Jai S Rathod, director, Natural Group, a renewable energy company based in India, in an exclusive interaction with Greentechlead.com, says lack of Renewable Purchase Obligation (RPO) enforceability makes solar projects unviable in India. Government should make RECs bankable by ensuring enforceability of RPO obligations. Solar REC rates can be revised to Rs. 2-3 to reduce the burden on purchasing entities, Rathod says.
Read the full interview here:
Give a brief about Natural Group and its activities in IndiaÂ
Natural Group is an India focused Renewable Energy Advisory & Management Organization. Some of our main offerings in this space are Solar EPC, Opex-based i.e. pay per use Solar Rooftop & Ground mounted projects, Complete Turnkey solutions, Biomass Fuel Supply Assessment studies and Fuel Supply Agreements for stranded and new biomass power plants, Turnkey Biomass Energy Plantations and Joint Ventures with land owners
How do you expect the renewable energy industry in India evolve in the next 10 years?
It goes without saying that the share of Renewable Energy and esp. Solar in the energy basket will be much higher than what it is today. As fossil fuels (coal, oil and gas) start becoming more expensive and solar becomes cheaper as well as more efficient, investors as well as the government would be more inclined towards the latter. It will start making sense from an economic and not just an environmental perspective and that will be the key trigger for large scale deployment. A subsidy regime can only be the beginning. Its only when the market takes over that we can hope to see renewables as a serious rival to fossil fuels. Renewables have to be cost competitive vis-a-vis fossil fuels and I see that happening in the next 10 years for sure and probably even sooner. I would also not rule out the possibility of some other new form of Renewable Energy (other than solar, wind, biomass) to steal a march over all others through greater and faster technological improvements, inventions and discoveries.
What is your vision and goals for the next 10 years?Â
Our vision is to be amongst the Top 10 renewable energy companies in India and develop more than 100,000 acres of biomass energy plantations while maintaining the highest standards of professionalism, ethics, integrity, value systems and equality for all stakeholders.
Tell us more about the investor sentiments in renewable energy sector? Has the Modi wave helped boost the confidence of investors?
Yes, without a doubt, the arrival of Mr. Modi has boosted the overall investor sentiment. Given Mr. Modi’s track record of pro-actively encouraging Solar and other renewable power in Gujarat, the anticipation of positive change is that much more from the Renewable Energy (RE) sector. There is a feeling that RE and esp. solar will receive a much bigger push in the coming days. On the whole, investors in RE are quite bullish on their prospects. However, a fair degree of work needs to be done on the policy side to enable much wider participation through greater clarity.
What are the major challenges you see in the following energy sectors in India: Solar, Wind and Biofuel?
Solar– The main challenges are again policy related such as lack of Renewable Purchase Obligation (RPO) enforceability which makes Renewable Energy Certificates (REC)-based projects unviable and unbankable. Since rooftop space is limited, there should be preferential Open Access regulations in all states so that projects can be set up on larger and cheaper  land parcels away from the consumption site.
Wind– With the reinstatement of 80 percent Accelerated Depreciation, the Wind sector which was gasping for breath has found a new lease of life. However, some unavoidable problems remain. The principal one being that most of the major “windy” sites have already been exhausted and now projects are being put up in locations with much lesser wind speed and consequently lesser potential for generation of power. Larger turbines are now being considered to extract more power from such less favorable sites. India is anyway blessed with more resources of solar energy than wind energy and hence, solar obviously enjoys a huge advantage. Also, while solar has the potential to significantly increase plant efficiency and performance levels from here on, the same is not very apparent in the wind sector.
Biomass– The biggest challenge facing the biomass power sector over the last several years has been getting enough biomass supply at rates which are competitive. With rising biomass use among industries as a replacement for fossil fuels such as furnace oil etc. the rates of biomass have been on a sharp upward trajectory. Power plants simply cannot match the rates being paid by industries and this has resulted in a majority of biomass power plants either shutting down or running at very low plant load factors or worse still, running on coal. The new CERC guidelines do, however, represent a ray of hope for the beleaguered sector. Biomass supply can, however, also be addressed by efficient and professional biomass supply chain establishment and management. Growing biomass energy plantations on unused wastelands also has significant potential to provide carbon-neutral fuel for generations to come. For example, a simple 1 acre plot can generate 50,000 tons of biomass fuel over a millennium even at current output levels and there is no reason why this cannot go on for several millennia assuming of course that the burning of fossil fuels does not drive us to extinction before that. We need to shift our focus from a “plunderer” mentality to that of a “grower”. There are, of course, people concerned over a “food versus fuel” debate. My take on this is that 1) there is enough land available for both even in the current scenario esp. as biomass can also be grown on wastelands and 2) eventually most food will be grown in hydroponic and aquaponic structures with benefits such as 4-10x more yield per acre, soil-less cultivation (thereby preventing soil and water contamination through farming on the earth’s surface), residue free and pest free produce. Policy enabling wasteland lease to energy plantation companies would go a long way in ensuring fuel security. It is important to remember that biomass is the one energy source that can be “grown” and hence can assure a perennial supply forever, something which fossil fuels can never match.
Though everyone seems concerned about the fuel crisis, there are no aggressive steps toward making the country energy surplus. For ex. Government bodies are not keen to invest in renewable energy in their own infrastructure. Why does this happen?
All other considerations become secondary if the alternative (renewable energy) is more expensive than the current solution (coal). We also have to remember that solar plants generate power only during the day time and wind power plants generate whenever there is wind i.e. both are not available throughout the day whereas the power demand is much more uniform. Wind is, of course, much more infirm in nature than solar. Hence, unless renewable energy reaches grid parity and is able to deliver power 24×7, it will always be treated as a secondary source of power. Till just  a couple of years back a 1 MW solar power plant would cost INR 15 crores and generate 1.6 million units of electricity p.a. compared to a coal thermal power plant which costs INR 5-6 crores and generates 6 million units p.a. Under such a scenario no government can push renewable energy goals beyond a point. However, as renewable energy reaches grid parity and storage technology improves, we would see the focus shifting from coal to solar, wind and biomass.
Give three suggestions/policy changes to policy makers that will help the industry address the current problems.
Here are the suggestions
Solar
1) Make REC’s bankable by ensuring enforceability of RPO obligations. Solar REC rates can be revised to Rs. 2-3 to reduce the burden on purchasing entities
2) Make solar water heaters compulsory for all new buildings as this is efficient technology with a quick payback period making it a low hanging fruit.
3) Make the 80 percent Accelerated Depreciation (AD) benefits tradable since this benefit is useless for an IPP (Independent Power Producer) business model. It also unfairly tilts the balance in favour of larger profit making companies at the cost of the IPP’s.
Wind
1) Make REC’s bankable by ensuring enforceability of RPO obligations.
2) Greater focus on Generation Based Incentive (GBI)
3) Make the 80 percent Accelerated Depreciation benefits tradable since this benefit is useless for an IPP (Independent Power Producer) business model.
Biomass
1) Mechanism for half yearly review of local market prices of biomass to more accurately reflect the ground realities
2) Allotment of government wastelands on 30 year lease for biomass energy plantations. This will generate revenue and employment opportunities in remote areas and slow down the population migration to cities
3) Make the 80 percent Accelerated Depreciation benefits tradable since this benefit is useless for an IPP (Independent Power Producer) business model.
Points relating to REC and AD are a recurring theme since they significantly affect all RE power sources and addressing them is very easy while the benefits can be game changers. Preferential Open Access regulations for Renewable Energy across all states in India would also provide a great fillip to the sector.
Rajani Baburajan