBIGGEST ADVANTGES OF RENEWABLE ENERGY OTHER THAN FROM ECOLOGICAL PERSPECTIVE .BIGGEST ADVANTGES OF RENEWABLE ENERGY OTHER THAN FROM ECOLOGICAL PERSPECTIVEBIGGEST ADVANTGES OF RENEWABLE ENERGY OTHER THAN FROM ECOLOGICAL PERSPECTIVE .
RURAL POWER – OTHER THAN POPULATIONRURAL POWER – OTHER THAN POPULATION
IRRIGATION CANALS / RIVULETS – SMALL HYDRO
POWER
ABUNDANT WASTE LAND AND GOOD BREESE – WIND
POWER
AGRICULTURAL WASTE – BIOMASS POWER
FROM VALUELESS RURAL RESOURCES TO HIGH VALUE RURAL PRODUCTS
FROM POVERTY TO PLENTY, INCREASE IN RURAL GDP
RURAL POWER – OTHER THAN POPULATIONRURAL POWER – OTHER THAN POPULATION
RENEWABLE ENERGY – EMPLOYMENT GENERATION
A. SMALL HYDRO (<10 MW Capacity)
During Construction : An average of more than 150 persons mostly locals employed for more than a year at a salary of USD 3 – 10 per day
During Operation : Permanent direct employment - 20 – 30 persons at an average salary of USD 8-10 per day
B. BIOMASS (< 5 MW)
During Operation : An average of more than 200 persons regularly for collection of Biomass at an average salary of USD 3 – 10 per day
RENEWABLE ENERGY – EMPLOYMENT GENERATIONRENEWABLE ENERGY – EMPLOYMENT GENERATION
C. ADDITIONAL EMPLOYMENT AVENUES
Due to availability of power , the following businesses could thrive:
Rice Mills
Flour Mills
Oil Expeller / Extraction Units
Small workshops for farm equipment and
pump repairs.
Ice making Units
Small Cold Storages
ADDITIONAL EMPLOYMENT AVENUESADDITIONAL EMPLOYMENT AVENUES
RENEWABLE ENERGY – QUALITY OF POWERRENEWABLE ENERGY – QUALITY OF POWER
POWER GENERATED IN AND AROUND THE AREAS OF CONSUMPTION – DISTRIBUTED GENERATION
IF POWER TO THE RURAL AREA IS COMING FROM A DISTANCEOF 200 KMS THROUGH MULTIPLE LEVELSOF TRANSMISSION VOLTAGES, THERE WILL BE A SAVING OF NEARLY 10% IN TRANSMISSION LOSSES DUE TO DISTRIBUTED GENERATION.
ADDED TO THAT THE QUALITY OF POWER IN TERMS OF VOLTAGE AND FREQUENCY WLL BE AT DESIRED LEVELS.
LESSER IRRIGATION PUMPSETS BREAKDOWN, HIGHER PRODUCTIVITY, LESSER EXPENDITURE FOR THE FARMERS
RENEWABLE ENERGY – QUALITY OF POWERRENEWABLE ENERGY – QUALITY OF POWERRENEWABLE ENERGY – QUALITY OF POWERRENEWABLE ENERGY – QUALITY OF POWER
RURAL INFRASTRUCTURE IMPROVEMENTRURAL INFRASTRUCTURE IMPROVEMENT
BENEFICIAL FALLOUT OF IMPLEMENTING RENEWABLE ENERGY PROJECTS.
IMPROVEMENT TO VILLAGE ROADS / NEW ROADS
IMPROVEMENT TO EDUCATIONAL INFRASTRUCTURE
-IN OUR PROJECT SCHOOLS MORE THAN 1500 CHILDREN ARE STUDYING AT SUBSIDISED RATES.
RURAL INFRASTRUCTURE IMPROVEMENTRURAL INFRASTRUCTURE IMPROVEMENT
PROGRAMS FOR HUMAN DEVELOPMENT
- THROUGH SELF HELP GROUPS, VOCATIONAL TRAINING FOR WOMEN ETC.
- WE HAVE TRAINED MORE THAN 1000 WOMEN IN VARIOUS TRADES LIKE TAILORING ETC. AND ALSO CREATE MORE THAN 100 SHG’S FOR MICROFRAME
NET RESULT –
ECONOMIC WELL BEING IN THE LONG TERM
ECONOMICS OF RENEWABLE ENERGY ECONOMICS OF RENEWABLE ENERGY Sector Capital Cost
(US$ Million/MW)
Cost of Generation(US Cent/kWh)
Small Hydro 0.9 to 1.3 5 - 6
Wind Energy 0.95 to 1.10 6 – 7
Biomass Power 0.8 to 1.00 5 to 6
Bagasse Cogeneration
0.6 to 0.8 4.5 to 5.5
Biomass Gasification
0.6 to 0.8 5 to 6
Solar PV 5.21 to 6.25 18.80 to 41.70
COMPARATIVE RETURNSCOMPARATIVE RETURNS
( Value in US$)
10 YR TERM 15 YR TERMTARIFF IRR TARIFF IRR
GRID 0.075 0.074
HYDRO 0.065 10% 0.032 14%
THERMAL 0.052 9% 0.048 14%
OBSERVATIONS OBSERVATIONS
PVT. SECTOR THE MOST IMPORTANT PLAYER IN RENEWABLE ENERGY DEVELOPMENT WORLDOVER
THE OTHER KEY STAKE HOLDERS ARE GOVERNMENT, UTILITY, BANKERS & REGULATORS
GOALS AND RISK PERCEPTIONS DIFFERENT FOR EACH OF THEM
ENTITY GOAL RISK PERCEPTION VISION
PVT. SECTOR -
MAXIMISE PROFITLEAST RISK
LOSS / BANKRUPTCY
MED. TERM
BANKER - MAXIMISE PROFITLEAST RISK
LOAN TURNINGNPA
MED. TERM
UTILITY - MAXIMISE GEN.LEAST RISK
HIGH COST OF ENERGY PURCHASE
SHORT TERM
REGULATOR - CONSUMER INTEREST
HIGH COST TO CONSUMER SHORT TERM
GOVERNMENT - ENERGY SECURITYEMP. GEN.GHG REDOTHER EXTERN
MISPLACEDSUBSIDIES ANDINCENTIVES
LONG TERM
RISK PERCEPTIONRISK PERCEPTION
VIEW POINT VIEW POINT
NO SINGLE POLICY CAN SATISFY ALL THE
STAKEHOLDER
A BALANCED OUTLOOK SHOULD BE BASIS OF POLICY
ANY POLICY SHOULD BE DRIVEN BY LONG TERM
VISION
EVERY RISK MITIGATION ADDS TO COST
MOSTLY WE TALK OF RISK MITIGATION THROUGH
FISCAL POLICIES
THERE ARE NON FISCAL POLICIES OF EQUAL
IMPORTANCE
RISK AVOIDANCE THROUGH MORE INFORMATION
AND NOT SIMPLY RISK MITIGATION THROUGH FISCAL
MEASURES SHOULD DRIVE POLICY INTERVENTION FOR
PROMOTION OF RENEWABLE ENERGY
POWER PURCHASE – PRICE AND QUANTITY
POWER PURCHASE – PRICE AND QUANTITY
IN AN EMERGING SCENARIO GUARANTEE OF PURCHASE AT A PRICE ONLY WAY TO FAST TRACK GROWTH
RENEWABLE ENERGY GENERATION NOT TO BE SUBJECTED TO MERIT ORDER PURCHASE OR OTHER CONDITIONALITIES
POLICY INTERVENTION – FEED IN TARIFF SHOULD BE THE POLICY DRIVER TO ENCOURAGE RENEWABLE ENERGY TILL AT LEAST 10% RE MIX IN OVERALL ENERGY IS ACHIEVED. SUBSEQUENTLY, ONE CAN SWITCH OVER TO MARKET PROCESSES SUCH AS TENDERING, RENEWABLE ENERGY PORTFOLIO STANDARDS ETC
THE HIGH RENEWABLE ENERGY SECTOR GROWTH IN INDIA DURING 1994-2004 WAS MAINLY DUE TO THE FEED IN TARIFF POLICY
LONG TERM ENERGY COST LONG TERM ENERGY COST
LOW / NO INPUT RESOURCE COST FOR RENEWABLE
ENERGY IN ITS LIFE CYCLE
CONTINUOUS INCREASE IN INPUT RESOURCE COST FOR
FOSSIL FUEL / CONVENTIONAL ENERGY GENERATION
STUDIES INDICATE COST OF RE POWER WHICH IS 130%
INITIALLY DROPS TO 60 – 65% OF CONVENTIONAL ENERGY
AFTER 15 YEARS AND CONTINUES LOWER THEREAFTER
HIGHER THE RE MIX IN ELECTRICITY PORTFOLIO LOWER
THE AVERAGE TARIFF IN A LONG TERM SCENARIO
HOW TO MAKE A STARTHOW TO MAKE A START
ENUNCIATE AN ENDURING RENEWABLE ENERGY POLICY
LET IT BE INCLUSIVE TO ADDRESS EVERY STAKEHOLDER’S CONCERN, BE IT THE PUBLIC,DEVELOPERS, BANKER’S OR CONSUMERS.
POLICY SHOULD HELP EVERY STAKEHOLDER’S VIEW TO BE CONVERGENT AND NOT DIVERGENT.
CREATE PUBLIC AWARENESS OF THE POLICY INITIATIVES
HOW TO MAKE A STARTHOW TO MAKE A START
RECOMMENDATIONRECOMMENDATION
RESOURCE AVAILABILITY STUDIES ON A LONG TERM BASIS IS KEY FOR VIABILITY PROJECTIONS ON A REALISTIC BASIS
AUTHENTIC DATA NEED TO BE MADE AVAILABLE BY GOVERNMENT DEPARTMENTS.
BANKS COULD HELP IN KEEPING LOCAL CURRENCY INTEREST RATES BELOW 10%.
BANKS COULD ALSO HELP IN INCREASING THE LOAN TENURE TO 15 YEARS WHICH COULD HELP IN KEEPING TARIFF’S DOWN IN THE INITIAL FEW YEARS.
WORLD BANK THROUGH IFC COULD HELP IN ACHIEVING BOTH THE ABOVE OBJECTIVES THROUGH LONG TERM DEDICATED FUNDS.
THE FUNDS COULD BE FOR DEVELOPMENT OF AT LEAST 200 MW RENEWABLE PROJECTS INITIALLY.
RE PROJECTS COULD SERVE WORLD BANKS OBJECTIVES OF RURAL DEVELOPMENT AS WELL AS SUSTAINABLE ENERGY DEVELOPMENT
RECOMMENDATIONRECOMMENDATION
ABOUT US ABOUT US
Bhoruka Power Corporation Limited The Company is a leader in the Renewable Energy Sector in India. The Company remains the first in the post independence period to set up and operate a Hydel project in the private sector (Nov. 1992) The Company spearheads environmentally friendly Renewable Energy projects. Current portfolio is mainly Small Hydel and to some extent Wind. By early next year the capacity will touch 80 MW and by 2007, 100 MW. The Company has to its credit many honours and has received the ISO 9001and ISO 14001 Certifications. It is currently working for the ISO 18001 recognition The Company is backed by a unique mix of Engineering Intellect, Project Management Capability, Deep Industry experience and committed man power.
PHOTOSPHOTOS
MADHAVAMANTRIMADHAVAMANTRI
PHOTOSPHOTOS
SRD KATTEWIND PROJECT - JAISELMER
NERIA CHAYADEVI
Mr. S. ChandrasekharManaging DirectorBhoruka Power Corporation
Limited# 48 Lavelle RoadBangalore 560 001 – IndiaTel: +91 80 2227 3285 (D) 2227
2271(O)Fax: +91 80 222 45246Email: [email protected]
Contact Details
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