Transcript Document 7340321

Renewable Energy Experiences
Food for thought minus the RE statistics to
be found at mnes.nic.in, powermin.nic.in,
www.cea.nic.in and www.recindia.com
Albrecht Kaupp, Manager
Indo-German Energy Programme, IGEN
1
Basic Power Statistic of India
The overall statistics as given by (i) integrated energy policy for India (2005),
(ii) draft of national electricity plan (2005) and (iii) national electricity policy.
Minimum life electricity consumption of
Access to electricity by all households in
Total villages in India
Statistically electrified based on old definition
Actually electrified based on new definition
Electrified based on 1 kWh/day and household
Electrified based on policy plan quality requirement
Villages to be electrified based on old definition
Villages to be electrified based on new policy
Lifeline of 0.5 kWh per day per household at
Villages which will be not connected to a grid
Per capita supply will rise from 370 kWh now to
1 kWh/ household and day
2010
587,258
87%
Non known
Not known
Not known
77,605
Could be 200,000
50% of av. supply cost
estimated 25,000
1000 kWh in 2012
2
Other relevant indicators
(i)
Economic growth rate and growth of energy consumption rate is strongly
correlated at about 1:1.
(ii)
Hydro power is the only significant RE contributor at 25% based on MW
installed. Contribution to power mix ratio had been steadily declining.
(iii)
Wind, solar and biomass are contributing about 0.8%. They may contribute
2% to 3% to kWh electricity consumption in 2012.
(iv)
Validated numbers for wind, solar and biomass are difficult to get because
official statistics record only MW capacity addition with no reference at what
plant load factor or whether the system is still in operation.
3
National priorities
• Medium term energy security through conventional fuels.
• Decoupling of energy growth rate from economic growth rate.
• Energy efficiency and conservation. Energy modesty is in question.
• Expansion of conventional power such as atomic power plants, coal
& gas fired, as well as hydropower at a rate of 10,000 MW per year.
• Overseas investment in fossil fuel sources are on the top agenda,
while domestic exploration, in particular coal, suffers.
4
Where is the market for commercially viable
RE-systems in India?
• At least 85,000 MW nominal capacity hydropower coming up in the
next 15 years (Policy and plan)
• At least 7,000 MW small hydropower <(25 MW) of more than 1,500
systems in a planning stage (Policy and plan)
• Realistic 12,000 MW potential biomass power plants fired with “real
agricultural waste”. Size 3-7 MW. (No plan and policy)
• Wind power market cornered by three major players. (State level
different policies, no Centre plan and policy )
• Bio-diesel policy and first commercial bio-diesel refinery (30,000
tons/year) presently under construction.
5
Where is the market for highly subsidized
RE-systems in India?
• At least 25,000 villages (10-50 kW systems, Policy and plan)
• Subsidy scheme 90% central subsidy grant contribution, 10% State
contribution, applies to each State, not only to North-East region
(Policy and plan)
• Life line tariff 1 US Cent/kWh or at least 50% of supply costs
(Recommendation).
• Conflict of interest with State Electricity Utilities who already suffer
large financial losses due to “a free power to rural areas” policy.
Realization of about 10% of supply cost.
6
Regulatory constrains and opportunities
• State electricity regulatory commissions (SERC) have authority but do
not always practice to approve tariffs for all systems.
• It sometimes seems that a case law is applied and individual deals are
cut.
• Some States (Maharashtra) have policies similar to the German
Renewable Energy Act.
• Conflict of interest between SERC and power utilities (SEB) who may
have to buy expensive green power and are forced to sell at cheap
rates.
7
The Indian private sector driven
renewable energy market
• Alive, impressive, aggressive and successful.
• Lobbyists all over the place.
• Their only problem is the market of renewable
energy for the rich is about 10% of the market
of renewable energy for the poor. In other
words, to tap into the market for the poor public
and donor agencies’ subsidies are necessary.
8
Resulting problem for donors, development
banks and public treasury
Are we supporting accelerated market
penetration or accelerated non-sustainable
subsidy penetration schemes ?
9
Rural electrification should be more than
shedding light at poverty at night
10
1. What is your fancy?
Public announcement and stated objectives should be very focused
concerning the contribution to which objectives. Select at most two.
Ticking off more is pure window dressing.
(i) poverty alleviation,
(ii) quality of life improvement,
(iii) clean energy,
(iv) green house gas mitigation,
(v) accelerated market penetration of renewable energy technologies,
(vi) least cost energy supply solution,
(vii) affordable solution for consumer,
(viii) economic development of backward areas.
11
Example 1: Biomass Power Plants
It is not really necessary to advertise biomass power plants as
“clean and green power plants: They smoke as much or even
more than any coal fired power plant but nevertheless serve a
purpose under objectives (vii) and (viii).
Why always equating “renewable = clean”
to justify renewable energy?
12
A good example of income generation
Biomass Power Plant, Karnataka, India
Project Size, (nominal power plant capacity), MW
4.5 MW
Land area of procurement, km2
300
Cultivated area within the procurement area
150
Number of land holdings within this area
10,000
Rural population in this area
50,000
Agricultural labour in this area, people
8,000
Price for biomass, moisture free basis, per ton
Annual value recirculated to rural economy, Rs/US$
Permanent jobs created in biomass supply business
Rs. 1150
24 US$
44,000,000
920,000
500
13
Example 2: PV and Kyoto
Do not market photovoltaic (PV) systems under the label
“green house gas mitigation”. Smart appraisers will only tell
you that you have increased greenhouse gas emissions,
because for the same life cycle cost investment, any effort to
improve energy efficiency in a fossil fuel fired system would
most likely have a 3 to 5 fold greater effect. You may be
labeled a hypocrite or a lousy business man taking advantage
of a serious climate change problem. Market the system under
(ii) where it belongs. Marketing under (i) and (viii) is also
misleading.
14
2. Is everybody on board?
Those within the command and control area of an
RE-system should agree to it in word and spirit,
should benefit from the system, and are not exploited.
The question often arises: Become beneficiaries
victims because we don’t listen to them. ?
15
Example 3: Run-off-the River Hydro
A run-off-the-river hydro power project of 50 m3/s river
flow which keeps a sacrifice of 0.1 m3/sec in the riverbed,
by diverting almost all of the water to gain 50-100 m in
elevation harms all those villages living within the command
and control area, and has therefore little acceptance and will
only widen the conflict between rural and urban areas for
natural resources, in particular if the village is already
electrified and power transmitted to urban areas. (About
1600 small hydro power projects (7000 MW) have been
identified and are in a planning state in India.)
16
Example 4: Biomass Power Plant
A 5 MW biomass power plant, firing “real” agricultural
residues, which have so far not found a market and are
burned in the field, provides additional income to farmers as
well as manages downstream power distribution to villages
reducing pilferage and technical losses. Good example of
meeting objective (i).
17
3. Why subsidizing the wrong end of the system?
Subsidizing the investment costs of a renewable energy
power system is often the least desirable intervention. If
necessary subsidize kWh generation/consumption to
ensure that only technologically sound equipment and
professional operators/service providers are entering the
market.
18
Example 5: First wind park policy, India
Fiscal incentives of 100% first year depreciation for
wind farms has resulted in at least one hundred wind
power mills which never went into operation or
worked for a short time only, particularly in cases
where over-invoicing took place. The programme
died out and was replaced by a preferential tariff
based on kWh supplied.
19
4. Accelerated market penetration or
accelerated subsidy scheme?
The principle that nonessential goods and
services should not be sold at grossly different
price levels just for perceived social
consideration is too often violated, i.e. market
prices for the rich and highly subsidized prices
for the poor.
20
Example 6: PV parallel market
There are two fairly large PV markets for providing electricity to rural
areas. The same firms are selling at commercial terms to those who can
afford it and at the same time giving systems away at a 50:50 to 90:10
subsidy to the poor if the Government or a sponsor pays the difference.
The justification under the heading “accelerated market penetration of
renewable energy technologies” is a lame one, because the market for the
poor grows faster then the market for the rich. Therefore this becomes a
programme for accelerated unsustainable subsidies.
Besides nobody would ever get the idea to subsidize refrigerators at 90%
for the poor!
21
5. Homeopathic proportions or real electricity?
Don’t electrify if you can provide only homeopathic
proportions of electricity and have no affordable and
cost effective solution to follow demand. Or electrify only
at this level for social considerations in areas where it is
likely that no economic development will
take place for the next 15 years. They exist and are
numerous!
22
Example 7: Fast demand increase scenario
A consumption level of 60 Wh to 300 Wh of electricity per
day per household will seldom trigger economic development,
although it improves quality of life. The question is not the
esoteric issue of providing the minimal electricity supply level
that is the least cost and/or most affordable solution at the
onset of the project. You have to go beyond this and answer
the question of what you are going to do when the first
refrigerator in the village arrives, requiring 2 kWh/day, when
the present minimal consumption level already burdens a rural
household with 10% to 20% of their cash income.
23
Example 8: Philippines PV program
All PV systems (SHS, village AC plants, battery charging
stations) , except two, that the author post-appraised in the
Philippines in 1998 and which had been installed between
1985 and 1993 were no longer in operation and had been
replaced by either diesel gensets or grid connections. The
issue was not inferior technology or services, but economic
development that the systems could no longer support. Call it
a short lived transition technology.
24
Example 9: Very remote area PV
All systems which the author visited in North India
(Himachal Pradesh, Spiti, Kinnaur, Tirthan
district) in 2000 – 2004 in very remote villages (24 days trekking) were for various reasons not any
longer in use.
25
6. Public power utilities as
beneficiaries or victim of Renewables ?
Rural electrification with (renewable) energy
power systems should be done in such a way
that it does not financially harm public power
utilities. Just because it is a renewable energy
technology does not mean this principle should
be waved.
26
Example 10: Reluctant beneficiary
It has been observed in the Philippines and India
that some utilities are rather reluctant to become the
owner of village RE power plants, even if given for
free. They either abandoned the system or try to
quickly get “real electricity” to the place.
27
7. Wind power beats easily diesel generator
Promote renewable energy power systems in
environments and with customers where the
still expensive electricity is nevertheless less
costly than power from existing conventional
systems.
28
Example 11: Textile industry and wind power
Wind farm operators in South India provide power which is
not even firm at about 50% of the cost of conventional diesel
generators, because they have target a consumer group
which operates diesel generators at high costs of 0.16 US$
per kWh. It is then only a matter of replacing expensive
fossil fuel power with wind power (unreliable or not)
whenever available to reduce costs of diesel generator set
operation.
29
8. Renewable energy + energy efficiency
+energy modesty is the mantra
In particular grid connected and subsidized renewable
energy power systems selling to known customers
should only be implemented in combination with a
demand side management component to reduce, in a
financially attractive way, the technical and commercial
losses at the consumer side.
30
Example 12: Systematic denial
None of the proposals seen by the author have compared the costs
to generate electricity on the supply side with the avoidable costs
of technical and commercial losses. The option to avoid, or reduce
supply side subsidies per kWh by moving these subsidies into
DSM measures which may even be financially attractive is rarely
considered. In other words, whoever claims that his wind park
power requires a special tariff which is 30% higher than the
average power mix generation costs should answer the question
why consumption at the demand side cannot be reduced by 30% at
lesser subsidy for the same level of comfort and productivity.
31
Serious business proposal: Rarely happens
Village council of “Vasant Vihar” is looking for an entrepreneur who wants to
establish a business in the village, requiring electricity. Entrepreneur should
view the ”power plant” as a nucleus to also electrify the village. Choice of
technology and system is open although renewable energy technology would be
preferable. Many households are willing to pay a reasonable (= affordable) rate.
To what extent very poor households will be cross- subsidized and also
connected is negotiable. Entrepreneur is not required to electrify public places
(street lights, community hall, village centre). Entrepreneur may also provide
other services on request and against payment. Village is prepared to provide a
business development and electrification grant through the “HelpTheVillages”
fund. For more details download village profile and infrastructure from
www.AdoptVillage.com/VasantVihar.html
32
Barefoot solar energy warriors: A true story
Village council of Vasant Vihar has been informed that the village has been
selected by the Government for electrification. The technology and system must
be renewable energy since funding comes from a special purpose grant to
promote renewable energy systems. The technology provider has been selected
and no competitive bidding will take place. In order to keep the system alive for
the next 5 years a repair and maintenance fund has been established and rural
barefoot solar energy warriors will be trained to service the systems. Since most
people are poor in this village, only marginal cash contributions are to be
expected. As a community service all public places are provided with electricity
for lighting. In order to satisfy one grant conditionality it is planned to show that
a few households are engaging in cottage industry activities to demonstrate
economic development in the village. For profit technology and service
providers need not apply.
33
The battle field
Jogin 6465 m
My final salute goes to the Indian Himalaya, a favorite battle field
of various philosophies and strategies for renewable energy markets.
The “ Abode of the Gods and Sadhus ” will survive it all.
34