Energy in India

The energy and environment scenario in India is expected to witness changes that would bring it at par with the global stipulations on carbon emissions and sustainability. One effective step towards this has been the launch of Jawaharlal Nehru National Solar Mission (JNNSM)—a joint initiative of the Ministry of New and Renewable Energy (MNRE) and Ministry of Power and the first of its kind in the world—which emphasises the use of solar energy and is one of the most important environment-friendly energy solutions available today. The National Solar Mission targeting 20,000 MW grid solar Power, 2,000 MW of off-grid capacity including 20 million solar lighting systems and 20 million square meters (sq.m.) solar thermal collector area by 2022 is under implementation. The main objective of the mission is to help reach grid parity by 2022 and help set up indigenous manufacturing capacity.

Emission of greenhouse gases leading to climate changes has become a major concern globally. Under the Kyoto Protocol's terms, industrial country parties will be under obligation to limit their greenhouse gas emissions by 2008-12. India has also signed the treaty and under the protocol, India now focuses to drive a Clean Development Mechanism (CDM) aimed at protecting the environment by reducing carbon emissions.

Around 40,781 mega watt (MW) capacity has already been added during the Eleventh Plan which is nearly double the capacity added in the entire Tenth Plan, according to Mr Sushilkumar Shinde, Minister of Power. He said the last four years have seen rapid strides in capacity addition and the installed capacity has gone up from approximately 1,32,000 MW in March 2007 to over 1,81,000 MW in July 2011 with an unprecedented growth of 37 per cent. Highlighting the strong participation by the private sector, the Minister said the private sector would contribute to nearly 36 per cent of the capacity addition in the 11th Plan and over 50 per cent of the capacity addition proposed for the 12th Plan.

Further, a total grid interactive renewable power generation capacity of around 20,556 MW has been set up in the country which is about 11.5 per cent of the total power generation installed capacity from all sources, according to a release by the Ministry of New and Renewable Energy.

Solar technologies posses the highest potential when it comes to off-grid energy generation. These include solar water heating systems, home lighting systems comprising solar lanterns, solar cooking systems, solar pumps and small power generating systems. Under the Solar Mission, it has been proposed to cover 2,000 MW equivalent by 2022 which includes all the above, except solar water heating systems for which there is a separate target of 20 million sq. meters.

As per provisional data for the period April-September 2011 provided by the Ministry of Petroleum and Natural Gas, 19.224 million metric tonnes (MMT) of crude oil was produced in the country, as against 18.297 MMT produced during the corresponding period in 2010. Further, 83.75 MMT of crude oil was refined during April-September 2011.

Natural gas is also expected to play a key role in India’s energy mix by 2025, increasing to 20 per cent. The proportion of natural gas in the total energy mix has increased to 10 per cent in 2009 from 4 per cent in 1999. The country produced 24405.2 million cubic metres (MCM) of natural gas during April-September 2011, as per the provisional data provided by the Ministry of Petroleum and Natural Gas.

India has been ranked as the third best investment destination in renewable energy sector, next only to China and the US, according to a report ‘Ernst & Young Renewable Energy Country Attractiveness Indices, May 2011’, released by Ernst & Young. Significantly, an investment of about Rs. 4900 crore has been received as FDI equity inflows in the renewable energy sector during the last three years and the current year, till June 2011.

India's power sector is expected to generate revenue of about Rs 13 lakh crore (US$ 294 billion) during the 12th five year plan (2012-17), according to Mr P. Uma Shankar, Union Power Secretary. He said the government is looking at revenue estimates of Rs 2.5 lakh crore (US$ 56 billion) from transmission and Rs 4 lakh crore (US$ 91 billion) from distribution in addition to Rs 6.5 lakh crore (US$ 147 billion) from generation.

India's petroleum refining capacity is expected to rise to 240 million tonnes per annum (MTPA) by March 2012 from the current 188 MTPA, attracting an estimated investment of US$ 13.5 billion – US$ 14.6 billion. This will boost the country's exports of petroleum products, according to S Sundereshan, Secretary, Ministry of Petroleum & Natural Gas.

During 2010-11 the Ministry has selected grid solar power projects of 800 MW capacity. Further, six major R&D projects in solar thermal and photovoltaic (PV) technologies have been sanctioned. National Centre for Photovoltaic Research and Education has been set up at IIT-Bombay.

Government has also approved the implementation of the first phase of the JNNSM (upto March, 2013) and the target to set up 1,100 MW grid connected solar plants including 100 MW of roof-top and small solar plants and 200 MW capacity equivalent off-grid solar applications and 7 million sq.m. solar thermal collector area in the first phase of the Mission, till 2012-13.

The Prime Minister, Dr Manmohan Singh, at the Jawaharlal Nehru National Solar Mission in January 2010, had urged the industry to create 'Solar Valleys' and cash in on business opportunities being raised through development of non-conventional energy sources. He said that these valleys were expected to become the hubs for solar science, engineering and research, fabrication and manufacturing. He also referred to the target of 20,000 MW of solar generating capacity by the end of the 13th Plan period as ambitious.

Renewable energy contributes around 70 per cent of the total power business in India, as compared to 10 per cent in 2000, in terms of project numbers and dollar value, as per Anita George, Director, Infrastructure, International Finance Corporation (IFC). Renewable energy is central to climate change mitigation efforts. Broad estimates have shown that mitigation from existing renewable energy portfolio is equivalent to around 4-5 per cent of total energy related emissions in the country. Moreover, India has become an attractive destination for CDM projects owing to the vast market potential and well-developed industrial, financing and business infrastructure.

By October 2010, India had 534 registered CDM projects, which is around 22 per cent of worldwide registered projects. With 347 projects, renewable energy-oriented constitute around 65 per cent of Indian CDM registered projects. Within those, wind has the maximum number of projects (119) followed by hydro (68) and solar (3). Of these 3 solar projects 2 are photovoltaic and 1 is solar thermal (cooking) project. In addition, there was a CDM project pipeline of around 1200 projects, of which around 750 projects were renewable-energy-oriented.

The Indian government has proposed incentives of up to US$ 0.258 per kilowatt hour for power plants, 10-year tax holidays, electricity tariff exemptions and other preferential tariffs. There are also subsidies for solar power systems and small hydro power projects.

To promote solar power for off-grid applications for both thermal as well as photovoltaic, the Government is offering financial support through a combination of 30 per cent subsidy and/or 5 per cent interest bearing loans for companies in the business.

The Union Cabinet has approved the implementation framework of the National Mission for Enhanced Energy Efficiency (NMEEE), which seeks to strengthen the market for energy efficiency by creating conducive regulatory and policy regime. NMEEE has been envisaged to foster innovative and sustainable business models to the energy efficiency sector. The Cabinet approval includes implementation plan of NMEEE, funds to the tune of US$ 5.07 million.

As per the Ministry of New and Renewable Energy (MNRE) Proposal for 11th Plan for Renewable Energy for Urban, Industrial and Commercial Applications - Subsidy / incentive is valid for only 2.5 million square metre targetted during first two years of the Plan (11th Five Year Plan – 2007-12).

Following the Central Government's decision to enforce the Energy Conservation Building Code (ECBC) in new buildings to minimise the use of energy and recommendations to the state governments to follow the same with suitable amendments warranted by local circumstances and requirements, the state of Haryana has enforced the provisions of the code. The code is applicable to all buildings and complexes having a connected load of 500 KW and more, or having a contract demand of 600 KVA and more. Buildings not using electricity or fossil fuel and those using energy for manufacturing, are exempt from application of the code.

Investment policies have been initiated to bolster investments through regulated means. These include:

• FDI up to 100 per cent under the automatic route is permitted for oil and natural gas exploration activities, infrastructure for marketing of petroleum products, petroleum product pipelines and natural gas LNG pipelines
• FDI up to 49 per cent is permitted under the Government route in petroleum refining in the private sector
• 100 per cent FDI into renewable energy through automatic route has been allowed by the Government

Source: Consolidated FDI Policy, Department of Industrial Policy & Promotion (DIPP)