Here’s an interaction with Prakash Nayak, Senior Member of The IET and Director, PEnA Power Engineering and Automation Pvt Ltd., on the current state of renewable energy market in India.
Please share an overview of the renewable energy sector in India?
Nayak: India has the fifth largest power generation capacity in the world. India’s installed capacity stood at 273 GW as of FY15. Thermal power, the largest component .i.e. 189 GW, followed by hydro 42 GW, renewable energy 36 GW and nuclear 5.8 GW. India’s total power generation capacity has increased at a Compound Annual Growth Rate (CAGR) of 9.4 per cent over FY09–15. On the production of electricity India is the third largest producer of electricity in the world. India is targeting a total of 88.5 GW of power capacity addition by 2017, of which, 72.3GW constitutes thermal power, 10.8 GW hydro and 5.4 GW nuclear.
Renewable energy is fast emerging as a major source of power in India. Wind energy is the largest source of renewable energy in India. It accounts for an estimated 60 per cent of total installed capacity (21.GW). There are plans to double wind power generation capacity to 20GW by 2022. India has also raised the solar power generation capacity addition target by five times to 100GW by 2022.
The Government of India has been supportive to growth in the power sector. It has de-licensed the electrical machinery industry and also allowed 100 per cent Foreign Direct Investment (FDI) in the sector.
Foreign participation in the development and financing of generation and transmission assets, engineering services, equipment supply and technology collaboration in nuclear and clean coal technologies is also expected to increase.
Many major investments in renewable and developments in the Indian power sector are happening viz., Inox Wind Ltd, a wind energy solutions provider, increasing its manufacturing capacity to 1,600 MW at a total investment of Rs 200 Crore by the end of the next financial year. Reliance Power Ltd signed an accord with the Government of Rajasthan for developing 6,000 MW of solar power projects in the state over the next 10 years etc.
The Government of India has identified power sector as a key sector of focus so as to promote sustained industrial growth. Many initiatives have been rolled out by the Government of India to boost the Indian power sector, viz., Joint Indo-US PACE Setter Fund has been established, with a contribution of 25Crores from each side to enhance clean energy cooperation., The announcement of massive renewable power production target of 175,000 MW by 2022., Union Cabinet of India approved 15,000 MW of grid-connected solar power projects of National Thermal Power Corp Ltd (NTPC) etc.
The Reserve Bank of India (RBI) has also notified to include renewable energy under priority sector lending (PSL). Therefore, banks can provide loans to borrowers for renewable energy projects. The Indian power sector has an investment potential of Rs 15 trillion in the next 4–5 years, thereby providing immense opportunities in power generation, distribution, transmission, and equipment.
From the above one can see surely agree with me that , there is larger focus and drive in the Power sector with much greater emphasis on Renewable Energy, which we never witnessed earlier years.
What are the challenges hindering the growth of the power sector in India?
Nayak: While the Electricity Act, 2003, laid the framework for rapid development of the Power sector and it is attracting significant investments, the bottlenecks continue to remain. India has ambitious plans of adding over 175 GW of generation capacity as well as associated Power Systems in the 11th and 12th plans. Thus the country is poised to build more power generation capacity as well as supporting power systems in the next 10 years as compared to the previous 60 years. India is expected to maintain a robust economic growth rate of over 8 percent in the coming decade. This implies substantial increase in economic activities and raises the challenge of adding the infrastructure necessary to enable this development. While India witnessed spectacular progress in the telecommunication space with full privatisation in place, other infrastructure segments like roads, ports and electricity lacked similar progress due to a variety of bottlenecks. This necessitates flawless project execution of the projects with a strong focus on timely delivery and quality execution.
With large scale integration of renewable energy being variable in nature, there is need for base load stations to ramp up and ramp down as and when needed. Hence, hydro power as part of the Renewable sources besides bulk Fossil large power plants and corresponding incentives as available to wind and solar resulting in healthy and viable grid power.
While large-scale investments have been planned and numerous projects are underway, the lack of competent manpower to execute these projects and subsequently operate and maintain them is already being felt. From last one decade there are cases where government utilities and public sectors have stopped the man power resource recruitment. Manufacturing and project relates industries have failed to attract engineers as they opted to IT industries in which jobs are more attractive in terms of pay-packet and perks. The scarcity is increasing and unless the Government and all other stakeholders including private players invest in attracting and training the available talent on an urgent basis, it has the potential to become a major bottleneck and derail the rapid growth in the sector that has just begun.
The total manpower in the power sector at the end of 10th plan was approximately 950,000 as per the report of the Planning Commission’s Working Group on Power for 11th Plan. It is estimated that over 500,000 technical manpower and 150,000 non-technical manpower need to be inducted into the sector in the 11th and 12th plan periods. These are huge numbers.
In addition to the technical manpower, tens of thousands of highly skilled managers will be required in areas such as project planning and management, project monitoring, project finance, contracts and materials management, etc., to execute flawless execution. Further, with increasing focus on energy efficiency and renewable energy, there is an opportunity to productively engage millions of people to participate in harnessing the renewable energy, provided they have the appropriate specialised knowledge. Moreover, demand side management, power trading, carbon credits, smart grids etc. will also require manpower with specialised training.
One of the key hindrances to ensuring adequate manpower for the sector is the lack of training infrastructure. While infrastructure for Thermal induction is sufficient, it is grossly inadequate for Hydro and Renewable Power System induction, so there is a need to get adopted for this. Though there are efforts being put from governments and industries, the scale at which this need to be enhanced, seeing the huge size of requirement.
Most importantly, there is huge deficit in infrastructure for managerial training, which currently caters only to 4 percent of the requirements. This has a significant impact in decision making capabilities, efficiency and effectiveness of project executions of both private and government organisations. At a time when the sector is undergoing rapid growth amidst a changing environment, lack of managerial competencies would hamper the ability of organisations to adapt and grow, thus applies to private organisations as well. In such a scenario, it is important that managerial talent is oriented towards commercial, social and environmental aspects of the industry.
The development of all the renewable resources to their fullest potential will require millions of people to contribute to the growth and development of these resources. Thus adequate care is taken for the training and development of manpower who will be involved in managing these assets.
Other emerging areas driven by the imperative to mitigate climate change, there is an increasing focus on energy efficiency and conservation. This includes implementation of energy efficient systems, monitoring and auditing. Other key focus areas include loss reduction (today the AT&C Loss is `30 percent in distribution utilities and improving demand side management (DSM). These would help efficient management of the power systems and generation facilities, reduce losses and provide better quality of service. Monitoring systems for detecting losses as well as DSM techniques require usage of advanced IT and Communication systems which call for a large number of personnel to be trained in these specialised areas.
What is the role of Clean & Green technology in the power sector?
Nayak: Besides what is mentioned above, there are many challenges and hence the role of Clean & Green, in our country’s vision to make India’s economic development energy-efficient, we must shift from economic activity based on fossil fuels to one based on non-fossil fuels and from reliance on non-renewable and depleting sources of energy to renewable sources of energy. With the emergence of competitive markets and Power trading systems like in advanced countries like US and Europe, a large number of highly skilled professionals with analytical, commercial and technical knowledge are required in this area. Other key decision makers and mangers also need to develop a good understanding of the trading systems in order to make commercial decisions.
Considering the country’s commitments on climate change and inherent benefits to lower cost per MW, significant shorter gestation cycles, and the focus should continue with the push that has been created. We expect the incentives like Accelerated depreciation and Subsidy provided to continue however, flawless execution of this will be the key success factor. One need to remove the hurdles in the approval process to remove the delays and enhance the accountability, the present government has come out with many innovative ideas in other areas for distributing the benefits straight to the beneficiaries, adopt similar approach in this as well, this will motivate more to be part of this initiative. In large country with more than 50 percent with age group less than 25 years inclusiveness is the key to success.
In my opinion it would be better to prioritise few of them and address them very effectively, as the credibility of implementation is the key to success and inclusiveness of the society as mentioned above is yet another factor leading to success.
First one is, as mentioned whatever incentive are available make these schemes a flawless execution. Second, present state of State Electricity Boards (SEBs) is a bigger problem when it comes to large developers and banking communities. This situation we have invited for ourselves, mainly because of non-payment from the end user but mostly because of power theft and free power promised by political parties and also poor quality of power. The result is that the SEBs hardly ever realizes the full amount for the power they purchase from the generation companies. Second, there is a serious need to hike power tariff. Naturally, this will be an unpopular step for the political parties. Thus focus on the inflow of funds, once again flawless execution of PPA; this will increase confidence level of both short term and long term investors. More investments can happen provided government find some innovative way and improve their credibility. Third, I would also emphasise more of roof top to generate a power where the load is, and effective implementation of Net metering policy of the various state governments, with good execution could be the game changers.
How can India resolve its Power crisis?
Nayak: Besides focusing green energy and Energy conservation, few measures mentioned above, like improving the credibility and also attracting more investment of global players with low interest funds, are the main measures required to be taken. Government and ministry are continuously working on the various options, which are very much visible in the public domain compared to earlier times. Tax incentives, excise and customs duty benefits etc are there already to promote the scheme. Ministry tried with bundling of Viability Gap Funding (VGF) in the Solar Utility scale bidding. Even the recent bid result indicate that Indian solar sector may not require incentives such as bundling and Viability Gap Funding (VGF) going forward. There is continuous exploration of various initiatives like Ujwal Discom Assurance Yojana (UDAY) to revive the DISCOM Situation. These initiatives will attract more consumers to adapt to these technologies.
What is the scope of the IET Power Engineers panel?
Nayak: Particularly in India considering the capacity expansion envisaged in power sector i.e. ~ 175 GW in the next planning period and to cope up with demand and further looking at employability of engineers and technicians as low as 30 percent we decided in 2006 forming a Power Engineers Panel as part of IET’s energy sector for focused approach. Also help engineers as to why they should take the role in power by explaining them about the huge opportunity and growth both in terms of job profile and technology adaptation and research.
Further, IET UK also being home for professional communities with large base with large base close to 1,50,000 , worldwide can play larger role in supporting the initiative in skill development by involving the professional communities around the world, just a replication of what has been done in UK and other countries. IET Being a voluntary driven organization to take this forward and make it more effective, Vision, Mission as well as both short term and long term goals have been defined by this panel. The Vision of the team is “To be strong Partner and catalyst in developing Power Engineering Communities in around India and sub region” and the Mission is to “Facilitate and promote from time to time the solutions needed to strengthen the country’s power system development and growth, focusing on resource development and also enhancing the awareness of technologies and trends to all stakeholders”, by way of technology talks, published articles, conferences, etc., While doing so we created a Solar panel with senior members from across the industry, academia etc. to promote the same, in schools, and colleges etc. We also brought out a white paper on the same. To our surprise many of the industries whom we have interacted with also have matching vision and mission and there are lot many activities happening in the academia and industry connect initiative , with high profile events , lectures, technology lectures, white paper on solar etc.
Besides working on low hanging fruit, we are also working on some focused priority subjects to bring home the technological developments happening in the world and help the members and communities around an access to technology developments etc. in the area related to, Smart Grid approach( Energy Conservation), Renewable energy development and Environment Management.
Rajani Baburajan