Solar Policy

THE STATE OF
RENEWABLE
ENERGY
IN INDIA
2019
A CITIZEN'S REPORT
THE STATE OF
RENEWABLE
ENERGY
IN INDIA
2019
A CITIZEN'S REPORT
00Cover, credit and contents.indd 1 17/01/19 3:52 PM

Research direction: Chandra Bhushan
Authors: Priyavrat Bhati, Priya Sreenivasan, Mandvi Singh, Shweta Miriam Koshy,
Pratha Jhawar and Swati Sambyal
Research support: Soundaram Ramanathan and Richa Agarwal
External contributors: Nikita Das and Jatin Sarode, Prayas, Pune (Chapter 7: Discoms)
Editor: Souparno Banerjee
Editorial support: Arif Parrey
Layouts: Kirpal Singh and Surender Singh
Cover design: Ajit Bajaj
Infographics and design support: Raj Kumar Singh and Vijayendra Pratap Singh
Production: Rakesh Shrivastava and Gundhar Das
Research supported and funded by: Shakti Sustainable Energy Foundation

We are grateful for the support provided by Shakti Sustainable Energy Foundation
(https://shaktifoundation.in). However, the views espoused in this report do not
necessarily reflect that of the foundation. The Foundation does not guarantee the
accuracy of the data not does it accept any responsibility for the consequences of its use.
© 2019 Centre for Science and Environment
Material from this publication can be used, but with acknowledgement
ISBN: 978-81-86906-27-9
Price: Rs.750 (US $45)
Maps used in this report are indicative and not to scale.
Citation: Chandra Bhushan, Priyavrat Bhati, Priya Sreenivasan, Mandvi Singh, Pratha
Jhawar, Shweta Miriam Koshy and Swati Sambyal 2019, The State of Renewable Energy
in India, Centre for Science and Environment, New Delhi
Published by
Centre for Science and Environment
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Contents
Foreword v
Executive summary 1
1. The road to 175 gigawatt 11
2. Utility-scale solar: Charting a new course 23
3. Solar rooftop: Overshadowed 41
4. Solar manufacturing: Moving out of the doldrums 59
5. Wind energy: Braving the headwinds 69
6. Energy access: Bridging the gaps 85
7. Discoms: Fundamental reforms required 113
8. Integrating RE: Preparing for the future 131
9. Waste to energy: Limited scope 147
Statistics 159
References 185

Key abbreviations
ABT: availability-based tariff MW: megawatt
ACS: average cost of supply NBFC: non-banking financial corporation
AGC: Automatic Generation Control NCEF: National Clean Energy Fund
AMI: automatic meter infrastructure NEP: National Electricity Plan
APERC: Andhra Pradesh Electricity Regulatory Council NGT: National Green Tribunal
APPC: annual pooled purchase cost NIWE: National Institute of Wind Energy
ARR: average revenue realised NPA: non-performing asset
AT&C: aggregate technical and commercial NREL: National Renewable Energy Lab
BU: billion units NSEFI: National Solar Energy Federation of India
CEA: Central Electricity Authority NSM: National Solar Mission
CEMS: Continuous Emission Monitoring Systems NTP: National Tariff Policy
CEQMS: Continuous Effluent Quality Monitoring Systems NVVN: NTPC Vidyut Vyapar Nigam
CERC: Central Electricity Regulatory Commission OA: open access
ckm: circuit km OMC: oil marketing company
CPCB: Central Pollution Control Board OMS: outage management system
CSS: cross-subsidy surcharge PE: private equity
CUF: capacity utilisation factor PGCIL: Power Grid Corporation of India Ltd
DCR: domestic content requirement PLF: plant load factor
DDG: decentralised distributed generation PLM: peak load management
DDUGJY: Deen Dayal Upadhyaya Gram Jyoti Yojana PMU: phasor measurement unit
DHBVNL: Dakshin Haryana Bijli Vitaran Nigam Ltd PMUY: Pradhan Mantri Ujjwala Yojana
discom: distribution company POSOCO: Power System Operation Corporation
DRE: distributed renewable generation PPA: power purchase agreement
DSM: Deviation Settlement Mechanism PPP: public-private partnership, public-private participation
EDC: electrification distribution circle PQM: power quality management
EDD: electrification distribution division PSA: power sale agreement
EIA: environment impact assessment PSHP: Pumped Storage Hydro Plants
EOI: expression of interest PSM: Payment Security Mechanism
EPC: Engineering Procurement and Construction R-APDRP: Restructured Accelerated Power Development and
ESMI: Electricity Supply and Monitoring Initiative Reforms Programme
F&S: Forecasting & Scheduling RDF: refuse-derived fuel
FiT: feed-in tariff REC: Renewable Energy Certificate / Rural Energy Corporation
FoR: Forum of Regulators REMC: Renewable Energy Management Centre
FY: financial year RE-OA: renewable energy-based open access
GBI: generation-based incentives RESCO: Renewable Energy Service Company
GEC: Green Energy Corridor RGGVY: Rajiv Gandhi Grameen Vidyutikaran Yojana
GST: Goods and Services Tax RPO: renewable purchase obligation
GW: gigawatt RRAS: Reserves Regulation Ancillary Services
GWEC: Global Wind Energy Council RRF: Renewable Regulatory Fund
HAREDA: Haryana Renewable Energy Development Agency SAUBHAGYA: Sahaj Bijli Har Ghar Yojana
HERC: Haryana Electricity Regulatory Commission SBM: Swachh Bharat Mission
HUDA: Haryana Urban Development Authority SECI: Solar Energy Corporation of India
HVDC: high voltage direct current SERC: State Electricity Regulatory Commission
IEA: International Energy Agency SPIS: Solar Pumping Irrigation System
IEGC: Indian Electricity Grid Code SRISTI: Sustainable Rooftop Implementation for Solar Transfiguration
INDC: Intended Nationally Determined Contribution of India
IPDS: Integrated Power Development Scheme SRT: solar rooftop
IPP: independent power producer SVC: static var compensator
IREDA: Indian Renewable Energy Development Agency SWM: solid waste management
ISMA: Indian Solar Manufacturers Association SWP: solar water pump
ISTS: Inter-state Transmission System T&D: transmission and distribution
IT: information technology TANGEDCO: Tamil Nadu Generation and Distribution Company
JAREDA: Jharkhand Renewable Energy Development Agency TASMA: Tamil Nadu Spinning Mills Association
JNNSM: Jawaharlal Nehru National Solar Mission TNERC: Tamil Nadu Electricity Regulation Commission
KERC: Karnataka Electricity Regulatory Commission TPD: tonne per day
KUSUM: Kisan Urja Suraksha Evam Utthan Mahabhiyan TSP: total suspended particles
kW: kilowatt UDAY: Ujjwal Discom Assurance Yojana
kWh: kilowatt hour UI: unscheduled interchange
LDC: load dispatch centre UPNEDA: Uttar Pradesh New and Renewable Energy Development
MGO: mini-grid operator Agency
MGP: Mera Gaon Power URTDSM: United Real Time Dynamic State Measurement
MNRE: Ministry of New and Renewable Energy VCPE: venture capital and private equity
MoEF&CC: Ministry of Environment, Forests & Climate Change VGF: viability gap funding
MoP: Ministry of Power WAMS: Wide Area Management System
MoUD: Ministry of Urban Development WECI: Waste to Energy Corporation of India
MPUVNL: Madhya Pradesh Urja Vikas Nigam Ltd WSAT: Wind Security Assessment Tools
MSW: municipal solid waste WTE: waste to energy
MU: million units WTG: wind turbine generator
MVA: mega volt ampere WTO: World Trade Organization

Foreword
F
ive years ago, when Centre for Science and Environment (CSE)
published its first State of Renewable Energy report, the sector was just
taking wings. We were part of its cheerleaders — an environmental
research and advocacy group which believed strongly that the world
needs to move out of fossil fuels because of the growing risks of climate
change. Renewable energy (RE) is the ticket to get the world out of its
addiction to oil and gas. We were its proponents, but we had our fears.
We believed that India needed a RE policy that would be less about
industry and more about supply to meet the needs of the poorest in the
country. For us, renewable energy was (and is) a means to both decarbonise
our economy and provide access to large numbers of people who were (and
still are) energy-deprived.
Five years later, when we publish the 2019 State of Renewable Energy
report, much has changed, and yet much remains the same. The government
of India has an ambitious target for RE — 175 gigawatt (GW) by 2022. There is
no question now that RE has arrived. Nobody argues about its imperative or
feasibility. The industry has matured. There are RE companies that can bid
and out-bid each other for the supply of panels, solar power plants or wind
turbines. RE is an industry with sparkling offices, new age companies and
flamboyant leaders. It is no longer restricted to the musty world of scientists
or activist NGOs. It has certainly grown out of the world of community
groups working in villages on small projects. It is real. It is big. RE plants
compete with coal-based energy. Renewables are now under the Ministry of
Power — RE is no longer a peripheral scientific sector, struggling to compete
with the big boys.
The testimony to this growth lies in its numbers. Today, the Ministry of
New and Renewable Energy (MNRE) says that the country has hit 73,000
megawatt (MW) of installed RE power, which is some 20 per cent of the
country’s installed capacity for power generation. On good days, when the
sun is shining and the wind is blowing, RE meets some 12.5 per cent of the
country’s electricity demand. On other days, it is over 7 per cent. This is not
small. But it is not big either.
This, therefore, is not the time to be complacent or to pat our backs
for work done. Even as RE has grown, the challenges that confront India
have also grown — in fact, they have become even more troublesome and
crippling. This is what we must discuss.
First, there is the challenge of electricity supply. The government has
an aggressive plan to reach every household with electricity. But the fact

FOREWORD
is that even as the grid reaches everywhere, the light does not. This is
either because people are too poor to pay for electricity, or the distribution
company is too poor to supply the electricity, or the market has no way
of working in the cashless energy segment. Whatever the reason, millions
in the country are still in darkness. Energy poverty is still crippling vast
numbers of Indians, who cannot use this crucial enabler to progress — from
education to employment. This is our challenge.
Second, there is the challenge of clean cooking energy. This is the world’s
wicked, wicked problem. Women across the developing world — including
in China and India — are exposed to toxic emissions because of the biomass
they burn to fuel their cooking stoves. Globally, it is estimated that 2.6
billion people still rely on biomass for cooking food, with 80 per cent of
Sub-Saharan Africans and 66 per cent of Indian’s using this inefficient and
polluting fuel. This adds up to roughly half the developing world and 40
per cent of the entire world. The International Energy Agency estimates that
even in 2030, 43 per cent of the developing world (33 per cent of the world’s
people) will continue to cook on biomass.
In India, the Census of 2011 revealed that 75 per cent of rural households
used biomass and dung to cook, as against 21 per cent of urban Indian
households. In addition, data from the National Sample Survey Organisation
(NSSO) on energy sources of Indian households for cooking and lighting
reveals that nothing changed in the two decades of 1990s and 2000. In 1993-
94, as many as 78 per cent households in rural India used biomass as a
cooking fuel and in 2009-10, 76 per cent used this fuel. Therefore, in this
period, when urban India moved to LPG (from 30 per cent to 64 per cent),
rural India remained where it was, cooking on highly inefficient and dirty
stoves. This shift to cleaner energy in urban areas was not incidental. It
happened because government provided subsidised LPG cylinders to the
middle classes — people like you and me. The subsidy ran out because the
government could not provide it to all. The poor, particularly poor women,
remained where they were; first expending vast energy to collect firewood,
and then inhaling toxins.
This has changed to some extent in the last five years. The Indian
government’s aggressive and much-needed push to provide LPG to poor
households has made a dent in the cooking energy sector. The national
Ujjwala programme, which provides cheaper cooking energy to households
below poverty line aims to correct an historical injustice by transferring the
subsidy from the rich to the poor. It does not focus on the cooking appliance
— cleaner stoves — but on providing vast amounts of LPG, a fossil fuel, but
cleaner and one that most urban Indians use, to the rural masses and to the
poor. This is all very good.
But it is also a fact that in spite of this, households are still using dirty
biomass fuel, ranging from firewood, leaves and cowdung, for cooking food.
This is because it is free — the labour of women is always discounted as is
their health. There is a definite correlation between income and cooking
fuel. So, households do not get the refill of their cylinder as frequently as
they must. The data on this is patchy, but what is clear from any visit to
vi

THE STATE OF RENEWABLE ENERGY IN INDIA
rural India is that smoke still fills the air. So, the ‘other’ energy crisis still
exists, RE or not.
The third challenge is air pollution. Almost every city in the country is
reeling under choking air, which is literally making us ill. There are deep
connections to energy in the air we breathe. There is the belch from our
every growing fleet of petrol- and diesel-powered vehicles. This is a big part
of the pollution problem. Then there is the fact that industries use (in this
age of RE) the dirtiest of fuels — everything from the bottom-of-the-barrel
pet coke to anything (literally anything) that they can get which is cheap and
so, sadly, also dirty. Industry is competing to reduce costs; it says electricity
(which is where RE is fed through the grid) is either too expensive or too
unreliable. So, it continues to use polluting fuels and continues to pollute.
Worse, air pollution knows no boundaries. So the use of emissions from
biomass cooking fuel of the poor ends up in the same air-stew as the diesel
SUV of the rich. The health impact of the foul air is now so big that even
governments cannot deny the problem. Clean combustion, in other words
RE, has a big role to play in clearing the air of toxins. But it is just not there.
Fourth, without any doubt, is the climate conundrum — the world and
India remain addicted to fossil fuels. This is when we are definitely running
out of time to combat climate change by drastically reinventing our energy
system. According to the Intergovernmental Panel on Climate Change
(IPCC) 2018 report on 1.5°C, the world is in serious jeopardy. IPCC has
revised its previous findings; it says now that the impacts of global warming
will be greater than previously anticipated at a temperature increase of
1.5°C. To stay below this temperature guardrail, the world has to cut net
anthropogenic CO2 emissions by 45 per cent, over 2010 levels and reach net
zero around 2050.
This means serious energy transformation. It means that renewable
energy must supply 70-85 per cent of all electricity by 2050. Currently,
renewables supply some 20 per cent of global electricity, the bulk coming
from hydropower plants. So, the challenge is enormous. It also means that
coal use must be close to zero per cent by 2050. This is huge — the world is
still addicted to coal for its electricity use, in its rich as well as poor parts.
The developing world needs to provide affordable energy to large numbers
of its people. How can it replace coal and yet provide this energy security?
This is the question. This is where RE must matter.
I would argue, given these challenges, it is time that we began an
altogether different discourse about RE. It is not about industry; its market
imperatives; its predictable policy environment. This is not to say we don’t
need industry in RE. But we need to reinvent its imperatives. We need to
redefine its objectives (and certainly its language) so that it can meet societal
needs. It cannot be enough to meet targets. It must meet the poor’s energy,
clean air and climate change needs. Frankly, this RE market needs to be
embedded in societal principles. It needs it to be emboldened and driven so
that it is the change.
This is where the opportunity is enormous. Indeed, it is mind-blogging.
This sector can provide the answers to growth and climate change. But the
vii

FOREWORD
path ahead is also extremely difficult. No government has gone there before.
No energy company has walked this path till now.
How will it happen? The fact is that energy security for vast numbers
of the poor requires an energy delivery system that is different. It will
require reaching energy, which costs less but is advanced and cleaner, into
households that cannot even afford to buy the basic fuel or light. It will
require cutting length of supply lines, leakages and losses and everything
else that makes energy cost more, so that it is affordable. There is no clear
idea what will work. But what is clear is that we have to push the envelope
so that RE becomes transformational — not because it is produced, but
because it is an agent of transformation of society and environment.
As yet, our track record (as the 2019 State of Renewable Energy report
shows) on these fronts is not commendable. RE is like all energy sources
— it could be coal or gas — it is produced and pushed into the grid. It is
supplied through the conventional (and broken) distribution network. It is
limited by its environment and its imagination.
This is also why efforts to do the energy business differently, through
mini-micro grids or rooftop solar, are still not taking off. This work is patchy
and, frankly, disheartening. It seems like we don’t believe in it. We cannot
make it work. I am not saying that this is the only pathway to energy access
and clean energy. But we need to give it a hard try before we give up.
What is clear is that we need to do ask deliberately what it would take
to put clean energy, RE, into the hands of the poor. For this, we will need to
do everything to make the transition to clean power — not a few light bulbs,
but the whole shindig of this new business. Similarly, we need to ask how
RE can work to clean up local air in our cities. It is not just about battery
vehicles, but clean power to power the batteries. It is not about shifting the
source of pollution, but about really cleaning it up. Every house needs to
generate this clean power; every vehicle — ideally a bus or cycle — and
every industry needs to be powered from this source. This is where we need
to go.
The same is the case with the wicked problem of cooking energy of the
poor woman. We need RE to be the basis of the electricity that powers the
cookstove — from solar and wind to biogas and all other ways in which
it can be supplied into the hearth. It can do this if it is available; if it is
convenient, affordable and clean. The basis for this transition has to be the
health of the last person, in this case the woman behind the cookstove.
This is the course correction we must seek in 2019 and beyond. This is
also important for the future of RE in India. This is the dialogue we must
have so that we can seek new policies and methods. RE has to be the moral
and economic imperative for a cleaner and more inclusive world. Anything
less is selling us short. Anything else must be unacceptable.
Sunita Narain
viii

Executive summary
I
t has been five years since we published our inaugural State of Renewable
Energy in India (the SO-RE 2014), in January 2014. These five years
have proven to be transformational for the renewable energy industry
in the country. In 2014, the industry had barely taken roots. Making a
timely intervention, our SO-RE 2014 offered several recommendations
to encourage and nurture a sustainable growth for the sector. It called for
pursuing a predictable, consistent policy course; developing an integrated
policy and plan for 2050; and setting up ambitious goals, especially in
view of the fact that the growth in capacity had exceeded official targets. It
urged policymakers to pay more attention to distributed generation such as
mini-grids to efficiently provide energy access to unconnected households;
reduce subsidies and promote reverse bidding to push the sector to reach
grid parity. It also advocated rationalisation and enforcement of RPOs
(renewable purchase obligations) to stimulate demand from discoms.
Some of these recommendations, we are happy to note, have found
a place in the country’s policies. Meanwhile, the renewable sector has
made tremendous strides — according to the Union Ministry of New and
Renewable Energy (MNRE), renewable capacity has reached 73 gigawatt
(GW), accounting for over 20 per cent of the country’s total. Solar has
performed particularly well: in 2017-18 alone, around 10 GW of solar was
installed equaling the entire installed base. The capacity growth was driven
by a sharp fall in tariffs, with both solar and wind auctions attracting bids
that were lower than the cost of power from coal-based plants.
Generation of renewable energy has also increased sharply. Its share in
total electricity supply had stalled at around 5.5 per cent during 2011-16.
But in 2017-18, its share jumped to 7.8 per cent; in June 2018, when wind While 2017
generation is strong, it was around 12.5 per cent. The growth was supported
by a favorable policy environment offering low import duties, a payment
left us with
security mechanism and efficient auction processes, combined with a dip a sense of
in PV prices.
While 2017 left us with a sense of success, a lot still needs to be done to success, a lot
maintain the momentum. Indeed, 2018 has seen a reversal of some of the still needs to
positive trends. Installations dropped to ~6.6 GW in the months between
January to September. Tariffs went up as the government introduced a be done to
safeguard duty on imported PV modules. Solar auctions were cancelled or maintain the
retendered for a lower size due to lack of developer interest and discoms’
demand for lower tariffs. The wind sector was disrupted by the auction momentum
regime introduced in June 2016 which impacted installation — though,
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EXECUTIVE SUMMARY
auction volumes climbed up in 2018 following the release of auction

guidelines in December 2017.
Issues and challenges

Some of this slowdown is a temporary phenomenon, since longer term
trends — such as declining PV module costs — remain in place. But there
are also some policy and implementation hiccups that need to be addressed
to ensure the sector continues to grow strongly.
Unpredictability in policy
Nothing can be more disruptive for an emerging sector that seeks to attract
global investors, than ad hoc and abrupt policy changes. In the case of
renewable energy, the most recent example has been the introduction
of a safeguard duty on imported PV modules — this has resulted in an
uncertainty about project costs, increase in tariffs and, consequently, a drop
in installations.
So far, the growth in India’s solar capacity has been built on an
overwhelming (almost 90 per cent) share of imported PV modules because
their costs are up to 30 per cent lower. In fact, the government has encouraged
imports by keeping duties low — as a result, domestic manufacturing units
have suffered financial distress and have experienced capacity utilisation of
only around 50 per cent. The recently injected safeguard duty points to the
fact that the government has not resolved its dilemma between its professed
goal to ‘Make in India’ and the need for cheap electricity based on imported
panels and equipments.
The sector’s growth has been marred in the past as well by several ill-
The growth considered steps. Auctions with ‘domestic content requirement’ have been
introduced to support local manufacturers, but the World Trade Organization
in India’s (WTO) has contended that the move violated international trade rules. The
solar capacity government announced a safeguard duty of 70 per cent, withdrew it, and
reintroduced a 25 per cent duty in June 2018. Import duties were increased
has been to up to 10 per cent in late 2017 and subsequently removed. In early 2018, the
built on an Solar Energy Corporation of India (SECI) announced an exclusive auction
of 10 GW linked to new manufacturing capacity — the move flopped. After
overwhelming multiple modifications and several rounds of auctions, only one company
share of made an offer to install 600 MW.
The wind industry has been caught unawares, similarly, by the
imported introduction in June 2016 of an auction-based regime to award bids
from the feed-in tariff (FiT) process. The transition has resulted in a dip
PV modules in installations. Auctions too declined sharply and recovered only after
because their detailed guidelines to address policy gaps were issued in December 2017.
costs are up Hiccups in auctions and PPAs

to 30 per cent Over the last year, there have been a number of incidents that have proved
to be damaging to the auction process. Several auctions have been cancelled
lower after the winning bids were announced because the buyers felt the rates
were not low enough; in some cases, discoms refused or delayed signing

the power purchase agreements (PPAs). In a few others, arbitrary tariff caps Power
were introduced resulting in auction failures.
There have been media reports as well about regulators and discoms procurement
clamouring to renegotiate PPAs. In 2017, Karnataka’s Electricity Regulatory
Commission (ERC) rejected PPAs that had been approved, forcing the state
policies need
government to step in and overrule its decision using a rarely used provision. to be more
It is important to maintain the sanctity of the auction process and the PPAs
to ensure sustained investor interest in this sector.
sophisticated,
with a lower
The trouble with discoms
• Curtailment and payment delays: Renewable power enjoys a ‘must run’
share of
status, which means it should be scheduled first by the discoms unless long-term
there are technical constraints such as grid congestion or unavailability.
However, there have been reports and court cases of “illegal” curtailment.
PPAs
State Load Dispatch Centres (SLDCs), in collusion with discoms, have combined
reportedly asked developers to shut down the supply for commercial
reasons. Some developers have alleged curtailment in excess of 25 per with peaking
cent, which severely reduces their revenues. power and low
To add to this, discoms have reportedly been delaying payments to marginal cost
developers by several months. These problems are directly related to the renewable
financial weakness of the discoms. Renewable companies operate with
thin margins and small capital, and will have difficulty remaining viable energy
if these issues are allowed to fester.
• Procurement policies: Most discoms have a sizable share of contracted

capacity under long-term, two-part tariff PPAs, which provide the back-
up supply to intermittent renewable power. However, an excessive share
of thermal PPAs amounts to an inefficient process — it will prevent
discoms from contracting renewable energy and will result in higher
consumer tariffs. Yet, the Union Ministry of Power (MoP) has been
encouraging discoms to sign more PPAs with thermal power plants.
Power procurement policies need to be more sophisticated, with a

lower share of long-term PPAs combined with peaking power and low
marginal cost renewable energy. This would require developing a real-
time electricity market. In addition, regulators may need to modify the
tariff structure of both thermal power plants and renewables and the
principles governing dispatch of power.
• Non-implementation of policies: New regulations that have been

introduced to open the electricity market or to promote renewable
energy can result in potential revenue losses for discoms. Therefore,
many discoms appear to have withheld support for implementation
of such policies. For example, open access regulations, which allow
large consumers to choose their power suppliers, have encouraged
them to contract the lower-cost renewable power producers (waiver of

EXECUTIVE SUMMARY
transmission and distribution charges makes them even more attractive).

Also, the bulk of open access is short term, which imposes additional
costs on discoms to balance the grid and maintain back-up supply.
Similarly, rooftop installations may lead to revenue losses for discoms.

Migration of large, profitable customers will leave the discoms with an
increasing share of subsidised customers. Regulators need to ensure that
discoms are not burdened with unfair costs on account of open access
consumers. Additionally, discoms need to explore innovative business
models, such as partnering with renewable companies in the rooftop
sector, to offset revenue losses.
Decentralised distribution: Not yet in vogue

• Mini-grids ignored: The government’s focus on grid-based power supply
to ensure universal access, a long-standing goal, seems misplaced. The
failure to provide universal access is not only a measure of the challenge;
it also underscores the inadequacy of various policies over the decades.
The two latest iterations — extending the grid to all villages (through the
Deen Dayal Upadhyaya Gram Jyoti Yojana, or DDUGJY) and providing
electricity connection to all households (through the SAUBHAGYA
scheme) are also unlikely to succeed.
One reason for the likely failure is that the burden of ensuring 24-hour,
affordable supply will rest primarily on financially-stressed discoms.
Historically, the discoms have been reluctant to provide power supply to
poor households given their small consumption, subsidised tariffs and
poor collection. Our survey reveals that households that were recently
connected do not enjoy regular power supply. Furthermore, the cost of
the power is prohibitive for most poor families. Mini-grids can be a more
efficient and quicker route to providing access to a sizable number of
consumers, point out energy experts as well as state regulators — but is
the Central government listening?
Mini-grids can • Solar rooftop’s untapped potential: In a similar vein, the potential of
be a more solar rooftop has not been exploited — the growth in renewables has
been powered almost entirely by utility-scale projects. Solar rooftop has
efficient and garnered a major share in many developed markets and it can be a key
quicker route contributor to India’s renewable ambitions as well. Residential solar
rooftop offers a unique set of benefits: lower electricity bills, reduced T&D
to providing losses and a sizable number of retail investor-consumers; additionally,
access to consumers can do away with polluting diesel generating sets for their
back-up supply. But the lack of awareness about solar PV technology —
a sizable their performance and maintenance — and high up-front costs dissuade
number of retail consumers. Although India has set itself a massive goal of 40 GW of
solar rooftop by 2022, only 3.4 GW had been installed till September 2018
consumers — most of it by commercial and industrial customers, as the government
has not promoted it with the right set of policies.

Wind: In the sun’s shadow

Wind power, which still has a leading share of renewable capacity, has
received little attention from policymakers. Wind provides valuable daily
and seasonal balancing to solar generation. It also provides an additional
benefit of supporting local manufacturing. Yet, the sector has suffered
from periodic policy flip-flops such as abrupt changes in accelerated
benefits, unexpected introduction of auctions etc. Moreover, various policy
initiatives such as repowering, offshore or hybrid have been introduced
with little details, which has resulted in their failure. Repowering is a very
cost-effective approach to increase wind capacity of old projects (many of
which are located in prime wind sites) that have a capacity utilisation factor
(CUF) of as low as 10 per cent; in comparison, the latest turbines can reach
CUF of over 40 per cent.
The wind industry — both the turbine manufacturing segment and
wind developers — is a mature sector with significant installations over the
years. The government’s modest long-term goals for it, and its lack of policy
support, are therefore inexplicable.
The way forward

The energy sector is at a critical juncture. Climate change and its
accompanying risks have meant the world needs to plan for a decarbonised
power sector. The falling cost of renewable power and grid-scale storage

EXECUTIVE SUMMARY
point us to the fact that a 100 per cent renewable-based electricity supply is
technically and economically feasible in not too distant a future.
Furthermore, renewable-based distributed generation offers advantages
over supply from a centralised infrastructure. A new supply model will
need to ensure viability of various providers, competitive price discovery
and new policies to determine tariffs and schedule power. Meanwhile,
electric vehicles and super-efficient, internet-connected devices, combined
with demand-side management tools, will modify demand patterns. These
changes will require redesigning the grid. In short, a new energy architecture
would be needed.
Energy decarbonisation
To begin with, the country needs an ambitious low-carbon growth pathway.
India’s INDC (Intended Nationally Determined Contributions) goal for 2030
— building up a non-fossil fuel capacity of 40 per cent of the total — is not
ambitious enough and would be easily surpassed. The Niti Aayog’s draft
National Energy Policy, 2017 assumes a largely centralised, conventional
fuel-based supply. It projects 570 GW of renewable capacity by 2040, less
than half of the total capacity of 1,200 GW, while the share in electricity
supply is projected to be only 28 per cent by 2040, with fossil fuels
contributing over 60 per cent. The country needs to have an ambitious goal
to generate 100 per cent power from non-fossil fuel sources by 2050-2060.
Secondly, while the 175-GW goal has led to investor interest and boosted
the sector, there is no clarity about the assumptions behind the target.
The rationale for various sub-sectors — 40 GW for solar rooftop or 60 GW
for wind — is even less convincing. Going forward, there should be an
The energy integrated renewable strategy which would include balanced targets for the
various sub-sectors.
sector is Thirdly, there should be a clear plan for fossil-fuel based capacity — its
at a critical role will steadily transition from being central to the country’s energy mix to
becoming the back-up supply for renewables. The National Electricity Plan
juncture. (NEP), 2018 prepared by the Central Electricity Authority (CEA) is based
Climate on questionable assumptions such as a deceleration in renewable growth
(100 GW during 2022-27 compared to 117 GW in 2017-22). Consequently, it
change and its has concluded that a huge 93 GW of additional coal capacity was required
accompanying during 2017-27. As a result, 70 GW of thermal power plants are under
construction as of September 2018. But some of these plants in the pipeline
risks have are already stalled or stressed. In this scenario, no more new coal-based
plants should be approved. In fact, old, inefficient and expensive plants
meant the should be shut down.
world needs
Distributed generation
to plan for a The second major trend that policymakers need to plan for is the increase
decarbonised in the share of distributed renewable generation (DRE). This is already
contributing a major share in several parts of the world, given its falling
power sector costs compared to grid-based supply. However, DRE has received little
policy support in India.

SOUPARO BANERJEE/ CSE

Solar rooftop: So far, to promote solar rooftop, the government has relied
on subsidies to residential households. This approach does not address
the main bottlenecks: high up-front costs and lack of financing; discoms’
reluctance to support installations; low comfort with technology; and
bureaucratic hurdles. The government’s latest proposed policy, Sustainable
Rooftop Implementation for Solar Transfiguration of India (SRISTI), appears
misguided and is essentially a short-term approach — it compensates
discoms for potential revenue losses from rooftop installation, instead of
encouraging sustainable and innovative business models.
The problem of high up-front cost and doubts about technology can be
addressed by RESCOs (Renewable Energy Service Companies) that can
offer long-term supply contracts to households. A multi-pronged effort
would be needed to build the RESCO industry for the residential sector:
ensuring sanctity of PPAs, making repossession of defaulters’ assets easy,
and encouraging discoms to partner with RESCOs in customer sourcing,
installation and bill collection.
Mini-grids: Mini-grids have the potential to efficiently provide energy to

households in regions that might not be satisfactorily served by discoms.
In fact, mini-grids also thrive in areas that are connected to the grid. The
government needs to introduce a comprehensive policy that requires mini-
grids to provide a certain standard of supply (for example, total hours of
supply and a minimum supply during peak hours) and incentivise mini-

EXECUTIVE SUMMARY
grids to ensure tariffs are in line with those of grid-based supply. Secondly,
the policy should provide for a viable business model for mini-grids, which
means mini-grids should have reasonable and well-defined exit options (sale
price of mini-grids’ assets, tariff for sale of power to discoms etc), once the
grid supply does become reliable in their markets. For this, the mini-grids’
network should comply with the grid codes so that they can be seamlessly
integrated with the grid, which in turn would require capital support for
additional investment in distribution network.
There are other models as well that are emerging. The government is
planning to distribute around 1.8 million solar water pumps, which can
be linked together in a mini-grid and supply to the grid when they are not
needed to draw water. This would prevent wasteful extraction of water
and provide an alternate source of income. In many developed markets,
groups of residential blocks are establishing micro-grids, a market that is
essentially similar to rooftop solar in residential societies. Policies need to
both anticipate and plan for these developments.
Grid of the future

Integrating 175 GW of renewable by 2022, which translates into around 20
per cent share of renewables in total energy, will not be a challenge. A recent
report by the NREL estimates this can be achieved with curtailment of only
1.4 per cent by using the inherent flexibility of the country’s coal-based
fleet. Importantly, current grid expansion plans, if executed on schedule,
would be sufficient. Regulations such as forecasting and scheduling,
deviation settlement mechanism and ancillary services mechanism are
being implemented across states, which will help in efficient integration.
The future electricity scenario — which is expected to include very high
penetration of variable renewable energy, sizable distributed supply, more
volatile demand and internet of things — will require ‘smart grids’ that use
communications infrastructure, control systems and information technology
for efficient delivery. The National Smart Grid Mission was a good start, but
A multi- its ambition and outlay (Rs 990 crore for 2017-20) are extremely limited in
the context of a rapid increase in renewables.
pronged Smart grids have real-time awareness of the grid, which can enable
efficient dispatch and balancing when power dynamically flows in multiple
effort would directions. Distributed energy resources (including EV batteries) can be linked
be needed in micro-grids and balanced through flexible resources (such as batteries)
leading to lower cost of operations. Micro-grids can also provide ancillary
to build services and improve grid resiliency. Advanced metering infrastructure and
the RESCO smart appliances will allow automated demand management; data analytics
can identify meter tampering. Remote sensing and control systems and
industry for machine learning can accurately locate faults and quickly resolve outages.
the residential While some of the scenarios presented above are still in the future,
a number of countries are already in advanced stages of smart grid
sector implementation to assist in efficient integration of distributed renewal
energy and demand side management using market signals.

Reforming discoms The country’s

The country’s ability to reach the target of 175 GW by 2022 will depend
on the health of discoms, which are at the heart of the electricity market. ability to reach
Most discoms in India incur significant losses due to a combination of the target of
high aggregate technical and commercial (AT&C) losses, inadequate tariff
increases, cross-subsidies and poor billing. The renewable energy market 175 GW by
is already witnessing problems such as muted demand for new capacity,
attempts to renegotiate PPAs or cancellation of auctions, curtailment
2022 will
of power for commercial reasons and delays in payments to developers. depend on
Some of the problems stem from poor governance/political difficulty of
raising tariffs. Others are on account of misguided strategies — for example,
the health
excessive long-term capacity contracts. New policies to promote renewables, of discoms,
if ill-considered, may result in revenue losses and higher costs for discoms,
exacerbating their financial distress.
which are at
The government’s latest effort to reform the discoms, the Ujjwal Discom the heart of
Assurance Yojana (UDAY) scheme, has translated into shifting their
substantial debt load on to the states. However, UDAY does not appear the electricity
to be succeeding in resolving the fundamental challenges to discoms’ market
sustainability — cutting AT&C losses and rationalising tariffs.
The discom model needs to be rethought of. A separation of carriage and
content, which implies customer choice and competition among suppliers, is
required. However, it will lead to migration of high-tariff paying customers,
leaving the discoms with an unprofitable and subsidised consumer base.
Policies should ensure that open access consumers pay an equitable amount
for network access and back-up supply; in the initial years, there should also
be a provision for a cross-subsidy. Legacy discoms need to be compensated
to service remaining customers through explicit budgetary support.
Discoms also need to explore newer revenue sources such as supporting
DER, enabling retail exchange for producer-consumers, energy efficiency
and demand response, and ancillary services to/from retail customers
Building storage ecosystems

Inexpensive energy storage is critical to achieving a high penetration of
variable renewable energy. The levelised cost of lithium-ion battery, which
has become the dominant technology, has fallen to US $0.2/kWh for grid-
scale storage (similar to a gas peaking plant). A rapid dip in prices has
resulted in grid-scale storage being deployed to balance the grid. Industry
experts predict battery pack costs will halve to US $100/kWh in five years,
at which point there would be a quantum shift in its value addition.
Bloomberg predicts 1,000 GWh of storage by 2040, which will require
US $620 billion of investment. Countries such as China, the US, Korea
and Japan are building huge capacities to dominate this market, with their
governments providing significant funding for R&D. India runs the risk of
becoming an importer of Chinese batteries, similar to what happened in the
case of solar cells.
However, the future of storage is not only about lithium-ion — India has
some time to establish a competitive industry. The use of the battery will

EXECUTIVE SUMMARY
For the be varied and so should be the storage types — from pumped hydro and
compressed air to batteries using different materials. Varied battery types
first time, reduce reliance exposure to few materials. Indigenous research can improve
upon existing technology in terms of cost and performance. Policy support
decarbonised for EVs, DRE etc — potentially a very large domestic market — can drive
electricity scale for the battery industry. The country should also consider providing
seed capital or subsidised financing to support industries of the future.
appears Finally, policies should promote a wide storage ecosystem — for example
feasible in the mobile storage, leasing, conversion of IC engines to electric etc — to expand
the market.
foreseeable
future. Can The first word
As pointed out earlier in this chapter, we stand at the cusp of a momentous
this vision be shift in the energy sector. For the first time, decarbonised electricity appears
translated into feasible in the foreseeable future; it is not an abstract vision. The question
is, whether India will reach peak coal and 100 per cent renewable quickly
reality? and efficiently, or whether it will be a delayed process, merely egged on by
global momentum.
Secondly, will the transition bring about innovations in the electricity
market, or will it result in undesirable disruption in delivery of electricity
and in the well-functioning segment of the market? Thirdly, will we be able
to use this opportunity to develop indigenous research and manufacturing
to service both the domestic and the vast global markets, or will we become
an importing client? Only the right strategy, policies and incentives can
help us get the right answers.
10

CHAPTER 1
The road to
175 gigawatt
T
he renewable energy sector in India has come into its own in the last
few years, with the country now home to some of the largest solar
and wind installations in the world. The sector received a major boost
after 2015 following the government’s decision to create 175 gigawatt
(GW) of renewable energy capacity in the country by 2022. The new target
redefined the scale and scope of the sector, especially for wind and solar
which comprise 60 GW and 100 GW (the original goal for solar was 20
GW), respectively, of the goal. Over the last few years, the government has
launched a series of supportive policies and schemes to encourage the
building up of renewable capacity in the country. The dramatic fall in prices
of Chinese-made solar PV modules (by over 35 per cent between 2015 and
2017) has helped further boost the sector.
As a result of all this, renewable capacity in India has registered a sharp
growth, and stands at 74.8 GW as of November 2018, up from 36.5 GW in
March 2014; it now contributes 20 per cent of the country’s total electricity
capacity (see Graph 1: Installed capacity by source). India currently has
the world’s third and sixth largest wind and solar installed capacities,
Renewable
respectively.1 capacity in
However, renewable energy still makes up only a small portion of the
total generation mix — the low capacity utilisation factors (CUF) of wind
India has
and solar plants have meant the share of generation from renewables has registered a
remained very small. This share has increased from 5.6 per cent of the total
generation in 2014 to a mere 7.8 per cent in 2018 (see Graph 2: Generation
sharp growth,
mix over the years). Coal-fired power plants continue to dominate the and stands at
country’s energy mix with a 57 per cent share of the capacity; since these
plants run at high capacity utilisation, the share of thermal generation is a 74.8 GW as
very high 80 per cent.2 of November
Reaching the 175-GW target 2018, up from
The 175-GW renewable capacity target by 2021-22 is an ambitious goal. 36.5 GW in
It implies increasing the share of the capacity from around 20 per cent
currently to over one-third by March 2022 — as per the estimates of the March 2014
National Electricity Plan (NEP) 2018, prepared by the Central Electricity
11
01The Road to 175 Gigawatt(11-22).indd 11 16/01/19 4:19 PM

THE ROAD TO 175 GIGAWATT
Graph 1: Installed capacity by source in India

Renewables now account for 20 per cent of the total electricity capacity
100
12%
29.4 GW 20%
90
70.6 GW
Installed capacity (in percentage)
80 17%
40.5 GW 13%
70 45.4 GW
60
50
40
60% 57%
30
145.2 GW 196.9 GW
20
10
0
March 2014 June 2018
Renewable Diesel Nuclear Hydro Gas Coal

Source: Compiled from Central Electricity Authority’s installed capacity reports, http://www.cea.nic.in/monthlyarchive.html
Graph 2: Generation mix over the years

Thermal plants dominate
5.6% 5.6% 6.6% 7.8%
61.7 BU 65.7 BU 81.5 BU 101.8 BU
100
90
Generation mix (in percentage)
80
70
60
50
79.4% 80.8% 80.4% 79.5%
40
878.3 BU 943.7 BU 994.2 BU 1,037 BU
30
20
10
0
2014-15 2015-16 2016-17 2017-18
Renewable Hydro Nuclear Thermal
Source: Compiled from Central Electricity Authority’s generation reports, http://www.cea.nic.in/monthlyarchive.html
12

The geographical concentration

While the push to expand renewable capacity has come from Central government-driven
policies, the sector’s growth has been unevenly distributed among various states, with the
southern and western states home to most of the wind and solar assets (see: Renewable
capacity in various states — July 2018). The states in these parts of the country also have
higher targets since they hold greater solar and wind potential.
Remarkably, these states have outperformed other states in terms of two key measures:
the share of their installations mostly exceeds their share of the country’s total potential,
and several states such as Karnataka, Tamil Nadu, Andhra Pradesh-Telangana (combined)
and Rajasthan have already achieved a significant share of their overall targets.
Renewable capacity in various states — July 2018

Southern and western states dominate
State Wind Installed Solar Installed Percentage Percentage Percentage
target wind target solar of combined of total wind of state
(MW) capacity (MW) capacity wind and and solar RE target
(MW) (MW) solar targets installed achieved
(%) capacities (%)
(%)
Karnataka 6,200 4,713 5,697 5,172 7 18 83
Tamil Nadu 11,900 7,969 8,884 1,819 13 17 47
Gujarat 8,800 5,537 8,020 1,344 11 12 41
Rajasthan 8,600 4,281 5,762 2,310 9 12 46
Andhra 8,100 4,009 9,834 2,517 11 12 36
Pradesh
Maharashtra 7,600 4,777 11,926 763 12 10 28
Madhya 6,200 2,497 5,675 1,210 7 7 31
Pradesh
Telangana 2,000 100 0 2,990 1 5 155
Other states 600 55 43,735 4,201 28 8 10
Source: Based on information from MNRE and state nodal agencies
Authority (CEA). The NEP projects that renewable energy capacity will
increase to 275 GW by March 2027 with a share of almost 45 per cent; its
share of generation is projected to be 25 per cent in 2026-27 (see Graph 3:
Share of renewable energy capacity in total capacity and generation mix).3
Trends in renewable capacity addition

Are the NEP’s projections supported by past trends? The growth of
renewable energy capacity in India between 2014 and 2018 is attributed
to grid-connected solar and, to a lesser extent, wind. While the annual
renewable capacity additions have been impressive, especially between
2015 and 2017, the shortfall has increased since 2017-18 as annual targets
have also climbed up (see Graph 4: Annual renewable capacity addition).4
13

Graph 3: Share in total capacity and generation mix

The National Electricity Plan projects substantial jumps in share of renewable energy capacity
50
45
Renewable energy capacity (in percentage)
40
35
30
25
20
15
10
0
2017-18 2021-22* 2025-26*
% of RE in total generation mix % of RE in total electricity capacity installed
Source: National Electricity Plan, CEA, http://erpc.gov.in/wp-content/uploads/2017/03/NEP_slides_200418.pdf
Graph 4: Annual renewable capacity addition vs yearly targets

Higher targets have meant more shortfalls
30
Renewable capacity addition (GW)
25
20
15
10
0
2015-16
2015-16 Target
2016-17
2016-17 Target
2017-18
2017-18 Target
2018-19*
2019-20 Target
2020-21 Target
2021-22 Target
2018-19 Target
Small hydro Biomass & waste to energy Solar Wind
Source: MNRE* as of November 2018, https://mnre.gov.in/physical-progress-achievements
14

Solar capacity has increased sharply from 3 to 22 GW between 2015

and 2018 and is expected to contribute the bulk of the capacity addition.
However, till July 2018, it had achieved less than 50 per cent of the March
2019 target of 48 GW (see Graph 5: Solar installation — achievements vs
targets). The rooftop PV sector has been faring particularly badly, with only
2.1 GW installed by December 2018 against a target of 40 GW.5 As the targets
in the next few years climb further, annual new capacity additions have to
grow even more to reach 100 GW. Based on the performance so far and the
outlook, it seems unlikely that they will.
One of the main impediments to utility-scale solar is the poor health of
the discoms. Many discoms appear to be slowing down on new purchase
commitments — the better ones may have already sourced sufficient
renewable capacity. Meanwhile, solar rooftop continues to struggle due to
lack of financing available to households and because developers find the
residential and small business sector unattractive.
The wind sector presents a better picture. As of July 2018, wind capacity
totaled 34.4 GW against the March 2019 target of 40 GW (see Graph 6: Wind
installation — achievements vs targets).6 In fact, the likely shortfall would
be partly due to the sudden introduction of an auction scheme for wind
projects, which slowed down installations in 2017. After December 2017, the
sector has been picking up again with auctions totaling 6.9 GW, according
to data compiled by CSE. It is, therefore, conceivable that the wind sector
might achieve a significant share of the 60-GW goal by 2022, especially if the
government manages to jump-start repowering and hybrid projects.
Graph 5: Solar installation — achievements vs targets

Capacity has increased, but targets remain out of reach
120,000
Cumulative annual target Installed capacity
100,000
Solar installation (MW)
80,000
60,000
40,000
20,000
0
2015-16 2016-17 2017-18 2018-19* 2019-20 2020-21 2021-22
Source: Compiled from MNRE Annual Reports, https://mnre.gov.in/annual-report*, November 2018
15

Graph 6: Wind installation — achievements versus vs targets (MW)

The sector looks set to achieve a significant portion of its target
70,000
Cumulative annual target Installed capacity
60,000
50,000
Wind installation (MW)
40,000
30,000
20,000
10,000
0
2015-16 2016-17 2017-18 2018-19* 2019-20 2020-21 2021-22
Sources: Compiled from MNRE reports; annual targets obtained from Prayas, http://www.prayaspune.org/peg/publications/item/
download/813_72f650b395383a796d4b5b898a61a10e.html*, November 2018
Auctions with reverse bidding — the driving mechanism

One of the notable drivers of renewable success in the country has been the
introduction of auctions with reverse bidding. In these, bids which offer
the lowest tariffs are declared the winners. The success of these auctions
can be measured by the fact that the bids made in them by developers have
been consistently below the tariff benchmarks set by the Central Electricity
Regulatory Commission (CERC) — in fact, by 2017, this allowed the CERC
to stop publishing its benchmark tariffs altogether.
The mechanism has helped foster competition by driving down prices
which, in turn, has incentivised discoms to sign up for ever increasing
capacity contracts. In the last few years, wind and solar have gone from
being expensive sources of power that needed subsidy support to becoming
cheaper than conventional power (see Graph 7: Lowest solar tariffs achieved
in FY 2010-18).
In the initial years, wind tariffs were determined by feed-in tariffs (FiTs),
with price demarcation across zones based on favourable wind conditions.
The FiT was reviewed over the years by the State Electricity Regulatory
Commissions (SERCs). Occasionally, it showed an upward trend, ranging
between Rs 4 to 6.5 per kilowatt-hour (kWh). However, the success of the
solar auctions led to the adoption of the same mechanism for wind from
2016 onwards. This ended the wind developers’ complacency with regard
to tariffs — the auctions began receiving bids that were at par with those in
16

solar. While the transition created a short-term disruption that resulted in

a dip in the number of new installations, the last few auctions held in 2018
have seen successful project allocations, with the lowest tariff achieved
being Rs 2.44 per kWh, significantly below the tariffs previously offered in
the most favourable zone. (see Graph 8: Benchmark CERC wind tariffs in
2014-16).7
Graph 7: Lowest solar tariffs achieved in FY 2010-18

Solar has become cheaper than conventional sources of power
20
18
16
Solar tariffs (Rs/kWh)
14
1
10
8
6
4
2
0
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
Source: Based on data from MNRE and various news reports
Graph 8: Benchmark CERC wind tariffs in 2014-16

Wind auctions got tariffs significantly lower than the benchmarks
5
Wind tariffs (Rs/kWh)
1 Zone 1 Zone 2 Zone 3 Zone 4 Zone 5 Auctions
0
2014-15 2015-16 2016-17 2017-18 2018-19
Source: Compiled from CERC tariff orders
17

Investment in renewable energy in India

As of November 2018, close to 100 GW of capacity installation goal was
pending, which would require capital investment of over Rs 600,000 crore
(see Table 1: Investment required to meet the 175-GW target). This translates
to approximately US $28 billion (Rs 200,000 crore) a year. In comparison,
the average annual investment in the sector has been significantly less,
with the highest amount clocked at US $13.8 billion (see Graph 9: Annual
investment in renewable energy in India).8
Table 1: Investment required to meet the 175-GW target

100 GW of capacity yet to be installed, at over Rs 600,000 crore
Technology Capacity needed to Cost per Investment
meet 2022 target (MW) MW (in INR required (in
as of November 2018 crore) INR crore)
Utility-scale solar 36,800 4.5 165,600
Solar rooftop 37,861 5.5 208,235
Wind 25,000 5 125,000
Evacuation infrastructure – 1 100,000
Total – – 598,835
Source: CSE estimates
Graph 9: Annual investment in renewable energy in India

While on the rise, the investment is still below required levels
13.8 13.7
14
12 11
9.9
Investment (US $ billion)
10 9
8.5
8.1
8
6.8
0
2010 2011 2012 2013 2014 2015 2016 2017
Source: Bloomberg New Energy Financehttps://data.bloomberglp.com/bnef/sites/14/2018/01/BNEF-Clean-Energy-Investment-Investment-Trends-2017.pdf
18

Table 2: Financing sanctioned for RE projects (March 2016)

Commercial banks and non-banking financial corporations have chipped in
Bank/NBFC Capacity Amount sanctioned Shares
(MW) (Rs crore)
Public banks 12,620 19,639 SBI (28%)
Private banks 6,905 18,660 Yes Bank (13%)
Public NBFC 6,122 20,802 IREDA (41%)
Private NBFC 5,337 19,728 L&T Infra Financing (75%)
Source: The Economic Times, https://economictimes.indiatimes.com/industry/energy/power/banks-financial-institutions-

provide-over-rs-78k-crore-for-clean-energy-projects/articleshow/53265652.cms
However, due to the fall in capital costs per MW of both wind and solar
(the latter by 45 per cent during 2011-17), the investments in 2015-17 have
translated into a higher volume of installations, according to CSE estimates
(see Table 1: Investment required to meet the 175-GW target).9
Sources of finance
Wind and solar developers have been financed, to a significant extent, by
Indian commercial banks and non-banking financial corporations (NBFCs).
As of March 2016, banks and NBFCs had together sanctioned Rs 78,830
crore (of which Rs 33,483 crore was disbursed)10 (see Table 2: Financing
sanctioned for RE projects). The trend held steady in 2017 as well, with SBI,
L&T, Yes Bank, IREDA, IDFC and PTC continuing to be the largest financiers
of new capacity in renewable energy in India.11 In 2016, the Reserve Bank of
India (RBI) mandated that renewable energy be added to the list of ‘priority
sectors’ — this ensured the flow of credit to this industry.12
The high dependency on Indian banks, especially public sector ones,
carries several risks. A significant number of independent power producers
are highly leveraged. The drop in tariffs has led to developers operating Wind
on thin margins and falling equity returns for the developers. This leaves
little room to maneuver in case of unexpected problems such as payment and solar
delays, defaults by discoms or curtailment, which can quickly overwhelm
developers. A rise in the banks’ non-performing assets (NPAs) on account of
developers
renewable projects could dry up the flow of credit to the sector. have been
Private equity
financed
Many IPP (independent power producers) projects are financed through by Indian
bank loans midway through the construction process or after commissioning.
Relatively well established, larger IPPs have also secured capital via bonds, and
commercial
equity investment. However, access to financing poses challenges, especially banks and
for smaller companies to grow, hence most IPPs have relied on private equity
(PE) financing. In fact, the flow of PE into the renewable energy sector has been non-banking
considerable. According to PricewaterhouseCoopers (PwC), the year 2017 had financial
seen PE investments worth US $1.5 billion in the sector.13 In the first three
quarters of 2017, the solar sector in India received 59 per cent of the total global corporations
venture capital and private equity (VCPE) financing in the sector.14
19

The Indian Renewable Energy Development Agency (IREDA)

The IREDA, established in 1987, is a wholly government-owned NBFC. Its primary function
is the financing of renewable energy, and it was once the largest source of financing
for the sector. Aside from budgetary allocations from the MNRE, IREDA raises funds from
domestic and multilateral banks.1
The agency is currently facing scrutiny, particularly on account of its poor
disbursement rates and questions over its loan sanctioning process. IREDA has also been
experiencing high NPAs (net NPA was 3.84 per cent as of March 2018, up from 3.77 per
cent in the previous financial year. This does not account for the loans that were written
off.)2
The agency plans to sanction Rs 13,000 crore in FY2018-19, which would be 20 per cent
of the total credit for the renewable sector.3 It is an ambitious target, and IREDA would
have to improve its credit approval processes and transparency to meet it.
IREDA’s sanctioned vs disbursed amounts (1987-2017)

25,000
Sanctioned Disbursed
20,000
Amount (Rs crore)
15,000
10,000
5,000
0
Wind Hydro Biomass and Energy efficiency Solar Short-term loan
cogeneration & conservation
Sectors funded by IREDA
Source: Compiled from IREDA’s Annual Reports
However, this source of financing would be adversely impacted if the

project returns become volatile, or are artificially capped. Having a policy
environment that is market-friendly and consistent is, therefore, critical for
encouraging participation by private equity investors.
Foreign direct investment (FDI)

In response to the policy push in the country, foreign direct investment (FDI)
in renewables has gone up. Of the total Rs 40,280 crore (US $6.8 billion) FDI
directed at the sector in India since 2000, 54 per cent was made between
March 2014 and June 2018.15 However, when viewed in the context of the
20

Graph 10: Green bonds issued by Indian entities

Developers and government-backed entities have embraced green bonds
Non-financial corporate
Green bonds (US $ billion)
Government-backed entity
3
Financial corporate
Development bank
0
2015 2016 2017
Source: Climate Bond Initiative, https://www.climatebonds.net/resources/reports/india-country-briefing-july-2018
US $35 plus billion invested in the sector between 2015 and 2018, the FDI
component of US $3.217 billion in the same period is relatively small.16
Green bonds
‘Climate’ or ‘green’ bond refers to bonds issued for projects that are
considered environmentally friendly. A fairly recent concept, pioneered by
the European Investment Bank in 200817, global green bond issuance (i.e.
the total debt raised by bonds globally where the use of proceeds have been
solely for “green” projects), currently stands at US $389 billion.18 The first
green bond was issued in India in 2015 by the EXIM Bank for US $500
million. So far, US $6.5 billion worth of climate/green bonds have been
issued by banks, renewable IPPs and government agencies in India (see
Graph 10: Green bonds issued by Indian entities). A majority of these bonds
were issued for financing renewable projects.19
The success
The road ahead
The 175-GW target has been a driving force for the sector and is in no
of renewable
small part responsible for the introduction of supportive policies, market energy has
mechanisms and investor confidence in renewable energy in India. Overall,
the phenomenal growth in capacity as a result of reverse bidding auctions, come about
that resulted in grid parity of wind and solar, underscores the fact that predominantly
renewable energy has been a success story, 2015 onwards.
But this success has come about predominantly on the back of large- on the back
scale solar. The wind industry, historically the largest source of renewable of large-scale
generation in the electricity mix in India, is continuing to face headwinds.
Distributed generation — solar rooftop and renewable-based mini-grids — solar
has performed poorly.
21

The clarity As of mid-2017, cracks in the large-scale solar sector have begun to
appear, as market conditions turned unfavourable and entrenched problems
around the in the electricity procurement market reared their head. Wind is, likewise,
end goal yet to gain momentum.
While the sector has managed to obtain financing for its growth thus far,
of 175-GW the journey forward might prove to be arduous. The banking sector has been
needs to be plagued with NPAs, with the thermal power assets proving to particularly
culpable. The relatively new renewable sector is also financed, to a large
supported extent, by Indian banks and any newfound reluctance in lending to the
by ensuring power sector might slow down growth. With FDI inflows insufficient to pick
up the slack at the moment and the fluctuating rupee causing difficulties in
continuity and raising foreign capital and in the bond market, there is cause to be concerned
about whether finances will be as readily available in the near future.
longevity of One of the most successful interventions by the government in the sector
successful are those that mitigate the risks posed by off-takers that have poor credit
ratings — payment security mechanisms that guarantee that the developer
policy gets paid even if the discoms cause delays. It is a measure that will need to
measures and be carried forward and sustained to ensure that banks continue to finance
wind and solar projects. The sancity of the auction process needs to be
regulations upheld, leaving no room for cancellation at the whim of nodal agencies and
discoms. Likewise, power procurement agreements should be enforced and
not be subject to the uncertainty of renegotiations.
Finally, policy consistency is of the essence. Return on equity is already
squeezed due to aggressive bidding in the auctions and private equity
investors will need the reassurance of continuity of those regulations that
have de-risked the sector, to an extent, post-2015.
The clarity around the end goal of 175-GW needs to be supported by
ensuring continuity and longevity of successful policy measures and
regulations. It is imperative that renewable energy growth is sustained and
integral to the country’s energy mix, up to and beyond 2022.
22

CHAPTER 2
Utility-scale solar:
Charting a new course
I
ndia’s ambitious renewable energy goal of developing 175 GW capacity
by 2022 leans heavily on the Jawaharlal Nehru National Solar Mission
(JNNSM), the country’s key solar programme, which targets to install 100
GW of solar energy, 60 GW of which would comprise large or utility-scale
solar capacity and 40 GW, rooftop solar.
Over the last four years, the utility-scale solar sector’s performance has
been exceptional, with an average annual growth rate of over 70 per cent. The
installed solar capacity has increased from 2.6 GW in March 2014 to 26 GW
as of December 2018, of which utility-scale solar comprises over 91 per cent.1
In 2017-18, 8.3 GW of utility solar capacity was installed, a 50 per cent growth
over the previous year (see Graph 1: Utility-scale solar capacity). The outlook
has remained healthy with 9.5 GW of capacity in the pipeline at the end of
August 2018.2 During January to July 2018, over 10 GW of solar projects were
Graph 1: Utility-scale solar capacity

The average annual growth has clocked an impressive 70 per cent
30,000 Cumulative capacity Capacity added annually
25,000
20,000
Capacity (MW)
15,000
10,000
5,000
0
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19*
Source: Information compiled from MNRE Annual Reports, 2011-18, https://mnre.gov.in/annual-report *as of December 2018
23
02Utility-scale Solar Charting a New Course(23-40).indd 23 16/01/19 4:19 PM

UTILITY-SCALE SOLAR: CHARTING A NEW COURSE
auctioned. Although some auctions were cancelled recently because discoms

felt the bids were too high, these hiccups do not change the fact that the long-
term fundamentals of the utility-scale solar sector remain strong.
A number of factors have come together over the last few years to
provide a boost to this sector: the sharp increase in the JNNSM goal from
its original target of 20 GW; continually falling cost of solar PV driven by
overcapacity in China; supportive Central government policies and schemes
such as the establishment of solar parks and the Solar Energy Corporation
of India (SECI); introduction of competitive auctions and payment security
mechanisms to offset discom risks; easy financing from banks, private
equity and other investors. These factors have led to the entry and growth
of numerous solar developers, and tariffs have now reached below that of
coal-based power, which in turn has persuaded discoms to sign up for large
long-term capacity.
However, this rapid growth has exposed some risks. First, the sector’s
growth is overly reliant on Central government support. SECI-run
auctions dominate the sector with their payment guarantees that protect
developers from payment delays by discoms. Corporate procurement of
renewable energy has failed to take off due to inconsistent implementation
of open access. Projects face curtailment of power, given the lack of clear
regulations to forecast and schedule variable renewable power, combined
with “illegal” direction by the load dispatch centres that are driven by
commercial reasons. Discoms’ existing two-part tariff PPAs (power purchase
agreements) with coal power plants have provided back-up capacity
for renewable energy — however, excessive coal power PPAs are now
inhibiting discoms from signing solar PPAs. Most of these issues require
policy interventions to open up the market further, which will increase
competition and help it mature.
India’s solar potential

India’s southern states — Karnataka, Andhra Pradesh, Tamil Nadu and
Telangana — are together home to almost 50 per cent of the installed
capacity in the country, though their collective potential is only 8 per cent
of the country’s total.3 They have pushed supportive policies to help grow
solar capacity. The western states — Rajasthan, Gujarat, Maharashtra and
Utility solar Madhya Pradesh — have some of the highest potential in the country. Of
these, Rajasthan and Gujarat have installed significant capacities; the other
comprises two are not far behind (see Table 1: States — the targets and achievements).
over 91 per The market and its evolution: Auctions
cent of the So far, the National Solar Mission (NSM) can be deemed to be a success
installed solar with regard to installed capacity: over the last eight years, the NSM has gone
through various experiments and policy refinements that have progressively
capacity in helped the solar market grow. The first stage, represented by auctions run
by NTPC’s Vidyut Vyapar Nigam (NVVN), the power-trading arm of the
India National Thermal Power Corporation (NTPC), was marked by high feed-in
tariffs (FiTs) that was considered necessary to attract investors in this new
24

Table 1: States — the targets and achievements

Four southern states account for 50 per cent of the installed capacity
State Potential Installed State potential Installed
(GW) capacity (MW) (% of total) capacity (%
of total )
Andhra Pradesh 38.4 2,165 5 13
Karnataka 24.7 4,100 3 24
Tamil Nadu 17.6 1,819 2 11
Telangana 20.4 2,990 3 17.5
Punjab 2.8 905 0 5
Gujarat 35.7 1,344 5 8
Madhya Pradesh 61.6 1,210 8 7
Rajasthan 142.3 2,310 19 14
Uttar Pradesh 22.8 550 3 3
Maharashtra 64.3 763 9 4
Total 748.9 17,027 - 2
Source: Union Ministry of New and Renewable Energy
sector — it saw NVVN auctioning 470 MW of solar PV and 200 MW of solar

thermal during 2010-13.4
In later auctions, NVVN introduced bundling (solar power was bundled
with cheaper coal power and sold to discoms) to reduce the cost of power.
While the scheme was basically an accounting exercise in coal cross-subsidy,
it did help solar developers sell power to a good buyer.
SECI: In the next stage, the Solar Energy Corporation of India, a public
sector undertaking, was given the charge of administering auctions. SECI
would act as the off-taker, sign PPAs with developers and sell the power
to the state distribution companies (discoms). This mechanism protected
developers from the financially stressed discoms. The benchmark tariff In 2015, the
was aggressively reduced to Rs 5.45/unit with a provision for viability gap
funding (VGF)5; the auction winners were chosen based on the lowest VGF
target for
requirement (reverse bidding). solar power
Solar parks: In 2014, new initiatives were introduced to scale up the
was upped
programme, with the most important being solar parks (see more on them to 100 GW
later in this chapter).
from 20 GW.
100-GW solar: In 2015, the target for solar power was upped to 100 GW This meant
from 20 GW. This meant a change of scale in the auctions — from as low
as 20 MW to 500 MW in the very first bundling auction held in Kurnool. a change of
Further, the auctions saw a narrow range of winning bids (less than Rs 0.02/ scale in the
kWh), indicating that a competitive market had developed.
auctions
SECI-run auctions: Between 2013 and 2017, a host of auctions were
25

held, mediated by the SECI, with the mechanism of reverse bids for VGF
against a benchmark tariff (see Table 2: Major National Mission phases
and schemes). As global module prices continued to fall resulting in lower
capex, developers began bidding negative VGFs by mid-2017, the winning
bids fell below the benchmark, reaching Rs 2.43/unit.6
Inter-state Transmission System (ISTS): The ISTS scheme heralds the

further opening up of the sector. Previous auctions relied on a sponsoring
state that was a major off-taker and the installations were, typically, in a
certain solar park. The ISTS scheme is an ‘open auction’ that does away
with both of these provisions. A developer can install anywhere and sell to
Table 2: Major National Mission phases and schemes

The NSM schemes evolved with the prevailing market conditions
Phase or Time Target Capacity under Means of achieving target
scheme period (MW) construction/operational
(Dec 31, 2017)(MW)
National Solar Mission target set at 20 GW, to be achieved by 2022
Phase I 2010-13 150 140 Allocated capacity by reverse bidding off
NVVN batch I high FiT
NVVN batch I 470 200
solar thermal
NVVN batch II 350 330
Phase II 2013 750 680 Implemented by SECI through support from
batch I National Clean Energy Fund (NCEF); reverse
auction of VGF; tariff set at Rs 5.45/kW
National Solar Mission Target increased to 100 GW, to be achieved by 2022
Batch II tranche I 2015-18 3,000 PPA: 2,750 MW Solar parks through state-specific bundling
Commissioned: 2,050 MW scheme; NVVN the implementing agency.
Capacity allocated by reverse bidding of
tariffs
Batch III 2015-19 2,000 PPA: 2,295 MW PSA: 2,425 Implemented by SECI; state-specific
MW projects auctioned by reverse bidding of
Commissioned:300 MW VGF with benchmark tariff of Rs 4.43/kWh
Batch IV 2017-19 5,000 PPA: 970 MW PSA: 1,720 Implemented by SECI; projects auctioned
MW by reverse bidding of VGF with benchmark
Commissioned: 250 MW tariff of Rs 4.43/kWh; negative VGF
allowed reflected by tariffs lower than the
benchmark.
ISTS 2018-2019 7,000 Auctioned: Implemented by SECI and NTPC; open
2,000 (NTPC) auction; projects can be located anywhere
3,000 (SECI) and power sold to any buyer
CPSU 2017 1,000 Sanctioned: 986 PSUs granted VGF of Rs 1 crore/MW to
Commissioned: 765 develop capacity; projects expected to use
indigenous cells/modules. If imported cells,
VGF reduced by half.
*Proposed schemes/targets of 12,000 MW under Phase II batch II were cancelled in 2018.
(1) 375 MW: DCR, 375 MW: open category)
Sources: Compiled from MNRE Annual Reports, https://solarrooftop.gov.in/notification/Notification-09012017.pdf and various news reports
26

any discom (SECI/NTPC remain the intermediaries, though). Till July 2018,
7 GW had been auctioned under the scheme. However, SECI cancelled the
Utility-scale
allotment of 2.4 GW solar power capacity out of 3 GW auctioned in July solar auctions
2018 on the grounds of high tariff rates (all bids above Rs 2.44/kWh).7 The
somewhat higher rates might have been due to the risk of land acquisition
by states
and construction of power evacuation infrastructure. seem to do
The state auctions better when
Over the last two years, all the attention has been focused on SECI (Central SECI is not in
government-backed) auctions. Historically, however, that was not the
case. The state sector auctions had a share of almost half of the installed the market
capacity and over 60 per cent of the pipeline (see Graph 2: Utility-scale solar
capacity). As of August 2018, states had commissioned a total of 10.2 GW,
and another 6 GW was in the pipeline.8
In the past, state auctions did well only when SECI was not in the market.
This suggests an imbalanced scenario (see Graph 3: Auctions categorised by
scheme). The NSM’s Central government auctions in 2013 were followed
by a period when the solar market was driven almost entirely by states,
with PPAs signed directly between the developers and state discoms. State
auctions slowed down in 2016 after the SECI took the lead with several
auctions under batches 3 and 4. Indeed, Tamil Nadu and other states failed
to hold successful auctions in 2016. In late 2017, auctions were held by
Tamil Nadu and Gujarat in a background of dwindling NSM auctions. But as
the SECI-driven auctions struggled to make headway in 2018, state auctions
Graph 2: Utility-scale solar capacity (MW)

Operational and pipeline capacity from state auctions is significant
NTPC offtake
3,335
State offtake
5,978 SECI offtake
3,405
CPSU development
579
CPSU development
SECI offtake 1,049
1,990
Pipeline Miscellaneous
9,547 467
NTPC offtake
1,000 Comissioned
24,941
Rooftop Solar
2,916
State offtake
10,244
Others
3,525
Source: Bridge to India, https://bridgetoindia.com/reports/india-solar-compass-q2-2018-august-2018/
27

Graph 3: Auctions categorised by scheme

State auctions are making a comeback after losing ground to SECI in 2016
10,000
9,000
8,000
Capacity auctioned (MW)
7,000 NTPC ISTS auctions

6,000
SECI ISTS auctions
5,000
NSM SECI VGF auctions batch 4
4,000
NSM SECI VGF auctions batch 3
3,000
NSM bundling auctions
2,000
State auctions
1,000
0
2014 2015 2016 2017 2018
Sources: Compiled from SECI notifications, Lok Sabha Unstarred Question No-1740, and various news reports
Graph 4: State-driven solar auctions from 2012 to 2018

Auctions held by most states have been fairly successful
3,000
Cancelled auctioned capacity

2,500
FiT capacity
Auctioned capacity
2,,000
Capacity (MW)
1,500
1,000
500
0
Tamil Nadu
Karnataka
Telangana
Uttar Pradesh
Madhya Pradesh
Punjab
Uttarakhand
Haryana
Odisha
Andhra Pradesh
Maharashtra
Jharkhand
Gujarat
Source: Compiled from State Nodal Agency notifications and various news reports
28

Graph 5: Tariffs (weighted average) for state-run auctions

Tariffs have mirrored the national trends, but varied among states
10
5
Tariffs (Rs/kWh)
0
Odisha Mar-12
Odisha Dec-12
Karnataka Apr-12
Madhya Pradesh Jun-12
Tamil Nadu Mar-13
Rajasthan Mar-13
Andhra Pradesh Apr-13
Punjab Jun-13
Uttar Pradesh Aug-13
Karnataka Aug-13
Madhya Pradesh Jan-14
Andhra Pradesh Oct-14
Karnataka Nov-14
Telangana Nov-14
Punjab (5-24 MW) Feb-15
Punjab (25-100 MW) Feb-15
Uttar Pradesh Jun-15
Madhya Pradesh Jun-15
Telangana Aug-15
Telangana Aug-15
Punjab Sep-15
Uttarakhand Oct-15
Haryana Dec-15
Jharkhand Mar-16
Madhya Pradesh (Rewa Solar Park) Feb-17
Tamil Nadu Aug-17
Gujarat Sep 17
Karnataka Mar-18
Maharashtra May-18
Uttar Pradesh Jul-18
Gujarat Sep-18
Sources: MNRE, https://mnre.gov.in/file-manager/UserFiles/GW-Solar-Plan.pdf and various news reports
in Gujarat, Karnataka, Uttar Pradesh and Maharashtra have once again begun
to dominate the scene.
States have used different schemes to install solar capacity (see Graph
4: State-driven solar auctions). Telangana, with one of the largest installed
solar networks in the country, drew its entire capacity from its own auctions.
On the other hand, Rajasthan built all of its solar capacities under NSM
schemes.
The tariffs obtained by the states mirrored the national ones with a
similar downward trajectory, though they were higher than the bids received
in NSM projects auctioned at the same time. Also, there was a marked
difference in the tariffs obtained by various states reflecting the financial
health of discoms and the state’s governance (see Graph 5: Tariffs for state-
run auctions).
29

NSM and its policy successes
SECI — a vital intermediary

SECI operationalises various schemes of the Union Ministry of New and
Renewable Energy (MNRE), administers auctions, and develops solar parks.
In 2013, the company was appointed as the power purchaser under the Solar
Park Scheme. SECI signs long-term power sale agreements (PSAs) with the
state distribution companies, earning a margin of Rs 0.05-0.07/kWh. Having
SECI as the counter-party against financially stressed discoms is a safety net
for developers — this has played a vital role in the solar sector’s growth.
However, SECI is becoming the dominant buyer in both solar and
wind sectors, hobbling the development of a diversified market where
independent power producers sell directly to various buyers (mainly
discoms) and tariffs are determined by, among other things, the risk profile
of buyers. State auctions that are not backed by the SECI are not garnering
sufficient interest from developers; some auctions have failed and states are
now demanding bids in line with SECI auctions (along with the protections
entailed in them), which is an unreasonable expectation.
A potentially serious concern is that while payment delays by discoms
have been manageable so far, the issue could compound in the future;
Having SECI insulate developers from the discoms’ risk is a good idea, but
having the Corporation back-stop almost the entire renewable sector is a
debatable policy — it will inhibit the industry from standing on its own feet
and may saddle taxpayers with a situation where they have to bail out SECI.
Payment Security Mechanism (PSM)

To give additional confidence to developers about SECI’s capability to
honour its obligations vis-à-vis payment delays by discoms, the government
has established the PSM with an initial corpus of Rs 500 crore. This scheme
is applicable for the 7.75 GW of capacity where SECI has signed PPAs,
and will be upsized as the Corporation signs more PPAs. The PSM assures
developers that payments will be processed quickly by SECI without the
need for a lengthy resolution process.
Solar parks — infrastructure support

So far, 45 In 2014, the MNRE issued a mandate for the development of ‘solar parks’, a
plug-and-play concept where the risks of land acquisition and evacuation is
solar parks covered. These parks acquire large tracts of land and equip them with basic
infrastructure. These parks were designed especially to attract overseas
have been investors. The parks have been developed using different models, with a
approved, dominant portion developed by SECI and state nodal agencies (see Graph
6: Breakdown of solar parks by ownership type, across states). In 2017, the
with a total solar park target was increased to 40,000 MW.
capacity of So far, 45 solar parks have been approved, with a total capacity of 26,449
MW (see Graph 7: Total capacity of sanctioned solar parks by state), of
26,449 MW which Gujarat, Rajasthan, Andhra Pradesh and Madhya Pradesh command
significant shares (also see case study on Bhadla Solar Park in this chapter).
30

Graph 6: Breakdown of solar park by ownership-type, across states

Park ownership is mostly concentrated in the hands of state nodal agencies and SECI
4,500
4,000
3,500
Solar park capacity (MW)
3,000 Private entity

JV - state nodal agency & private entity
2,500
JV - state nodal agency & SECI
2,000 State nodal agency
1,500
1,000
500
0
Rajasthan
Madhya Pradesh
Karnataka
Maharashtra
Gujarat
Tamil Nadu
Odisha
Himachal Pradesh
Haryana
Uttar Pradesh
Chhattisgarh
Kerala
Jammu & Kashmir
Assam
Uttarakhand
Arunachal Pradesh
Nagaland
Manipur
Meghalaya
Mizoram
Andhra Pradesh
West Bengal
Source: https://mnre.gov.in/file-manager/annual-report/2017-2018/EN/pdf/chapter-4.pdf
Graph 7: Total capacity* of sanctioned solar parks by state

Gujarat, Rajasthan and Andhra Pradesh have the largest capacities
2,203
6,200 Gujarat
1,000
Rajasthan
1,000
Andhra Pradesh
1,000 Madhya Pradesh
Karnataka
1,805 Maharashtra
Himachal Pradesh
2,000 Odisha
4,331
Tamil Nadu
Other states
2,750
4,160
*In megawatt
Source: https://mnre.gov.in/file-manager/UserFiles/List-of-approved-Solar-Parks-Phase-wise.pdf
31

The cost of solar parks

The main funding support for solar parks comes from the Central Finance
Assistance (CFA) of the MNRE, which has budgeted Rs 8,100 crore for solar
park development. This includes a subsidy of Rs 20 lakh per MW (or 30 per
cent of the total capital cost, whichever is lower) and Rs 25 lakh per park to
prepare a Detailed Project Report (DPR). Park owners charge solar developers
a one-time down payment and annual recurring costs per MW. The charges
vary widely since land prices and evacuation costs are highly variable (see
Graph 8: Park charges over a project’s lifetime). Solar companies claim
that park charges are actually higher than what the government incurs on
developing them.
Notwithstanding claims made by solar companies that park charges are
not subsidised, the parks clearly offer several benefits, especially to foreign
investors. First, solar parks remove the serious challenge of acquiring large
tracts of contiguous land. In some cases, the government has allocated its
own land which may be below the market price. Second, power evacuation
facilities, built in tandem, reduce the risk (12-15 months in parks vs two
to 2.5 years for stand-alone projects) for developers. Given that bids in
solar parks are among the lowest, the implicit benefits to developers are
undeniable.
Graph 8: Park charges over the project’s lifetime

Park charges vary across different locations
1.00
0.90
0.80
Park charges (Rs crore/MW)
0.70
Miscellaneous charges
0.60
O&M (25 years)
0.50
Land lease (25 years)
0.40
0.30 One time charges/cumulative

infrastructure charges
0.20
0.10
0.00
Pavagada Kurnool Rewa
Sources: Based on data obtained from park authorities at Rewa and Kurnool; Pavagada park charges from http://kspdcl.in/SP_DOCS/solarparks/Charges%20to%20be%20
paid%20by%20SPDs%20to%20KSPDCL%20for%20Pavagada%20Solar%20Park.pdf,
32

DMRC and Rewa — a successful marriage

The 750-MW Rewa Solar Park was commissioned in July 2018 by a 50:50 joint venture
between the Madhya Pradesh Urja Vikas Nigam Limited (MPUVNL) and SECI. The land
was made available by the state government, and the evacuation infrastructure was
built by the Power Grid Corporation of India Ltd (PGCIL).
The bids achieved first year tariffs of under Rs 3/kWh and levelised the tariff over the
projects’ lifetime at Rs 3.30/kWh in February 2017. However, the Rewa Park is unusual in
terms of various guarantees and safeguards undertaken by the Madhya Pradesh state
government, that enabled low bids:
• Tier 1: One-month letter of credit by offtakers to cover payment to the park
• Tier 2: PSM (payment security mechanism) for a three-month guarantee
• Tier 3: State government guarantee to pay the difference or the pending amount to
developers in case of further delays
• Tier 4: State government guarantee to pay the costs incurred if transmission outage
lasts over 50 hours
The Rewa Solar Park is the first of its kind facility in which solar power will be supplied
to an interstate commercial entity — the Delhi Metro Rail Corp (DMRC). The PPA for 345
million units is expected to meet 80 per cent of the DMRC’s needs. Given that DMRC pays
Rs 6.1/kWh to the discom, the levelised tariff of Rs 3.30/kWh will result in annual savings of
Rs 96.6 core.
Emerging risks
While the sector has made tremendous progress in terms of capacity
installation and the pipeline is strong with large auctions over the last few
months, it is also facing challenges that have a potential to disrupt it. Many
of the sector’s risks relate to the financial weakness of its main buyers, the
discoms. Other concerns are inconsistent implementation of policies and
lack of enforcement of regulations, and the casual attitude of regulators and
discoms towards honouring contracts. To address these emerging risks and
to ensure that the sector’s momentum is not lost, regulators need to establish
clear policies and strictly enforce them.
Market turbulence
The year 2017-18 has been a record year for solar installations in India,
with more solar capacity coming on-line than ever before.9 However, the
industry also started facing problems: rising module prices exacerbated by
international trade disputes; policy flip-flops in India on import duties; and
confusion over GST slabs and their impacts. These resulted in a smaller
number of NSM auctions in the second half of 2017.
The slowdown continued into 2018 — several auctions in Gujarat,
Maharashtra, UP and Karnataka were either unsuccessful and required to
be retendered multiple times or cancelled altogether. The 3,000-GW ISTS
auctions held by SECI were also cancelled for similar reasons. Discoms have
added to the market problems by saying they will not accept tariffs above a
certain level, throwing the auction processes’ credibility into doubt. More
33

recently, they have cited their inability to sign any new solar PPAs since
they already have excess supply tied in from existing coal power PPAs.
Curtailment
Curtailment of power means that the load dispatch centre (LDC) asks the
solar plant not to inject power into the grid, resulting in loss of revenues
for the developer. It may be for legitimate technical reasons such as grid
unavailability or/and demand-supply mismatch (for example, when demand
is lower than forecast, or there is a spike in renewable energy supply).
Curtailment for commercial reasons means that LDCs or discoms have
asked solar plants to shut down because cheaper power is available (this
request, however, is against the law). Often, older projects with high FiT are
subject to curtailment. However, even newer projects at low tariffs face this
problem. Since fixed costs for coal power have been paid under the two-
part PPAs, the discoms compare coal’s variable cost with the solar tariff to
schedule power.
Industry observers say curtailment in the solar sector is in the range of
1-3 per cent. SLDCs/discoms claim that a surge in supply compels them to
issue back down orders to maintain grid stability. However, developers say
that curtailment has often been due to commercial reasons.
In 2016, the National Solar Energy Federation of India (NSEFI) filed
a petition before the Tamil Nadu Electricity Regulation Commission
(TNERC) saying that the Tamil Nadu Generation and Distribution Company
(TANGEDCO) has been backing down solar power.10 In 2017, a similar
petition was filed by solar power plant developers arguing that backing
34

down instructions from the TNSLDC violates the ’must-run’ status. The case
is now at the Madras High Court, stuck in a protracted legal process.
The New Guidelines for Tariff-Based Competitive Bidding Process 2017
have attempted to address some of the risks associated with curtailment.11
The discom/buyer has to procure power over three years in excess of the
PPA contract if there is curtailment due to transmission constraints or grid
unavailability. In case of a back-down, the generators will be compensated
for 50 per cent of the generation that is backed down.
In addition, Forecasting and Scheduling (F&S) as well as Deviation
Settlement Mechanism (DSM) need to be enacted by states and implemented
to limit variability and curtailment.
Payment delays
Payment delays by discoms seem to be a widespread problem, as reported
by developers surveyed by CSE, affecting even states with well-performing
discoms (see Table 3: Payment delays in states). Most solar developers do not
have a large capital cushion or cash reserves and can get financially stressed
if faced by payment delays. The projects that reported payment delays have
several characteristics: they were auctioned under state schemes, most have
high tariffs, and most of the states have large capacities (see Table 4: State
auction capacities and tariffs). While PPAs have penalty clauses in case
of delays, developers are unable to enforce them, given discoms’ strong
bargaining position.
Table 3: Payment delays in states

Payment delays can put developers in serious financial stress
Surveyed Solar portfolio Reported states with payment Delay period
developers size in India delays
A >2,000 MW Karnataka, Andhra Pradesh, Punjab, 6-7 months
Tamil Nadu
B >200 MW Andhra Pradesh, Karnataka, Up to 4 months
Telangana
C >1,200 MW Andhra Pradesh, Rajasthan, Madhya 6-12 months
Pradesh
D <1000 MW Telangana, Andhra Pradesh 1.5-2 months
Source: Data obtained and compiled by CSE from surveys conducted with developers
Table 4: State auction capacities and tariffs

Significant capacity was auctioned by states before 2016
State Capacity auctioned in older state-run Tariff range (Rs/
auctions between 2013 to 2015 (MW ) kWh)
Andhra Pradesh 690 5.5-8.34
Telangana 726 6.45-6.75
Karnataka 2,500 5.17-6.72
Punjab 970 5.09-8.75
Madhya Pradesh 525 5.05-12.45
Sources: Compiled from state nodal agencies’ notifications and various news reports
35

Quantifying the discom risk

Based on discussions with developers, CSE believes the risk of dealing directly with state
discoms compared to the SECI is around 5 per cent premium in terms of tariff, or around
Rs 0.16/kWh. If we compare two recent auctions held in Uttar Pradesh — one by the
state nodal agency Uttar Pradesh New and Renewable Energy Development Agency
(UPNEDA) (July 2018) and the other by SECI (June 2018) — the difference in tariffs was
Rs 0.16-0.23/kWh. Developers expect around 2 per cent higher IRR (internal rate of return)
for projects where the state discoms are the direct procurers.
The UPNEDA auctions were ultimately cancelled after the completion of the auctions,
fulfilling the prophesied risk1 — 500 MW was retendered in August 2018, this time carrying
concessions in case safeguard duties were imposed on PV panels. The leeway given in
response to a difficult market condition resulted in successful round of auctions in which
tariffs fell as low as Rs 3.17/kWh.2 This case highlighted the need for state auctions to have
more in the way of incentives to attract low bids to compensate for discom risks.
Price difference in SECI and state nodal agency auctions in Uttar Pradesh
SECI auctions command cheaper tariffs
Uttar Pradesh SECI (Jalaun) auction tariff Rs 3.32/kWh
Uttar Pradesh New Energy Development Agency (UPNEDA) 1-GW auction tariff (cancelled) Rs 3.48-3.55/kWh
Uttar Pradesh New Energy Development Agency (UPNEDA) 500-MW auction tariff Rs 3.17-3.23/kWh
Sources: https://www.eqmagpro.com/upneda-1000-mw-solar-tender-bidder-list/, https://mercomindia.com/upneda-solar-auction-500-mw-l1-tariff-3-17/ ,

https://www.business-standard.com/article/pti-stories/acme-bags-75-mw-solar-project-in-up-at-rs-3-32-unit-118060800735_1.html
Contract enforcement
The rapidly falling tariffs in this sector are now creating some unexpected
complications. There have been media reports about state discoms (Uttar
Pradesh, for one) approaching renewable energy developers to renegotiate
signed PPAs that were signed previously at higher rates.12 In some cases, the
ERCs refused to approve PPAs that had been signed. In September 2017, the
Karnataka Electricity Regulatory Commission (KERC) decided to reduce the
tariff the state discom would pay for wind energy projects for which PPAs
were signed before March 2017. The state government had to intervene to
overrule the KERC’s order to ensure the PPAs were honoured.13
In the case of Jharkhand, tariff renegotiations were held twice in March
2016 and August 2017 for the auctioned 1,200-MW capacity. In April 2018,
the Jharkhand State Electricity Regulatory Commission rejected JAREDA’s
(Jharkhand Renewable Energy Development Agency) petition to sign PPAs
citing several reasons; these included the facts that the auction process
did not follow the MNRE’s guidelines and that the final tariff was arrived
at through negotiations. This particular case highlighted the need for
transparent processes to ensure contract enforcement.14
Regulators need to ensure that auction processes are transparent,
auctions are not cancelled for arbitrary reasons, and the sanctity of contracts
is maintained.
36

The way ahead

The deployment of large-scale solar in India has been a success so far.
But the fundamental reason for the success has been the outsized role
played by the Central government. While the sector no longer receives
direct subsidies (high FiTs or VGF), it continues to receive assistance in
myriad ways — making large tracts of land available for parks, waivers of
transmission and distribution charges and evacuation infrastructure built
with large multilateral loans. The SECI has played a very significant role in
helping the sector grow by protecting solar developers from the risks posed
by financially-stressed discoms.
Central government support has also created some distortions in the
market. The price discovery process, especially of state discoms, is not
working well, as highlighted by the arbitrary cancellation of auctions.
This points to an insufficient appreciation of market conditions and risks
which can sow doubts about the auction process itself. Similarly, delays in
signing PPAs, attempts to renegotiate them or their rejection by regulators
undermines investor confidence in the sanctity of contracts.
While the supportive tools and policies were vital for the sunrise
industry’s growth and some may still be required, over the longer
term, regulators need to ensure the development of an independent,
competitive market.
PRIYA SREENIVASAN / CSE
37

The utility- So far, attempts to open up the sector have been half-hearted, with
open access regulations poorly implemented; as a result, procurement of
scale solar renewables by the corporate sector has not taken off despite the substantial
has reached economic benefits it poses.
Finally, the excessive focus on tariffs has led to concerns about the quality
a stage were of panels being used. Since most projects are financed by substantial loans
government from scheduled banks, a poorly performing project will have a cascading
impact on the banking sector.
has to open
the sector for Going ahead, the following policy interventions would be critical to sustain
the growth of this sector:
more private • SECI’s role as the intermediary off-taker needs to be gradually diluted.
Auctions, with sale of power directly to end-consumers (utilities or a
risks and third party), should come to the forefront. This will help in the creation
competition of a mature market.
• The private sector should be engaged in solar park development to ensure
‘park charges are not subsidised and are reflective of the market value of
land, a precious resource in India, and the evacuation network.
• Having the public sector guarantee payments to insulate developers from
discom risk is neither a desirable nor a sustainable solution. Alternative
mechanisms to protect against discom risks include creating an insurance
fund by pooling industry contributions.
• The current auction mechanism (pay-as-bid) may result in unviable bids
for the lowest bidders. Government should also experiment with other
models like the uniform pricing auction where every winning bidder
gets the same tariff. This model is also likley to obtain a better average
tariff compared to the pay-as-bid model.
• Corporate entities cannot procure power from ISTS auctions as it would
mean the SECI underwriting the risks of the private sector. Auctions need
to be completely competitive allowing for projects to be built anywhere
and accessible to all end-users, creating a truly open, market-driven
sector.
38

CASE STUDY: A ‘BLUE SEA’ IN THE DESERT

Bhadla Solar Park, Jodhpur, Rajasthan
RRECL
T
he sight of the Bhadla Solar Park is awe inspiring: rows of panels,
glinting against the barren land, stretch over a 45 square kilometer area
all the way into the horizon, a dark, blue sea in the middle of the sun-
scorched desert.
The Bhadla Solar Park epitomises the success of the National Solar
Mission. Here, all the policy initiatives have come together in a massive
2,255-MW capacity installation that has regularly produced the lowest
tariffs in the country from 2015 onward (including the current record at
Rs 2.44/kWh). Bhadla receives the highest solar irradiation amongst all the
solar parks in the country — 5.71 kWh/m2/day, compared to the national
average of 5 kWh/ m2/day. The solar irradiation is high throughout the year,
which translates to consistent solar output.
Built in four phases, the park’s developer for the first two was the
Rajasthan Solar Development Corporation Ltd (RSDCL), wholly owned by
the Rajasthan Renewable Energy Corporation Ltd. Phases III and IV were
developed in partnership with private entities, IL&FS and Adani Green
Power.
The land has been leased to the park developers at approximately Rs
39

Table 5: Ownership and associated capacity in the Bhadla Solar Park

Private sector participation in park development has been successful in Bhadla
Phase Capacity (MW) Park owner/administrator Status as of September 2018
I 75 RSDCL Operational
II 260+420 RSDCL Operational
III 1000 Saurya Urja Company of Rajasthan Ltd (JV between Under construction
IL&FS and Rajasthan government)
IV 500 Adani Green Power Under construction
Source: Government of Rajasthan, https://d2oc0ihd6a5bt.cloudfront.net/wp-content/uploads/sites/837/2018/06/Basant-Dosi-Rajasthan-The-Solar-Destination-and-

Development-of-Bhadla-Solar-Park.pdf
2 lakh per hectare, with a 5 per cent annual escalation. The evacuation
infrastructure has been financed through the Green Energy Corridor Project,
funded by the German development bank KfW and the Asian Development
Bank (ADB).
Bhadla is the first park to have been developed in partnership with private
entities and serves as a model for weaning the sector away from dependency
on the public sector. It is also the first one to have signed an agreement to
supply power across state boundaries with a 750-MW PPA with discoms
in Uttar Pradesh (see Table 5: Ownership and associated capacity in the
Bhadla Solar Park).
Given the fact that the park is located in the arid Thar desert, water for
cleaning panels and maintenance is scarce; this has prompted innovative
solutions. For instance, solar developer Rising Sun’s plant makes use of a
home-grown semi-mechanical cleaning device with an efficient spray nozzle,
which is hoisted on an improvised tractor. The device uses significantly
less water than the average plant. Some of the newer plants in Phases III
and IV have opted for fully automated, water-less cleaning devices supplied
by an Israeli company named Ecoppia, which is expected to cut water
consumption to zero.
The park is also equipped with state-of-the-art SCADA systems, with
on-site engineers constantly monitoring the plant output. It is technically
ready to respond to new forecasting and scheduling regulations to ensure
maximum injection of power.
The Bhadla Solar Park realises the vision of using waste land to tap into
the country’s vast solar resources for generating renewable power.
40

CHAPTER 3
Solar rooftop:
Overshadowed
M
ost developed economies started their solar programmes by
targeting household rooftops; as a result, they now have a sizable
share of installations in the residential rooftop segment (see
Graph 1: Rooftop and utility-scale solar in different countries).
China and India, on the other hand, have used large-scale solar installations
in an effort to quickly achieve scale and — simultaneously — push down
costs. In the case of India, this focus on large utility-scale solar seems to
have become an unintended obstruction in the development of the rooftop
segment.
India, though, does have an ambitious plan for solar rooftop or SRT, as
it is called: a target of 40 gigawatt (GW) capacity by 2022. But so far, the
Graph 1: Rooftop and utility-scale solar in different

countries
Developed countries have focused on residential rooftop
120
Rooftop solar Utility scale
100 3
Percentage installed
27
80 40
54
60 79
92
97
40
73
60
20 46
21
8
0
Australia Germany Spain USA China India
(7.8 GW) (41.2 GW) (4.7 GW) (50 GW) (130 GW) (26.02 GW)*
Countries (with total solar PV installed in GW )
*Indian capacity up to December 2018, others till December 2017.

Source: Compiled by CSE from various sources
41
03Solar rooftop systems(41-58).indd 41 16/01/19 4:19 PM

SOLAR ROOFTOP: OVERSHADOWED
achievement has fallen short of the goal. According to the Union Ministry
of New and Renewable Energy (MNRE), only 2,158 megawatt (MW) of SRT
systems had been installed in the country till December 2018.1 Gurugram
(Haryana)-based solar consulting company Bridge to India reports 3,400
MW of SRT systems till September 2018.2
The shortfall in capacity is compounded by the fact that a large proportion
— 70 per cent — of the installed rooftop systems is for commercial and
industrial (C&I) customers; residential consumers account for less than
20 per cent of the total installed capacity3 (see Map: SRT installation in
India). Of the states with sizable SRT systems — Maharashtra, Tamil Nadu,
Karnataka, Rajasthan, Uttar Pradesh, Gujarat, Haryana and Delhi — the
industrial segment has the largest share in all except Delhi. Public sector
undertakings (PSUs) have been the largest rooftop driver in Delhi.
There are clear economic considerations behind industrial and
commercial consumers’ preference for rooftop systems: solar rooftop
power is cheaper than grid-supplied electricity. These consumers have the
financial resources to make the necessary investments, which are sizable,
to install SRT systems. Moreover, they also have access to the Renewable
Energy Service Company (RESCO) model (in which developers install the
system on the consumers’ premises and sign a long-term contract to sell
them electricity), under which they do not need to make any investments.
The dominance of ‘large-scale’ rooftop installations by commercial-
industrial, institutional and government/PSU segments has meant that
attention to the residential solar rooftop segment has lagged behind.
Distributed solar rooftop systems, installed on individual residences, offer
many advantages. They help minimise transmission and distribution losses,
as the generated power is consumed locally. In large cities, they can act as
a back-up, replacing polluting diesel generator sets. Solar rooftop can be
harnessed for demand-side management (for example, time-of-day pricing
Instead to match household demand with solar generation). With falling solar
prices and steadily increasing discom tariffs, SRT systems are being seen as
of policy financially attractive.
initiatives and The policy environment: A subsidy-driven strategy
administrative Achieving significant capacity addition in rooftop solar would require close
interventions, engagement with numerous small consumers, which is a challenging task
in itself. Concerted effort would be needed for raising consumer awareness
government about the benefits of SRT systems and PV technology and their installation.
Processes for approving net metering applications and disbursing subsidies
has largely will need to be efficient and painless to motivate consumers to invest in
relied on this new technology. Loans need to be made available, which requires
significant capacity building of retail bank branches. Instead of these much-
subsidies needed policy initiatives and administrative interventions, the government
to drive SRT has largely relied on subsidies (70 per cent for hill and north-eastern states
and 30 per cent for other states) to drive SRT installation.
installation There have been a few half-hearted efforts to break this mould. One such
effort was the Solar City Programme initiated in 2008 — but it has not been
42

Map: SRT installation in India

Industrial-commercial consumers account for 70 per cent of installations
Capacity addition from Oct 2017 to Sep 2018, MW

2
> 100 45-100
Uttarakhand 20 32
10-45 <10 10
Delhi 48 13 80 141
Uttar Pradesh 100 77 45 223

3
19 11 Jammu & Kashmir 2
5 Bihar 12 20
6
97 8 32 57 Punjab
West Bengal 14 30 24 69
6
12
26 12 Chandigarh
North Ea st 9 33
8
Manipur, Assam, Meghal aya, 12
Tripura, Mizoram, N agaland,
Sikkim, Arun achal pradesh
6
Jharkhand 11 22
5
10
Odisha 11 26
5
7
Chhattisgarh 8 11 26
Telangana 33 33 24 90
Andhra Pradesh 49 40 24 113
Tamil Nadu 65 233 14 312
48 14 15 19 Kerala 273 43 140 89 Karnataka
473 21 359 93 Maharasht ra
97 18 67 12 Madhya Pradesh
220 46 146 28 Gujarat
270 40 195 34 Rajasthan
187 18 109 61 Haryana Others 22 28 13 63

Puducherry, Dadra & Nagar Haveli,Goa,
Daman & Diu, Lakshadweep,
Himachal Pradesh
Total installed capacity: 3,399 MW
as on September 30, 2018 Public sector
785 1,591 502 521
Commercial Indus tria l Residential
All figures in MW
Source: Bridge to India, India Solar Rooftop Map December 2018; https://bridgetoindia.com/wp-content/uploads/2018/12/BRIDGE-TO-INDIA-India-Solar-Rooftop-Map-
December-2018-1.pdf
43

Table 1: State policies on solar rooftop

Most state policies put limits on the installation of SRT
Parameters Regulation range
Limit on SRT capacity (at customer level) 30-150% of sanctioned load
Limit on total SRT capacity (at distribution 15-90%
transformer level)
Cap on system size No cap up to 1 MW
Metering — both net and gross 10 states (net-metering in others)
Feed-in tariff, Rs/unit Rs 0-9.5
Annual power purchase cost (national Rs 2.5-3.9 (national average —
average)*, Rs/unit Rs. 3.5)
*Excludes RE, while APPC includes it; they are similar.

Source: Union Ministry of New and Renewable Energy, ‘Grid Connected Solar Rooftop — State Policies and SERCs Regulatory/
Tariff Order’, available at https://mnre.gov.in/grid-connected-solar-rooftop-states-policies-and-sercs-
regulatory-tariff-order
See Statistics section for details.
backed by any concrete steps. Similarly, the Environment Impact Assessment

(EIA) Notification, 2006 requiring buildings with an area over 5,000 square
metre to have at least 1 per cent of their connected load through SRT4, has
not had much impact due to non-existent monitoring and enforcement.
Policies at the state level

Several states and Union territories (UTs) have announced regulations
governing SRT installation (see Table 1: State policies on solar rooftop).
These regulations focus primarily on clarifying the limits on capacity that a
consumer can install. In addition, they define the terms of metering (net or
gross) and the purchase cost. However, policies of most states have not done
anything yet to encourage installations.
So far, 30 states and UTs have defined their net metering guidelines.
Feed-in tariff (FiT) for SRT systems are decided by the state tariff regulators.
Most regulators allow payment to SRT systems based on the annual pooled
purchase cost (APPC) of the discom. A few states and UTs, such as Rajasthan,
Chandigarh, Uttarakhand and Karnataka, allow FiTs that are higher than the
APPC. Some states have introduced other measures to boost the SRT market:
Additional state subsides: Gujarat provides as much subsidy as the Centre;

this means the cost of solar rooftop systems for homeowners in the state
30 states becomes Rs 30,000 per kilowatt (kW).5 Uttar Pradesh is disbursing up to

Rs 30,000 as incentive to residential customers, while Maharashtra provides
and UTs have 100 per cent subsidy to government and semi-government offices and 15 per
cent to private offices.6
defined their
net metering SRT mandates: In May 2016, the Chandigarh Renewable Energy and
Science and Technology Promotion Society (CREST) made installation of
guidelines rooftop solar systems in the city mandatory within two years in residential
houses measuring over 500 square yards as well as in group housing
44

societies.7 Karnataka has decided that 40 per cent of the state’s solar energy
target (2,300 MW) should be met through rooftop solar, with a cap of 200
Some
MW per taluk to ensure widespread installation by 2021-22.8 Delhi, on the states have
other hand, has mandated that all government-owned buildings must have
a rooftop solar plant within the next five years.9
introduced
measures to
Expanding the target base: Karnataka has tried a new approach: land-
owning farmers are offered additional incentives to put up solar installations
boost the SRT
of 1-3 MW capacity under the land owners’ category. Till November 2018, market, but
the state had already triggered installation of 290 MW under this scheme
against the allotted 314 MW.10 Delhi has recently introduced a scheme under these have
which private companies can install SRT systems in one-third of a farmer’s had little
land; the farmer receives a rent.11 However, it is still too early to assess the
success of these schemes. impact
Overall, the measures put forth by the states are not backed by concrete
efforts to raise awareness, remove bureaucratic bottlenecks or even monitor
the progress — as a result, they have had very little impact.
SRISTI — a misguided approach

The MNRE believes that discoms are a bottleneck in the spread of rooftop solar
— they are seen to be slow in approving and installing net meters because
they fear losing revenues from their most prized customers. To address
this, the ministry launched the draft Sustainable Rooftop Implementation
for Solar Transfiguration of India (SRISTI) scheme in December 2017. The
scheme proposes Rs 23,450 crore of incentives for discoms and consumers
(see Figure 1: Subsidy break-up in SRISTI).
The scheme has a number of flaws, though. To begin with, the subsidy
itself: it may incentivise discoms to encourage rooftop installations, but it is
designed to benefit them only over the shorter term while magnifying their
revenue problems over the longer term. Instead of helping discoms tide over
revenue losses, the subsidy should be targeted to improve their long-term
Figure 1: Subsidy break-up in SRISTI

A short-sighted solution to a multi-dimensional problem?
• Rs 18,000/kW (upto 5 kW); benchmark cost Rs. 65,000/kW

RESIDENTS • Total Rs 9,000 crore for 5 GW
DISCOMS • Rs 5,500/kW (based on estimated targets achieved

(for industrial annually by discoms); benchmark cost Rs 55,000/kW
and commercial • Total Rs 14,450 crore for 35 GW
installations)
Source: 2017, Union Ministry of New and Renewable Energy Concept Note on SRISTI, available at https://mnre.gov.in/file-
manager/UserFiles/comments-on_RTS.pdf
45

Table 2: Non-agricultural sales with variable tariff

In most states SRT is cheaper than commercial and industrial tariff
State Sales in MUs with variable Percentage of non-
tariff > Rs 5/kWh agriculture sales with
variable tariff > Rs 5/kWh
Maharashtra 52,485 75
Punjab 26,403 80
Madhya Pradesh 14,294 49
Haryana 22,061 72
Rajasthan 28,625 91
Andhra Pradesh 25,906 67
Telangana 12,602 61
Gujarat 40,774 68
Bihar 12,114 77
Source: Prayas (Energy Group), ‘India’s journey towards 175 GW renewables by 2022’
viability — for example, by pushing them into newer business models such
as partnering with rooftop installers to collect their bills.
Another concern with the scheme is the fact that it reduces residential
consumers’ share of the rooftop target to just 5,000 MW out of the total
target of 40,000 MW. This points to both a failure of existing policies and
wrong direction, given the fact that small-scale distributed generation
offers a unique set of benefits. Further, India’s large number of middle-
class consumers can be a vital source of financing for solar rooftop. The
scheme offers a narrow solution to a problem which requires addressing the
following issues:
Customer migration: It is true that discoms face a problem of potentially

losing a share of their residential, commercial, industrial, and institutional
customers — especially the ones whose tariffs are the highest— to cheaper
Customer renewable power. Customer migration on account of solar rooftop can
migration on worsen a discom’s already precarious financial health, which is why they
may not be keen to streamline the net metering process. An analysis by
account of Prayas shows that almost half to over 90 per cent of non-agricultural sales by
discoms in various states were at a tariff of more than Rs 5 per unit, which
solar rooftop is broadly the cost of rooftop solar12 (see Table 2: Non-agricultural sales with
can worsen variable tariff).
a discom’s Power procurement: Solar rooftop may only partially help in reducing the
already peak demand from the grid, which is widely assumed to be in the afternoon
for most cities when solar generation is also the highest. Delhi’s load curve
precarious shows a second peak around midnight when most households turn on
financial their air conditioning (see Graph 2: Daily load curve of Delhi and the solar
rooftop potential). Discoms’ procurement strategy entails having the vast
health majority of the demand met through long-term power purchase agreements
(PPAs). In this scenario, they incur a cost for providing the balancing power
46

Graph 2: Daily load curve of Delhi and SRT potential

Solar rooftop does not help in reducing the night peak demand
6,000
Load curve and SRT potential (MW)
5,000
4,000
3,000
2,000
1,000
0
00:00
01:00
02”00
03:00
04:00
05:00
06:00
07:00
08:00
09:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
22:00
23:00
Hours
Delhi demand curve Solar rooftop system (1 GW)
Sources: Compiled by CSE 2018. Delhi State Load Despatch Center, https://www.delhisldc.org/; SMA Sunny Portal, https://
www.sunnyportal.com/Templates/Start.aspx?ReturnUrl=%2f
to rooftop consumers. Discoms will need to develop sophisticated power

procurement processes that rely on a combination of peaking supply, short-
term purchases, demand management etc, in addition to long-term contracts.
The challenges
Financing
The total funding requirement for installing 40 GW of SRT systems by 2022
is estimated to be over Rs 2.8 lakh crore (US $40 billion).13 A 30 per cent
capital subsidy support from the government does cover a portion of this
cost. However, most prospective customers either do not have the savings to
cover the upfront costs, or are simply unwilling to invest given the relatively
large amount. Also, most customers do not have access to bank financing.
In recent years, the government has taken steps to improve the availability
of loans for SRT projects. The Reserve Bank of India has identified solar
rooftop as a priority sector for lending. Eight public sector banks have
included SRT systems under their housing or housing improvement loans.
Multilateral banks are providing concessional loans against sovereign
guarantee to public sector banks to support subsidised lending to the
segment. Despite this, collective lending from them till 2017 for solar
rooftop financing was only to the tune of US $1.4 billion, just 3.5 per cent of
the total required funding.14
47

Some of the possible ways of breaking the financing logjam could be:
The RESCO model: In this, developers install the SRT and sign long-term
PPAs with the customer. Almost exclusively targeted currently at industrial,
commercial and institutional consumers, this model can give a big boost to
household segment installations, since developers will no longer need to
make a sizable investment in the installation. Currently, RESCOs are not
keen on the household market because they are unable to assess homeowner
risk and are wary of the cumbersome legal process in case of payment delays
or defaults by the homeowner.
A neat solution could be for discoms to partner with RESCOs to install
SRT systems. Another alternative could be that discoms collect a monthly
PPA amount on behalf of the RESCO, along with the electricity bills — this
mechanism would protect RESCOs from homeowners’ credit risk, while
discoms could earn a fee. Furthermore, this arrangement will allow RESCOs
to raise financing from banks and other investors, which would otherwise
be reluctant to extend funding to RESCOs targeting households.
Securitisation: Bundling a number of individual SRT loans and raising

finance against them can be explored as an alternate source of funds. However,
this would require measures to develop the relatively underdeveloped debt
market. It would require strengthening repossession of defaulting assets,
assignment of collateral and targeting new investors such as IREDA (Indian
Renewable Energy Development Agency).
Municipal bonds: Another idea is to have municipal authorities issue bonds

that are backed by house or other taxes and use the proceeds to finance
rooftop installation or to extend loans to rooftop developers.
Consumer apathy
Residential consumers have been, largely, staying away from SRTs for a
number of reasons. They are not familiar with the solar PV technology, its
performance and its life. They are wary of claims that it is reliable and worry
about its maintenance needs, especially when confronted by the fact that it
has to be in operation for at least 25 years. The rooftop installers who are
tasked with the maintenance are small new companies, and hence do not
Only a policy arouse any confidence.
that integrates The financial benefits — in terms of monthly deductions in the billed
amounts — tend to be relatively small for many middle class consumers
the interests whose tariffs are low (in fact, rich households which pay higher tariffs stand
of discoms to gain much more).

Finally, the process of installing solar rooftop on one’s own can be a
with SRT will daunting prospect. The larger and better known companies do not operate
in this market. There is no reliable source of market information. Most
succeed consumers do not even know about the government subsidies, and those
who do, fear the bureaucratic process of obtaining the subsidy. Consumers,
48

typically, have a poor opinion of discoms’ customer services and believe that Policymakers
obtaining approvals for the SRT system would be an exhausting process.
should focus
The way ahead their efforts
It is clear that SRT systems provide multiple benefits — to households, to the
grid and even to discoms. Promoting them, therefore, is a desirable policy on cities
goal. SRT systems can offer reduced power bills for households; the gains may and involve
increase as tariffs are likely to keep going up. They provide environmentally
friendly, inexpensive back-up supply of power (compared to DG sets), a big city, town
advantage given the persistent supply interruptions in most places. They and district
can result in lower T&D losses and improved grid management, since the
generation is close to the point of consumption. Solar rooftops, however, authorities
also face several challenges, as indicated in the preceding section: lacklustre
growth, little consumer awareness, lack of innovative government policies
or attention, bureaucratic hassles, and limited support from discoms.
Sustained and broad-based efforts are required to promote SRTs.
Refine the SRISTI scheme: SRISTI needs to focus on strengthening the long-
term viability of discoms, which should ideally play a central role in the SRT
market. Discoms need to explore innovative business models to not just avoid
revenue losses, but also profit from the emerging SRT sector. For instance,
discoms have valuable customer data and can assist solar developers in
identifying clients, sizing up SRT systems etc. They can act as a franchise to
bill and collect for a range of entities, and take a fee for providing this service.
Since residential customers are unlikely to default on bills, discoms can help
banks collect the EMIs for individual SRT systems, thereby expanding the
available financing. They can also act as intermediaries in structuring loans
for large numbers of customers in an area.
City-wide concerted efforts: Policymakers should focus their efforts on

cities and involve city administrations and town and district authorities. An
ideal beginning could be the development of a city-wide long-term plan and
targets. The SRT sector involves the participation of a large number of small
consumers — accordingly, raising awareness about the financial benefits
of SRT, the durability and performance of solar PV, and about government
subsidies is very important. These efforts need to be intensive and down
to the town/housing colony level. Subsidy approvals need to be processed
efficiently. Nodal offices should be set up to monitor city-wide goals as well as
performance of various authorities which are responsible for promoting SRT.
Streamlining processes: Discoms need to deploy more resources to

encourage SRT installation. This will involve both hiring people and
training staff about net metering processes. Discoms must also enforce tight
timelines to approve applications and install net meters and ensure they are
meeting those performance standards.
49

CASE STUDY: IMPLEMENTATION OF SRT POLICY

CSE analysis of implementation of SRT regulations in Gurugram
S
olar rooftop is largely an urban phenomenon in India, with cities being
at the forefront of interventions to promote it. Large towns and cities
have significant power demand as well as solar rooftop potential, and
their residents have the resources to afford installation of SRT systems. A
comprehensive analysis of SRT implementation in a city, therefore, can
provide insights about challenges, bottlenecks and solutions on the ground
which might be relevant to other cities as well. Gurugram, one of the fastest
growing urban centres in India, has been chosen for this analysis by CSE.
Gurugram’s electricity demand

With sizeable commercial and industrial activity and a large consumer
population, Gurugram’s per capita consumption of electricity stands at
4,000 kWh per person per annum; this is expected to increase to 6,400
kWh per person per annum by 2022.15 The Dakshin Haryana Bijli Vitaran
Nigam (DHBVNL), the discom supplying to Gurugram, has almost 250,000
customers in the city who consume 6.4 billion units (BU) (see Graph 3:
Load-wise category of consumers). According to the DHBVNL, the average
demand for electricity in Gurugram is around 1,125 MW per day; during
peak summers, this reaches around 1,700 MW.16
Solar rooftop in Gurugram

Gurugram district has installed a total of 24 MW of SRT systems. Of this,
8 MW is grid-connected and 16 MW is off-grid. The commercial and
industrial sectors dominate rooftop installations because of the clear financial
50

Graph 3: Load-wise category of consumers

Two-thirds of the power is consumed by a small number of commercial and
industrial customers
100
80 35,202
Industrial, HT consumers
Percentage
60 Industrial, LT consumers
Commercial, above 1,000 kW
40 Commercial, 50-1,000 kW
1,71,172
Commercial, up to 50 kW
832 564
20 Residential, above 10 kW
1,229 Residential, under 10 kW

530
0
Number of consumers Electricity sold (million kWh) Revenue (in Rs crore)
Revenue Rs 3,249 crore • Electricity 6,303 MU • Customers 2,44,518

Source: Dakshin Haryana Bijli Vitran Nigam (DHBVNL), 2018
Graph 4: Solar rooftop installations

Despite a sizable number of retail consumers, SRT holds a small share of the total capacity
Total 25 MW
100 kW and
171 customers 6% above 37 19
26 customers 3%
39
96 40-100 kW 59 14
customers
customers
10%
36% Off-grid
103 20-40 kW 55 19
on-grid customers
customers
28%
0-20 kW 74 202
44 customers 17%
Industrial off-grid Industrial on-grid Commercial off-grid
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
Commercial on-grid Residential off-grid Residential on-grid
Source: Dakshin Haryana Bijli Vitaran Nigam (DHBVNL), 2018
benefits to these customers, who are charged Rs 8-10 per unit by DHBVNL.
More than 14 MW of the total capacity comprises of installations larger
than 100 kW17 (see Graph 4: Solar rooftop installations). These installations
do not really fall under the ‘rooftop’ category from the perspective of
‘distributed generation’.
Power supply
The DHBVNL claims that there is virtually no load-shedding in Gurugram.
It defines load-shedding as “four hours per power cut per day for four
continuous days” to come up with this rather unbelievable statistic. The
Nigam refers to sporadic power outages as “regular maintenance or line
51

Table 3: Solar rooftop mandates for Gurugram

Large consumers have been been mandated to install SRT
Total Rooftop Electricity Electricity
Connected No. of
load potential consumed generated —
load (kW) customers
(MW) (MW) (MU) rooftop (MU)
50—1000 334.4 3,957 21 458 30.9
Commercial
Above 1000 434.7 207 14 854 21.1
50—1000 265 1,769 21 477 31.5
Industrial
Above 1000 156.5 69 5 2,018 7.5
Educational institutes Above 30 14.6 146 0.7 NA 1.1
Government buildings Above 30 8.5 106 0.4 NA 0.6
6,254 62.1 3,807 92.7
Source: Dakshin Haryana Bijli Vitaran Nigam (DHBVNL), 2018
faults”. A survey by CSE done in December 2016 showed that power cuts
in housing societies ranged from 30-60 minutes per day18. Another survey
done in January 2018 also confirmed approximately 30 minutes of power
cuts every day in winter and an average of 60 minutes per day in summers19.
State policies
Haryana allows customers to install grid-connected solar rooftop systems of
a capacity equal to the sanctioned load. Average power purchase cost is set
as feed-in-tariff by the Haryana Electricity Regulatory Commission (HERC).
In 2016, the Haryana Renewable Energy Development Agency (HAREDA)
issued an order mandating certain customers to install solar rooftop (see
Table 3: Solar rooftop mandates for Gurugram). The order was applicable
to only around 6,200 non-residential customers, including less than half
of the industrial and 15 per cent of the commercial segment customers.20
CSE researchers estimate that around 62 MW of solar rooftop installation
can potentially emerge from the order. Industrial and commercial customers
with loads between 10-50 kW could easily add a sizable capacity. Further,
an estimated 200 MW of solar rooftop can be installed on the buildings
planned to be constructed under Gurugram’s Master Plan 2031.
But till the time of going to press, less than 300 customers had complied
with the HAREDA order. Agencies such as the Town and Country Planning
Department, the Haryana Urban Development Authority (HUDA), the
municipal corporation and various government departments (police,
PWD etc) are responsible for ensuring compliance. They were required to
incorporate relevant provisions in their departmental bye-laws to facilitate
the implementation of the order, but many of them have not done so yet.
Most have not even informed their consumers about the requirement. None
of the agencies are monitoring progress either.
One of the stumbling blocks is the perception that SRT is a threat to
discom viability. While it might be termed a long-term risk, currently, most
cities continue to have very low level penetration of SRT. If the HAREDA
order was implemented, the installed solar rooftop in Gurugram will
generate a mere 2 per cent of the electricity consumption of those customers.
52

CASE STUDY: POTENTIAL OF SRT TO REDUCE POLLUTION

A study to estimate the pollution load from DG sets in Gurugram
GREENTECH PROJECT
A
large number of residents in Gurugram rely on diesel generator (DG)
sets for back-up power.21 CSE conducted a study to assess the impact
of operating these DG sets on pollution levels inside residential
societies.22
Five such societies (DLF Phase 1, DLF Phase 2, Devinder Vihar, New
Colony and Time Residency) located across Gurugram were selected, with
varying sizes of DG sets and building configurations (see Table 4: Societies
surveyed by CSE). The sites were selected carefully, and did not have any
other significant sources of pollution (construction, traffic congestion etc)
near the buildings, which might have corrupted the data.
CSE installed automatic air pollution monitoring equipment at these
Table 4: Societies surveyed by CSE

Sites were carefully selected to understand the impacts of DG sets
Location Devinder Vihar New Colony Time Residency
Details 450 flats in 9 buildings 3 houses and a commercial 875 flats in 7 buildings
entity
DG capacity 325 kVA 64 kVA 500 kVA
Monitoring period 17th to 21st May 2018 23rd to 27th May 2018 22nd to 26th May 2018
DG operation 18th May between 02:34 23rd May between 04:07- 24th May, from 03:00-10:01, 11:09 -
and 06:44 hrs (for 4 hours) 07:30 hours (more than 3 22:42 (longest operation span within
hours) a day).
Note: The DLF residential societies did not suffer from extended power cuts, and hence are not featured in this table.
53

Graph 5: Duration of power cuts

The societies faced a number of power cuts during the monitoring period
20
Duration of DG operation (in hours)
15
10
0
DLF phase 1 DLF phase 2 New Colony Devinder Vihar Times
Residency
1st day 2nd day 3rd day 4rth day
Note: There was no power cut on the fifth day of monitoring at any location.
sites to collect PM1, PM2.5, PM4, PM10 and total suspended particles (TSP)
data at intervals of 10 minutes for five consecutive days. The operational
hours for the DG sets were noted separately. The societies faced a number
of power cuts over the monitoring period, both in terms of days as well
as hours of cuts per day (see Graph 5: Duration of power cuts). Since the
DLF societies experienced minimal power cuts, CSE researchers studied the
impacts of DG sets only in the remaining three societies.
The three case studies in Table 4 include one residential society with
moderate levels of power cuts and ambient pollution levels (Devinder
Vihar) (see Graph 6: Pollution levels in Devinder Vihar); one with very
high ambient pollution (New Colony) (see Graph 7: Pollution levels in New
Colony); and one with long power cuts and DG operation timings (Time
Residency) (see Graph 8: Pollution levels in Time Residency). In all of them,
PM2.5 and PM10 levels were found to be spiking when the DG sets were
operated. Since pollution keeps on accumulating during the period a DG set
is in operation, the average pollution levels in the hour after a generator was
shut down were found to be even higher.
The average PM2.5 levels increased by 30-40 per cent after three to four
hours of DG set operations — the levels remained high even after one hour
of shutting down the generator. Similarly, average PM10 levels increased
by 20-50 per cent during DG operations and the levels remained high for an
hour after. Maximum levels of both PM2.5 and PM10 were also found to be
extremely high in two of the societies.
Societies with exceptionally high duration of DG operations experienced
sustained high levels of PM — longer the DG use, higher the ambient levels.
On the other hand, there was a barely discernible impact on air pollution in
societies with limited power cuts (15-30 minutes) and DG use.
54

PM 2.5 in mu.g/cu.m PM 2.5 in mu.g/cu.m PM 2.5 in mu.g/cu.m
20
70
120
170
220
0
50
100
150
200
250
300
0
50
100
150
200
2 hours before
03Solar rooftop systems(41-58).indd 55

2 hours before 2 hours before
Minimum
Minimum
Minimum
1 hour before
During DG 1 hour before 1 hour before
operation
During DG During DG
1 hour after
PM 2.5
PM 2.5
PM 2.5
operation operation
Average
Average
Average
During DG
362
second operation 1 hour after 1 hour after
1 hour after
2 hours after 2 hours after
2 hours after
Maximum
Maximum
Maximum
PM 10 in mu.g/cu.m PM 10 in mu.g/cu.m PM 10 in mu.g/cu.m
100
200
300
400
500
600
0
500
1,000
1,500
2,000
0
100
200
300
400
500
2 hours before
Minimum
Minimum
Minimum
2 hours before 2 hours before

1 hour before
During DG 1 hour before 1 hour before
operation
1 hour after
PM 10
During DG PM 10 During DG
PM 10
Average
Average
Average
Graph 7: Pollution levels in New Colony
During DG operation operation

Graph 6: Pollution levels in Devinder Vihar
Graph 8: Pollution levels in Time Residency
1,879
second operation
1 hour after 1 hour after 1 hour after
2 hours after 2 hours after 2 hours after
Maximum
Maximum
Maximum
55
16/01/19 4:19 PM
CASE STUDY: THE ECONOMICS OF SRT VS DG SETS

The viability of replacing DG sets with SRT in Delhi NCR
U
rban households largely opt for DG sets as a default option for back-
up power when grid power is unavailable. In 2017, CSE conducted a
study in residential societies located in Delhi, Haryana, Uttar Pradesh,
and Rajasthan to assess the cost of power from solar rooftop compared to
the cost of power from DG sets. The study tried to estimate actual costs for
households in different societies based on power cuts, back-up DG capacity,
roof space and DG set use.23
The societies selected for the study covered a wide range in terms of
number of apartments, society type (upper or middle income), DG back-
up level (full, partial or only for common services) etc. In addition, these
societies experienced power cuts, which drove DG usage (see Table 5: An
overview of the societies).
The study assessed the cost of tariffs for two scenarios. The first one
sized up the total demand based on a 300-W load per household and battery
56

Table 5: An overview of the societies

Sample reflects a wide range of societies
Society No. of Connected Common “Stated” back-up DG Annual grid
flats load (kW) area load size electricity
(kW) (kW) consumption
(kWh)
Satisar, Dwarka 245 1,924 180 Partial (common area load + 112 1,510,550
(Delhi) 800 watt to each apartment
ICON, Gurugram 344 1,998 550 Full back-up for all loads 1,112 4,005,450
(Haryana)
Hanging Garden, 400 4,218 183 Back-up only to common 180 304,512
Jaipur (Rajasthan) loads
Rangoli Garden, 1,300 10,635 555 Partial (common area load + 1,712 2,390,625
Jaipur (Rajasthan) 750 watt to each appartment)
Amgel Mercury, 280 363 142 Common area load + 1 kW 256 1,146,627
Gjazianad (Uttar and 3 kW back-up provided
Pradesh) to apartment
Source: CSE survey
to cover average outage hours in the building. The second added common
area demand to the total demand and provided for battery for up to twice
the time of average outage. The rooftop system was limited by available
space in both the scenarios. Under the first scenario, the cost of SRT power
was one-fourth the cost of supply by DG (including capital cost of DG). In
the second case, the cost of SRT power was between one-third and half of
the cost of supply through DG sets (see Graph 9 – Scenarios 1 and 2: Tariff
Graph 9: Tariff comparisons

Solar tariff is half of the DG tariff in all societies
Scenario 1
33.2
33.1
35
27.7
30
23.4
25
Tariff (Rs/unit)
17.3
17.3
17.2
20
17
15
7.9
7.4
7.4
10
7.5
7.3
6.8
6.8
5.9
7.0
6.4
6.6
5.4
0
Satisar ICON Hanging Garden Rangoli Garden
LCOE (Capex) — Scenario 1 LCOE (RESCO) — Scenario 1 Grid tariff DG tariff DG tariff with capex
Scenario 2 on next page
57

Scenario 2
33.1
33.2
35
27.7
30 23.4
25
Tariff (Rs/unit)
17.2
17.3
17.3
20
15.1
17
14.5
14
10.8
13
15
10.3
8.2
7.5
7.7
7.3
6.4
10
6.8
5
0
Satisar ICON Hanging Garden Rangoli Garden
LCOE (Capex) — Scenario 2 LCOE (RESCO) — Scenario 2 Grid tariff DG tariff DG tariff with capex
Table 6: Demand met by SRT systems

Solar rooftop can meet significant amount of partial load in most societies
Society Percentage of partial load* Percentage of partial Percentage of DG
load* (0.3 KW/flat) capacity
Satisar 54 100 100
**ICON 24 69 6.5
Hanging Garden 100 100 100
Rangoli Garden 36 87 20
*Partial load — 0.3 kW/flat + common area load

**For ICON, 10 per cent of the connected load is considered as common area load
Source: CSE analysis
comparisons). Even if we ignore the capital cost of DG, power generated by

it cost much higher (over twice than that under the first scenario) because of
the high cost of diesel.
In addition to the cost benefit, the study confirmed that most societies
have sufficient rooftop space for installing SRT systems that could reliably
meet the basic load for individual flats (assumed to be around 300 W), plus
the common area loads, assuming power cuts of up to one hour per day (see
Table 6: Demand met by SRT systems). But an SRT system may not be able
to fully replace DG sets in upscale societies that provide “full back-up” —
which typically means the facility to operate air conditioners in addition to
the usual household needs.
58

CHAPTER 4
Solar manufacturing:
Moving out
of the doldrums
W
hile solar installations have grown in number and spread
in India, they have largely done so on the back of imports —
domestic manufacturers of solar modules and panels have fared
badly and have had little role to play in this growth. During the
period 2014-17, local manufacturers in India had ramped up their capacities,
as both targets and installation of solar PV saw a rise. According to the Union
Ministry of New and Renewable Energy (MNRE), manufacturing capacity of
cells and modules jumped by 160 per cent and 258 per cent to 3.1 GW and
8.4 GW respectively.
But production has failed to keep pace with this hike (see Graph 1:
Indigenous solar cell production) resulting in the under-utilisation of
the installed capacity (see Graph 2: Capacity utilisation). To add to that,
Graph 1: Indigenous solar cell production Graph 2: Capacity utilisation*

Does not match capacity Under-utilised
90
Capacity utilisation (%)
1,400 80
1,164 70
1,200
Production (GW)
1,000 60
798 50
800
40
600 30
400 305 20
246
200 10
0 0
2014-15 2015-16 2016-17 2017-18 2014-15 2015-16 2016-17 2017-18
(Annualised) (Annualised)
*Five major manufacturers who have 72% share in total installed capacity in 2017-18.
Source: 2018, Directorate General of Safeguards Duties, http://dgsafeguards.gov.in/DataFiles/Tender/NWM77Preliminary%20Findings%20Solar%20Cells%2005.01.18-
Final.pdf
59
04Solar Manufacturing(59-68).indd 59 16/01/19 4:19 PM

SOLAR MANUFACTURING: MOVING OUT OF THE DOLDRUMS
Graph 3: Landed import prices vs domestic sales prices

The price difference ranges between 10-25 per cent
0.45
0.4
Prices (US$/W)
0.35
0.3
0.25
0.2
Q1 2017 Q2 2017 Q3 2017 Q4 2017
Average selling price of Chinese modules Average selling price of Indian modules
in India in India
Source: Mercom India and CSE estimates
cheap imports, mainly from China, have put domestic manufacturers at

a severe disadvantage. Compared to Chinese manufacturers, Indian firms
suffer from smaller scale, operations that are not fully integrated, and high
costs of energy and finance. The price difference between domestic and
imported modules is, broadly, 10-25 per cent (see Graph 3: Landed import
prices vs domestic sales prices). Unable to compete on the price, domestic
manufacturers’ capacity utilisation has remained quite low.
An import-driven market has its own pitfalls. The question before India,
therefore, is whether to continue to rely on a cheap-imports and low-tariff
model, or to create conditions in which domestic manufacturers might grow
and prosper.
The import conundrum

India’s dependence on imported, especially Chinese, modules has existed
since the days of the National Solar Mission’s first phase. This dependence
has magnified over the years, and imports have grown faster than the rate
of solar installations. In 2017, the share of domestic manufacturers in the
Indian market stood just at 10 per cent (see Graph 4: Imports — solar cells
and PV modules).
The cheap imports have propelled a relentless fall in tariffs and triggered
a rise in solar capacity. The phenomenon of falling prices was disrupted
in 2017 — spot prices went up due to a spike in demand from USA in
60

Graph 4: Imports — solar cells and PV modules

India’s solar manufacturing business is almost wholly dependent on imports
4,500
4,000
Values in US $ million
3,500
3,000
2,500
2,000
1,500
1,000
500
0
FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18
China Malaysia Taiwan USA Germany Japan South Korea Others
Source: Union Ministry of Commerce and Industry, http://commerce-app.gov.in/eidb/Icomq.asp?hs=85414011
Graph 5: Average selling price of Chinese modules in India

Prices have largely been in a free fall
34
32
Average selling price (Rs/W)
30
28
26
24
22
20
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018
Sources: Bridge to India; Mercom; PV Magazine; CSE estimates
anticipation of safeguard tariffs by the US administration (see Box: The

changing Chinese dynamics). But the disruption was brief (see Graph 5:
Average selling price of Chinese modules in India).
There are legitimate concerns about India’s almost total dependence
on imported components — supplies can be affected by changes in the
exporting countries’ strategic priorities or due to international trade disputes.
Imports are also vulnerable to abrupt changes in domestic trade policies
and exchange rate risks. Recently, imports were disrupted on account of
‘new’ import duties. Solar PV components have been exempt from customs
61

The changing Chinese dynamics

India’s dependency on imported, especially Chinese modules, is not a new
phenomenon. More than 90 per cent of the total demand from the Indian solar industry
was taken care of by imports in the last three financial years. Of this, China accounted for
82 per cent of the total modules installed in 2016-17 and 88 per cent of the total import
mix in 2017. Solar cells and PV module imports from China have increased by over six
times — to US $3.84 billion in 2017-18 from US $596.73 million in 2013-14.1
But this dependence on imports brings with it inherent pricing risks. In 2017, Chinese
manufacturers saw a spike in demand from the US in anticipation of the safeguard tariffs
that were expected to be levied on China by the incumbent US administration. As a
result, spot prices went up and manufacturers were no longer keen on supplying at the
low prices drawn up on contracts with solar developers in India. Chinese manufacturers
began demanding a higher price — US $0.35-0.37/watt, up from US $0.30-0.32/watt.2
Developers who had bid under Rs 3/kWh in anticipation of further declines in module
prices were suddenly faced with potentially unviable projects. Given the short 12-15
month deadline to complete a project, there was no option of waiting it out till the
market stabilised.
This incident highlights the risks from over-reliance on imports, as well as the impact
(on supplies) of international trade disputes and changes in exporting countries’ strategic
priorities.
China is now entering a new phase of solar installation, by terminating any approvals
for new subsidised utility-scale PV power stations. It is capping the construction of
distributed project size at 10 GW — down from 19 GW — mandating auctions for utility-
scale projects and reducing feed-intariffs (FiTs). These internal developments will reduce
the demand within China leading to oversupply in global markets, and may trigger a
one-third reduction in prices of solar modules.3
At the same time, the Chinese government has started reforming its solar sector by
reducing the intensity of subsidies. If this move is extended to the manufacturing sector,
Chinese companies will not be in a position to supply PV modules at such low rates.
These changing dynamics within China keep the Indian solar market on tenterhooks.
The glaring lack of growth in India’s local/domestic manufacturing industry has left most
developers with very little alternatives. India needs to support its manufacturing for self-
reliance in the near future.
duty since 2010. However, in September 2016, the Central Board of Indirect
Taxes and Customs (CBIC) issued a notification saying solar PV components
are electricity generation components and should attract a custom duty of
7.5 to 10 per cent.1 The ruling, enforced in mid-2017, held up trade in PV
components worth millions of dollars. In April 2018, the CBIC finally issued
a clarification that solar panels can be classified as diodes and will not be
charged a duty.2
India needs to nurture its domestic manufacturing sector, growth in which
is desirable for many reasons — for employment generation, encouragement
to indigenous R&D, earning foreign exchange and ensuring long-term stable
62

supply. However, the country’s policies to support the domestic sector have
been ad hoc (for example, introduction of a safeguard duty that will provide
A strategic
only temporary relief) and muddled (such as the hike in import duty that vision is
was later withdrawn). A strategic vision is required that can carefully
balance the benefits of cheap electricity from imports against the costs of
required that
supporting local manufacturers. can balance
Policy moves the benefits
To be fair to it, the government has taken some tentative steps. In the of cheap
initial phase of the NSM, a substantial portion of the auction capacity was
reserved for domestic manufacturers under domestic content requirement electricity
(DCR). The DCR auctions were supported by a higher level of capital from imports
subsidisation by commanding higher viability gap funding (VGF). In 2013,
the US complained to the World Trade Organization (WTO) that the DCR against the
scheme was a violation of the WTO’s rules. In 2016, the WTO ruled against costs of
India and asked it to stop DCR allocations by September 2017 (see Statistics
section). However, the ruling permitted a loophole — entities that were supporting
generating power for their own consumption were not bound by it.3 This
has allowed the Indian government to continue with DCR auctions for PSUs
local
and government offices. manufacturers
There has been action on anti-dumping as well. Faced with the domestic
manufacturers’ precarious condition, the Indian Solar Manufacturers
Association (ISMA) had filed a petition with the Directorate General of Anti-
Dumping & Allied Duties (DGAD) in July 2017, alleging dumping of PV
cells and modules by China, Taiwan and Malaysia.4 China’s solar module
manufacturing capacity has increased sharply over the years (see Graph
6: Growth and market of Chinese modules), and prices have consistently
climbed down. India is particularly vulnerable, having replaced Europe as
Graph 6: Growth and market of Chinese modules

China’s domestic demand is about half of its manufacturing capacity
50
Idle capacity Exports Domestic consumption
Growth and market (GW)
40
30
20
10
0
2012 2013 2014 2015 2016
Source: United States International Trade Commission, November 2017, https://www.usitc.gov/publications/safeguards/

pub4739-vol_i.pdf
63

GST and its impact on the sector

Earlier, solar plant components were largely exempt from taxes in most states. The new
GST (Goods and Services Tax) regime has changed that. While all the components (PV
modules, inverters, etc) have been clubbed under ‘solar power generating system’,
which is taxed at 5 per cent, there is no clarity on the tax on Engineering Procurement
and Construction (EPC) services.
Different states have variously interpreted the taxes on solar power systems.
Maharashtra, for instance, has declared that EPC services for setting up a plant would be
levied an 18 per cent tax. On the other hand, Karnataka has ruled that a specific type of
EPC contract (including component sourcing and maintenance after installation) should
be taxed at 5 per cent. The industry contends that GST has resulted in raising the cost of
projects by 10-12 per cent.
Recently, the Central Electricity Regulatory Commission (CERC) has ruled that the
enactment of GST laws is covered under the Change in Law provision. Under this, any
increase in costs as a consequence of transitioning to the new GST mechanism would be
passed on to buyers. The ruling may result in disputes if developers demand higher tariffs,
because the argument for GST has been that it should not increase costs but merely
apportion them through the supply chain.
In December 2018, the GST Council clarified that renewable devices and EPC services
will attract tax at the rate of 5 per cent and 18 per cent, respectively. But more clarity
is required on the implementation of these rates. The industry, on the other hand, is
demanding a constant rate of 5 per cent.
the largest market for Chinese PV. In July 2018, therefore, the Union Ministry
of Finance imposed a safeguard duty of 25 per cent on solar panels from
China and Malaysia, followed by 20 per cent for the next six months and 15
per cent for another six. Developers, however, have claimed the duty would
increase tariffs and jeopardise the 100-GW solar target.
In December 2017, the MNRE rolled out a new scheme to support
fully backward integrated manufacturing capacity for solar PV modules,
cells, wafers/ingots and poly-silicon. The scheme proposes a financial
assistance of Rs 11,000 crore along with several incentives — a 12,000-MW
CPSU (Central Public Sector Unit) scheme with an assured DCR component,
capital subsidy for capacity addition, and interest subvention for upgradation
or expansion.5
Separately, the government has announced an expression of interest
(EOI) for a scheme that would auction 20,000 MW of solar capacity to
integrated manufacturers6 — however, no further public information is
available on its progress. In May 2018, the Solar Energy Corporation of India
(SECI) floated an RfS for the development of 5 GW of solar manufacturing
capacity and 10 GW of solar projects under the ISTS scheme.7 This has now
been reduced to 3 GW (per annum) of solar manufacturing capacity. The
tender has been floated four times till November 2018, with each iteration
64

VIKRAM SOLAR
containing changes to attract manufacturers — but it has failed to attract

even a single bid.
The solar market is still perceived as a high risk sector and needs huge
investments to execute such programmes. Therefore, not many manufacturers
are enthusiastic about building the facilities. The SECI must take note of this
and come up with clarifications to queries from manufacturers about the
challenges they face.
65

Innovation and functionalities — for instance system, and hopes to have a

technology signages, emergency warning prototype ready by 2025.
systems, and charging stations Look beyond silicon
India is emerging as a world to plug in electric cars, which India has been largely
leader in installing solar are poised to be the future of dependent on imported
power. But the growth has transportation. silicon-based solar PV
little to show in terms of Building Integrated components. Currently,
manufacturing expertise, Photovoltaics (BIPV) is an crystalline silicon technology
development of new innovation in solar cell is the backbone of the
technology or innovative development. Companies are solar industry. But it has a
ideas. If India is to benefit from experimenting with products fundamental limitation: it
the global demand for solar like solar-skin that enhances has an efficiency of only
installation, it needs to offer or personalises the look of 32 per cent. Therefore,
state-of-the-art solutions. buildings and roofs without researchers are working on
interfering in the efficiency next generation solar cells that
Look beyond land and roof of the solar panels. Another would be more efficient.
Utility-scale solar power is innovative product is the Examples include gallium
land-intensive, while rooftop frameless panel with strong arsenide-based solar PV
plants use up valuable space adhesives at back that can developed at London’s
in cities. It is time, therefore, to be installed on roofs in a few Imperial College, which
look beyond the conventional. hours with minimal effort. will be nearly three times
Floating solar power plants Space solar, another more efficient than existing
are already a reality in India. out-of-the-box idea, has the products. The US-based
Some countries like France, potential to replace all other Massachusetts Institute of
the Netherlands and China sources of power. Japan Technology (MIT) is developing
have experimented with solar is developing a system for an advanced thermo-
roads or highways. The US is capturing solar energy from photovoltaic energy device
testing a new solar technology space in the form of laser (which first converts sunlight
for pavements. All this may beams or microwaves. The into heat and then converts
revolutionise the way we US National Aeronautics and heat back into light with
build and design our roads, Space Administration (NASA) the focus on the spectrum),
which can now have lots of is also researching a similar which will be able to absorb
The way forward

So far, the government has employed short-term ideas — a combination of
incentives and protections (import duties) — to support the sector. But if
the cost gap in domestic manufacturing is not narrowed, India will have
no option but to continue relying on cheap imports that drive low tariffs.
The longer term solution lies in making Indian manufacturers globally
competitive. This would require a broad range of initiatives:
Policy support: Concerted efforts are required to address the apprehensions

of manufacturers and make the sector lucrative for them. There is a sizable
market in India and new entrepreneurs will be willing to be part of it — but
66

more solar energy than the at a lower cost compared to Unlike China, which has
traditional silicon. lithium-ion batteries. clear Solar Innovation Goals in
Perovskite (hybrid organic- its Five-Year Plans, India lacks
inorganichalide-based An R&D challenge for India strategic planning. The Clean
material) solar cells could be India seems to be almost Energy Research Initiative
the next generation disruptive absent in this innovation set up by the government
technology: they are cheap race. Even India’s ‘Mission is supporting solar-oriented
and simple to manufacture. Innovation’ in clean energy fundamental research on an
Light-sensitive nanoparticles does not capture solar PV ad hoc basis. Other research
called colloidal quantum dots adequately. The reasons institutions are not keeping
and polymer-based thin films behind this dearth in R&D up with global developments
are being developed as solar could be summarised under — in fact, very few of them
paints. These technologies three heads — budget (such as the Indian Space
have the potential to change crunch, lack of vision and lack Research Organisation and a
the market. of research partnerships. few IITs) are driving innovation
Apart from solar cells, The MNRE’s budget for in solar. India requires more
storage solutions are also R&D in solar averaged less collaborations with global
receiving a lot of attention. than Rs 70 crore (about US leaders of technologies: there
High capacity, long- $10 million) per annum for the is a huge scope for learning
lasting and cost-effective period 2012-16.1 A company from the best institutions
batteries will play a big role like First Solar invested more — worldwide.
in the future of renewable about US $130 million per year India needs an ecosystem
energy. In early 2018, the — in the same period.2 The in which academics can lead
MIT discovered a low-cost, US spent $1.5 billion on solar- innovation from the front,
effective way of reviving an dominated renewable energy while the government acts
old battery through a steel R&D projects in 2015-16. The as a facilitator. Participation
mesh technique to make it Office of Energy Efficiency by industry in R&D for business
more durable. The US-based and Renewable Energy in the innovation in private or public-
company NantEnergy has US budgeted $134 million for private partnership mode is a
developed a rechargeable FY18 — this covered research dire need at this hour.
battery operating on zinc on renewable generation and
and air that can store power manufacturing technologies.3
only if they get sufficient support from policies that are conducive to the
growth of market and that can enable them to sell.
Scaling up: Economies of scale will play a big role in making the solar
manufacturing industry competitive. Hence, large-scale manufacturing
should be supported by the government through stable policy. Cheap finance
is required to support and nurture a new industry till market forces take over.
Also, availability of raw material for ingots and power for wafer production
has to be guaranteed for long-term viability of solar manufacturing in India.
In parallel, increasing the number of testing facilities is required to ensure
the quality and reliability of the products.
67

Vertically integrated operations: Backward integration up till the

manufacturing of ingots should also be backed up with a parallel industry
that produces machines for photovoltaic manufacturing. It may require
further analysis on viability. The Indian manufacturing sector should
explore technological ties with countries like Germany, Italy, China and
USA to leverage from their experiences.
Research and development: The time has come to invest in R&D for storage
solutions. The solar manufacturing sector provides unique opportunities
to cut down on material costs and take a leap into the next phase of the
technology. Domestic R&D can be developed in association with research
institutes — this will help narrow the gaps in technology and scale.
Developing skilled human-power: Skill development in solar module

repairing can help create jobs; additionally, this kind of auxiliary service can
support an already existing market with millions of modules deployed each
year. It will save on the material costs for manufacturing, and reduce the
quantum of waste created by discarding old and malfunctioning modules.
68

CHAPTER 5
Wind energy:
Braving the headwinds
W
ind energy found its bearings in India in the 1980s, with the
country’s first wind energy demonstration project of 1.15 MW
established in 1986 in Tuticorin, Tamil Nadu. But the sector’s
growth trajectory did not pick up pace till the mid-2000s.
Over the last decade, wind has become the largest contributor to renewable
energy capacity additions in India. It has reached a sizable 35 GW and now
accounts for 50 per cent of all renewable energy capacity and 10 per cent of
the total installed power capacity in India.1 The sector’s growth has come on
the back of a favourable policy environment, including a host of subsidies
and incentives. At the end of 2017, India was in fourth spot globally for
cumulative installed capacity — behind USA, China and Germany — and
fifth for annual capacity installations.2
This growth, however, has been turbulent, with the government erratically
introducing and withdrawing incentives. In the past, the government has
announced incentives that were subsequently reduced and when faced
with a sudden drop in the market, it has reintroduced incentives. The latest
abrupt change in policy occurred in 20163 when the government introduced
competitive auctions to determine tariffs and award contracts; the change
stalled the market for around a year as the industry was unclear about
certain provisions and protections in the auction mechanism. However over
Wind accounts
the last year the new regime did result in a sharp fall in tariffs. for 10 per
The wind energy sector in India stands at a crossroads today. Although its
tariffs are similar to that of solar, there are questions about their sustainability. cent of the
Over the longer term, its competitive position vis-à-vis solar may worsen if country’s
costs of solar drop faster and as the best wind sites are taken up. Indeed,
the country’s plans call for a far smaller capacity of wind compared to solar. total installed
Nevertheless, the industry is a mature one, with a large installed capacity capacity and
and years of operating experience along with a large manufacturing base
and skilled human power. This makes it important for the country’s energy half of its
security and diversification. The sector needs to explore alternatives such
as repowering, hybrid and offshore to remain relevant and to expand its
renewable
scope, in addition to improving efficiencies and cutting costs to retain its capacity
competitive edge.
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05Wind energy Braving the headwinds(69-84).indd 69 16/01/19 4:20 PM

WIND ENERGY: BRAVING THE HEADWINDS
Evolution of the wind power industry
The potential
The latest wind energy potential study carried out by the Chennai-based
National Institute of Wind Energy (NIWE) estimated 302 GW at 100 metre
above ground level (agl).4 With 35 GW installed so far, the country has a
sizable untapped potential. However, almost 90 per cent of this potential is
concentrated in just five states (see Graph 1: Wind potential and installations).
Given the high variability of wind energy, this has important implications on
the evacuation infrastructure needed and grid integration measures adopted.
The growth
In 2015, the Ministry of New and Renewable Energy (MNRE) set a target for
60 GW of wind installations by 2022. While the capacity additions in FY
2016-17 were a sizable 5.4 GW, the pace slowed down considerably in FY
2017-18, with only 1.7 GW of projects commissioned, against a target of 4.1
GW. Most of these installations (~1.2 GW) came online only after December
2017.5 The industry blamed the abrupt introduction of reverse auctions and
bidding — moves that it felt were not fully thought through — in addition
to the untimely withdrawal of support mechanisms. In contrast, the MNRE
called the move a necessary “course correction” to develop a competitive
market (see Graph 2: Wind energy development in India).
Lately, the industry’s performance has been mixed. Running January
to September 2018, a sizable 5.2 GW of auctions were planned: these
included the three tranches of auctions led by the SECI Tranche-III of 2 GW,
Graph 1: Wind potential and installations

Against a potential of 302 GW, only 35 GW has been installed
90,000 84,431
Potential at 100 m agl Installation
80,000
Potential and installation (MW)
70,000
60,000 55,857
50,000 45,394 44,229
40,000 33,800
30,000
18,770
20,000
10,484
5,429 7,870
10,000 4,280
3,775 4,752 3,611 2,498
0
Gujarat Karnataka Maharashtra Andhra Tamil Nadu Rajasthan Madhya
Pradesh Pradesh
Sources: Compiled from National Institute of Wind Energy (NIWE) and Ministry of New and Renewable Energy (MNRE) reports
70

Graph 2: Wind energy development in India

The pace slowed down in 2017-18, due to the introduction of auctions
70 6,000
Installed capacity
60
Targeted capacity 5,000
Capacity additions (MW)

50 Capacity additions
4,000
Capacity (GW)
40
3,000
30
2,000
20
1,000
10
0 0
2011
2021
2004
2006
2007
2008
2009
2010
2014
2016
2017
2018
2019
2020
2002
2003
2005
2012
2013
2015
2022
Source: Compiled from various MNRE annual reports
Tranche-IV of 2 GW and Tranche-V of 1.2 GW and 1.2 GW of NTPC auctions.

However, some of the auctions were reduced or cancelled on account of
concerns about lack of evacuation capacity.6 If the wind energy industry
is planning to meet the target of 60 GW by 2022, it must auction 20 GW
of capacity within the next two years, considering the two to three years
needed to commission wind projects.
Historically, the growth in wind energy capacity has followed a pattern,
with individual states dominating for a few years before the focus shifts to
another state. In the first phase, before 2004-05, Tamil Nadu was responsible
for a majority of the capacity addition: in March 2005, its share of the
country’s total wind energy capacity was around 56 per cent. Subsequently,
Maharashtra, Gujarat and Karnataka began making sizable investments in
wind energy. Rajasthan was the next state to show rapid growth beginning in
2009-10, followed by Andhra Pradesh whose installations increased sharply
post 2012-2013. During 2014-16, Madhya Pradesh was the clear leader (see
Statistics section).7
The policy on wind energy

The sector has been marked by the introduction of large incentives and
sudden withdrawals that has, alternately, boosted installations and
disrupted the market. Growth began with the introduction of high feed-in
tariffs (FiTs), which ensured long-term guaranteed sale of power at attractive
tariffs. At the same time, accelerated depreciation (AD) and generation-based
incentives (GBI) were employed to draw in investors. But these policies
were periodically withdrawn or reduced and, subsequently, reintroduced
when installations slowed down.
71

Accelerated depreciation (AD)

The AD scheme, introduced in 1992, was particularly attractive for
investors who had large taxable incomes: they benefitted from the scheme’s
tax benefits.8 Wind projects no longer needed to rely on traditional funding
sources such as banks, but could access a large number of private investors.
The tremendous growth of wind energy in Tamil Nadu was driven by AD
benefits.9
In 2002, the AD applicable to wind projects was reduced from 100 per
cent to 80 per cent, and was finally withdrawn in 2012. Capacity additions
immediately dropped from 3.2 GW in 2011 to 1.7 GW in 2012. The scheme
was reinstated in 2014, which resulted in a rebound during 2015-16 and
2016-17; AD benefits were used by nearly 70 per cent of all wind installations
in 2016. In 2017, AD benefits were reduced again to 40 per cent (see Graph
3: Impact of incentives on capacity addition).10
Generation-based incentives (GBI)

The GBI scheme was introduced in 2009 to incentivise generation, rather
than just installations. It offered an incentive of Re 0.50 for every unit (kWh)
of electricity fed into the grid. The scheme was attractive for independent
power producers and foreign investors, who had little to benefit from AD.
The GBI scheme was discontinued in 2012, but lobbying by the industry led
to its reinstatement in 2013. It was again discontinued in March 2017.
Graph 3: Impact of incentives on capacity addition

Fluctuations in AD and GBI policies have impacted the sector
5
GBI I and II
4
Capacity (GW)
0
2010-11
2003-04
2005-06
2006-07
2007-08
2008-09
2009-10
2013-14
2015-16
2016-17
2017-18
2002-03
2004-05
2011-12
2012-13
2014-15
80% 0% 80% 40%
Level of accelerated depreciation
Source: Compiled from MNRE annual reports and PIB notifications
72

Graph 4: Winning bids from wind auctions in India

Almost 8.4 GW have been auctioned by SECI and NTPC combined
2,500 Capacity auctioned Winning tariff 4

3.46
3.5
2,000
Capacity auctioned (MW)
2.77 3
Winning tariff (Rs/kWh)

2.64 2.51
2.44
2.76 2.5
1,500
1,000
1.5
1
500
0.5
0 0
Feb/17 Apr/17 Jun/17 Aug/17 Oct/17 Dec/17 Feb/18 Apr/18 Jun/18 Aug/18
Source: Compiled from various MERCOM press releases
The shift to competitive bidding

The government felt that the FiT mechanism was leading to high tariffs
and an uncompetitive market. In the light of the success of the auctions in
the solar power market, the government decided in June 2016 to introduce
a competitive bidding process for the wind sector. The first 1,050-MW
auction held by SECI in February 2017 achieved a then-record low tariff
of Rs 3.46 per unit. The state discoms of Uttar Pradesh, Bihar, Jharkhand,
Delhi, Odisha and Assam signed a 25-year PPA under the auction. Although
the auction was considered a success, the sudden introduction of the new
policy, lack of clarity about certain critical issues and the sharp fall in tariffs
disrupted the sector. Some discoms and ERCs added to the confusion by
trying to renegotiate terms of already-signed old PPAs at higher FiTs, stalling
installation.
The government finally released the new guidelines for the competitive
bidding process in December 2017 to address the policy gaps.11 Since then,
close to 6.4 GW has been auctioned (see Graph 4: Winning bids from wind
auctions in India). The tariffs have fallen steadily, reaching Rs 2.44 per unit,
making wind cost-competitive with solar. In addition to the auctions held
by SECI and NTPC, the states of Tamil Nadu, Gujarat and Maharashtra have
conducted auctions totaling 2.9 GW between August 2017 and March 2018.
Introduction of new policies

The Indian government has released several new policies over the last
three years to expand the potential of wind energy deployment in India.
But almost all of them are poorly conceived, and lack innovative ideas and
adequate support. The result: the expected development has not happened.
73

National Offshore Wind Policy, 2015

India is Offshore wind energy has seen tremendous success across the world,
embarking on with close to 19 GW installed.12 The United Kingdom and Europe have
been the pioneers, followed closely by China. The economics of offshore
offshore wind projects is now compelling — in 2017, the Netherlands held the world’s
without any first subsidy-free tender for an offshore project. Auctions in Germany and
Denmark have yielded tariffs comparable to those attained for onshore wind
experience in India.13
from In the light of the growing global offshore sector, India released its
‘National Offshore Wind Policy’ in 2015 to realise its vast offshore potential.
demonstration The country set itself a target of 30 GW from the sector by 2030. But offshore
projects or wind comes with its own set of challenges — resource characterisation,
sub-sea cabling, turbine foundation, and installation including logistics
detailed data and development of the transmission infrastructure.14 India is ill-prepared
to meet these challenges. It lacks sufficient wind data, oceanographic
and EIA studies along with basic resource assessment, and preliminary
feasibility studies.
The NIWE, the agency in charge, has turned to the Global Wind Energy
Council (GWEC) to build on the European experience. But the challenges
will remain. In Demark, developers were made to conduct their own
metocean data and geological condition studies. Germany spent close to
eight-ten years collecting and correlating data from the proposed plant site
before the first offshore project was set up. India’s target for 5 GW by 2022
might be too short a timeline and in need of a drastic revision.
Demonstration projects provide invaluable inputs when working on a
new technology. Although the first offshore wind project in India was set up
purely for this purpose, the government has decided that India would start
out with a tender and skip the demonstration project part altogether.15
The National Offshore Wind Policy lays the onus of development
of infrastructure (till the sub-station on land) on the developer. Large
investments in offshore structures and transmission facilities (sea-bed
structures, foundations and submarine cables, array layout and grid
connection) can perhaps be best addressed by delinking the responsibilities
for transmission and generation — similar to the UK’s offshore transmission
owner model. Otherwise, offshore wind projects will be uncompetitive due
to high tariffs.
Ports close to the offshore farm are essential to reducing the costs of
installation. They could also help in O&M, repowering and decommissioning.
The policy does not discuss upgrading or redesigning existing facilities
of ports to meet the needs of offshore projects. If India is serious about
offshore wind, it must set up dedicated ports — Europe, for example, has
10 such ports.
Recently, the MNRE issued an expression of interest (EOI) for India’s
first commercial offshore wind farm auction: 34 global and domestic wind
energy companies responded. The official auctioning process is awaiting
results from the surveys and studies conducted by the NIWE.
74

Table 1: State-wise installed WTGs for repowering

Large capacities for repowering lie in the states of Tamil Nadu and Gujarat
Repowering capacity (kW)-COD prior to March 2000
State
< = 500 kW 500-1,000 kW Total capacity (kW)
Tamil Nadu 717,050 37,900 754,950
Gujarat 143,745 1,600 145,345
Andhra Pradesh 84,390 84,390

Karnataka 24,525 24,525
Maharashtra 63,715 2,250 65,965
Madhya Pradesh 21,100 21,100
Rajasthan 2,900 2,900
Source: Wind Power Directory 2014
Policy for Repowering Wind Power Projects, 2016

In 2016, the MNRE released the ‘Policy for Repowering of Wind Power
Projects’, which merely offers the bare outlines rather than a comprehensive
strategy to promote repowering.16 The policy has failed since it does not
address the fundamental issue — how to quantify the cost of repowering
wind projects and compensate the developer.
Repowering entails replacing ageing wind turbine generators (WTGs)
with modern infrastructure and technology. Another option is ‘partial’
repowering, which means reusing components such as the foundation,
towers and electrical infrastructure and replacing worn-out components
such as blades, grid connections etc. Under both these options, the result is
higher efficiency of WTGs and increased generation.
According to the MNRE, of the total wind power capacity in India, there
is a need to repower 3 GW of capacity; Wind Power Directory 2014 provides
visibility of around 1.1 GW of capacity installed till March 2000 (see Table 1:
State-wise installed WTGs for repowering).17 Furthermore, according to the
NIWE, two-thirds of the ‘repowerable’ WTGs in the country are located in
prime wind sites.18 Neither does the national policy address the commercial,
technical and regulatory challenges associated with repowering, nor does it Policy for
incentivise upgradation of the Indian fleet (also see section on repowering).
repowering of
National Wind-Solar Hybrid Policy, 2018 wind power
Locating solar and wind energy projects at the same site offers multiple
benefits. The generation patterns of wind and solar technologies are projects needs
complementary: wind generation is high in monsoon when solar generation more clarity
dips, and could be stronger at night, which helps reduce variability and
eases integration with the grid. India’s wind and solar potential maps show and detailing
significant overlaps: co-location can result in efficient utilisation of available before it can
land and evacuation infrastructure. ICRA, the Delhi-NCR-based credit rating
agency, reports19 that capital costs for a hybrid project are 5-7 per cent lower take off
in comparison to a single technology plant.
75

Further, the convergence of O&M activities and reduced storage

requirements could result in additional savings. There is also some
evidence that wind turbine activity close to solar panels helps in reducing
the temperature of the panels, thereby increasing efficiency and lowering
the rate of degradation.20
In May 2018, the MNRE announced the ‘National Wind-Solar Hybrid
Policy’, two years after the draft was released. Despite a two-year consultation
process, the document offers nothing new.21,22 It merely states the basic
rationale for hybrid projects, and provides some rudimentary definitions
and configurations. The policy says hybrid projects shall be encouraged by
allowing captive use and sale to open access consumers and discoms; the
sale to discoms can happen through an auction process or at average power
purchase cost to earn RECs. Power procured from these projects qualifies for
RPO compliance.
These provisions, however, are standard terms and can hardly be
considered incentives if the government’s aim is indeed to push hybrid
projects. The policy has met with little success. In January 2018, the SECI
invited bids to set up a 160-MW storage-backed wind-solar hybrid plant
in Andhra Pradesh.23 In May 2018, it issued a tender for ISTS-connected
2.5 GW hybrid plants to be set up anywhere in India. However, the latter
was reduced to 1.2 GW, and the tendering process has been subsequently
postponed five times. The tender was recently reintroduced with a higher
ceiling tariff and an increased bidding capacity, in the hopes of drawing
more participatio. However, it remained under-subscribed by 150 MW,
with the Rs 2.70/kWh ceiling tariff: Adani and SB Energy were awarded
capacities worth 600 MW and 450 MW, respectively.24
The key challenges

Wind energy
has been Environmental issues
Despite its many benefits as a renewable energy source, wind energy has
associated been associated with a string of ecological issues — impact on land and
with a string biodiversity, shadow flicker and noise pollution. The requirement of land
for wind energy is large, and is a point of contention in a densely populated
of ecological country like India. Wind-rich regions tend to overlap hilly forested areas,
abundant in biodiversity — Western and Eastern Ghats are key examples. In
issues — addition to the loss of habitat and animal life, infrastructure development
impact on for wind projects may lead to suppression of native vegetation, large-scale
erosion and landslides.
land and Birds have been a major casualty — collisions with windmills and
biodiversity, electrocution has had a particularly severe impact, with the critically
endangered Great India Bustard’s fate drawing the most attention. In March
shadow flicker 2018, the Union Ministry of Environment, Forests & Climate Change’s Forest
and noise Advisory Committee discussed guidelines to help prevent bird loss in this
sector.25
pollution Noise from wind turbines has been a concern in settlements surrounding
wind farms. Though technology has reduced the intensity of the sound, it
76

continues to be a problem. Another pressing issue is that of WTG disposal.

Reconditioning and reusing them for captive usage or exports has been
Wind
the practice in some countries. European countries have reused WTGs as technology
structures in children’s parks and as public infrastructure. Germany has
tied up with its cement industry to reuse the blades in cement production.
has witnessed
Though India has not taken any specific policy steps in this direction, it an increase
does have a considerable WTG reconditioning capacity.
in average
Technology CUFs because
A number of the old turbines set up in India were refurbished, second-hand
purchases from the developed markets. These turbines were considerably
of increasing
cheaper, but of relatively smaller capacity. Though these installations made hub heights,
sense in the initial years, today, an aging fleet of WTGs of capacities less
than 500 kW and low CUF is occupying some of the best wind sites in India. larger rotor
Close to 4,000 of the installed WTGs, primarily located in Tamil Nadu, are diameters
of 1,000 kW or lesser capacity (see Table 2: Number of WTG installations by
size and location). There are another 8,000 odd WTGs of capacities between and improved
500-1,000 kW dispersed primarily across Tamil Nadu, Gujarat, Karnataka, electronics
Rajasthan and Maharashtra. More than 30 per cent of the installed WTGs can
and should be discarded and replaced by newer, more efficient technology.26
Wind technology has witnessed an increase in average CUFs primarily
because of the increasing hub heights (to reach stronger wind at higher
heights), larger rotor diameters (to increase the swept area) and improved
electronics. For example, in the US, the average capacity factor of WTGs
installed before 2011 was 31 per cent; of those installed between 2014 and
2016 was 42 per cent.27 At the same time, the costs per MW have fallen. In
India, the improvements in technology have been slow. The average rated
capacity of WTGs manufactured before 2000 was below 500 kW. Today, the
largest WTG manufactured in India has a maximum rated capacity of 2.8
MW, with the first prototype installed in 2018.28
Another challenge is that India-specific turbines need to optimise potential
from the low to medium wind speeds of 5.5-7.5 meter per second (m/s)29,
Table 2: Number of WTG installations by size and location

More than 30 per cent of the installed base is obsolete
Gujarat Karnataka Maharashtra Andhra Tamil Rajasthan Madhya Telangana Kerala
Pradesh Nadu Pradesh
<500 202 63 302 94 1,744 53 27 0
501- 1,475 1,312 1,000 301 2,375 1,287 311 34
1,000
1,000- 1,255 795 1,877 194 2,445 1,023 604 0
1,500
1,501- 1,329 1425 931 1,479 925 948 1,320 16
2,000
>2,000 1,106 230 538 1,467 321 989 238 101 8
Note: As on March 2017

Source: 2018, Repowering of old wind turbines in India, IDAM, New Delhi
77

The old and the new

NEPC’s SRC31 and Suzlon’s S111
To understand the benefits of repowering, CSE has compared an old turbine with the
current technology leaders in the market. In 1986, NEPC India Ltd, one of the earliest
players in the Indian wind industry, set up Asia’s first wind farm of 1.1 MW capacity in
Gujarat. The most advanced of NEPC turbines, SRC31, has a rated power of 250 kW, a
maximum hub height of 45 m, and rotor diameter of 31 m.
In comparison, a recent turbine by Suzlon, S111, has a rated power of 2,100 kW. With
a hub height of 120 m and rotor diameter of 111.8 m, it is capable of extracting the
increased potential available at these heights. A demonstration prototype in Kutch,
Gujarat achieved a CUF of 42 per cent in its first 12 months of operation.
Sources: NEPC and Suzlon
as well as cope with turbulent, strong gusts of wind. Most manufacturers

in India have obtained proprietary technology (for India: Class II and Class
III optimal wind profile) through licensing, joint ventures or mergers and
acquisitions (M&A), but investing in R&D to develop proprietary technology
would be a big competitive advantage. Also, manufacturers will need to
streamline operations and cut costs to remain profitable since their buyers,
the wind project developers, are bidding at very aggressive rates.
Problems with discoms

Most discoms are financially weak, which has negatively affected the
wind sector. Renewable energy, including wind, enjoys a ‘must-run’ status
according to Indian regulations — energy generated by wind projects is
evacuated by the grid on a priority basis and must be purchased by discoms.
The only exception is if the grid is unavailable, or if evacuating the renewable
power is creating grid instability.
Wind project owners claim that the load dispatch centres, in connivance
with the discoms, curtail wind power under the excuse of grid congestion/
imbalance. However, the real reason is the discoms are not keen to buy
wind power, especially from older projects, because they were contracted at
relatively high FiT rates. Wind projects also face delays in receiving payments
from discoms. Wind developers claim that the banking commitments
(energy fed into the grid is permitted to be used at a later date) are often
not honoured by discoms (see Case Study: TASMA’s textile cooperative and
wind farms).
Moreover, since the introduction of auctions there have been media
reports of discoms seeking to renegotiate terms of older PPAs that were
signed at higher tariffs. In Karnataka, the Karnataka Electricity Regulatory
Commission (KERC) refused to accept signed PPAs, jeopardising 599 MW
of signed PPAs pending with it. Eventually, the Karnataka state government
had to step in and overrule the KERC to uphold the sanctity of the signed
PPAs. In Andhra Pradesh, the state discom requested the return of 41 PPAs
78

that were with the Andhra Pradesh Electricity Regulatory Commission

(APERC) for final approval, so that it could renegotiate them.30
Repowering
Repowering is defined as replacing old turbines with much larger ones. The
majority of MNRE-listed repowering capacity lies in Tamil Nadu and Gujarat
(see Table 1: State-wise installed WTGs for repowering), the early adopters of
wind energy. These turbines are small — most of them under 500 kW, with
some between 500 kW and 1 MW — and were typically established before
the year 2000. Their capacity utilisation factors (CUF) are as low as 10 per
cent, whereas the PLF of new, larger turbines can go up to 40 per cent.31 As
many of the old turbines are located in very good wind sites, repowering can
increase generation from wind projects exponentially.
Moreover, new turbines are more specific to India’s wind profile, meet grid
code requirements and consume less reactive power. The new technology is
adaptable to ancillary services and other electronic components required for
efficient integration with the grid. To add to this, capital costs have fallen,
making economic benefits of repowering even more compelling.
However, repowering also faces some challenges.
The economics of repowering

Repowering entails decommissioning an existing plant, which may have a
PPA with a number of years of remaining term and a salvage value at the end
of the PPA term. Since dismantling an existing project would result in a loss
to owners, they need to be compensated. A compounding problem is that
several of the older wind projects are owned by multiple investors in wind
farms with turbines of differing sizes, age, commercial terms (tariffs, project
lifetimes etc) and land ownership models (leased, owned etc). The owners
of these projects may have varying goals, with some not keen on making any
additional investments in repowering.
These projects with fragmented ownership will need to be consolidated
to enable repowering — the first step in the repowering process should be Repowering is
to consolidate ownership. Private developers may be able to consolidate
ownership only for large-sized projects with multiple owners but one or two
economically
buyers. It will not work in a wind farm that has many owners, varying turbine viable. What
types and several commercial contracts. One option could be to mandate
repowering where existing owners are required to sell to the ‘consolidator’
is required
at a pre-defined value if they do not wish to participate in repowering. is for the
A more efficient alternative would be for the government, perhaps through
SECI, to acquire wind assets. These sites/assets can then be auctioned off to government to
developers who will repower the projects. This could be managed through a compensate
reverse auction with a targeted capacity and a ceiling price.
Repowering will result in loss for original investors from lost revenues the old owner
over the remaining life of PPA and the salvage value of the project. They and auction
have to be compensated for the loss. The compensation may be in the form
of a lump sum (similar to the VGF) or a per unit amount in addition to the the site
tariff that could be spread over a new PPA term of 25 years.
79

An economic analysis of repowering

Assumptions
• Remaining life of the project/PPA: 10 years
• Tariff for old project: Rs 5.75/kWh
• Tariff for new project: Rs 2.7/kWh
• O&M costs: Rs 2.3 million/MW per annum, inflated at 5 per
cent every year
• Wheeling and transmission charges have been ignored to
simplify simulation. Also, they vary across the country with
many states partly waiving them.
Old project New project

Capacity 500 kW x 2 turbines 2 MW 4 MW
CUF (%) 10 40 45
NPV Rs 2.7 crore
Expected increase in tariff Rs 0.2/kWh Rs 0.08/kWh
The above analysis clearly shows that repowering is

economically lucrative. The compensation that needs to paid
to the old turbine owners will be just about 3-7 per cent of the
tariff of the new turbine, depending on the size of the new
turbines.
If it is assumed that two WTGs of 500-kW capacity each, commissioned in

2003, are replaced with new WTGs, the owners of the old project will need
to be compensated for the remaining 10 years of the plant life. A simplified
model shows a VGF of Rs 2.7 crore that needs to be paid to the old project.
Alternatively, the tariff of the new project will increase by 20 paisa/unit
and 8 paisa/unit as compared to an “unsubsidised” tariff, assuming the
replacement WTGs have capacities of 2 MW and 4 MW, respectively. This
will be 3-7 per cent of the tariff of the new turbine. (see Box: An economic
analysis of repowering).
Captive wind projects

Captive consumers enjoy several benefits such as concessional wheeling,
banking provisions etc. However, such consumers need to own a minimum
of 26 per cent equity in the project and must consume at least 51 per cent
of the generated electricity.32 If a project is repowered, the captive owner’s
share of consumption or equity may fall below the threshold in which case
it will lose the benefits. Therefore, these provisions need to be loosened to
enable repowering of captive projects.
80

Disposal of WTGs
Disposal of wind assets in the process of repowering is a major environmental
challenge. Countries which have taken up repowering at a large scale have
adopted some innovative concepts. For example, some have repurposed
the scrap to serve as utilitarian public infrastructure. Germany has
established a recycling unit that reduces scrap to fuel raw material to be
used in cement factories.33
Repowering also throws up opportunities. Old turbines can be refurbished
for exports. For this, the government needs to seed the refurbishment
industry and provide export incentives. The target could be those developing
nations that are keen to expand their renewable energy capacity, but have
low demand and, therefore, would prefer small turbines.
Eligibility
Any repowering policy must have a comprehensive target for repowering.
Age and size are the basic screening criteria. In addition, the policy should
look at turbines with poor performance and low efficiency. Good wind sites
should have a higher standard of performance. The policy should assess
repowering eligibility and needs based on the long term evolution of the
WTG fleet.
So where does the sector stand today?

Although a significant amount of capacity has been auctioned since January
2018, cracks are appearing in the wind sector. Auctions have witnessed
hiccups, with investors citing insufficient evacuation infrastructure. The
SECI Tranche-V auction, initially for 2 GW, was re-auctioned for a lower Wind
capacity of 1.2 GW. The subsequent SECI Tranche-IV auction, initially for 2.5 developers
GW, was cancelled temporarily. Wind developers assert that the widespread
problems of curtailment, delays in payments and the lack of recourse in case assert that the
of defaults under old PPAs need to be resolved for the sector to bounce back.
The sector’s slow but steady loss of momentum has other reasons as
widespread
well. First, the government’s policies have been haphazard, with several problems of
changes in incentives and subsidies and sudden introduction of auctions,
which have led to frequent disruptions in the market. Also, the sharp fall in
curtailment,
solar tariffs over the last few years has shifted the focus of the government, delays in
developers and buyers to large-scale solar projects. Although recent wind
auctions have achieved tariffs that are competitive with that of solar, there
payments
are increasing questions about their long-term sustainability. and the lack
Second, compared to solar, wind installations have a higher dependence
on peripheral costs — primarily transportation and civil construction — of recourse
that are less amenable to technology improvement and manufacturing cost- in case of
cuts. Economically, it makes more sense to develop local manufacturing
capabilities; however, policymakers have not offered a long term strategy to defaults under
promote it. Local manufacturers have relied on imports of components, as there old PPAs need
is inadequate investment in R&D. The FiT regime has created complacency,
which is why the sector is not cost-competitive. The manufacturing sector to be resolved
now faces the twin problem of excess capacity and uncompetitive products.
81

There should Third, the low tariffs in wind auctions are being attributed to
manufacturers offering WTG components at unsustainable prices to dispose
be an urgent of the piled-up inventory. With continued innovations in technology, solar
effort to costs are expected to drop consistently in the coming years. While wind
manufacturers predict that prices will fall and turbine efficiencies will
upgrade the improve, experts expect solar’s cost advantages to widen over the longer
evacuation term.
Fourth, solar energy presents a far larger potential across a wider area.
network, Wind is more variable and less predictable than solar — these characteristics
which has increase the cost of its integration with the grid. Moreover, the best sites
have been used up already or are a rapidly diminishing number. The sector
been cited as is also grappling with a host of environmental concerns.
the reason The way ahead
for the tepid Despite all this, the wind sector is likely to play a role — albeit a secondary one
response to to solar — in India’s energy future. The country’s wind industry is relatively
mature, with a large installed capacity that has been operational for several
new auctions years. Unlike solar, the wind sector is supplied by a large, technically adept
local manufacturing industry. The industry may become more competitive,
with the coming of larger turbines with increased efficiency. However, it
means manufacturers must invest in R&D.
At the level of the government, a consistent and predictable policy
environment is needed. There should be an urgent effort to upgrade the
evacuation network, which has been cited as the reason for the tepid response
to new auctions. Repowering the aging, small turbines is an efficient way
to expand wind generation, especially since some of the best wind power
sites house many low-efficiency turbines. For this, the government needs to
come up with a comprehensive policy that addresses the key concerns —
consolidation of fragmented ownership of wind projects, compensation to
old projects for the loss of value, loosening ownership, and consumption
provisions for captive projects.
The government should also encourage growth of hybrid and offshore
projects to fully exploit the wind sector’s potential. Hybrid projects have
been stymied by arbitrary ceiling rates: the best course would be for auctions
to discover the lowest tariff. A slightly higher tariff will be offset by the
balancing benefits as well as lower evacuation costs. Approvals for offshore
projects need to be streamlined — currently, clearances need to be obtained
from, among others, departments of defense, space and telecommun
ications. Offshore wind farms may further benefit from separating evacuation
and generation projects.
82

CASE STUDY: POWER SPINNING

TASMA — textile cooperative and wind farms
A
2018 report lists Tamil Nadu as one of the top nine renewable energy
markets in the world.34 Today, 14.3 per cent of all energy demand in
the state is met by renewable energy, primarily solar and wind. Wind
power capacity in Tamil Nadu increased from a meager 877 MW in 2002 to
7,652 MW in 2017 (see Graph 5: Capacity addition in Tamil Nadu).35
Persistent load shedding by the Tamil Nadu Generation and Distribution
Corporation Limited (TANGEDCO) has been a huge problem for the local
industry. The policies and incentives offered by the government — bundling
of wind power projects, accelerated depreciation, a Technology Upgradation
Fund etc — has driven the state’s power-intensive industries to invest in
captive wind power plants. Of the total capacity today, nearly 5,500 MW36
of captive plants have been set up by textile mills and cement industries.
The Tamil Nadu Spinning Mills Association (TASMA) was an early
adopter of the ‘bundled wind project’ model — several small power
consumers formed cooperatives to invest in wind turbines. Today, TASMA
cooperatives own a total of 3,500 MW of wind energy capacity, 45 per cent
of the state’s wind-generation capacity.37
But the wind generating capacity in the state has stagnated since 2012.
83

Graph 5: Capacity addition in Tamil Nadu

Annual capacity addition has taken a hit post-2012
1.20 1.08
1.00
Capacity addition (MW)
1.00 0.88 0.86

0.80 0.68
0.58 0.60
0.60
0.43
0.37 0.38
0.40
0.17 0.18 0.20
0.20 0.13 0.11
0.00
Up to March 2002
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
Source: Compiled from various MNRE annual reports
Even the reintroduction of accelerated depreciation could not revive the

regional wind market. This can be attributed to evacuation problems,
history of curtailment and payment delays, all of which are acute in Tamil
Nadu because of the large shares of RE in its power mix. A TASMA official
said, “The curtailment averaged around 30-35 per cent of the generation
in the peak season during 2012-15 and averages at 20-25 per cent today. A
conservative figure of 15 per cent back down translates to an annual loss of
2,000 to 2,500 million units.” TASMA has filed a case to ensure compliance
of a must-run provision for windmills. The Association claims that the older
wind turbine generators with higher tariffs were curtailed more compared
to the newer, more efficient ones and payments continue to be delayed by
12-18 months.
Wind generation peaks during the southwest and northeast monsoon
months, followed by below average generation for the remaining months.
The state introduced banking of energy, which allows the cooperatives to
supply to the grid when there is excess generation, in exchange for free
supply during low generation periods. According to TASMA, TANGEDCO
seldom honours these banking obligations since power purchase costs are
high during the low generation period.38
Addressing these challenges should be the priority; if that is not done,
they can wreak havoc in the renewable energy industry. While these issues
are more serious in Tamil Nadu, they are slowly creeping into the other
high potential states of India as well, since discoms across the country are
struggling with poor financial health.
84

CHAPTER 6
Energy access:
Bridging the gaps
D
espite the implementation of several dedicated electrification
schemes, India’s struggle with ensuring universal electricity
access persists. The country declared 100 per cent of its villages
as electrified in April 2018 — as per a Government of India (GoI)
definition, this required 10 per cent of households and all public facilities
in the 5.9 lakh inhabited villages to be connected to the grid.
This was followed (rightly so) by a scheme to provide connections to
all individual households (SAUBHAGYA — see section in this chapter for
details). As of October 2018, 95 per cent of all households in India were
reportedly electrified — this included 100 per cent of urban and 94 per cent
of rural households.
Even if this claim were true, quality power supply to every urban and
rural household in India remains out of reach. Many rural households still
get only a few hours of power supply which is typically absent during peak
hours. Ensuring universal energy access — uninterrupted, affordable power
— would require comprehensive reforms, including distribution sector
reforms — a challenge that the government has been struggling with for
decades. Ensuring
Given this scenario, mini-grid systems based on renewable energy
sources can play a significant role in shouldering the government’s rural
universal energy
electrification responsibility. There are thousands of mini- and micro-grid access —
systems operating in the country to supply electricity to remote and rural
settlements, but the government considers them merely as a stop-gap solution
uninterrupted,
till the grid arrives. Only a more comprehensive policy can help realise the affordable
true potential of these systems in ensuring universal electrification.
power —
Policy inadequacies: Central schemes struggle to deliver would require
Over the last decade, the Indian government has launched a string of
policies and schemes to enhance energy access. To understand the scale of
comprehensive
the problem, it might be worthwhile to approach it through the prism of the distribution
GoI’s efforts at providing a solution.
In 2005, the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) was sector reforms
conceived to electrify all villages/habitations, and provide access to all
85
06Energy access Bridging the gaps(85-112).indd 85 17/01/19 6:08 PM

ENERGY ACCESS: BRIDGING THE GAPS
households, especially those below the poverty line (BPL). It laid emphasis
on infrastructure for distribution of rural electricity and use of decentralised
distributed generation (DDG) for settlements where supply was not feasible or
cost-effective. Implemented through the Rural Electrification Corporation, the
scheme received 90 per cent of its funds to meet the overall project cost from
the Centre and 10 per cent from the state. At its close in 2014, RGGVY had
reportedly reached 97 per cent of the un-electrified villages under its purview.1
The Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), launched in
2014, aimed to take the work forward under a different title. Its Rs 75,893-crore
outlay was directed at improving rural power infrastructure through feeder
separation; and strengthening sub-transmission and distribution systems
and metering at various stages — transformers, feeders and consumers. It
subsumed the RGGVY scheme and took on the responsibility of electrifying
the remaining 18,452 villages. In April 2018, the government declared that
100 per cent of the villages had been electrified under DDUGJY.2 (see Graph
1: Rate of village electrification).
But this was a misleading claim. Both these schemes considered a village
as ‘electrified’ if a mere 10 per cent of its households and all its public
facilities (such as schools, health centres etc) were connected to the grid.
Therefore, though the power infrastructure extended to reach all villages,
most households remained unelectrified. In any event, most of the electrified
villages did not receive a regular supply.
In October 2017 came another scheme — the Pradhan Mantri Sahaj Bijli
Har Ghar Yojana (SAUBHAGYA) — to provide electricity connections to
Graph 1: Rate of village electrification

As per government records, 100 per cent of the villages have been electrified
35,000
30,000
25,000
Number of villages
20,000
15,000
10,000
5,000
0
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
Source: Compiled from various Rural Electrification Corporation (REC) annual reports, https://www.recindia.nic.in/annual-reports
86

Decentralised systems for access

In the late ‘90s, the Union Ministry of New and Renewable Energy (MNRE) initiated the
Remote Village Electrification Programme, an off-grid scheme, to cover villages located
in remote areas. The scheme offered distributed renewable energy solutions to meet
basic lighting needs. Abysmal after-sales services and widespread corruption led to the
termination of this scheme in 2012.
In 2009, the government made another similar effort — the Decentralised Distributed
Generation scheme was launched under RGGVY. Plagued by lack of accountability and
monitoring, this scheme was reduced to just another target to be met by the Rural Energy
Corporation (REC). The Off-grid and Decentralised Application Programme, launched
under Jawaharlal Nehru National Solar Mission (JNNSM), is yet another attempt at
deploying decentralised (solar) renewable energy (DRE) in the country. The programme
included providing solar-powered lights, study lamps, pumps, SPV power plants and
even mini-grids to increase energy access (see Cumulative installation of SPV systems —
December 2017).1
Cumulative installation of SPV systems — December 2017

Total installed capacity of solar PV off-grid systems/power plants is 182 megawatt peak (MWp)
Lanterns and lamps Home lights Street lights Pumps Stand-alone power plants
(No) (No) (No) (No) (MWp)
2,328,865 1,477,189 471,220 147,527 181,901.36
Source: Ministry of New and Renewable Energy (MNRE) Annual Report 2017-2018, https://mnre.gov.in/file-manager/annual-report/2017-2018/EN/pdf/
chapter-4.pdf
all households, rural and urban. The scheme, when it began, identified
4 crore un-electrified households. However, this number has kept changing.
As per the latest data put out by the government only 2.48 crore households
were willing to take up connections; the remaining refused to get connected.3
India’s electrification gap

India’s rural areas bear the brunt of its energy access problem. Though the
divide between electrification of rural and urban areas has reduced over
time, it still remains considerable. As per SAUBHAGYA, 96 per cent of
the un-electrified households were in rural areas, only 4 per cent were in
the urban areas4 (see Graph 2: Households targeted to be electrified under
SAUBHAGYA ).
Further, a vast majority of the un-electrified households is concentrated in
just a few states — Uttar Pradesh, Bihar, Odisha, Assam, Madhya Pradesh and
Jharkhand (see Graph 3: State-wise distribution of un-electrified households).
In theory, India has sufficient installed capacity to meet its discom
demand. According to the Central Electricity Authority of India (CEA),
power supply is in surplus in the country (see Graph 4: Trends in energy
deficit). For example, the peak demand in October 2018 was 172.9 GW
against a national power supply position of 346 GW, at a time when thermal
power plants operated at less than 60 per cent capacity.6
87

Graph 2: Households targeted to be electrified

under SAUBHAGYA
96 per cent of the targeted households are in rural areas
100 96
Percentage of targeted households (%)
80
60
40
20
0
Rural Urban
Source: SAUBHAGYA dashboard, accessed in January 2019, http://saubhagya.gov.in/
Graph 3: State-wise distribution of un-electrified households as of October 2018

A vast majority of these households is concentrated in just six states
1.60
1.40
1.20
Households (in crore)
1.00
0.80
0.60
0.40
0.20
0.00
Uttar Pradesh
Bihar
Odisha
Assam
Rajasthan
Madhya Pradesh
Jharkhand
West Bengal
Chhattisgarh
Maharashtra
Karnataka
Telangana
Uttarakhand
Others
Source: SAUBHAGYA dashboard, accessed in October 2018, http://saubhagya.gov.in/
88

Graph 4: Trends in energy deficit

National energy deficits are decreasing, but quality supply remains a mirage
45,000 4.0%
38,138
40,000 Deficit (MU)
3.5%
35,000 Deficit (%)

3.0%
30,000
3.7%
Percentage
Million units
2.5%
23,558
25,000
2.0%
20,000
1.5%
15,000
0.6%
2.2% 8,567 1.0%
10,000 7,595
5,000 2,010 0.5%

0.7% 0.7%
0 0.0%
2014-15 2015-16 2016-17 2017-18 2018-19*
Notes: *as of July 2018; MU = million units

Sources: Compiled from various Central Electricity Authority (CEA) annual reports, http://www.cea.nic.in/annualreports.html
However, the deficits presented by the CEA do not reflect the true picture:
they are merely the mathematical difference between energy demanded
by the distribution companies and supplied by the generating companies,
which understates the real deficit. Since many distribution companies are
financially stressed, their electricity off-take is driven by their ability to pay
— the discom demand does not reflect the expected end-consumer demand.
Besides this, the potential demand of households that are not connected to
the grid is not accounted for. Essentially, the relatively small energy deficits
reported by the CEA are largely on account of grid congestion.
SAUBHAGYA: Sufficient for universal access?

SAUBHAGYA is the government’s latest attempt to connect households to
the grid. To electrify the four crore households (as identified under Census
2011), an outlay of Rs 16,320 crore has been sanctioned, which includes
a budgetary support of Rs 12,320 crore from the Government of India.
SAUBHAGYA incentivises discoms to set up the infrastructure — service
line cables, poles, single point wiring, meters (including prepaid meters)etc
— for last mile connectivity of all unconnected households.
The funding (at Rs 4,500 per household), however, appears to be
inadequate. Installing meters could cost anywhere between Rs 1,000 to
Rs 2,000 per household (Rs 7,000-Rs 9,000 for prepaid meters). The low
tension service line connecting a house to a pole itself could cost between
Rs 1,800 to Rs 3,000 per household for a single phase and Rs 5,000 to
Rs 9,000 per household for a three-phase connection. Further, as per the
89

Table 1: SAUBHAGYA’s funding fault lines

Allocation falls short of cost estimations made by UPPPCL
For rural households No of households Cost (Rs Budgetary
(in millions) crore) support (Rs
crore)
Cost of service connection @ Rs 25 7,500 5,625
3,000 per household
Cost to provide last mile 25 3,750 2,812
connectivity @ Rs 1,500 per
household
SPV-based stand-alone systems for 0.5 2,500 1,875
remote households @ Rs 50,000 per
household
For urban households 2,295 1,732
Grand total 16,320 12,320
Source: Guidelines for Saubhagya scheme, https://powermin.nic.in/sites/default/files/webform/notices/Guidelines_of_

SAUBHAGYA.pdf
UPPPCL’s schedule for 2017-18, the cost of installing a low tension (LT)
overhead line could vary from Rs 1.5 lakh to Rs 3.1 lakh per km depending
on conductor type, conductor size, and span length. This excludes the cost
of setting up a new substation or distribution transformer which could cost
several lakhs of rupees. As per the cost estimates done by the UPPCL, there
is a significant gap between the actual cost and the budgetary support (see
Table 1: SAUBHAGYA’s funding fault lines).6
Assuming India does achieve full electrification, ensuring regular and
affordable supply will be the next big challenge. Many BPL households may
need to be provided subsidised power. Supplying relatively small 30 to 50
units per household per month to the additional 2.4 crore rural households
to be electrified under SAUBHAGYA would increase the annual subsidy
burden of state discoms by approximately Rs 3,400-5,600 crore (see Table 2:
Assuming Potential subsidies due to SAUBHAGYA).
India does Moreover, the bulk of the subsidy burden will be borne by a few of
the poorest states that are home to the largest number of un-electrified
achieve full households — Uttar Pradesh, Bihar, Odisha and Assam. Also, the provision
electrification, of subsidised electricity by state-owned discoms may result in households
increasing their consumption, thereby inflating the subsidy. This raises the
ensuring question if grid extension is the most effective approach to improve access.
regular and Discoms: bottlenecks for access

affordable Universal energy access — defined as provision of a minimum level of
electricity (around 30-50 units per household per month) for a minimum
supply will be number of hours a day at an affordable cost — would certainly need subsidy
the next big support for a sizable number of people. However, India’s policies are not
geared to address this.
challenge Indian states have relied on discoms to provide subsidised electricity,
which is very politically popular, to people. This policy has had a ruinous
90

Table 2: Potential subsidies due to SAUBHAGYA

Subsidy burden of discoms may go up by Rs 3,400-5,600 crore
Details Estimates
Total number of households to be electrified (crore households) 2.48
Number of rural households to be electrified (crore households) 2.4
Assumed electricity consumption per household per month (units) 30 50
Rural consumption (crore units per month) 72 120
Assumed AT&C losses (%) 25 25
Discom procurement demand (crore units per month) 90 150
Discom procurement cost at average cost of supply of Rs 5.51/unit
(Rs crore)
495.9 826.5
Tariff for metered rural consumers for the first 100 units 3 3
Revenue from new consumers (Rs crore) 216 360
Revenue shortfall (Rs crore) 279.9 466.5
Increase in annual subsidy burden (Rs crore) 3,358.8 5,598
Notes: AT&C losses and average cost of supply for 2015-16, as per PFC report on utility performance
Sources: 1. Unelectrified households: http://saubhagya.gov.in/, accessed in October 2018
2. AT&C losses -*https://www.financialexpress.com/economy/power-pack-discoms-atc-losses-come-down-at-19-1/1197993/
impact on discoms’ financial health, resulting in most of them needing

repeated bailouts by the government. In this scenario, discoms will not
be able or willing to provide additional subsidised electricity to newly
connected customers.
Can mini-grids bridge the electrification gap?

Given the challenges that the SAUBHAGYA scheme faces, mini-grids
powered by renewable energy offer an alternative. They are ideal for remote
villages where electrification through grid extension is financially unviable,
typically due to long distances and a heterogeneous terrain. Interestingly,
CSE surveys show that mini-grids are popular even in electrified villages
since discom supply is for limited number of hours and frequently not
available during peak hours.
Mini-grid systems, typically, are under 1 MW. They generate as well as Currently,
distribute electricity and are installed close to the point of consumption.
The mini-grid market grew after the passage of the Electricity Act, 2003,
India has
which allowed private operators to supply electricity in remote/rural areas over 17,000
without licensing requirements or tariff regulations. Currently, India has
over 17,000 (primarily hydro and diesel) mini-grid installations with sizes
(primarily
varying from 5 to 1,000 kW.7 On the official front, however, nothing much hydro and
has happened — a National Mini-Grid Policy has been in a state of limbo
since 2016 (see Box: The National Mini-Grid Policy). diesel)
mini-grid
So what is the future of mini-grids in India?
What is clear is that mini-grids do have a potential over the short to medium installations
term: both consumers and regulators appear to agree on the benefits of the
91

The National Mini-Grid Policy

Most independent energy policy experts believe mini-grids will fill the energy access gap
for a sizable number of consumers. State regulators, too, acknowledge that grid extension
may not fully solve energy access issues and mini-grids will continue to be relevant. Given
this widely shared view, in 2016, the MNRE released a draft National Mini-Grid Policy for
comments.
The document was presented as a broad set of guidelines that states could
choose from to frame their own state-specific policies. The draft listed the acceptable
configurations of mini-grids and suggested various tariff models as well as the standards
and norms for the technologies that were employed. It envisioned 10,000 new, renewable
energy-based micro- and mini-grid projects ( 500 MW) by 2022 with an average size of 50
kW. Though it categorised mini-grids based on their sizes, the draft policy favoured larger,
clustered systems.
Till date, the final national policy has not seen the light of the day.
system. It remains to be seen whether an environment can be created in

which these systems can play their expected role in enhancing energy access.
The SAUBHAGYA scheme does not look poised to attain 24x7 electricity for
all, and therefore mini-grids might continue to operate in even connected
villages which are plagued by irregular supply. The immediate risk is of
redundancy when the grid reaches the mini-grid served areas; therefore,
states must develop regulatory frameworks for compulsory purchase of
power into the grid from these small projects.
The primary aim of both the draft national policy and state policies has
been to develop mini-grid systems that can service rural/remote consumers
at affordable rates. But mini-grid generators (MGOs) claim that the projects
would be unviable at tariffs comparable to discom rates even with the
additional state subsidy (30 per cent, in the case of UP). There is also an
uncertainty about the terms of exit when the grid starts supplying — the
future price at which MGOs can sell either the generated power to discoms
or the project assets. MGOs believe they are better off with the flimsy
distribution network which helps keep the tariffs low. Investment in a Grid
code-compliant distribution network makes sense only if it is integrated
with the grid (and not abandoned).
The extension of the national grid into the mini-grid serviced markets is
inevitable. In such a scenario, integrating mini-grids into the grid can make
them viable over the longer term under varied business models (see Box:
Grid integration — some possible scenarios). However, a comprehensive
national policy needs to be developed that addresses the existing gaps. The
comprehensive mini-grid policy should include the following provisions:
• If a mini-grid avails a subsidy, it should mandatorily comply with certain
service parameters including minimum number of hours of supply,
92

supply during peak hours, and a minimum percentage of total supply to

the residential segment.
• Tariffs for residential consumers should be in line with discom rates.
The subsidy to support this may be best discovered through an auction
on viability gap funding. Given the small size of individual projects, an
auction may be conducted for a portfolio of projects.
• The network should comply with the grid code to allow integration
at a later date. Funding support should be provided for incremental
investment in distribution assets.
• Exit options should be clearly laid out. Sale of generation assets to a
discom may equal the outstanding debt plus 150 per cent of equity. The
cost of supply to the discom or to consumers may be the same as the
project’s tariff.
The way ahead

The goal of universal energy access — 24-hour, affordable electricity to
all — has bedeviled Indian policymakers over the past several decades.
Grid integration of mini-grids — some possible scenarios

• Tail-end generation for grid or open access consumers: Mini-grid developers will
operate as independent power producers (IPP) after integration with the national grid.
The generated power will be sold to the grid under a power purchase agreement
(PPA) or to an open access consumer at a mutually agreed upon price. In both cases,
the mini-grid distribution network will be abandoned or sold off to the local discom,
depending on its condition.
• Distribution franchisee with a generation asset: The mini-grid developer will operate
as a distribution franchisee, buying power from the local discom and selling it to
rural consumers at the prevalent tariff rate. The mini-grid’s distribution network will
be purchased (and upgraded, if needed) by the discom, and the franchisee will be
allowed to access it. The generation asset will continue operations as an IPP feeding
power into the grid.
• Grid integration with net metering: The mini-grid developer will continue to own
and operate generation and distribution assets, while the entire system could be
interconnected to the grid with bi-directional metering. The mini-grid system will export
power to the grid in case of surplus and import power in case of deficits, with the
balance settled on a net metering basis. Thus, the mini-grid continues to generate and
supply power while interacting with the grid to balance demand and supply.
• Back-up power supplier: Mini-grids will act as a source of back-up when the grid fails
to supply (basically, act as a flexible generation source). These generators will be
adequately compensated with high per unit generation tariffs for providing these
services. The mini-grid operator will retain the generation asset, while the distribution
network will be taken over by the discom.
Source: Mini Grids in Uttar Pradesh, CSE 2018, https://www.cseindia.org/mini-grids-in-uttar-pradesh-8826
93

Mini-grids Grid-based supply has been and will remain the core strategy to expand
access to electricity. The SAUBHAGYA scheme, which aims to connect all
have a households to the grid, is a worthy initiative. It will significantly improve
potential energy access; however, it may not be sufficient to ensure regular electricity
supply. Discoms remain financially stressed due to their poor operating
— both performance and political interference regarding tariff-setting and subsidies
consumers to various interest groups. The government’s latest attempt to reform the
discom sector, the UDAY scheme, also looks likely to fail. Weak discoms
and regulators will not supply adequate power to many recently-connected poor consumers
appear to who are not profitable for disoms. In fact, SAUBHAGYA will further weaken
discoms if it is not accompanied by reforms such as an increase in tariffs for
agree on its certain consumers and caps on subsidised supply.
benefits A one-size-fit-all strategy will fall short. Mini-grids do have a potential
over the short to medium term — both consumers and regulators appear to
agree on the benefits of the system. Indeed, mini-grids continue to operate
in even connected villages which are plagued by irregular supply. A well-
designed set of policies, some of which have been detailed above, can
ensure that mini-grids fill the gap by supplying affordable power to energy-
deprived households; at the same time, they also have a viable business
model when the grid becomes the reliable and predominant source of power
in their markets.
94

CASE STUDY
Providing universal 24x7 electricity access in Uttar Pradesh
JONAS HAMBERG
U
ttar Pradesh (UP), with over 14.2 million un-electrified households,
presents the biggest challenge in India. District-level data presents a
grim picture, with rural electrification ratio of less than 30 per cent
in places like Lalitpur, Jalaun, Sonbhadra and Jhansi; and 35 to 40 per
cent in Chandauli, Fatehpur, Kanshiram Nagar, Bahraich, Kanpur Dehat,
Saharanpur, Kanpur Nagar and Kaushambi.8
Households which do get power are plagued by its poor quality — limited
hours of supply, frequent outages and fluctuating voltages. The Electricity
Supply Monitoring Initiative (ESMI) shows that in May 2018, 68 per cent
of the monitored locations in UP experienced outages lasting more than 15
minutes a day, with the urban areas faring better than the rural ones. In fact,
UP and Jharkhand were the two states with the highest number of supply
interruptions in the country. In UP, urban and rural areas did not get any
power supply for an average of 131 hours per month and 328 hours per month,
respectively; for Jharkhand the figures were 163 and 257 hours, respectively.
Another report by ESMI for the period between January and March 2018,
showcases the true disparities between urban and rural settlements in UP.
The number of interruptions in a month are significantly more among the
95

Table 3: Quality of power supply in Uttar Pradesh

(January-March 2018)
Rural areas bear the brunt of poor quality
Jhansi Barabanki Sitapur Bahraich
Daily supply hours Urban 22 18 19 20
Rural 18 17 14 15
Evening supply hours (5-11 Urban 5 4 4 4
pm) Rural 4 4 3 3
Interruptions in a month Urban 32 75 76 59
Rural 101 75 116 121
Outage hours in a month Urban 34 151 137 99
Rural 147 196 283 246
Source: Prayas Summary Analysis on Electricity Supply Monitoring Initiative, May 2018, http://www.watchyourpower.org/
uploaded_reports.php
rural as compared to their urban counterparts. In Sitapur, interruptions in a

month were 115 in the rural and 76 in the urban areas. Similarly, the outage
hours in Sitapur amounted to 283 and 137 in rural and urban settlements,
respectively (see Table 3: Quality of power supply in Uttar Pradesh).
This ESMI study by Prayas — although limited — is the only attempt at
monitoring supply in the country, and confirms the widely held view that
power supply quality is abysmal in rural areas.9
As per Prayas, in Sitapur district, domestic consumers living in the town
in the Vijay Laxmi Nagar area received power for 54.8 per cent of the 720 hours
in May 2018, while consumers in Paharpur village and Bhadupur Sidhauli
block received it for only 2.1 and 6.3 per cent of the time, respectively.
Significantly, the low voltage-supply duration in Vijay Laxmi Nagar was
only 40.4 per cent, while it was 45.4 and 50.2 per cent in both Paharpur
and Bhadupur Sidhauli respectively. In contrast, the Jankipuram area in
the state capital of Lucknow received power for 97 per cent of the time in
May, all at normal voltage level (see Graph 5: Power supply to domestic
consumers in UP).10
A CSE survey conducted in six villages of the state confirmed the sorry
state of rural power supply in UP (see Table 4: Electricity supply in villages
surveyed by CSE). It found that most villages received less than 16 hours
of supply a day. Dhankal Khera village in Unnao received on average 10-
12 hours of supply; Tamakuhi Raj village in Kushinagar received 10-14
hours. To add to this, some villages were found to have very low rates of
electrification — for instance, only 24 per cent of the households were
connected in the largest village in the CSE study sample.
Besides this, the limited hours of supply seldom coincided with ‘peak’
morning and evening hours. The power supply schedule of the Uttar Pradesh
State Load Dispatch Centre (UPSLDC) for the aforementioned villages
indicates two- to four-hour gaps during the morning and evening peak-
demand periods — even the limited rural supply was not available at times
most needed (see Table 5: Power supply schedule for selected villages).
96

Graph 5: Power supply to domestic consumers in Uttar Pradesh

Supply to rural areas is for far fewer hours
100 97%
80
Supply (per cent)
60
54.8%
52.4%
50.2%
45.4% 43.4%
40.4%
40
20
4.7% 6.3%
2.1% 2.7%
0%
0
Vijay Laxmi Nagar, Sitapur Pahadpur, Sitapur Bhadupur Sidhauli, Sitapur Jankipuram, Lucknow
Urban Rural Rural Urban
No supply duration Low voltage duration Normal voltage duration
Note: Data for 720 hours in May 2018

Source: Watch Your Power portal, Prayas (Energy Group), as viewed on May 2018, watchyourpower.org
Table 4: Electricity supply in villages surveyed by CSE

Average power supply varied from 10 to 16 hours a day
Location Total Rate of Average duration of
households electrification grid power supply
(%) (hours)
Sanda, Sitapur 737 70.4 15-16
Kamplapur, Sitapur 132 95.5 12-16
Katkutiyan, Kushinagar 819 42.4 15-16
Tamakuhi Raj, Kushinagar 881 66.7 10-14
Para village, Unnao 1212 24.0 12-16
DhankalKhera, Unnao 101 80.2 10-12
Source: CSE survey
Discoms prefer serving urban households over their rural counterparts,

since supply to rural areas is associated with higher AT&C losses due to
lengthy distribution lines, inadequate size of conductors, long distances
between distribution transformers and load centres and over-rated
distribution transformers. The primary concern, however, is commercial.
Many rural households are poor and consume very little electricity; they
may also receive power at subsidised rates. Agricultural consumption is
material, but is even more heavily subsidised. Rural areas also have high
rates of power theft, but have poor billing and collection rates. All these
factors add up to making the rural belt unprofitable for discoms.
97

Table 5: Power supply schedule in selected villages

No power supply for nearly two to four hours during peak periods
District Substations Power unavailable at peak Total
times duration
(29 April–5 May 2018)
Sitapur Muradabad control 1A 7.00–9.15 a.m. 2 hours 15
minutes
Muradabad control 1B 6.45–8.45 a.m. and 9.30– 2 hours 30
11.00 p.m minutes
Kushinagar Sarnath control 2A 5.45 –8.15 a.m. 2 hours 15
minutes
Sarnath control 2B 9.00–11.30 a.m. and 8.00– 2 hours 30
9.30 p.m. minutes
Unnao Piniki control 2A 5.45–8.15 a.m. and 7.45–9.15 3 hours 45
p.m. minutes
Piniki control 2B 8.15–10.45 a.m. and 9.15– 2 hours 30
10.45 p.m. minutes
Note: Peak demand time is 6 a.m.–10 a.m. and 6 p.m.–10 p.m.

Source: Uttar Pradesh State Load Dispatch Centre (UPSLDC) as viewed on May 2018, http://www.upsldc.org/real-time-data
Can SAUBHAGYA fill the gap?

SAUBHAGYA, launched in September 2017, aims at connecting all
remaining un-electrified households in the country. As of November 2018,
19 million households have been provided electricity access — 11.3 million
households are yet to be electrified. The last few months have witnessed
electrification at a rapid rate (two-three million households per month).11
But the rate is expected to slow down as the scheme tries to connect remote,
difficult-to-reach or very poor areas.
At the start of the scheme, Uttar Pradesh had the largest population
without access to electricity (15 million out of 40 million households) in
India. Despite the 5.5 million households electrified since then, UP’s 6.8
million remaining households make up half of the total un-electrified
households in India.12 To understand whether SAUBHAGYA can connect
all households quickly and supply quality power on demand, CSE surveyed
Shamli, a relatively rich district in north-eastern UP which claims to have
UP’s 6.8 100 per cent electrification, to assess the SAUBHAGYA scheme (see Table
million 6: Villages surveyed and Graph 6: Electrification progress in Shamli under
SAUBHAGYA).
households Shamli, home to about 2,13,492 households, had over 25,000-26,000
make up half un-electrified households at the start of the scheme. Today, the district
claims it is 100 per cent electrified — but data from the local discom, the
of the total Paschimanchal Vidyut Vitaran Nigam Ltd (PVVNL), shows that only 19,486
households have been electrified; over 4,000 odd households have rejected
un-electrified the electricity connections, primarily because of their inability to pay. This is
households in addition to another 2,415 households that were found to be unoccupied.13
The latter should have been removed from the target altogether, but the
in India SAUBHAGYA dashboard — in an attempt to show increased numbers —
has added them to its list of electrified households.
98

Table 6: List of villages surveyed

Villages were randomly chosen for the survey
Villages Total Electrified Population Major economic
households under activity
SAUBHAGYA
Pindaura 1071 153 11000 Agriculture
Hath Choya 656 159 9000 Agriculture
Poorviyaan Mazra, 487 119 Migrant laborers
Gagaur and agriculture
Simbhalka 205 55 Agriculture
Source: CSE survey
Graph 6: Electrification progress in Shamli

Government data shows 100% electrification
6,000
5,000
Number of households
4,000
3,000
2,000
1,000
0
Nov-18
Oct-18
Sep-18
Aug-18
Jul-18
Jun-18
May-18
Apr-18
Mar-18
Feb-18
Jan-18
Source: SAUBHAGYA dashboard
The SAUBHAGYA scheme has tried to expedite electrification by

providing on-the-spot free registration in village electrification camps.
However, while focusing on household electrification targets, it appears to
have ignored the larger objective — providing electricity access at reasonable
cost. Our survey revealed multiple problems.
Tariffs and the ability to pay

Many consumers in Shamli complained about being forced into accepting
electricity connections, including instances of large joint families pushed
to take separate electricity connections. Economically weak consumers
are charged Rs 50 per month over the first 10 months (for the electricity
99

connection), in addition to a flat rate of Rs 80/kW/month over and above

their charges for consumption — which can add up to a substantial amount
if several connections are forcibly foisted on to them. These consumers are
charged anywhere between Rs 3-5.50/kWh, the amount varying based on
total consumption in a month.14
Most rural consumers in Shamli are either farmers or seasonal labourers.
The latter, who do not live in the town for six-nine months in a year, are
charged the monthly rental rate for the entire year. The farmers’ income is
staggered over the year in one or two installments — hence, their monthly
bills remain unpaid and attract penalties. Failure to resolve bills on
time incurs a penalty of 1.25 per cent of the dues per month for the first
three months; after that, every month incurs a 2 per cent penalty on the
dues (not including the penalty amount).15 In several cases, CSE surveyors
found bills of individual households to be as high as Rs. 11,000 a year,
including penalty.
As per the Socio Economic and Caste Census (SECC) of 2011, in 75
per cent of rural Indian households, the highest earning member earns
less than Rs 5,000 a month.16 Even if they are supported by an additional
income, electricity bills for such rural households cannot and should not
be costing them one-sixth of their annual salary for the meager electricity
they consume. In contrast, many electrified households in Shamli, which
are typically richer, do not have meters and are charged a flat rate of Rs
835/month, irrespective of usage. The SAUBHAGYA scheme seems unfair
to the new, poorer consumers forcing them to pay more than the wealthier
households.
Metering: A long way to go

As of October 2018, 18,236 meters had been installed in Shamli against
The the 19,486 newly connected households; however, of the installed
SAUBHAGYA meters, 420 were pending ledgerisation as per the CSE survey. Claims of 85
per cent billing efficiency under SAUBHAGYA, therefore, seems to have
scheme some merit.
seems However, a bigger billing and collections issue pertains to previously
connected households. Meter installations for 7,135 unmetered connections
unfair to the have been reportedly undertaken by the PVVNL, which claims to
new, poorer have achieved 38 per cent of its target. The Nigam also claims to have
achieved 100 per cent billing in the unmetered households where meters
consumers were installed.17 However, the CSE survey found this to be incorrect.
forcing them While many houses had meters installed in them, none were connected.
Furthermore, the 7,135 unmetered connections where PVVNL has installed
to pay more meters, account for only 13 per cent of all urban and rural unmetered
connections in Shamli district.
than the The PVVNL also claimed an increase in billing efficiency from 67 per
wealthier cent in the first two quarters of FY18 to 72 per cent in the corresponding
period in FY19, primarily reliant on urban consumers. It has further claimed
households that these numbers have improved post-SAUBHAGYA, with the first two
quarters in FY17 having a 62 per cent billing efficiency.18
100

The quality of power supply SAUBHAGYA

While this is not explicitly stated, SAUBHAGYA should be aiming for
ensuring regular electricity supply, not merely connecting households. But should be
regular supply continues to be a problem in these households with frequent aiming for
power cuts and voltage fluctuations — many consumers have complained
about no electricity during the peak evening time. The discom says the ensuring
villages, on an average, receive supply for 17-18 hours a day, while the regular
agricultural feeders (the few that have been separated) receive eight odd
hours of electricity. But villagers contend the supply is far less. To add to electricity
it, the discom points out that even this supply quality is unsustainable —
supply will take a further hit after the elections in 2019.
supply,
not merely
Local discom losing out
The PVVNL claims that under SAUBHAGYA, it pays contractors, on an
connecting
average, Rs 4,400 per connection; it collects only Rs 500 from the APL households.
(above poverty line) households, and nothing from the BPL ones. The
government reimburses anywhere between Rs 1,500-4,500 per connection
But regular
(subject to terms and conditions), but the higher limit is seldom the case supply
for a connection,19 putting additional pressure on the financially struggling
discoms. The amount, according to the PVVNL, averages around Rs 2,000 continues to
per connection, which more often than not is insufficient. And though be a problem
this does not excuse the shoddy work, it does explain the lack of intent.
Therefore, not surprisingly, the difference between PVVNL’s assessment and
realisation amounted to Rs 8,400 lakh in the first two quarters of FY17-18,
while it was Rs 4,900 lakh for the same period the year before.20
Secondly, collection efficiencies in the rural areas are as low as 20 per
cent: this is not expected to rise. Average collection efficiency in Shamli
district was 62.4 per cent for the first two quarters of FY19, down from 70
per cent in FY18. This could be attributed to the low collection efficiency
(only 44 per cent) at the electrification distribution division (EDD IV) level,
a new addition to Shamli’s electrification infrastructure.21
Thirdly, the AT&C loss was around 55 per cent for the Shamli
Electrification Distribution Circle (EDC): surprisingly, it was the highest for
the newest EDD IV at 72 per cent in the first two quarters of FY19. These
losses are further aggravated in rural settlements. The highest AT&C loss
was recorded at an 11-KV feeder in Kudana at 69.4 per cent.
Overall, while SAUBHAGYA and all such electrification programmes
must be applauded for their efforts to connect far-flung settlements for
which electrification — until recently — was merely a dream, the issues
related to supply and discoms mars all the good work.
Can mini-grids bridge the energy access gap in Uttar Pradesh?

UP’s acute access issues have seen influx on mini-grids to meet the energy
demands of the unconnected. This sector has always drawn in large funding
from non-commercial sources — CSR funds, charities, impact investors and
international development agencies. For example, of the 1,850 mini-grids in
UP, only 16 totaling 2.33 MW fall under the purview of the Uttar Pradesh
101

Non-Conventional Energy Development Agency (UPNEDA).

Mini-grids in Uttar Pradesh have adopted a wide variety of business models
— the anchor-business-community (ABC) model is the most commonplace.
It prioritises large ‘anchor’ loads — commercial and industrial — followed
by businesses and households. For example, a 36-kW solar-based mini-grid
system by OMC Power, a mini-grid operator, in Sitapur in UP supplies 30-
40 units per day to two telecom towers each, while supplying only eight to
nine units per day to 70 households. This model works only in villages with
considerable commercial/industrial loads. However, mini-grids supplying
a vast share of generation to anchor loads while deriving subsidies from
the government (30 per cent from the MNRE) is a gross misuse of scarce
government resources. The ABC model, thus, does little to further the
government’s development and access agenda.
The community-based model, on the other hand, deploys smaller
systems to serve the basic load requirements for limited hours in a day. The
project viability in such a model is heavily reliant on consumer engagement.
For example, projects by the mini-grid operator Mera Gaon Power (MGP)
are focused on small unconnected settlements with about 50 households,
where grid integration is not likely to happen in two to three years; these
projects offer basic supply to support lighting and phone charging for six
to seven hours. Their customer base primarily includes poor households
and micro-enterprises which are billed on a pre-payment basis using
community-based collection methods. The business model relies on low
capital and operational costs with a projected return of more than 30 per
cent at a repayment period of less than three years.
In contrast, projects by TARA, another such mini-grid operator, try to
stimulate community demand through micro-enterprise development
(Community Engagement, Load Acquisition, and Micro-enterprise
Mini-grids in Development — CELAMeD), by engaging with the community and
Uttar Pradesh encouraging development of local commercial activities.
CSE’s survey in UP points to some fundamental problems with the
have adopted various mini-grid operating models employed. Most mini-grid systems in
a wide variety the state are of 1-kW or less capacity (see Table 7: Size distribution of mini-
grids in Uttar Pradesh); these small systems with weak distribution grids
of business are incapable of grid integration when the need arises. Even the relatively
models — larger mini-grids set up by UPNEDA can supply only 150 W per household
compared to the 500 W per household from the discom grid. Coupled with
the anchor- the nominal amount of power they can provide, mini-grid systems also
business- restrict supply to usually four to six hours a day.
Besides this, the tariffs charged by MGOs (mini-grid operators) are several
community times higher than those for grid-supplied power — varying across installed
(ABC) model systems and consumer categories. The high tariffs are a result of the high
fixed cost of the generation plant and distribution system, for a relatively
is the most small capacity. Mini-grid operators also fear becoming redundant in the
event of the arrival or increased reliability of the grid — they, therefore, tend
commonplace to charge high tariffs to recover investments over a shorter time period (see
Table 8: Tariffs of mini-grids in Uttar Pradesh).
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Table 7: Size distribution of mini-grids in Uttar Pradesh

Most have small capacity; hence are incapable of grid integration
Range of installed capacity Number of mini-grids
Less than 1 kWp 1,627
1-30 kWp 30
30-50 kWp 43
50-100 kWp 10
Over 100 kWp 14
Note: The list may not be exhaustive.

Source: Compiled from various sources as part of the CSE survey.
Table 8: Tariffs of mini-grids in Uttar Pradesh

Effective tariff rates are several times higher than that of discoms
Costs of Effective tariff Duration of effective
Company
connection rate (Rs per unit) usage (hours)
OMC Power 15 watt — Rs 110 40.7 6
34 watt — Rs 230 37.6
Husk Power 50 watt — Rs 300 33.3 6
100 watt — Rs 630 35.0
20 watt — Rs 60 16.7
Boond Engineering 6
60 watt — Rs 350 32.4
Mera Gaon Power 20 watt — Rs 120 28.6 7
Source: Compiled from various sources as part of CSE survey.
In February 2016, in an attempt to address these issues, the UP government

released its Renewable Energy Mini-Grid Policy.22 The Uttar Pradesh
Electricity Regulatory Commission (UPERC) followed up the policy with
the Mini-Grid Renewable Energy Generation and Supply Regulations in
April 2016.23 The state offers a 30 per cent capital subsidy (based on viability
gap funding determined by reverse bidding), in addition to the Central
government subsidy. Availing the state subsidy obliges the MGOs to meet
certain supply standards — supply residential consumers for a minimum
of eight hours and commercial loads for six hours. The policy caps tariff
at Rs 60 per month for a 50-W load, and Rs 120 per month for a 100-W
load. It allows operators two exit options — to sell either the generation and
distribution assets to discoms, or the generated power as an Independent
Power Producer (IPP). Unfortunately, the policy has failed to attract any
projects since it was announced. Developers claim that even the inclusion of
state subsidy did not improve their economics enough to meet the standards
set by the policy.
Uttar Pradesh, with its large number of un-electrified villages, offers the
largest market for mini-grid operators. This has led it to be an early adopter
of a stand-alone mini-grid policy. Further, almost all mini-grid operators
across India employ same or similar models. Though the degree of issues
103

might vary, the problems remain same. Therefore, it might be safe to say that
the status of mini-grids in UP is reflective of the national sector.
So, what is the next step for mini-grids? It is clear that in a renewable
energy world, mini-grids will play a significant role in generating electricity
locally, supplying it to the local consumers and feeding the excess to the
grid. The government and the mini-grid operators will have to embrace this
vision and revive the sector.
104

CASE STUDY
How sustainable is solar power pumps?
I
ndia’s agricultural sector consumes nearly 25 per cent of the country’s
total electricity, largely for its irrigation needs.24 The sector’s demand is
met primarily from the 19 million electric and nine million diesel pumps
in India.25 Unfortunately, the use of electric motor pumps is limited by the
erratic electricity supply. Diesel pumps, on the other hand, are associated
with high fuel prices and dirty emissions. Approximately 60 per cent of
farmers in India buy water or rent pumping services at high costs.
Solar Pumping Irrigation Systems (SPIS) have a potential to help
reduce dependence on conventional pumping systems and increase farm
productivity (see Table 9: Solar pump deployment models). Solar water
pumps incur zero fuel costs and offer farmers reliability. The falling prices
and improving efficiency of technology are an added bonus.
The nine million diesel users can benefit the most from a switch-over to
solar pumping systems, given the high fuel cost. A comparison of 10-year
lifecycle costs of solar water pumps and diesel water pumps found that the
former was 35 per cent cheaper.26 Several anecdotal studies have shown that
farmers cultivate a variety of crops and earn higher incomes when using
105

Table 9: Solar water pump deployment models

Can reduce dependence on grid power and diesel pumps
Individual ownership For larger farmers with resources to meet the high upfront
costs
Farmer cooperatives For smaller farmers who co-own the pump; irrigation
needs of the farmers can be scheduled by a sole
operator or via shared asset model
Service models Consumers with irregular water needs can rent small
portable pumps or buy ‘water as a service’ from service
companies
Rent-to-own/pay-as-you-go Consumers are charged a fee/rent for the pumps, which
are treated as installments towards eventual ownership
Source: Compiled from various company reports
SPIS. However, the capital-intensive nature of solar pumps combined with

the low utilisation rate, if used individually by small farmers, reduces their
financial viability.
Myriad policies and schemes

The high capital cost of SPIS has meant that all government-led initiatives
States like have preferred handing out capital subsidies. Under JNNSM, the Solar
Maharashtra Pumping Programme for Irrigation and Drinking Water was introduced in
2014.27 As of December 2017, 2.4 lakh pumps had been sanctioned under
and Rajasthan the programme. In the same year, the National Bank for Agricultural and
Rural Development (NABARD) introduced a Credit-Linked Capital Subsidy
offer Scheme (CLCSS), which envisaged 30,000 solar water pump systems. The
successful scheme achieved less than 6 per cent of the target and was discontinued.28
States like Maharashtra and Rajasthan offer successful policy examples
policy that incorporate favourable financing mechanisms and deployment models
examples that for solar water pump adoption. Maharashtra has completed a tender to
procure 10,000 solar water pumps and is offering a 95 per cent capital
incorporate subsidy to farmers. A Rajasthan government scheme offered an 86 per cent
favourable capital subsidy, including 56 per cent state subsidy (under the Rashtriya
Krishi Vikas Yojana) and a Central subsidy of 30 per cent, for certain solar
financing irrigation pumps (2- and 3-HP DC submersible pumps). Overall, 1.14 lakh
mechanisms solar pumps were installed in India till the end of December 2017 (see Graph
7: Annual installation of solar pumps in India).29
and
Kisan Urja Suraksha Evam Utthaan Mahabhiyan (KUSUM)
deployment The Kisan Urja Suraksha Evam Utthaan Mahabhiyan (KUSUM) scheme, the
models Government of India’s latest endeavor towards deployment of subsidised
for solar solar pumps, will require a total outlay of Rs 140,000 crore over the next 10
years. Under KUSUM, the Centre will provide 60 per cent capital subsidy; 30
water pump per cent will be financed through bank credit and the remaining 10 per cent
will be borne by the farmers. KUSUM proposes installation of large solar
adoption power plants (28,250 MW), replacement of conventional pumping systems
(720 MW) and distribution of SWPs (solar water pumps); and installation
106

Graph 7: Annual installation of solar pumps in India

Over 1.14 lakh pumps installed till December 2017
160,000
114,878
Cumulative installations Annual installations
140,000
61,834
120,000
Installations
100,000
80,000
29,669
60,000
40,000 11,626
20,000 7,771 8,826
0
FY13 FY14 FY15 FY16 FY17 FY18
(Till Dec, 2017)
Source: Compiled from MNRE annual reports, https://mnre.gov.in/annual-report
of solar-powered tube wells (8,250 MW).30 Unlike its predecessors, KUSUM

promotes a model that allows farmers to sell surplus power to distribution
companies, which would get a Rs 0.5/unit incentive to purchase power.
This offers farmers a secondary source of income. But the scheme is yet to
obtain support from the Union Ministry of Finance and an approval from
the Union cabinet.
What is the way ahead?

One of the major concerns in India, however, is water, which has a direct
correlation to pumps. India accounts for 25 per cent of the world’s extracted
groundwater, and the agricultural sector is one of its major users. Declining
quality and quantity of surface water and unpredictable rain patterns have
pushed farmers to use groundwater more and more. What has compounded
the scenario is access to subsidised power — this has led to excessive water
withdrawal and unsustainable irrigation practices, aggravating the already
dire groundwater scenario in the country. An analysis shows a 13 per cent
decline in the water table nation-wide over the past 30 years.31 In areas
receiving free electricity, over-exploitation has been limited solely due to
power cuts. Given the fact that solar power’s marginal cost is almost zero,
indiscriminate SPIS use would be catastrophic for our aquifers.
SPIS deployment should, therefore, be carefully pursued. For example,
in the western part of the country where groundwater is scarce, policies
should encourage sale of excess power generated by the solar panel (when
the pump is not in use) to the grid (instead of incremental water withdrawal).
107

Reliable Secondly, the focus of KUSUM should be on solarisation of conventional

electric pumps to reduce the quantum of heavily subsidised grid electricity
electricity, that the agricultural load draws. Also, water use efficiency (drip irrigation,
however, sprinklers and other water management activities) should be promoted
alongside the SPIS schemes. In the Ganga-Brahmaputra basin, on the other
might not be hand, where groundwater is aplenty but electricity scarce, solar pumps can
an incentive displace diesel ones.
Reliable electricity, however, might not be an incentive enough for
enough for farmers to switch over to SPIS — especially for those who are enjoying
farmers to subsidised diesel and/or free grid electricity. A buy-back of the excess
electricity generated, as proposed under KUSUM, offers a secondary source
switch over to of income which could be the added incentive. Pilot examples, like the one
in Dhundi, Gujarat can showcase a change in the usage pattern, with its
SPIS focus on conservation of both electricity and water.
Considering the large size of India’s agricultural community, solar water
pumps seem to be an obvious choice for electricity generation at the point
of consumption — as a decentralised source of energy. As a decentralised
solution, SPIS can reduce transmission losses.
Cheap electricity to the agricultural sector is an enormous and continually
ballooning problem for discoms. Well-designed SPIS deployment models
can limit the subsidy burden on the government by incentivising both
appropriate water use and sale of excessive power to the grid. SPIS systems
also provide an effective way for discoms to meet their renewable purchase
obligations, since discoms can claim credit for all generated power as
opposed to only the quantum purchased back from the SPIS.
108

CASE STUDY
Can induction cooking solve the clean cooking fuel crisis of the country?
VIKAS CHOUDARY / CSE

C
lean energy access also encompasses fuel used for cooking: 63 per
cent of the Indian population continues to rely on traditional biomass
(firewood, crop residues and cowdung cake) which causes indoor
pollution and has serious health impacts. Studies have found women and
children to be disproportionately affected.
Government schemes and heavy subsidies drove an urban switch to
cleaner LPG and PNG. The 2016 Pradhan Mantri Ujjwala Yojana (PMUY)
attempts to bring a similar shift in rural areas. Under it, a ‘Give it up’
campaign asked LPG consumers to voluntarily surrender their subsidies
that can be redirected to rural consumers. Also under it, ‘PAHAL’ required
women of BPL families to open bank accounts, so that direct benefit transfer
of LPG subsidies (DBTL) could be facilitated.32
Under Ujjwala, beneficiaries are given Rs 1,600 for the LPG connection
and the security fee for the cylinder. But this level of subsidy is too low
for continued LPG use, a fact that has been corroborated by reports from
the ground.33
109

The gaps in Ujjwala

Ujjwala has been pitched as a scheme to encourage affordable, clean cooking
fuel uptake — but it seems to be failing at various fronts. The extra costs on
the stove or the first cylinder can be covered through a zero-interest loan
granted by the oil marketing companies (OMCs). This loan amount can be
recovered by withholding the subsidy amount for the four-10 refills that
typically follow. Charging beneficiaries the full rate for the first few refills is
the first disincentive and to the cause
Second, as per Petroleum Planning and Analysis Cell (PPAC) estimates34,
the growth in LPG consumption has actually fallen after Ujjwala entered
the picture. It was 10.11 per cent in FY16 — before the introduction of the
scheme — as compared to 8 per cent and 9 per cent in the following years.
Seen against the increasing number of new LPG consumers (growth rate of
19 per cent in FY2017 and 13 per cent in FY2018), this indicates dampened
usage (see Graph 8: Growth in LPG consumption against new enrollments).
Third, the national average refill of the 14.2-kg LPG cylinder has fallen
from 6.27 cylinders per household in FY2016 to 5.6 in FY2017. Though
national averages for refills per connection was 6.9 in FY2018, Ujjwala
consumers still averaged only 3.4 refills annually.35 Therefore, basing the
success of the programme purely on the connections provided, and not on
refills, might not be accurate.
Fourth, in 2018, the domestic sector accounted for a dominant 88.5
per cent of national LPG consumption;36 this has been a significant drain
Graph 8: Growth in LPG consumption against new enrollments

Number of new consumers increased against a dip in consumption growth
2,500
1,985
2,000
1,735
Consumption growth (TMT)
1,623
1,500
1,000
500 332 285

205
0
FY 2016 FY 2017 FY 2018
Consumption growth (TMT) New enrollment in domestic category (in lakhs)
Source: Compiled from Ministry of Petroleum and Natural Gas (MoPNG) annual reports, http://petroleum.nic.in/documents/reports/annual-reports
110

on foreign exchange, especially given the drop in local production (see

Statistics section).
An electric
To add to this, the government compensation for the subsidy burden stove’s
borne by OMCs is seldom enough. The companies say that the compensation
is based on 2002 prices and should be revised immediately. In fact, the
increased
subsidised LPG cylinder has resulted in an exponential increase in the efficiency can
subsidy burden — amounting to Rs 28,067 crore in 2018-19 alone — which
is borne by the Central Public Sector Enterprises (CPSE) OMCs.37 The help reduce
question is, are such heavy investments on an interim fuel the best way the amount a
forward for the country?
A government-sponsored report38 has pointed out the many gaps in family spends
Ujjwala: high costs and long waiting times for LPG refills; insufficient on cooking
distribution network; tedious process for getting new LPG connections
etc. These are forcing consumers to slip back to biomass-based cooking, a
phenomenon known as ‘cooking technology stacking’39, which defeats the
very purpose of the switch to LPG.
Onwards to electricity-based cooking

Currently, the share of electricity — the cleanest cooking fuel — in the
cooking mix is minimal, especially when compared to the large numbers
still dependent on biomass-based cooking. The obvious advantages accrue
to the poorest households, which can get rid of indoor pollutants if they
switch to electricity-based cooking.
In urban households, the parallel existence of LPG and PNG is being
supplemented by electric/induction cookstoves, but this has progressed at
a snail’s pace. An upper limit assumption says a family’s consumption of
eight to 10 LPG cylinders (14.2 kg each) per year is equivalent to electricity
consumption of nearly 4 kWh per day.40 The Niti Aayog claims that the
additional electricity demand from cooking, approximately 150 to 200
billion units per year, could help alleviate the problems associated with
underperforming generation assets.41
On efficiency, both electric (74 per cent) and induction (84 per cent)
stoves fare far better than gas stoves (40 per cent). An electric stove’s
increased efficiency can help reduce the amount a family spends on
cooking42, 43. Combining cooking goals could be an ideal way to use the
massive electrification exercise undertaken within the country. It would
also obviate the need for building a parallel LPG/PNG infrastructure. To add
to this, electricity tariffs tend to be more stable than gas prices — the latter
is vulnerable to international events and rupee depreciation.
But it must be kept in mind that electricity-based cooking can only be
done in households that are receiving 24x7 electricity without any voltage
fluctuations – an important concern in the rural parts of the country. The lack
of quality supply can be a deterrent, as has been seen in a TERI study done
in Himachal Pradesh.44 An year after the distribution of 4,000 induction
stoves, only 5 per cent households, which had reliable power supply, were
still using them.
A true leapfrogging would involve using renewable energy for cooking
111

Currently, (for example, using solar induction cookers). However, these restrict
cooking activities to a few hours unless combined with storage, which adds
none of the to the cost. A recent model developed by IIT-Mumbai shows that a solar
electric cooker providing 3 kWh of electricity per day (enough for cooking
country’s three meals for a family of five) with battery storage, would cost Rs 10,000.45
energy Alternatively, remote and/or rural areas that are not connected to the grid
may be better served by incentivising mini-grids that support cooking needs
access plans as well. The corresponding increase in energy consumption of households
and policies could further help improve the economics of mini-grids.
Most developed nations have shifted to using electricity for cooking;
discuss the India continues to lag behind. Recognising the disproportionate support
utilisation of meted out to transitioning cooking fuels (LPG and PNG), the Niti Aayog
suggests extending benefits/subsidies to all cooking fuels, including
electricity for electricity, through direct benefit transfer. Such a blanket subsidy will give
cooking consumers the option to pick and choose. BPL households, with access to
reliable, quality electricity, could be provided loans for induction stoves.
Consumers in remote regions could be incentivised to adopt electricity as a
credible and primary fuel for cooking through grid and off-grid electricity,
respectively.
However, any shift to either of the two technologies for cooking will
require the government to employ large-scale deployment schemes — such
as the distribution of LEDs under Ujjwala by EESL — to help bring down the
costs. Additionally, awareness drives must be carried out to bust the myths
regarding induction cookstoves’ inability to meet Indian cooking needs.
Currently, none of the country’s energy access plans and policies discuss
the utilisation of electricity for cooking. There is a need to develop an
effective, comprehensive policy that follows a multi-pronged approach for
adopting clean cooking fuels. As the economics of off-grid solar applications
for induction cooking46 and/or grid power quality improves, electricity is
poised to be a strong contender as a cooking fuel.
112

CHAPTER 7
Discoms: Fundamental
reforms required
D
iscoms (distribution companies) hold the key to the future of
renewable energy in India. Mostly state-owned, these companies
purchase power from generators and sell them to residential, retail,
agricultural, commercial and industrial consumers. Most of the
key concerns faced by the wind and solar energy sectors (these have been
discussed in the other chapters in this book) such as curtailment, payment
delays, off-setting discom risks by SECI and NTPC, refusal to sign PPAs with
new plants etc are connected to these companies and point to the fact that
discoms either drive the growth or can pose crippling problems.
The underlying reason behind this scenario is that most discoms have
run huge financial losses and have poor operational performance. Their
inability to collect revenues from large sections of their customer base due
to power theft and lack of proper billing and collection makes it difficult
for them to recover their costs. They are further saddled with unsustainable
tariff structures, slabs for different end users and associated cross-subsidies;
this makes it unlikely that their business can break even.
Discoms are also bound to large thermal power plants by means of long-
term PPAs, with two-part tariffs with a fixed cost component. As a result, there
is very little incentive to offset thermal consumption with newer renewable
power, even if the latter is cheap. In fact, a large renewable capacity with
‘must run’ status might be adding more pressure to the distribution sector.
There have been multiple attempts to turn the situation around, with
the latest being the Ujjwal Discom Assurance Yojana (UDAY) scheme,
introduced in 2015. It, however, remains a work-in-progress.
Ujjwal Discom Assurance Yojana (UDAY) Discoms either

UDAY was conceived as a plan to rejuvenate discoms in India. By March
20151, Indian discoms had collectively accumulated losses of Rs 3.8 lakh
drive the
crore and an outstanding debt of Rs 4.3 lakh crore. It was clear that all the growth or can
plans for the electricity sector — 100 per cent electrification, high quality
power supply being made available 24x7, and having 175 GW of renewable
pose crippling
generation absorbed by the network by 2022 — would suffer setbacks if the problems
discoms continued in this vein.
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DISCOMS: FUNDAMENTAL REFORMS REQUIRED
Three years In November 2015, therefore, the Ujjwal Discom Assurance Yojana
(UDAY) was introduced: the aim was to restructure the discoms’ debt to make
on, the results them financially stable and hold them accountable for their performance. It
produced by was proposed that state governments would take over 75 per cent of the
debt of their respective discoms, with bonds issued for the remaining 25 per
UDAY remain cent. Aside from the financial restructuring, the discoms were expected to
unclear and improve their performance along various metrics — most of which are tied
to deployment of infrastructure to help curb losses in the system.2
questionable The aggregate technical and commercial (AT&C) losses partly reflect the
efficiency at the transformer and distribution network level. In addition,
the losses go up when theft is endemic, as is the case in large parts of the
country. Poor metering and resultant low billing and collection efficiency
also contribute to the problem. To cut down on the AT&C losses, the UDAY
scheme mandated the installation of smart meters in rural and urban areas,
and metering of transformers to track theft and identify leakages and points of
low efficiency. UDAY planned that the losses would be cut down to a national
average of 15 per cent by FY2018-19. At the revenue end, a total recovery of
the cost of supply through various mechanisms, including upward revision of
tariffs and reduction in subsidies, was proposed.
Three years on, the results produced by UDAY remain unclear and
questionable. A lot of the tasks are running behind schedule — especially
smart meter installations. The AT&C losses remain high, with some states
indicating losses of over 40 per cent, a far cry from the 15 per cent target.
The ACS-ARR gap (the gap between average cost of supply or ACS and the
average revenue realised or ARR) continues to be high for most of the states3
(see Table 1: The UDAY check-list).
As per the Union power ministry’s annual integrated ratings report4
which assigns credit ratings to each company with respect to regulatory,
operational and financial parameters, 42 discoms are under the scanner. The
top tier — ‘A+’ rated discoms — are concentrated in the state of Gujarat.
Among states, Uttarakhand is the only new entrant, while Punjab, formerly
a highly rated discom, has deteriorated. At best, more discoms appear to be
Table 1: The UDAY check-list

The scheme has not produced the desired results
Task Stated deadline Status as of October 2018
Smart metering for consumers with:
>200 kWh/month December 2017 1%
>500 kWh/month December 2019 3%
LED distribution to achieve savings totaling Rs 40,000 crore March 2019 100%
Feeder metering June 2016 100%
Distribution transformer metering June 2017 Rural 59%/urban 63%
AT&C losses down to 15% March 2019 National AT&C losses: 23%
ACS-ARR gap down to Rs 0/kWh March 2019 National gap: Rs 0.27/kWh
Source: https://powermin.nic.in/pdf/Uday_Ujjawal_Scheme_for_Operational_and_financial_Turnaround_of_power_distribution_companies.pdf., as seen in October 2018
114

concentrated today at the higher end of the average range (B+) as compared
to the situation in 2014-15. The number of discoms in the worst performing
bracket has quadrupled.
While credit ratings are by no means a foolproof and dependable indicator,
it remains an indispensable source of information primarily considered by
banks for assessing a discom’s credit worthiness. With the rating of most
discoms far below the investment grade, the renewable sector will continue
to need interventions such as payment guarantees and intercession by SECI
to reduce the risks.
Aggregate Technical & Commercial (AT&C) losses

As per the UDAY dashboard in September 20185, overall AT&C losses
indicate poor outcomes (see Graph 1: AT&C losses in states from 2013-
14 to 2018). While there have been improvements in some states such as
Himachal Pradesh (lowest AT&C loss of 4.33 per cent), Kerala (which has
halved its losses in four years to 11.49 per cent) and Haryana (losses have
fallen by over 10 per cent, down to 23.8 per cent currently), others appear
to have significantly deteriorated. Chhattisgarh (losses have increased to
over 30 per cent) and Punjab (losses have almost doubled and currently
stand at 31.3 per cent) have recorded some of the biggest losses compared
to the previous three years. All other states show fluctuations with no clear
Graph 1: AT&C losses in states from 2013-14 to 2018

Only Himachal Pradesh, Kerala and Haryana have shown improvement
90
2013-14 2014-15 2015-16 Uday dashboard 2018
80
70
60
50
Losses (%)
40
30
20
10
0
Andhra Pradesh
Bihar
Chhattisgarh
Goa
Gujarat
Haryana
Jammu & Kashmir
Jharkhand
Karnataka
Punjab
Rajasthan
Uttarakhand
Uttar Pradesh
Manipur
Madhya Pradesh
Puducherry
Maharashtra
Himachal Pradesh
Assam
Telangana
Tamil Nadu
Meghalaya
Kerala
Tripura
Arunachal Pradesh
Odisha
West Bengal
Delhi
Sikkim
Mizoram
Nagaland
Sources: Compiled from PFC annual reports (2013-14 to 2015-16) available at http://www.pfcindia.com/Home/VS/72 and the UDAY dashboard, as viewed in October
2018 https://www.uday.gov.in/national_parameter_dashboard.php?id=
115

Many states improvements. Additionally, these numbers are self-reported by states and
the actual performance may be worse.6
are unlikely The outcomes continue to be variable in the case of the smaller universe
to meet the of renewable-rich states. Karnataka, Gujarat and Andhra Pradesh are the best
performers — on an average, they have consistently maintained their losses
target which between 10-15 per cent, with UDAY having had no obvious impact on them.
necessitates Rajasthan and Madhya Pradesh have also remained more or less static at over
27 per cent. Maharashtra, Uttar Pradesh and Punjab have, in contrast, done
keeping the significantly worse over the years. Tamil Nadu, a late entrant to the scheme
losses at 15 (January 2017) has achieved the target by falling below 15 per cent. Most
of these states are unlikely to meet the target which necessitates keeping
per cent by the losses at 15 per cent by March 2019, a sign that most discoms have not
March 2019 resolved their underlying operational issues.
The ACS-ARR gap

In terms of cost recovery through tariff revenues, most discoms continue
to have a significant ACS-ARR gap. It was expected that by March 2019,
all the states would be able to close this gap and begin turning profitable.
While there is still some way to go before this gap is completely closed,
the last four years have seen improvement in terms of the average national
performance (see Graph 2: The ACS-ARR gap through the years).7,8
On closer examination, only four states are, in theory, recovering their
costs incurred by supplying power, of which three — Rajasthan, Karnataka
and Gujarat — are significant procurers of renewable energy (see Graph 3:
ACS-ARR gap for states with large renewable capacities). On an average, the
states that are recovering their cost have relatively low AT&C losses.
Smart meters are touted as a viable solution to track electricity
consumption effectively, reducing losses by theft and improving billing and
collection. Rajasthan, the best performing state in terms of the ACS-ARR
gap, has 58 per cent smart meter installation rate for large consumers (over
Graph 2: The ACS-ARR gap through the years

Currently, this is 62.5 per cent lower than in FY-14
0.8
0.7
ACS-ARR gap (Rs/kWh)
0.6
0.5
0.4
0.3
0.2
0.1
0
2013-14 2014-15 2015-16 2016-17 2017-18
Source: Compiled by CSE from PFC reports and KPMG India
116

Graph 3: ACS-ARR gap for states with large

renewable capacities, 2018
States with a negative gap have lower than average AT&C losses
National average
Tamil Nadu
Telangana
Himachal Pradesh
Maharashtra
Madhya Pradesh
Uttar Pradesh
Rajasthan
Punjab
Karnataka
Haryana
Gujarat
Andhra Pradesh
-0.4 -0.2 0 0.2 0.4 0.6 0.8 1 1.2

ACS-ARR gap (Rs/kWh)
Source: Compiled from the UDAY dashboard in October 2018, https://www.uday.gov.in/national_parameter_dashboard.
php?id=5
500 kWh). This sets it apart from most of the other states, which have made
practically no headway on smart metering — most of the large states have
0 per cent deployment for both over and under the 500-kWh category9 (see
Table 2: The status of smart metering).
Installation of seperate feeders for rural households and agricutural load
aims to both provide appropriate power delivery to farmers and reduce
misuse of subsidised electricity. However, feeder separation has not had
any serious impact on discom financials; states such as Punjab, Haryana
and Tamil Nadu, while achieving 95-100 per cent feeder segregation, still
have high ACS-ARR gaps, surpassing the national average of Rs 0.27/kWh.10
Feeder separation and transformer metering has not led to better biling and
collection or reduction in thefts.
According to the UDAY dashboard, 25 out of 27 states and Union
territories have made tariff revisions.11 But as per data published by the
consultancy firm KPMG India12, the implementation of tariff increases (the
terms of which are agreed to in individual state MoUs signed with the power
ministry) is inconsistent. It is also unclear if the marginal increases in tariff
have had material impact on the ACS-ARR gap, since costs have gone up.
In the period between FY13 to FY16, the overall expenditure has
increased every year — this is reflected in the ACS. The largest component
117

Table 2: The status of smart metering

No progress on installation
Feeder segregation Smart metering Smart metering
(%) (200-500 kWh) (%) (>500 kWh) (%)
Andhra Pradesh 100 0 0
Gujarat 100 0 0
Haryana 100 1 3
Madhya Pradesh 98 1 20
Karnataka 97 1 0
Punjab 95 0 0
Maharashtra 66 0 0
Chhattisgarh 36 0 0
Rajasthan 24 0 58
Uttar Pradesh 15 0 0
Source: UDAY dashboard
(over 60 per cent) built into the expenditure is the power purchase cost,
which, historically, has increased annually. The operational costs (including
employee salaries and administration expenses) have also seen an annual
rise to the tune of 12 per cent in FY 2015-16 and 9 per cent in FY 2016 -17.13
The average 5 per cent tariff increase which is broadly agreed upon, if at all
enforced, would be unlikely to compensate for this.
The reduction in the ACS-ARR gap can be, in large part, attributed to
the financial restructuring between FY2016 -17 to FY2017-18. The interest
component of the tariff, as estimated by CSE from the tariff breakdown
provided in the PFC Annual Reports14 for the period15 is 8 per cent of
the total expense. With the state government taking over the debt and
reducing the discoms’ interest payment, the ACS has reduced. At a national
level it would appear that the gap closure is attributable to the financial
The reduction restructuring — this undercuts the notion that the discoms have made any
in the real improvements.
This lack of progress on the operational front is an indictment of the
ACS-ARR UDAY scheme and on rationalisation of tariffs.
gap can be Renewable purchase obligations

attributed RPO, or renewable purchase obligation, regulations require that a pre-
determined fraction of the electricity procured by utilities and third
to financial party (open access) power procurers, comes from renewable sources. The
restructuring objective is to ensure that renewable energy has a guaranteed market to
attract developers and investment.
and reduction At the time when RPO was instituted in 2011, wind and solar power
in debt burden were significantly more expensive than coal-powered generation. While this
premise has changed, the RPO regulation continues to be important for the
of discoms growth of renewable energy, since discoms appear to be reluctant to sign
additional PPAs.
118

Table 3: Long-term growth trajectory of RPOs

Mismatch between RPO targets and generation from RE sources
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 (%)
(%) (%) (%) (%) (%)
RPO target 11.5 14.25 17 17.50 19 21
% RE generation 6.33 8.06 - - - 16.38
(estimated)
Sources: Ministry of Power, https://powermin.nic.in/sites/default/files/webform/notices/RPO_trajectory_2019-22_

Order_dated_14_June_2018.pdf, estimates from CEA generation report 2017-18 http://www.cea.nic.in/reports/annual/
generationreview/gen_target-2018.pdf
In line with market growth, the MNRE has issued new long-term annual
RPO targets in 2018 for the period up to 2022.16 However, these targets
appear to be inconsistant with capacity installation goals (see Table 3: Long-
term growth trajectory of RPOs). According to the Niti Aayog’s estimates
for a scenario where the 175-GW target is met in 2022, renewable energy
generation would form only about 16 per cent of the total generation
percentage17, which makes the RPO benchmark targets of 21 per cent
unattainable.
State ERCs set their own RPO targets and tend to vary in the scale of their
ambitions. This is largely due to the concentration of renewable resources
in most western and southern states. The obligated entities in these states
have an advantage in being able to directly procure the generation at lower
costs. Cross-border power purchase from renewable IPPs comes with many
regulatory hurdles and charges which leaves those states with low renewable
resources at a disadvantage.
Another factor contributing to the inequality among discoms is their
customer base — discoms servicing a higher proportion of subsidised
residential and agricultural customers have higher cross-subsidies levied on
other segments. These discoms tend to be financially weaker and therefore
have less flexibility to procure additional renewable power.
However, most states (including the renewable-rich ones) have
comparatively modest RPO targets. Most of the larger states — with
the exception of Gujarat, Karnataka and Andhra Pradesh — are yet to
Most states
pass regulations on their RPO trajectory up to 2022 in alignment with have not
that of the Union Ministry of Power. This is a serious shortcoming,
especially in states like Maharashtra and Madhya Pradesh, which
yet passed
have large operational renewable capacity as well as a significant pipeline regulations
in the coming years (see Table 4: RPO regulations of states with largest
renewable capacities).
on RPOs in
The RPO regulations also need some fundamental changes. Splitting the alignment
RPO requirements into specifically solar and non-solar (mostly wind) made
sense earlier, when the former was exorbitant in comparison. But now, with with that of
both wind and solar tariffs equally priced at under Rs 3/kWh, this division the Ministry of
is meaningless. Having combined targets is likely to allow utilities and other
obligated entities more freedom to opt for the technology mix that makes the Power
most sense.
119

Table 4: RPO regulations of states with largest renewable capacities

State RPO targets are not in alignment with power ministry
Andhra Karnataka* Tamil Madhya Maharashtra Gujarat Rajasthan MoP
Pradesh (%) Nadu Pradesh (%) (%) (%) (%)
(%) (%) (%)
2015-16 0.25 0.5 1.5 Solar
5 to 10 9 7.5 Non-solar
2016-17 0.75 2.5 1.25 1 1.75 2.75 Solar
5.5 to 11 9 6.5 10 8.25 8.75 Non-solar
2017-18 3 2.75 5 1.5 2 1.75 4.75 4.75 Solar
6 6 to 12 9 7 10.5 8.25 9.5 9.5 Non-solar
2018-19 4 6 1.75 2.75 4.25 6.75 6.75 Solar
7 7 to 13 7.5 11 8.45 10.25 10.25 Non-solar
2019-20 5 3.5 5.5 7.25 Solar
8 11.5 8.8 10.25 Non-solar
2020-2021 6 6.75 8.75 Solar
9 8.9 10.25 Non-solar
2021-2022 7 8 10.5 Solar
10 9 10.5 Non-solar
*Each of the five discoms in Karnataka have their own RPO targets, and the range is indicative of the lowest and highest assigned.
Source: Compiled from state ERC RPO regulations of 2016 and 2017.
Poor RPO compliance

RPO compliance data is poorly reported. The last detailed audit done
by the Comptroller and Auditor General (CAG) in 2014 pointed out that
between 2011 and 2014, most states were non-compliant, with Karnataka,
Tamil Nadu, Mizoram and Arunachal Pradesh being the only exceptions.18
The issue was further highlighted by two rulings from the Appellate
Tribunal for Electricity19 and a Supreme Court ruling, which called for
stricter enforcement of the regulations issued by the SERCs for all the
buyers. However, the state governments remain casual about enforcing RPO
regulations. For instance, Madhya Pradesh20 and Maharashtra21,22 relaxed
or completely waived existing RPO backlogs for state and private utilities.
This non-compliance has continued between 2015 and 2018. The MNRE
reported that in FY16, only seven states met and surpassed their RPO
targets, of which only three were states with large renewable capacity
(Karnataka, Andhra Pradesh and Tamil Nadu).23 Twenty-one states had a
compliance of under 60 per cent.
Additionally, there is no uniformity on the penalties: prior to the CAG
audit, quite a few states did not have penalty clauses. The state-imposed
penalties vary wildly — some push for total compliance by procuring
Renewable Energy Certificates (REC) at forbearance prices to meet the
shortfall, with instances of additional fines for delays, while others impose
lenient one-time fines.24
120

The need for RPOs

At first glance, RPOs appear to be redundant — cheaper renewable power
should be automatically favoured by discoms for procurement. However,
that does not appear to be the case.
Discoms are locked into large long-term contracts with thermal power
plants by means of a two-part tariff which ensures that thermal plants are
paid a fixed component even if their generation is not consumed. This
means that solar procurement, however cheap in absolute terms, becomes
more expensive when that additional fixed cost is added to the per unit
discom expenditure. This makes it difficult for renewable energy to dislodge
thermal capacity at the supply end, without having regulations like the RPO
imposed on discoms.
Additionally, discoms are grappling with the vast excess supply that has
been attributed as the reason why no new long-term PPAs have been signed
with thermal plants. It is estimated that 20,000 MW of thermal capacity
is currently in limbo because of this.25,26 In this over-supplied market,
therefore, the incentives for signing new PPAs with upcoming solar and
wind plants is low.
At the state-level, even with wind and solar power reaching grid parity,
RPOs continue to be a driving factor. As recently as a few months ago,
renewable energy auctions in Maharashtra, Gujarat and Karnataka were
held by the state nodal agencies, primarily to meet their RPO targets.
The REC market

The REC (renewable energy certificate) market was introduced in 2010
to create an alternate means of meeting RPO obligations to incentivise
renewable generation procurement.
Projects registered with the REC market can generate certificates. For
every 1 MWh generated, one REC is issued, which in turn can be sold to
other obligated entities to allow them to meet their RPO compliance. The
income from trading the certificates has the benefit of creating a mechanism
that incentivises building projects outside the umbrella of the state or Even with
Central government policies. These projects, if supplying to discoms, do so wind and
at the average power purchase cost (APPC) determined by ERCs. The other
categories of projects that can register for RECs are those supplying power solar power
under open access (OA) agreements or captive plants.
The REC market’s largest contributor are those plants that sell power
reaching grid
to the discoms at the APPC, followed by OA. The former segment is parity, RPOs
taking a hit due to the allure of centrally-driven auctions. Although
captive plants are the only clear beneficiaries, this category accounts for just
would still be
over 18 per cent of the RECs issued (see Graph 4: RECs issued by different required to
categories of projects).
The price of RECs is determined by market demand between the limits
drive growth
of the floor price and the forbearance price which is set by the CERC; it is in renewable
reviewed periodically to reflect the average tariffs at which the solar and
wind markets are signing PPAs, as seen in the recent revision in April 2017 energy
which brought down the price of solar RECs from Rs 5,800 per MWh to
121

Graph 4: RECs issued by different categories of projects

Majority of the projects supply to discoms at APPC or to OA customers
38,24,715
4,44,418
80,68,723
Captive generation
Open access
APPC
1,66,02,593
APPC/open access
1,63,59,559
Captive/open access
Source: POSOCO, https://recregistryindia.nic.in/flasher_attachment/Report_on_REC_Mechanism.pdf
Table 5: Revised REC floor and forbearance prices

Floor price has reduced in line with reduction in tariffs
Prices before March 30, 2017 Prices on April 1, 2017
Solar REC Non-solar REC Solar REC Non-solar REC
Forbearance price 5,800 3,300 2,400 3,000
(Rs/MWh)
Floor price (Rs/MWh) 3,500 1,500 1,000 1,000
Source: CERC, http://www.cercind.gov.in/2017/orders/27.02.2017(R3)_1.pdf
Rs 2,400 (see Table 5: Revised REC floor and forbearance prices). Wind
comprises 40 per cent of the cumulative capacity of projects registered for
participation in the REC market, with solar at 19 per cent.27
RECs were the ideal solution for discoms of states that did not
have sufficient renewable capacity within their borders for direct
procurement of power. They also enabled thermal OA customers to meet their
obligations. However, the REC market has lost its appeal for developers, who
prefer to construct projects within the auction regime, which has purchase
guarantees and payment default protections. There is little incentive and
a lot of risk associated with building stand-alone projects and signing
PPAs. Between 2015 and 2018, the number of projects registered with the
REC market has stagnated (see Graph 5: Capacity and number of projects
registered for RECs).28
It is important to note here that this market has been under-performing
right from its inception. It has remained constantly over-supplied: currently,
there are 1.86 million non-solar and 2.29 million solar RECs that are lying
spare in the system as of September 2018.29
122

Graph 5: Capacity and number of projects registered for RECs

Number of projects registered with the REC market has stagnated
1,400 7,000
Capacity (MW) No. of projects
1,200 6,000
Cumulative capacity (MW)

1,000 5,000
No. of projects
800 4,000
600 3,000
400 2,000
200 1,000
0 0
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
Source: POSOCO, https://recregistryindia.nic.in/flasher_attachment/Report_on_REC_Mechanism.pdf
Graph 6: Percentage of RECs procured by individual states

Maharashtra and Gujarat account for a significant share
Maharashtra
Gujarat
19%
Delhi
Rajasthan
2% 31%
3% Odisha
3% Bihar
5% Madhya Pradesh
5% Punjab
13%
6% Chhattisgarh
6% 7% West Bengal
Others
Source: POCOSO, https://recregistryindia.nic.in/flasher_attachment/Report_on_REC_Mechanism.pdf
Poor RPO enforcement underlies the failure of the REC market. As of

date, many discoms have filed petitions seeking leniency on unmet RPOs
that often date back many years. State discoms in Haryana and Telangana
have not participated in the REC market, despite the fact that neither met
their targets in either solar or non-solar categories. On the other hand, states
with better enforcement are more active participants in the REC market —
examples are Gujarat and Maharashtra, which have the largest shares of RECs
in spite of having large renewable capacity PPAs (see Graph 6: Percentage of
RECs procured by individual states).
123

The recent push by various ERCs and the CERC has seen a spike in REC
trading, with the largest ever volume of wind RECs (5.2 million) bought in
a single month in December 2017. While this is a promising sign for the
REC market, it still remains weak and oversupplied. The market clearing
price, even in instances of relatively high demand, is only slightly over
the floor price, skimming the Rs 1,000/MWh30 mark — hardly an incentive
for developers to opt for the REC route. Going forward, it is unclear what
the future of the REC market is likely to be, even when RPO enforcement
becomes stringent. The fall in tariffs has made the option of directly procuring
renewable energy far more enticing than trading in REC certificates. The
wind and solar Inter-State Transmission System auctions, which waive
inter-state transmission charges, are likely to further dilute the relevance of
the REC market.
Open access customers are likely to be the only consumers of RECs in the
coming days, because direct procurement of renewable (or conventional)
power is challenging, with most states making OA, especially renewable-
based, more demanding. Consequently, it is also likely to keep the pool of
REC traders limited.
Renewable energy-based open access (OA)

Following the CERC’s lead and considering the mandate of the Electricity
Act, 2003, the SERCs started coming up with intra-state and distribution
open access regulations from 2004 onwards. OA transactions could either
be done bilaterally or collectively (through power exchanges) and for a
variety of time frames — short-term (up to one month at a time), medium-
term (three months to three years) and long-term OA (12 years and 25 years)
(see Figure 1: Existing framework for OA transactions).31
The CERC’s monthly market monitoring reports show that from 2010-11
The fall in to 2016-17, the absolute volume of power transacted under short-term OA
tariffs has has gone up six times (from 4 BU to 24 BU).32 The average total number of
OA consumers participating in the exchanges has also increased steadily
made the from 608 in 2010-11 to 4,420 in 2016-17. Moreover, the weighted average
price of such transactions decreased from Rs 2.74 per kWh in 2010-11 to Rs
option of 2.43 per kWh in 2016-17. This increase in volume and decline in prices are
directly indicative of the growth of OA in the short-term market.
Also, the rapid fall in prices of renewable power, coupled with high
procuring industrial/commercial tariffs, have made renewable-based OA viable in
renewable the country. Additionally, the concessions and waivers on OA charges that
various SERCs have been offering to renewable energy-based open access
energy far (RE-OA) consumers have helped their growth. These concessions were
more enticing introduced for the purpose of promoting RE-OA and boosting investments
which helped make RE-OA competitive with conventional open access.
than trading Based on the limited publicly available data from SERCs, State Load
in REC Despatch Centres (SLDC) and Regional Load Despatch Centres (RLDC), and
the requests filed under the Right to Information Act, 2005, the penetration
certificates of RE-OA (open access consumption wheeled through network of the
distribution licensees in the state) in few important renewable-rich states
124

Figure 1: Existing framework for OA transactions

Can be done bilaterally, collectively and for various time frames
OA transactions
Long-term open Medium-term open Short-term open

access (LTOA) access (MTOA) access (STOA)
Bilateral contracts (includes

Bilateral contracts Collected
term ahead market (TAM))
RE Non-RE Day ahead

market (DAM)
Inter-state Intra-state Inter-state Intra-state
REC Non-REC
Source: Prayas (Energy Group), September 2017, ‘Choosing Green: The status and challenges of renewable energy based open access — a working paper’
was estimated by Prayas (Energy Group).33 The data indicates that RE-OA
penetration has increased in the last three years (see Graph 7: Renewable
energy-based OA trends). Of the total open access consumption in 2016-17,
RE-OA consumption stood at around 30 per cent (2,700 MU) in Gujarat, 15
per cent (311 MU) in Madhya Pradesh, 8 per cent (167 MU) in Telangana
and 8 per cent (758 MU) in Maharashtra. Also, wind power-based renewable
open access dominated in most of the states except Madhya Pradesh, where
solar comprised almost 60 per cent of the RE-OA.
Challenges and difficulties

While data shows that there has been a considerable uptake of OA, the
implementation has seen various challenges and operational difficulties.
While some of these issues are specific to RE-OA, most affect all OA
consumers and generators. These issues include delays in giving of no-
objection certificates; overall procedural complexities; lack of independence
of SLDCs; frequent switching by OA consumers between the market and
the discom supply, leading to inefficiencies in procurement planning and
higher cost for discoms; and restrictions imposed by states under Section 11
of the Electricity Act, 2003 to deter export or import of power through open
access under deficit or surplus power conditions of the state.
Apart from these operational challenges, there is the vexed issue of
125

Graph 7: RE-based OA trends

The penetration has increased
3,000 120
2,739
Total renewable energy-based OA consumption (MU)
2,284
2,500 Renewable energy-based OA consumption as a share of 100
total OA consumption
2,036
Renewable OA consumption (MU)
2,000 80
Percentage
1,500 60
1,000 40
758
566
447
500 20
311
282
267
257
103
184
64
167
56
0 0
2014-15
2015-16
2016-17
2014-15
2015-16
2016-17
2014-15
2015-16
2016-17
2014-15
2015-16
2016-17
2014-15
2015-16
2016-17
Andhra Pradesh Gujarat Madhya Pradesh Telangana Maharashtra

(TNSPOCL) (MSEOCL)
Source: Prayas (Energy Group), September 2017, ‘Choosing Green: The status and challenges of renewable energy based open access — a working paper’
OA charges. These consist of a variety of fees, charges and surcharges that

consumers have to pay in order to avail electricity through OA. These
include application fees, network (transmission and distribution) charges
and losses, cross-subsidy surcharge (CSS), additional surcharge etc.
The CSS is levied to compensate the discom for its loss of cross-subsidy
needed to provide subsidised power for agriculture and low-income
residential segments. In some states, the CSS is as high as Rs 3 per kWh,
thus making it the most important charge. While OA consumers perceive
the CSS to be too high, it is often insufficient to recover the loss of cross-
subsidy to the discom. Also, the SERCs have been capping the CSS at 20
per cent of the respective consumer tariffs, without bringing tariffs for all
consumer categories within +/-20 per cent of the average cost of supply,
which was recommended by the National Tariff Policy (NTP), 2016.34
Additionally, the volatility and uncertainty in the yearly determined CSS
undermines a possibility of long-term OA planning. Hence, there needs to
be a medium-term certainty of the CSS to encourage consumers, to move to
medium-term (MTOA) and long-term open access (LTOA). CSS is also one
of those open access charges that many states offer concessions/waivers on
for RE-OA.
However, with grid parity being achieved and base price being equivalent
126

Graph 8: Landed cost of coal and renewable OA

Renewable is cheaper than coal
8
7
6
Cost (Rs/kWh)
Effective banking charges

5
RPO cost
4
Additional surcharge
3 CSS
2 Total losses
1 Total transmission charge

Base rate
0
FY16 Coal FY16 FY17 Coal FY17
Renewable Renewable
Source: Prayas (Energy Group), September 2017, ‘Choosing Green: The status and challenges of renewable energy based
open access — a working paper’
for green and grey sources (see Graph 8: Landed cost of coal and renewable
OA), the concessions/waivers on these charges can be gradually removed.
Most importantly, if the CSS alone cannot fully compensate the licensee’s
loss in revenue due to sales migration, some form of additional transitional
support from the state and Central government is necessary. Such support
can be provided through subsidies or cross-subsidy with the levy of duties
on all grid-connected consumers, including captive consumers as suggested
in the draft National Energy Policy. A generic
Sales migration from the discom to OA can result in stranded generation problem that
capacity. To recover the fixed costs of such capacity, an OA charge known
as the additional surcharge is levied. This is enabled by Section 42(4) of the additional
the Electricity Act, 2003.35 The NTP 2016 states that such a surcharge can
be charged ‘only if it can be conclusively demonstrated that the obligation
surcharge
of a licensee, in terms of existing power purchase commitments, has been poses to
and continues to be stranded, or there is an unavoidable obligation and
incidence to bear fixed costs consequent to such a contract.’36
all OA
Concessions on the additional surcharge are not available widely stakeholders
across states, with the exception of Gujarat, which provides a 50 per cent
concession for wind-based OA transactions. A generic problem that the
is the non-
additional surcharge poses to all OA stakeholders is the non-uniformity in uniformity
the methodology to calculate the surcharge across states. Going forward,
there would be a need to identify the principles for such a methodology. The
in the
Ministry of Power in its Consultative Paper released in 201737 has identified methodology
this as a need, and suggested a new methodology that can be followed
uniformly by all states. This methodology was also supported by the Forum to calculate
of Regulator’s ‘Report on Open Access’.38 the surcharge
Renewable energy generation sources (especially wind and solar) have
seasonal and diurnal variations. The pattern of renewable energy generation across states
(from wind/solar) may not match with the demand of the RE-OA consumer
127

in real time, resulting in excess generation in some time blocks, or excess

demand in others. In such cases, the banking mechanism allows for the
RE-OA consumer to notionally store or bank the excess generation from its
renewable generator with the distribution utility. Such excess energy can be
withdrawn when required after payment of a banking charge. In most of the
states, the regulators have imposed peak/no peak and seasonal restrictions
for injection and withdrawal of the banked power. At the end of the banking
period, the excess energy banked with the distribution company is allowed
to be purchased by it at a buy-back rate which currently differs from state
to state.
At present, the banking charges levied by SERCs vary across the states in
magnitude and principle. Most of the SERCs apply the banking charge ‘in-
kind’, i.e. in energy terms. While some apply a 2 per cent in-kind charge on
the banked energy, the KERC applies a 2 per cent charge on the total injected
energy and the APERC on total drawl of energy. Applying the banking
charge on total injected energy and total drawal of energy inherently implies
that each consumer, irrespective of his generation source (wind, solar, mini-
hydel) and demand profile, would have the same hourly/daily/seasonal
pattern of banking energy and have the same impact on the system.
Some of the discoms in Maharashtra, Karnataka and Tamil Nadu are
Current already claiming that the current banking mechanism is unable to recover
the difference in power purchase cost of the discom at the time of banking
regulations on and withdrawal of the banked energy. They have asked for changes in the
forecasting current design of banking charge.
Prayas (Energy Group) analysed banking data provided by MSEDCL in
and petition 85 of 2017 filed before the MERC.39 It shows that the monetary value
scheduling of the current ‘in-kind’ banking charge (2 per cent of the banked energy),
valued at the average lowest variable cost of backed down power per month,
present a works out to a mere Rs 0.04 per kWh of banked energy. Going by the new
challenge: framework as suggested by MSEDCL, the RE-OA consumer would have to
pay an average banking charge of Rs 0.69 per kWh of banked energy for the
they do not year 2016-17. This would result in only 3 per cent increase in the landed
cost of the RE-OA consumer. Quantifying the banking charge in Rs per
allow revision kWh and linking it to the power purchase cost of the discom at the time of
of schedules banking and withdrawal of the banked energy, will help stakeholders like
the SERCs, discoms, RE-OA generators and consumers to understand the
for wind value and impacts of energy banking.
and solar The current regulations on forecasting and scheduling present another
challenge as they do not allow revision of schedules for wind and solar
generators generators selling power under the collective transactions (power
selling exchanges), as it is in line with the present scheduling practices of inter-state
OA transactions. Wind and solar generators cannot control their generation
power under close to schedules because of their variable and uncertain nature. Hence,
collective these generators participating in the power exchanges face the risk of higher
deviation charges along with the market risk.
transactions Also, the regulations need to be periodically revised in terms of the
deviation bands and the corresponding deviation penalties. For example,
128

considering recent the PPA rates of around Rs 3 per kWh for wind and
solar power, the deviation penalties are higher for intra-state transactions
With fast
as compared to inter-state transactions.40 Hence, deviation penalties for declining
intra-state transactions based on absolute values need careful attention and
regular revision in line with the wind and solar market prices. Ideally, the
renewable
states should quickly move to schedule-based accounting and align the state prices, the
framework for renewable forecasting and scheduling in line with the CERC
framework for regional entities.
need for
These challenges can be dealt with in a more transparent way with better concessions
availability of data of RE-OA transactions. This will aid in taking informed
regulatory and policy-related decisions, thereby increasing the confidence may decrease
of stakeholders in making regulatory decisions. To enable this, ideally, the in the future.
CERC market monitoring report should broaden its scope and include STOA,
MTOA and LTOA RE transactions and track the amount of transactions and A gradual
average price. On similar lines, each SERC should also come up with its removal of the
own state market monitoring report.
Although RE-OA has seen growth in the recent past, some operational concessions
and regulatory challenges persist. With fast declining renewable prices, the
need for concessions may decrease in the future. Thus, a gradual removal
on RE-OA
of the concessions on RE-OA transactions is the way forward. A banking transactions
mechanism which addresses the variability in the RE-OA generation needs
to be deliberated on and made revenue-neutral for the discom. Finally, given
is the way
the ever-increasing economic attractiveness of renewable energy-based open forward
access, especially considering the high and rising consumer tariffs, there is a
need to critically examine the existing OA framework and work out a set of
rules for the near future which would balance the interests of the incumbent
discom and potential OA consumers.
The way ahead

It is clear that the various plans and schemes to allow for clean energy
penetration at a large scale are hinging on serious power sector reforms.
UDAY reforms seem likely to prove inadequate and discoms continue to be
plagued by under-performance. What, therefore, is the way ahead?
The discom business needs to be fundamentally restructured. The
proposed 2018 Amendement to the Electricity Act is a start but it still
has some shortcomings. First, there is a need to increase competition to
improve the quality of service provided by the discoms. The proposed
seperation of carriage and content does, indeed, allow for greater customer
choice. However, it means that rich households, commercial and industrial
consumers need to pay equitable costs in order to support poorer consumers
during the transition period. This responsibility is likely to fall on legacy
discoms and the regulations need to make an allowance for this.
Discom governance needs to be improved fundamentally, with greater
resilience to polticial influence. There should be robust mechanisms put
in place to ensure tariff rationalisation and follow-through on subsequent
increases.
Market-friendly electricity reforms need to be introduced and enforced.
129

The discom This includes expanding the role of the short-term markets, as well as strict
enforcement of PPAs to assure investors and developers of the legal sanctity
business of contracts signed with discoms.
needs to be Streamlining the open access process, with the fair application of
additional surcharges will boost the demand for renewable energy from the
fundamentally commercial and industrial sectors.
restructured Discoms will have to be pushed harder to invest in technical solutions
and infrastructure upgrade such as feeder seperation, installing smart meters
for a and undertaking detailed data collection and analysis to root out operational
renewable inefficiencies. In order to curb AT&C losses, as per the expectations set out
in UDAY, smart meters need to be set up at customer ends to fully evaluate
energy future their losses and enforce revenue collection.
RPOs will continue to be indispensable for driving the sector’s growth.
The MNRE has announced the creation of an RPO compliance cell that
is expected to track and report on a monthly basis on compliance by all
obligated entities.40 RPO compliance reporting should be made public and
compulsory; an annual audit by the CERC is likely to have more impact.
The bottom-line is that a renewable energy future cannot be built on an
outdated discom model. Fundamental changes are required to redefine the
role of the discoms.
130

CHAPTER 8
Integrating RE:
Preparing for the future
I
ntegrating renewable energy into existing power grid networks is widely,
and mistakenly, perceived to be a major challenge. Since wind and solar
energy generation is variable and unpredictable, it is commonly assumed
that any efforts to integrate them into the grid — even if their share in
the total energy mix is small — would require significant investments in
evacuation network and grid management systems.
However, the experience from many countries indicates otherwise:
it shows grid networks are capable of accommodating a high share of
renewable energy through improvements in power system operations and
reforms in regulatory frameworks and markets.1 Ireland, for instance, is
currently managing the world’s highest renewable generation penetration
of over 35 per cent despite being a small island power system (see Box: The
Irish miracle). Similarly, countries like Germany, the United Kingdom and Global
Spain are successfully managing RE shares of over 20-25 per cent in their
networks.2 experience
In India, the Central Electricity Authority (CEA) estimates the share of
renewable energy in power grid networks would reach around 17.5 per cent
shows grid
by 2022, based on the 160-GW capacity in solar and wind.3 Grid integration networks can
is far easier at these penetration levels of 15-20 per cent. The International
Energy Agency’s (IEA) study of best practices in managing RE integration
accommodate
indicates that gradual technical and economic grid management measures a high share
are sufficient for reliable and cost-effective operation of power systems in
a high renewable scenario.4 The IEA also estimates only a 15-20 per cent
of RE through
increase in system cost even at a very high RE penetration of 45 per cent.5 improvements
India’s grid is well positioned to efficiently integrate the level of RE
share projected for 2022. The planned transmission capacity in the country
in power
is adequate. India already has a vast 83 GW of inter-regional transmission system
capacity which provides grid operators with a wide balancing area. The work
on Renewable Energy Management Centres (REMC) for real-time monitoring is operations
in its advanced stages. On the policy front, the Central Electricity Regulatory and regulatory
Commission (CERC) has put regulatory frameworks in place for forecasting and
scheduling of RE and flexible operations of thermal power plants and auxiliary reforms
services — all of which support higher RE penetration; however, implementation
131
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INTEGRATING RE: PREPARING FOR THE FUTURE
at the state-level has been unsatisfactory. Discoms, on their part, hold sizable
contracted supplies under power purchase agreements (PPAs) with a two-part
tariff that pays thermal power plants even when they are not generating, thus
ensuring availability of back-up capacity for renewables.
However, achieving a higher level of renewable penetration — beyond
175 GW — would require additional measures such as an increase in the
balancing capability of the grid and enhancement of transmission networks.
A key area of concern is the limited network augmentation by discoms —
which involves smart metering, augmentation in transformer capacity etc
— to support distributed renewable energy.
Integration of 175 GW renewables

India’s transmission infrastructure has expanded significantly in recent
years. Between April 2012 and March 2018, the transmission line length
and substation capacity in the country has gone up at an annual average rate
of over 7 per cent and 12 per cent, respectively. During this period, the inter-
regional transmission capacity has increased nearly three times — from 28
GW to 83 GW.6
At the same time, the performance and stability of the national grid has
improved due to better forecasting and scheduling mechanisms, introduction
of the Deviation Settlement Mechanism (DSM), strengthened incentives/
132
The Irish miracle

How Ireland is preparing for the world’s highest wind power penetration
In 2017, the renewable energy share — dominated by wind power — in Ireland’s
generation mix was over 35 per cent. The country is aiming to increase this further to 40
per cent by 2020, with instantaneous wind energy penetration reaching 100 per cent of
the demand. For maintaining grid security in such circumstances, Ireland — with a small
isolated island network — has placed great emphasis on network upgrades, reserve
requirements, reliable delivery and performance monitoring of all generating units.
Renewable generation has been granted dispatch priority, which is being achieved at
low curtailment levels of 2-4 per cent.
To prepare the national grid for increased renewable penetration, Ireland’s national grid
operators, EirGrid and SONI, launched the Delivering a Secure Sustainable Electricity System
(DS3) programme in 2011. This multi-year, multi-stakeholder programme incorporated a
number of technical, economic and regulatory measures required to change system
policies, tools and performances to support 75 per cent system non-synchronous penetration
in Ireland’s grid by 2020, at a targeted annual curtailment of 5 per cent.1
Under this programme, grid codes have been strengthened not just for wind power
plants but also for conventional generators to ensure discipline from all connected
entities. Wind Security Assessment Tools (WSAT) have been installed across the control
centres. System service/ancillary service products are being developed to provide
financial incentives for improved system performance. Eleven products are already
operational, and three others are being introduced.2
System operational policies and system tools are being updated to assist voltage and
frequency management in the light of increased organisational and system complexity.
Ireland is developing a long-term policy for large-scale demand side management and
enhanced performance monitoring system. The individual work streams are in various
stages of implementation and are set to meet the renewable targets by 2020.
Ireland’s system upgrade plan under the DS3 programme

Comprises 11 work-streams categorised across three pillars
PERFORMANCE
MONITORING RENEWABLE DATA
C E SY
SYSTEM AN ST
DSM M VOLTAGE FREQUENCY
SERVICES
R
EM
FO
PO
SYSTEM PER
GRID
ROCOF
DS3
LICIES
CODE
SY
STEM
TOOLS
CONTROL
WSAT CENTRE TOOLS
MODEL DEVELOPMENT
STUDIES
Source: Eirgrid Group,‘The DS3 Programme Brochure’, http://www.eirgridgroup.com/site-files/library/EirGrid/DS3-Programme-Brochure.pdf
133
disincentives under the availability-based tariff (ABT) mechanism,

introduction of ancillary services, and development of short-term markets.
The improved grid performance can be seen in substantial tightening in the
grid frequency band to 49.5-50.2 Hz under the CERC’s 2010 regulations7
and the lower supply deficits. Maintaining such grid discipline in a 175-
GW renewable scenario would, however, require developing additional
transmission capacity, forecasting and scheduling systems and regulations,
and improving system visibility and flexibility — which are the focus areas
in the government’s existing efforts.
Detailed system modeling by Power System Operation Corporation
(POSOCO) along with the National Renewable Energy Lab (NREL) published
in the report Greening the Grid concludes that integrating 100 GW of solar
and 60 GW of wind can be achieved at a curtailment of only 1.4 per cent
without fast-ramping infrastructure such as batteries, pump hydro or gas-
based plants etc (see Table 1: Projected power system and curtailment
scenarios).8 The model suggests that “inherent flexibility in existing coal-
based capacity” will greatly help in integrating variable RE generation.
However, the assessment assumes that existing plans of expansion of
generation and transmission capacity, which would provide competency
Table 1: Power system and curtailment scenarios, 2022

100 GW of solar and 60 GW of wind can be integrated with minimal
curtailment even without fast-ramping infrastructure
Renewable energy • Share of renewable energy in total generation
scenario increases to 22%; nationwide curtailment of
renewable energy averages at 1.4% annually;
southern region reports highest curtailment of 2.9%;
implementation of ongoing regulatory and grid
development initiatives — state-level dispatch and
55% minimum generation levels on coal plants
Thermal energy scenario • Coal generation decreases by 21%; average plant
load factor (PLF) of coal-based plants drops to
50%; aggregated nationally, system-wide up-ramps
peak at almost 32 GW per hour
Impact of additional Improved scheduling and dispatch coordination:
measures Moving from state to regional coordination would
lead to 2.8% saving in production cost, and reduce
curtailment to 1.3%
Further increase in flexibility of conventional
generators: Curtailment reduces from 1.4% to 0.76%
when minimum generation levels are dropped from
55% to 40%; coal ramp rates, start-up costs, and
minimum up/down time do not significantly affect RE
curtailment or production costs
Increased integration of energy storage: Negligible
benefits of batteries at 2.5 GW aggregate capacity
operating at 75% efficiency
Source: National Renewable Energy Laboratory, Lawrence Berkeley National Laboratory, Power System Operation Corporation
Limited and US Agency for International Development, ‘Greening the Grid, 2017’, https://www.nrel.gov/docs/fy17osti/68530.pdf
134
to handle errors in RE forecasts, changes in net load (ramps), and low RE

generation, will be executed in time.
Infrastructure development
Expanding the transmission grid network is crucial for both evacuating power
from upcoming wind and solar plants and enabling interstate/interregional
transfer of surplus power. Inadequate network availability or congestion has
led to curtailment of renewable power in renewable-rich states like Tamil
Nadu and Rajasthan (see chapters on wind and solar energy). A survey of
industry leaders reported transmission connectivity of projects as a major
challenge in the utility-scale renewable market.9 Recently, the SECI decided
to slash the 2,500 MW Inter-State Transmission System (ISTS) wind tender
to 1,200 MW due to investor concerns about evacuation constraints. Industry
observers say that the MNRE may need to lower its goal of 10 GW of wind
auction in 2018-19 primarily due to transmission concerns.10
In the 2017-22 five-year period, India is targeting to increase transmission
line length by 105,580 circuit km (ckm) and substation capacity by 292,000
mega volt amp (MVA) based on the projected demand and supply growth
(including renewable capacity).11 Past experience — 110,370 ckm of line
length and 331,214 MVA of substation capacity were added during the 12th
plan period (2012-17)12 — indicates that these targets are achievable. Efforts,
however, need to be focused on fast-tracking projects dedicated to serving
wind and solar projects, given their short gestation periods.
Green Energy Corridor-I: In 2012, the government conceived the Green

Energy Corridor (GEC) project (GEC-I) to address evacuation bottlenecks,
especially in areas with large wind and solar capacity. GEC-I — concentrated
in the seven renewable-rich states of Andhra Pradesh, Gujarat, Himachal
Pradesh, Karnataka, Maharashtra, Rajasthan and Tamil Nadu — anticipated
a renewable capacity addition of 41 GW during 2012-17.13
However, the project has faced problems right from the start. The Cabinet
Delays in
Committee on Economic Affairs (CCEA) took almost three years to approve building the
the Rs 10,141-crore investment for the project. So far, GEC-I implementation
has made little progress. It is unlikely that its goals — adding an additional
Green Energy
2,550 ckm of interstate lines by June 2019 and 7,400 ckm of intrastate Corridors is
lines by March 2020 — will be met (see Graph 1: Status of Green Energy
Corridor-I).14
likely to result
in financial
Green Energy Corridor-II: The GEC-II project was formulated in 2015 to
build transmission infrastructure associated with 20 GW of ultra-mega solar
losses for
parks, at an investment of around Rs 12,786 crore. So far, transmission renewable
infrastructure associated with three solar parks — Kadapa and Kurnool in
Andhra Pradesh15 and Bhadla in Rajasthan — have been commissioned. It is plants
likely that Karnataka’s Pavagada Park transmission infrastructure will also because of
be completed soon. Delays in GEC-II would result in financial losses for the
plants that are being built inside the park since they would be unable to curtailments
evacuate power.
135
Graph 1: Status of Green Energy Corridor-I

The project has made little progress
10,000
8,500
Transmission (ckm) 8,000
6,000
4,000 3,200
2,000 1,100
650
0
Inter-state Intra-state
Target Achievement
Note: Data till December 2017

Source: Lok Sabha’s Standing Committee on Energy, March 2018, http://164.100.47.193/lsscommittee/Energy/16_
Energy_39.pdf
Renewable Energy Management Centres (REMCs): Proposed to be

installed in load dispatch centres (LDCs), REMCs are at the heart of
efficient integration. They are crucial for ensuring optimal forecasting and
scheduling, balancing of power (at state LDCs), coordination of the regional
grid (at regional LDCs) and maintenance of grid security (at national LDCs).
The REMCs will undertake real-time monitoring of renewable generation at
the pooling station level, intra-day and day-ahead forecasting, coordination
for scheduling and dispatch, and monitoring reserves. This will be enabled
by smart technologies such as Supervisory Control and Data Acquisition
(SCADA) systems, communication tools such as Wide Area Measurement
System (WAMS), and weather forecasting services.
Currently, 11 REMCs are being set up at an estimated cost of Rs 409
crore — including seven of them in the renewable-rich states, three at the
regional level and one at the national level16 (see Statistics section). The
project, funded by the German development agency GIZ, has experienced
delays due to lack of adequate technical expertise, and is now likely to be
operationalised in 2019.17
Grid technology upgradation
Wide Area Measurement System (WAMS) is crucial for large-scale

renewable integration as it enables real-time measurement and monitoring
of grid parameters through phasor measurement units (PMU). The Power
Grid Corporation of India Limited (PGCIL) is currently implementing a
Unified Real Time Dynamic State Measurement (URTDSM) project to install
PMUs in all inter and intrastate substations of 400 kV and above, generating
stations of 220 kV and above, high voltage direct current (HVDC) terminals
and key regional/national connection points. The first phase of the project
136
launched in January 2016 was to be completed in 24 months with installation

of 1,184 PMUs at 351 substations and 34 control centers. So far, works have
been completed only in the Northern Grid.18
Reactive Power Compensation through devices such as static var

compensators (SVCs) or static synchronous compensators (STATCOM) are
crucial for flexible and dynamic control of power systems and for balancing.
So far, one SVCs and four STATCOMs have been commissioned, while 11
more STATCOMs are at various implementation stages.19
Regulatory progress
Forecasting and scheduling

Forecasting, scheduling and DSM regulations are key to managing renewable
energy injection into the grid. The Indian Electricity Grid Code (IEGC)
mandated in 2010 that all wind and solar projects of over 10 MW and 5 MW
capacity, respectively, and connected to the transmission network should
forecast generation and schedule for dispatch on a day-ahead basis. The
Grid Code introduced penalties (for deviations exceeding 30 per cent from
schedule) under the Renewable Regulatory Fund (RRF) mechanism, but it
was never implemented due to resistance from wind energy generators and
insufficient infrastructure availability.
In August 2015, the CERC amended regulations to incorporate forecasting,
scheduling and imbalance handling for wind and solar generators Forecasting
that are connected to the interstate network. In November 2015, the Forum
of Regulators (FoR) came up with model forecasting and scheduling and
regulations for states. Several states have now introduced draft/final scheduling
regulations based on the FoR model — however, Karnataka is the only state
to have implemented them.20 regulations
are key to
CERC’s regulations: These apply to all wind and solar generators connected
to the ISTS. A hybrid approach has been adopted, in which both RLDCs managing
and generators (a generator, called a ‘qualified coordinating agency’ (QCA), renewable
may be appointed to coordinate when multiple generators are connected
to the ISTS through a common pooling station) forecast independently. energy
Scheduling can be based either on the QCA’s or the RLDC’s forecast, but
the commercial settlement of the deviations is based only on the generator’s
injection into
forecast. Deviations of generation from schedule are calculated and, the grid. But
• in case of over-injection from schedule, the generator is paid from the
regional DSM pool.
Karnataka
• in case of under-injection, the generator pays the regional DSM pool. is the only
State regulations: These are based on the FoR model regulations and apply
state to have
to wind and solar generators connected to the state network, whether implemented
supplying intra or interstate. The forecasting and scheduling process is
similar to that of CERC’s. However, there are differences in the commercial them
settlement mechanism — for example, states use a fixed rate for payments
137
Flexible while the CERC uses an average of power purchase agreement (PPA) rates.
Most importantly, generators connected to the state grid are paid as per their
thermal power actual injection against being paid as per schedule under CERC regulations.
plants can Further, state regulations require payment into a pool for both under- or over-
injection for intrastate transactions. For generators selling power outside the
easily balance state, the deviation charges are the same as under the CERC framework (see
Statistics section).
100 GW of
solar and 60 Emerging issues: The forecasting and scheduling framework in India is
at a nascent stage. Implementation is likely to lead to techno-economic
GW of wind in implications for various stakeholders which may need fine-tuning of
the grid regulations. Some of the emerging issues pertain to:
• Under CERC regulations, renewable generators have clear incentive to
under-schedule and take a chance that they may end up over-injecting,
since the payoffs are unequal: for under-injection, generators pay a
penalty but for over-injection, they merely receive a lower payment.21
Similarly, in state regulations, estimations by the Prayas Energy Group22
indicate that loss in revenue is always less for over-injection than under-
injection for the same absolute error, which may incentivise generators
to under-schedule slightly and over-inject.
• The existing forecasting and scheduling framework puts financial burden
on the host state. Deviation settlement of renewable generators is not
linked to frequency condition of the grid [in technical terms, renewable
generators do not pay unscheduled interchange (UI) charges]. However,
the host state will need to pay for deviation charges to the regional UI
pool for deviation caused by the renewable generators, bearing penalties.
• Deviation charges under state regulations specified in Rs per kWh terms
need to be updated regularly in line with market trends. These penalties
will have a higher impact on newer projects with lower tariffs. The target
should be to implement availability-based tariff (ABT) across states.
Balancing support from thermal power plants

India’s strategy for providing balancing support to accommodate variable
generation supply by 2022 relies primarily on flexible operations of thermal
power plants. The NREL-POSOCO report (Greening the Grid) estimates that
at a technical minimum of 55 per cent for thermal plants, the power system
would be able to support 100 GW of solar and 60 GW of wind. The report
estimates that variability in wind and solar power supply may require
thermal power plants to ramp up by 25 GW in one hour only for 56 hours
in a year.23 The inherent flexibility in current coal-based capacity can easily
manage these requirements.
The CERC, in April 2016, amended the IEGC to reduce the technical
minimum for all central and inter-state plants to 55 per cent, against the
previous norm of 70 per cent.24 However, the states are yet to follow suit:
their excuse is technical difficulties, although independent experts claim
the states’ position has little merit.
138
Reserve capacity and ancillary markets

To balance variable renewable energy, the reserve capacity needs to be
appropriately utilised. It can be broken down into various sub-categories
such as primary, secondary, slow tertiary, fast tertiary etc, depending on
their response time; these have to be identified in advance, kept available
and deployed in real time (see Table 2: Types of reserves/ancillary services
in India).
Availability of reserves/ancillary services has been ensured in India by
regulatory action. The IEGC amendments ensured availability of primary
reserves which can respond very quickly — within few seconds to under five
minutes — by requiring power plants to keep reserves for system security.
The roadmap to implement secondary reserves (with response time of 30
seconds to 15 minutes) and tertiary reserves (5 minutes to 60 minutes) was
notified by the CERC in October 2015.25
POSOCO has submitted a detailed procedure for implementing secondary
control through Automatic Generation Control (AGC). A pilot project on
AGC with the Dadri thermal plant stage II of NTPC Limited is currently
under implementation.26 The pilot’s test runs have been completed.
With regard to tertiary reserves, the CERC introduced Reserves Regulation
Ancillary Services (RRAS) in April 2016; under it, surplus generation from
regional entities can be used as part of RRAS on a day-head basis. The CERC is
also considering steps like moving away from administered procurement and
pre-specified mark-up to auction-based procurement of ancillary services.27
Table 2: Types of reserves/ancillary services in India

Availability of reserves is ensured in ISTS by regulatory action
Parameters Inertia Primary Secondary Fast Slow Generation Unit
tertiary tertiary rescheduling/ commitment
market
Time First few Few 30 5-30 > 15-60 > 60 minutes Hours/day-
seconds seconds-5 seconds-15 minutes minutes ahead
minutes minutes
Quantum ~ 10,000 4,000 MW ~ 4,000 MW ~ 1,000 MW 8,000-9,000 Load Load

MW/Hz MW generation generation
balance balance
Region Local Local NLDC/RLDC NLDC NLDC/SLDC RLDC/SLDC RLDC/SLDC
Order IEGC/CEA IEGC/CEA Roadmap Ancillary Ancillary IEGC IEGC
standard standard on reserves regulations regulations
Paid/ Mandated Mandated Paid Paid Paid Paid Paid
mandated
Regulated/ Regulated Regulated Regulated Regulated Regulated/ Regulated/ Regulated/

market market market market
Status Existing Partly Yet to start Yet to start Existing Existing Existing
existing
Source: Central Electricity Regulatory Commission, http://www.cercind.gov.in/2018/draft_reg/DP.pdf
139
The cost of renewable grid integration

An analysis by the CEA pegs the cost of grid integration of variable renewable energy in
India at Rs 1.11 per unit.1 In the two renewable-rich states of Tamil Nadu and Gujarat, this
cost is estimated to be higher at Rs 1.57 per unit and Rs 1.47 per unit, respectively. Analysis
of the cost components — balancing cost, stand-by cost, transmission charges and DSM
charges — considered by the CEA indicates that actual costs may be much lower (see:
CEA’s estimated cost of integrating 175-GW renewable energy by 2022).
At the national level, nearly half of the integration cost of Re 0.50 per unit is accounted
for by stand-by costs, i.e. the opportunity cost of foregoing cheaper thermal sources for
must-run renewables. For this, the CEA study assumes that 25 per cent of the wind and
solar generation operating on an average tariff of Rs 4 per unit would replace generation
from coal-based stations with a cheaper fuel charge of Rs 2 per unit. This cost component
will reduce significantly in the coming years as tariffs discovered through competitive
bidding decline further from Rs 2.50 per unit. The gap would further decline with reforms
in procurement practices — such as achieving an optimum mix of long- and short-term
contracts.
Further, suboptimal utilisation of the transmission system due to lower capacity utilisation
factor of renewables is expected to increase transmission charges by Rs 0.26 per unit. This
can also be reduced with reforms. Solar power plants use transmission systems only for nine-
10 hours, but pay charges based on maximum MW utilisation during a quarter year and
24-hour basis under the existing system. The CEA suggests that this should be changed to a
shorter period (monthly or hourly) in line with scheduling of generation to make billing more
equitable for renewable sources. The unutilised transmission capacity can be used by open
access generators or power exchange players.
The cost arising out of the
stand-by balancing capacity is
estimated to be minimal at Rs CEA’s estimated cost of integrating 175-GW
0.04 per unit — in line with the renewable energy by 2022
POSOCO-NREL report. Lastly, Cost pegged at Rs 1.11 per unit
the impact of the DSM charge
Balancing charge 4%
for interstate flow of power is
Additional
estimated to be Re 0.30 per transmission
unit, which can reduce as the charge 24%
Impact of DSM 27%
forecasting and scheduling
framework refines.
While the actual cost of
integration may be lower than
estimates, even at Rs 1.1 per
unit it will be cheaper to add
renewable capacities in future —
this has been pointed out by the
CEA as well. However, remedial Stand-by charge 45%
measures need to be initiated for Source: Central Electricity Authority, http://www.cea.nic.in/reports/others/planning/resd/resd_
sharing of balancing responsibility comm_reports/report.pdf
of renewable energy.
140
Given the fast-expanding pace of renewable energy capacity, Global

implementation of secondary and tertiary reserves needs to be prioritised
at the state level. The FoR is in the process of developing a complementary experience
intrastate-level regulatory framework for reserves, but progress on this
remains slow.
indicates that
renewable
Looking beyond 2022 penetration
The national grid capabilities, combined with ongoing regulatory
developments, will be adequate to effectively manage 175 GW of renewable beyond 25
energy capacity. However, additional measures will be needed to prepare
the grid for a higher renewable penetration.
per cent of
India’s Intended Nationally Determined Contribution (INDC) goals talk the total
about increasing the share of non-fossil-based power capacity to 40 per cent
by 2030.28 Further, the draft National Energy Policy (NEP) published by the
generation
Niti Aayog projects that 597-710 GW of renewable energy capacity is likely requires
to be operational in the country by 2040.29 This would amount to a 50-56
per cent share in installed capacity and 29-36 per cent share in generation. sophisticated
Planning for such high levels of renewable penetration must be initiated technical and
at the earliest as implementation of technology and policy interventions
tends to take longer time compared to setting up wind and solar energy economic
projects. measures
Global experience indicates that an increase in renewable penetration
beyond 15-25 per cent of the total generation requires implementation of
sophisticated technical and economic measures (see Table 3: Strategies
for cost-effective renewable integration in increased penetration levels).
A few of these have already been initiated in India; however, additional
measures are needed to match higher penetration in the coming years. These
additional measures primarily correspond to building balancing capacities
through batteries, pump storage hydro plants, and demand response.
In India, pilot projects are being deployed to test various battery
chemistries. For instance, the pilot project under implementation in
Puducherry by PGCIL is testing three technologies — advanced lead acid,
lithium-ion and NaNiCl2/alkaline/flow.30
The government is also trying to develop the market through competitive
bidding of solar-plus-storage projects. But these have met with limited
success. For instance, the tender for auctions held by state-run firm NLC
India Limited for 20 MW solar and 28 MWh storage project in the Andaman
and Nicobar Islands was cancelled and re-tendered at a far lower battery
capacity of 8 MWh. The bids in the cancelled auction varied widely —
bids submitted by 10 companies varied from Rs 342 crore to Rs 179 crore,
highlighting the under-developed character of the market.31
Given the critical role of batteries in India’s energy future, the Niti Aayog
has released the draft National Energy Storage Mission in August 2018. The
draft proposes a three-stage solution — promoting battery manufacturing;
scaling supply chain strategies; and scaling of battery cell manufacturing.32
141
Table 3: Strategies for cost-effective renewable integration

in increased penetration levels
Increase in penetration beyond 15-25 per cent of total generation requires
implementation of sophisticated technical and economic measures
Measures Phase Phase Phase Phase
I II III VI
Renewable penetration 5% 5-15% 15-25% Over
25%
Technical Real-time monitoring and control
Enhancing capacity of transmission
lines
Power plant flexibility
Special protection scheme
Advanced variable renewable
energy technologies and design
System non-synchronous limit
Smart inverter
Advanced pump hydro operation
Inertia-based fast frequency
response
Grid level storage
Economic Sophisticated sizing of operating
reserves
Integrating forecasting in system
operations
Faster scheduling and dispatch
Incorporating renewable energy in
the dispatch
Coordination across balancing
areas
Source: International Energy Agency, 2017, https://www.iea.org/publications/insights/insightpublications/

SystemIntegrationofRenewables.pdf
Grid-scale energy storage

Grid-scale energy storage at present remains prohibitively expensive for
large-scale deployment; however, its prices have been declining sharply. A
Bloomberg New Energy Finance and KPMG33 study estimates that the cost
of lithium-ion battery pack has declined at a compound annual growth rate
(CAGR) of 17.5 per cent during 2010-16. It is projected to decline further to
US $100 per kW/hr in the next five years (see Graph 2: Past and projected
trends in cost of lithium-ion batteries).
Pumped Storage Hydro Plants (PSHP)

PSHPs, a cost-efficient and reliable source of storage and balancing support,
remain grossly underdeveloped. Against a total estimated potential of 96.5
GW, only 4.8 GW of PSHP capacity has been developed, of which only 2.6
GW is operating in pumping mode.34
142
Graph 2: Past and projected trends in cost of lithium-ion batteries

Battery prices are expected to decline sharply in coming five years
1,200
1,000
1,000
CAPEX (US $/kW/hr)
800
800
630
590
600 550
400 350 315

250 231 213 194 175 156
200 138 119 100
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Source: Bloomberg New Energy Finance and KPMG, ‘Electric Vehicles: A case for a proactive approach’, https://assets.kpmg.com/content/dam/kpmg/in/pdf/2017/11/
Electric-Vehicles.pdf
Demand side management

Demand side management techniques can incentivise consumers to match
demand patterns with renewable energy generation patterns in a given
day. One way of achieving this is through implementation of time-of-day
(ToD) tariff. Under this, consumption is billed differently during different
time blocks to shift consumption from peak to non-peak hours. Studies in
North America demonstrate that ToD tariff motivates behavioural changes
resulting in overall energy saving of about 5 per cent with over 10-15 per cent
reduction during peak periods.35 So far, 15 SERCs in India have implemented
ToD tariffs for mainly industrial and commercial sectors. Some states (such
as Maharashtra and Gujarat) have mandatory ToD structures, while others
have optional variants.
The scope of utilising demand side management for grid balancing has
increased for India with recent developments. In cities, smart grid distribution
technologies can enable introduction of dynamic tariff structures that can
induce demand response in line with renewable energy availability. Some
utilities in the US have already implemented automated demand response,
in which high load equipment such as air conditioners are switched off in
response to supply fluctuations.
Further, tariff rates for charging electric vehicles (being introduced in
a big way) can be structured to encourage charging during off-peak hours.
Conversely, batteries in the EVs can be harnessed to feed into the grid around
midnight when the net demand peaks, since there is no solar generation and
households turn on air conditioners.
Grid integration of distributed generation

India has an ambitious target of installing 40 GW of solar rooftop (SRT)
capacity by 2022 — a tall order, considering existing capacity stands at
a mere 2.1 GW. Most discoms, being financially stressed, are reluctant
to support SRT as it would lead to decrease in revenues while imposing
143
administrative burdens of installation and metering (see chapter on solar

rooftop). In addition, grid-related regulatory and technical factors would
require investment in the discoms’ network.
Regulatory restrictions on deployment based on DT capacity: Most discoms

in India have set conservative limits for SRT installation — 15 to 60 per
cent of rated/peak capacity of the associated distribution transformer (DT).36
These restrictions are based on the assumption that higher levels of SRT
penetration would lead to voltage problems or overloading, necessitating
system upgrades.
However, these assumptions and concerns are misplaced. Detailed
simulation studies conducted by GIZ estimate that SRT penetration of 75
per cent of DT capacity can be accommodated by discoms in the urban areas
without major system upgrades. Rural networks in India need additional
strengthening and can currently accommodate SRT or ground-mounted
solar units connected to the 11 kV network, at penetration levels of above
50 per cent. Instead of state-wide limits, it would be optimal for discoms to
undertake local area studies to assess DT capabilities.37
Technical restrictions due to distribution grid design: Distribution grids in

India are not equipped to manage large amounts of variable bi-directional
power flow. These systems lack active voltage control measures (currently
available only till 66/33 kV step-down transformer level), which are
crucial to maintain grid security at high penetration of SRT. Automatic
voltage control capability of transformers can be enhanced by deploying
Discoms WAMS to enable real-time monitoring of voltage at feeders, and by setting
have set automatic taps.
Voltage support can also be enhanced at the consumer-end. Distribution
conservative grid codes must mandate reactive power and voltage control from rooftop
limits on SRT PV inverters, as well as cap SRT feed-in at 75 per cent of inverter capacity.
It must also mandate installation and operation of peak shaving batteries at
installation. the customer facility as per the grid requirement.
But SRT In India, deployment of advanced and smart technologies for optimising
distribution grid and supporting high penetration of distributed renewable
penetration of energy is yet to take off.
75 per cent Smart grids in India
of DT capacity Smart distribution grid architecture combines automation, information
can be created technology (IT) and communication systems with the traditional electrical
grid. It reduces network losses, and improves systems efficiency and
in urban reliability by enabling real time monitoring and control of power flow. It
increases predictability and flexibility of the system by enabling demand
areas without response. Such grid architecture helps seamless and cost-effective integration
major system of distributed generation by supporting bi-directional power flow, demand
response and distributed storage.
upgrades India started incorporating “smart” elements to the grid under the
Restructured Accelerated Power Development and Reforms Programme
144
(R-APDRP) initiative launched in 2008: the objective was ensuring better Despite major
utility efficiency by improving metering, indexing and automation. Some
of these works remain incomplete even after a decade and are now being benefits to
undertaken as a part of the Integrated Power Development Scheme (IPDS).
the discoms,
Smart metering yet to take off: Smart metering is the foundation on which smart grid
utilities can develop their expertise and understanding of data collection,
management and use, en route to the eventual transition to managing the
projects are
larger, more complex apparatus, that is, the smart grid. in a limbo in
Both Ujjwal Discom Assurance Yojana (UDAY) and IPDS schemes have
focused on rolling out smart meters for large consumer categories — the
the country.
progress, however, has been tardy. Against the national target of installing Less than
over 184 lakh smart meters for consumers in the 200-500 kWh consumption
category, less than 2 lakh meters have been installed so far. Similarly, for 2 per cent of
consumers in the over-500 kWh category, 1.9 lakh smart meters have been targeted smart
installed against a target of almost 60 lakh.38
meters have
Smart grid pilots in a limbo: Several pilot projects are under implementation been installed
in India with partial grant from the Ministry of Power (MoP) as well as under
the NSGM for demonstrating smart grid functionalities. These functionalities so far
include automatic meter infrastructure (AMI), power quality management
(PQM), outage management system (OMS), peak load management (PLM),
and distributed generation — all aimed at improving efficiency of discoms
and reducing distribution losses.
So far, very little progress has been made under these pilots. Out of 14
projects, only three projects (by UHBVNL, HPSEB Limited and CESC) and
IIT Kanpur’s smart city R&D platform have been completed. Implementation
has suffered owing to delays in award of contracts to vendors and finalisation
of detailed project reports, as well as implementation challenges. The Lok
Sabha’s Standing Committee for Energy notes that only Rs 5.5 crore has
been provided by the ministry to smart grid projects in past three years —
branding it a non-starter.39
The MNRE’s Solar Cities Programme remains equally uncertain. At
present, 60 cities including 13 pilot and five model cities have been
approved/sanctioned under the programme. Till date, little progress has
been achieved, with only 49 cities preparing master plan, 21 setting up
stakeholders committees, and 37 creating solar city cells.40
The way forward

India can easily integrate 175 GW of renewable energy sources by 2022
without the need for major investment. However, the progress on many
critical steps, especially with respect to regulatory reforms, has been fitful.
While some key regulations have been implemented nationally, the states
have lagged behind.
The key strategies — like GEC, forecasting and scheduling regulations,
reduction of technical minimum of thermal plants — are either suffering from
delays or remain at a nascent stage. Additional measures need to be initiated
145
Transmission on priority to prepare the grid for the next level of renewable development —
possibly 600-700 GW by 2040. Meanwhile, grid development for distributed
network for RE generation continues to suffer from legacy issues. Smart grid initiatives,
evacuation, while launched with much fanfare, have remained at pilot stage.
smart grid Going ahead, the following will have to prioritised for integrating large
technologies, penetration of renewable energy into the grid:
• Transmission network development for renewable energy evacuation
storage and transfer must be prioritised. Execution of projects under GEC-I and
infrastructure II must be monitored regularly by the CEA, and the roadblocks must be
addressed.
and demand • Deployment plans of smart grid technologies at the transmission grid,
like WAMS and control reserve monitoring, should also be scaled up
side both at inter- and intrastate grids to improve real-time monitoring and
management response.
• The existing national plans for grid integration must be upgraded, to
will be the key appropriately reflect the country’s long term renewable targets of 597-
components of 710 GW by 2040 as per the draft NEP of NITI Aayog.
• Forecasting and scheduling of wind and solar power plants at the
the grid of the state level must be prioritised and implemented within the next year
future to effectively manage the increasing renewable energy penetration.
Standards/guidelines/protocols for forecasting technologies or tools
must be notified by the CEA.
• SERCs should reduce the technical minimum for state-owned coal-based
power plants in line with the CERC’s directions.
• Market mechanisms must be developed to provide incentives to
generation plants to participate in balancing support.
• The MNRE must support reduction in cost of utility scale energy storage
through measures such as increased R&D on technology or competitive
bidding of large tenders.
• Smart grids and policies for demand side management (for example,
time-of-day tariff), which can be an efficient tool in grid management,
need to be developed
• Interconnection rules for SRT must be revised to accommodate its higher
penetration; for instance, discoms should be mandated to undertake
load flow studies in relevant areas. Distribution grid codes must specify
incorporation of technical solution for voltage management and control
at the consumer end.
146
CHAPTER 9
Waste to energy:
Limited scope
W
aste to energy, or WTE, is an option of energy recovery from
waste that cannot be recycled or composted — simply put,
it means the generation of energy from high-calorific value
rejects. Energy can be harnessed from municipal solid waste
(MSW) either by directly incinerating it (thermal) or by converting it into a
fuel (thermo-chemical/biochemical). In several scenarios, given that most
WTE plants worldwide run on incineration-based technology, the terms
‘incineration’ and ‘WTE’ are used interchangeably.
WTE emerged as a topic of discussion in India way back in the 1980s,
at a time when municipal authorities had started grappling with the
problem of disposal of the gargantuan mounds of solid waste in cities: as
cities continued expanding, huge dumpsites or landfills began making their
appearance. Burning this waste seemed the most appropriate way of getting
rid of it.
The first WTE plant came up in Timarpur in Delhi in 1987. It was
designed to incinerate 300 tonne per day (TPD) of waste and produce 3.75
megawatt (MW) of electricity. The plant failed and was shut down. The
commonly cited reason for the failure was a mismatch between the plant’s
waste input requirements and the quality of waste it received in terms of
calorific value, moisture content and physical composition.1 In 1995, a High
Powered Committee Report of the Planning Commission stated that Indian Waste to
waste has a low calorific value, is usually not suitable2 for self-sustained
combustion, and hence, incineration-based technologies in most cases energy plants
might be uneconomical for the country. are ideally
In June 2013, the Planning Commission appointed a task force to assess
the feasibility of WTE technologies. The report of the task force, submitted suited for
in May 2014, recommended stand-alone WTE facilities for large cities with waste that
populations above two million, and pooled or regional facilities for smaller
cities it estimated that India could support 88 WTE facilities in the next cannot be
five to seven years, 215 by 2031, and 556 by 2050.3
In October 2014, Prime Minister Narendra Modi announced a nationwide
recycled or
campaign to clean India — the Swachh Bharat Mission (SBM). One of composted
the components of this Mission was to improve solid waste management
147
09Waste to energy Limited scope(147-158).indd 147 17/01/19 1:10 PM

WASTE TO ENERGY: LIMITED SCOPE
When a capacities and infrastructure in cities. For this, the Mission provides an
incentive from the Central government in the form of a 35 per cent grant
comparison or viability gap funding (VGF) for each project to encourage public-private
between partnerships (PPPs) (see section on policy and regulatory framework in this
chapter).
renewable and
non-renewable WTE as a source of renewable energy
WTE, as indicated by evidence from across the world, has been a popular
sources is choice of waste disposal in industrialised countries for the last 50 years. It is
drawn, it is also considered a renewable source of energy. However, when a comparison
between renewable and non-renewable sources of power generation based
clear that on various parameters is drawn, it is clear that the energy produced by WTE
is minuscule in comparison to other sources, and much more cost-intensive.
the energy In fact, the cost of power generation from WTE is the highest among all the
produced renewable sources of electricity. Also, each WTE plant uses around 25-30
per cent of the power generated by it as auxiliary power in-house to run
by WTE is its own machines (see Table 1: Comparison between renewable and non-
minuscule and renewable sources of power generation).
Most of India’s WTE plants burn mixed waste, and need auxiliary fuel
much more for their operations. This is one of the reasons behind the expensive power
costly they produce. A unit of electricity produced in thermal or coal plants costs
Rs 3-4, while that produced in thermal-based WTE plants costs about Rs 7.
Also, India will have surplus energy by 2019, and the little contribution from
WTE will not add value — WTE, thus, can be considered as a technology for
waste management, not for generating energy.
The feasibility of WTE technology

There are three primary criteria for deciding the technology for processing
MSW through WTE — waste volume and composition, calorific value, and
Table 1: Comparison between renewable and

non-renewable sources of power generation
Energy produced by WTE is most expensive
Parameter Non-renewable Renewable
Thermal power WTE incineration Solar
plants
Tarrif costs Rs 2.5-6/KWh Rs 6..39–11/KWh Rs 2.4-3.5/
range KWh
Operation O&M cost for coal- O&M cost for MSW-based WTE Approxi-
and based plants will be project is in range of 6.5–9.44 mately
maintenance Rs 1,500–3,500/MWh per cent of the project cost Rs 1,000-
cost (variable (approximately Rs 2–8 lakh per 1,600/MWh
costs) day) for MSW technology and
13.5 per cent of the project cost
(approximately Rs 5–10 lakh per
day) for RDF
Sources: Planning Commission Task Force Report, 2014, Volume 2; prod.sandia.gov, irena.org, http://cornerstonemag.net/
coal-based-electricity-generation-in-india, CERC 2016
148

moisture content. For the volume of waste generated, only if the moisture in Countries that
the waste feed is low and the calorific value is high, will mass-incineration
technologies for waste processing be suitable: this basic premise must be are heavily
kept in mind before setting up such plants.
In India, the study of waste has repeatedly shown that the proportion
dependent
of high-calorific value waste is low — most of the fraction is biodegradable on WTE have
in nature, with low calorific value. Countries that are heavily dependent
on incineration have high calorific value of waste. A study by the Shriram
high-calorific
Institute for Industrial Research4 on municipal waste in South Delhi found value of
that the net calorific value of the waste was 1,274 kcal/kg and the gross value
was 1,324 kcal/kg.
waste. Studies
As per an assessment of different Indian cities done by Centre for Science indicate that
and Environment (CSE), the biodegradable fraction of MSW — which is 40-70
per cent of the total — is much more than its non-biodegradable counterpart:
in India, the
the non-biodegradable fraction (comprising both recyclable and non- proportion of
recyclable dry waste) varies. It is 27-40 per cent in cities with a population of
a million-plus; 20-35 per cent in cities with a population of 0.1-1 million; and high-calorific
25-40 per cent in cities with a population below 0.1 million. Since segregation value waste
of waste at source in India is minimal, wet waste gets mixed with the dry,
reducing its calorific value. A 2017 report by GIZ,5 a German government is low
agency working on waste and sanitation, states that mixed municipal solid
waste in developing nations is by nature different from that in industrial
countries and has specific characteristics in every city. This diversity must be
considered in any technology assessment. There is no countrywide data, but
Delhi, for instance, produces 10,500 TPD of waste, of which just 1,300 TPD
is suitable for incineration. The rest can be composted, recycled or processed
through biomethanisation. However, Delhi has three WTE plants to treat
4,900 TPD and is planning to construct a fourth one.
According to the National Green Tribunal (NGT)6 order of January 2017,
only non-recyclable non-biodegradable high-calorific value waste should
be used as waste feed for WTE. Though this portion of waste has high
combustibility and low moisture, using it as waste feed is possible only
if source segregation of waste is practiced. Without segregation at source,
resource recovery — this ensures the required characterisation from mixed
waste — is a complex process. It is energy-intensive and has exorbitant costs.
Also, neglecting the livelihood issues of the informal sector workers
and rag-pickers dependent on the availability of recyclable waste can cause
complex socio-economic problems related to WTE. In its survey ‘Give back
our waste’, Chintan7, an NGO that works for environmental sustainability
and social justice with diverse stakeholders, said that although WTE plants
have become a clean development mechanism favorite, they should not be
adopted blindly without considering them in the overall socio-economic
context.
WTE plants have regularly faced protests from residents and societies
in their neighbourhoods. Residents of Sukhdev Vihar in New Delhi, just 35
metres from the infamous Okhla WTE plant, have protested against it since
2003, alleging toxic emissions. The Okhla plant has been allowed to run
149

Despite despite its close proximity to residential areas, three major hospitals and
a significant green cover. While Indian emission standards for incineration
the poor plants in the SWM Rules 2016 are more comprehensive than in the SWM
performance Rules 2000, they are not as stringent as international standards.
The Union Ministry of Environment, Forests & Climate Change
of WTE plants, (MoEF&CC) has made installation of Continuous Emission Monitoring
Systems (CEMS) mandatory for WTE thermal-based plants. A plant
they are being discharging effluents is required to install a Continuous Effluent Quality
promoted — Monitoring System (CEQMS) as well. All four operational plants in India on
incineration technology have installed CEMS to monitor their air emissions.
in most cities, Real-time data from these systems is sent to the Central Pollution Control
capacity of Board (CPCB) and the respective State Pollution Control Boards/Committees.
However, according to CSE’s field surveys conducted in 20168, and field
the plant is studies and assessments (unpublished) carried out in 2017 and 2018,
equivalent to implementation of CEMS and CEQMS in India is marred by insufficient
information on different technologies, lack of standardisation in equipment
or even more quality, improper installation, and inadequate operation and maintenance
than the waste for most plants. Also, the emission standards are not as stringent as those
in European nations. For now, the CPCB is focusing only on installation
generated by and data collection — it is not checking for compliance, as the quality of
the city the data is questionable. Therefore, it is very difficult to say whether the
standards are being followed or higher emissions are being under-passed
through illegal means.
Despite the poor performance of WTE plants, they are being promoted
in the country — in most cities, capacity of the plant is equivalent to or
even more than the waste generation of the city! The overriding concern is
whether the WTE plants are intended to treat the mixed waste of one city
alone rather than of a cluster of cities, as the combustible, non-recyclable
fraction of waste in one city is too little to feed a single plant. Additionally,
almost all WTE projects in India have faced public protests and some have
been subjected to public litigation as well (this is an illustration of the so
called Nimby — not in my backyard — effect).
Status of WTE in India

As per a 2016 Standing Committee Report on energy, Power Generation from
Municipal Solid Waste,9 the then Ministry of Urban Development (MoUD)
(now MoHUA) had claimed that there are seven functional plants of 92.4
MW capacity, four non-functional plants of 40.6 MW capacity, 31 plants of
241.8 MW capacity under construction and 21 plants of 163.5 MW capacity
under tendering stage. Data from SBM10 says that there are seven operational
plants with a production capacity of 88.4 MW. Also, under SBM, 56 MSW-
based plants with a cumulative installed capacity of 412.5 MW are under
consideration.
As per a report of the Parliament session dated11 August 4, 2017, the
MNRE claimed that five projects of 66.4 MW capacity are operational and
generating power from MSW. These are running successfully in Solapur
(Maharashtra), Jabalpur (Madhya Pradesh), and New Delhi, and are able to
150

process about 4,516 TPD of waste. A gasification technology-based plant was

commissioned in Shimla in 2017. Another Parliamentary report12 suggested
that there are 48 MSW-based plants under construction, with a cumulative
installed capacity of 412.5 MW. In February 2018, the SBM noted 56 such
plants of 415 MW capacity.12 But CSE’s interactions with developers of
these plants indicated that only about eight plants were under construction;
many had been tendered while the rest were in the process of being
tendered. In many cities, the municipal bodies had denied permission to set
up such plants.
As it is clear that data in different government reports for installed,
under construction and under tendering WTE plants and their operational
capacities varies considerably, CSE undertook its own survey. According
to this, currently, thermal and thermo-chemical WTE plants in India
have a total installed capacity to incinerate 5,375 tonne of waste and
produce up to 69.2 MW of electricity per day. Close to 382.7 MW of power
generation from waste is under consideration for WTE, while plants with
a combined capacity of 84.3 MW are under construction (see Graph 1:
Status of WTE in India). Plants with a combined capacity of 66.35 MW have
been shut down in the last three decades. However, as per the government,
a cumulative installed capacity of 412.5 MW is under construction
(see Statistics section).
Graph 1: Status of WTE in India

Many WTE projects have failed; but over 382 MW of new plants
have been proposed
400
382.7
350
Waste to energy in India (MW)
300
250
200
150
100 69.2 84.3 66.35
50
Operational Under construction Proposed Non-functional
Sources: CSE survey, 2018.
151

As per The policy and regulatory framework

Solid Waste Solid Waste Management Rules, 2016 and SBM: According to the Solid
Management Waste Management Rules, 2016, municipal bodies have to ensure that
recyclables are routed through appropriate vendors and only the segregated,
Rules, 2016 non-recyclable, high-calorific fractions are sent to a WTE plant or for RDF
only non- (refuse-derived fuel) production, co-processing in cement plants or to a
thermal power plant.
recyclable, Under SBM, the Government of India will reimburse 100 per cent of the
high-calorific cost of preparing the detailed project report (DPR) as per the unit cost and
norms set down by the National Advisory Review Committee (NARC). The
fractions can State High Powered Committee (HPC) will authorise institutes of national
be sent to a repute for appraisal of the DPRs for projects recommended by urban local
bodies.14
WTE plant Besides this, the Central government’s grants/VGF can be used for WTE
projects, either up-front or as generation-based incentive for the power
generated for a given period of time. The Central government incentive for
SWM projects will be in the form of a maximum of 35 per cent grant/VGF for
each project.15 The Mission also says that states will contribute a minimum
of 25 per cent funds for SWM projects to match the 75 per cent Central share
(10 per cent in the case of states in India’s northeast and special category
states).16
Niti Aayog Action Plan, 2017-2020: According to the Niti Aayog Agenda
Report for 2017-2017, the Swachh Bharat Abhiyan has a deliverable for WTE
generation: 330 MW in 2017-18 and 511 MW in 2018-19, which is an over
400 per cent increase from the current installed capacity.
The report says: “…technologies such as composting and biogas are not
sustainable solutions since they generate by-products or residues in large
quantities that these cities will find difficult to dispose off efficiently. Only
Criteria for the WTE process as per SWM Rules, 2016

• Non-recyclable waste with calorific value of 1,500 k/cal/kg or more should not be
disposed of in landfills, but should only be used for generating energy either through
RDF or by giving it away as feedstock for preparing RDF.
• High calorific wastes shall be used for co-processing in cement or thermal power
plants.
• The local body, facility operator or designated agency proposing to set up a WTE
plant with capacity of over five tonne per day shall submit an application to the State
Pollution Control Board (SPCB) or Pollution Control Committee, as the case may be,
for authorisation. On receiving such an application, the SPCB or Pollution Control
Committee shall examine the same and grant permission within 60 days.
Source: Solid Waste Management Rules, MoEF&CC, 2016
152

incineration, thermal pyrolysis and plasma gasification technologies offer

sustainable disposal solutions. However, pyrolysis is not suitable for MSW
due to its diverse composition and plasma technology remains too costly
to adopt so far. Hence, incineration or ‘Waste to Energy’ is the best option.”
The report also suggests setting up an agency called the WECI (Waste to
Energy Corporation of India), which would primarily help set up the plants
in the 100 Smart Cities.
Environmental clearance: According to the MoEF&CC18, WTE plants, if

proposed as stand-alone options, are not covered under item 7(i) of the
Environment Impact Assessment (EIA) Notification of 2006, and hence do
not require prior environmental clearance. In case a WTE plant (up to the
capacity of 15 MW) is proposed at an existing landfill site, it will not attract
the provisions of the EIA Notification, 2006.
CHINKY SHUKLA /CSE
153

The money and the market
How much does WTE cost in India?

The Planning Commission Task Force of 201419 had taken approximations on
capital and operating costs based on various parameters such as procurement
of tools and equipment, humanpower, loan payback etc. According to the
estimates, for an incineration plant to treat about 1,000 TPD of waste, the
capital cost can be as much Rs 200 crore; some bigger plants in India have
invested as much as Rs 550 crore in the project. The O&M costs of these
plants are also very high, resulting in high cost of per unit of electricity (see
Table 2: Summary of expenditure for a 24-MW plant).
Table 2: Summary of expenditure for a 24-MW plant

Taking an approximate value based on industry trends and standards
Description Quantity
Project duration 20 years
Waste quantity 1,500 TPD
Annual escalation on waste quantity 5%
Power generated 24 MW
Auxiliary consumption 16%
PLF 80%
Net power sold to the grid 16.13 MW
Tipping fees Rs 1,500 per tonne
Annual escalation in tipping fees 5%
WTE tariff Rs 7.05/kWh

Annual escalation of WTE tariff 0%
Operating and maintenance expenses for power plant 6.5% of normative

capital cost
Annual escalation on O&M expenses for power plant 5%
Operating and maintenance expenses for other activities 5% of normative

capital cost
Annual escalation on O&M expenses for other activities 4%
Debt 70%
Equity 30%
Rate of interest 7.5%
Rate of depreciation 13%
Number of days in a year 330
Number of hours in a day 24
Source: Calculated by CSE in 2017
154

Tipping fee for waste collection and processing Since waste

One of the major sources of revenue for WTE plants is the tipping fee which
is a fee paid to an agency for door-to-door collection, secondary collection, is not
transportation and/or treatment (WTE processing) and disposal (in a landfill)
of waste generated. Plant developers that take charge of WTE plants are
segregated
given tipping fees by municipal bodies. The following tipping fees have and tipping
been set by some municipal corporations for WTE plants:
• Indore WTE: Rs 1,080/TPD
fee is paid
• Bhopal WTE: Rs 1,120/TPD on quantity,
• Jabalpur WTE: Rs 1,400/TPD
• Bawana, Delhi WTE: Rs 1,500/TPD
not quality,
There is, however, an issue here. Since waste is not segregated and operators
tipping fee is paid on quantity, not quality, operators are inclined to get
heavy and unusable unsegregated waste. This adds to the processing costs;
are inclined
as a result, the waste has high amounts of rejects (as high as 25 per cent) to get heavy
and little resource recovery. All plants that currently charge tipping fees
collect mixed waste. Contracts are based on payment of tipping fees — the and unusable
more the waste brought, the higher the tipping fee. This practice needs to unsegregated
be re-examined.
waste
High electricity tariffs
Another major source of revenue for WTE is through electricity tariffs. The
MoHUA had insisted that the Ministry of Power amend the tariff policy to
provide for state discoms to ‘mandatorily purchase all power generated from
municipal solid waste’. The Solid Waste Management Rules of 2016 also
included this as a rule for WTE plants. However, this is facing resistance
from discoms as electricity from such plants has a much higher tariff than
from other sources of energy. Low calorific value of the waste feed, capital-
intensive technology, high O&M and humanpower costs, and high cost of
treatment of emissions are reasons for the higher tariffs of WTE plants.
According to the 2015 Central Electricity Regulatory Commission (CERC)
report,20 WTE technologies in India are competing for sustenance both
commercially and technically. According to the CERC’s Renewable Energy
Tariff Regulations 2015, the working capital requirement with respect to
MSW and RDF projects is computed in accordance with the following: fuel
costs for four months equivalent to normative plant load factor (PLF), O&M
costs for a month, receivables equivalent to two months of fixed and variable
charges for sale of electricity calculated on the target PLF, and maintenance
spare at 15 per cent of O&M expenses.
Table 3 (Tariffs for different technologies for FY 2015-16) lists tariffs
applicable for all WTE plants commissioned in FY 2015-16. It is clear from
the data that the tariffs for WTE plants, both MSW and RDF-based, is very
high compared to other RE technologies, including biogas. Following the
guidelines of the CERC, the State Electricity Commissions have also notified
WTE tariffs. Some of the tariffs calculated by states in the year 2016 are as
follows — Haryana (7.05 Rs/kWh), Madhya Pradesh (6.39 Rs/kWh), Gujarat
(7.25 kWh) and Uttar Pradesh (7.05 kWh). The Centre has put renewable
155

Table 3: Tariffs for different technologies for FY 2015-16

Tariffs from WTE plants are higher
Technology Levelled Variable Applicable Benefit of Net levelled
fixed cost (Rs/ tariff rate accelerated tariff (upon
cost kWh) (Rs/kWh) depreciation adjusting for
(Rs/ (if availed)(Rs/ accelerated
kWh) kWh) depreciation
benefit) (if
availed) (Rs/
kWh)
MSW 7.04 0.00 7.04 0.54 6.50
RDF-based 4.34 3.56 7.90 0.31 7.59

Biogas 3.57 4.29 7.86 0.26 7.60
Source: CERC, 2016; http://www.cercind.gov.in/2017/regulation/Noti131.pdf
energy in the 5 per cent bracket under the Goods and Services Tax (GST).
This will make WTE more cost-intensive and discoms will resist any further
tariff increase, making electricity generation through WTE more unviable.
Where is the money?

According to a report by Assocham (Associated Chambers of Commerce and
Industry in India)21 titled Value of Waste 2015, the investment opportunity
in WTE in India was valued at almost US $1.5 billion in 2017 — and was
estimated to grow to approximately US $11.7 billion by 2052. According
to The Waste to Energy Opportunities in India 2017-2022 — Research and
Market Report, 201722, remunerative tariffs by the CERC has helped raise
investor interest in this segment.
But the 2015-16 Standing Committee Report23 of the MNRE states that the
WTE plants major problems that were hampering the implementation of WTE projects
in India were primarily related to non-payment of agreed fees and non-
are also marketability of waste-processed products, including power. According to
coming up Waste to Energy Opportunities in India 2017-202224, municipal corporations
are expected to receive Rs 15,000 crore under the Swachh Bharat Mission
because for the next three years for waste management and WTE projects. The
municipalities government is also setting up a US $1.25-billion fund, backed by the state-
owned Power Finance Corp Ltd and Rural Electrification Corp Ltd along
are expected with a few private institutions.
As per the 2016 paper Waste to Energy (WTE) Market Size by Technology25,
to receive solid waste management funding in Asia is done primarily through
large amounts government allocations. To tide over shortages, funds are also sourced from
public-private participation (PPP), as well as international bilateral and
of money multilateral financing.
under Swachh
Fiscal incentives for WTE: According to the Manual on SWM Rules
Bharat Mission 2016,26 a financial incentive of Rs 1.5-3 crore per MW is given to municipal
corporations or ULBs for supplying garbage free of cost at the project site
156

and providing land on a long-term lease (30 years and above) at a nominal WTE plants
rent. Also, state nodal agencies are given an incentive of Rs 5 lakh per MW
of power for promotion, coordination and monitoring of such projects. are running on
There is also a provision for financing 50 per cent of the preparation cost
of detailed project reports (DPRs) or techno-economic feasibility reports,
government
subject to a maximum of Rs 2 lakh per report. The Indian Renewable subsidies,
Energy Development Agency Ltd (IREDA) provides subsisted loan, which
is restricted to energy generation system and excludes pre-fuel processing
tipping fees
system. Other financial institutes can also be approached for loans. The and higher
Manual adds that for commercial projects, financial assistance is provided
by way of interest subsidy to reduce the rate of interest to 7.5 per cent
power tariff.
capitalised with an annual discount rate of 12 per cent. Once these
Partnerships: Public-private partnerships (PPPs) are strongly recommended
factors are
by the MoHUA for waste management-related services. The idea is to bring removed, a
private investment into these public interest-related areas of work. A PPP
scheme to avail viability gap funding (VGF) is also an option for private WTE plant
players. The MoUD, which implements the SBM, has a provision under will not be
which Central support of up to 35 per cent of the project cost in the form of
VGF grant can be provided for setting up WTE plants, subject to availability financially
of overall state-wise funds for waste management.27 viable
In September 2017, the National Thermal Power Corporation (NTPC)
invited developers and investors to set up 100 WTE plants in the country.28
The Confederation of Indian Industry (CII) has initiated a Task Force on
Waste to Worth, which has also proposed inviting foreign investors for
WTE development in India.29 The Niti Aayog, on its part, has proposed the
formation of WECI — the Waste to Energy Corporation of India — which
could help set up WTE plants through PPP models.30
It is evident that WTE plants are running entirely supported by
government subsidies, tipping fees and compulsory power purchase by
discoms at higher tariffs; on paper, these plants seem a profitable venture
for any city and hence the growing interest in them. But if these factors are
removed, a WTE plant will not be financially viable.
The way ahead: A misplaced idea?

The fundamental challenge of waste management is to get as much value
out of the waste as possible, with the aim of conserving natural resources.
The central discussion related to recycling versus incineration is whether
it creates value financially, environmentally and in terms of resource
management. Given that materials are often worth more than energy partly
because they can be transformed into energy (while energy cannot be turned
into materials), resource recovery from waste should attract more attention
than energy recovery from waste. Hence, whether to burn or not does not
have a clear-cut answer. It depends on multiple factors, including segregation
of waste at source, feasibility study of composition and characterisation
prior to proposal of a specific technology, waste quantity that is suited for
incineration and plausible alternatives to WTE.
157

Co-processing of end-life waste can be an alternative solution to thermal

treatment of waste for cement firms. Waste is already widely co-processed
in cement kilns in India. Cement plants — almost all the Indian states
have these — can be upgraded for use of RDF with a little investment. The
infrastructure already exists for cement companies — with retrofitting,
the companies can accept non-recyclable waste as alternate fuel and raw
materials (AFRs). According to GIZ’s Output-based Market Development
Assistance (OMDA),31 the current capacity of cement plants is up to an RDF
supply of 227 TPD to each of the 55 cement plants, which is roughly 13,000
tonne a day. Therefore, a major portion of non-recyclable waste can go for
co-processing in cement kilns in cities where the cement plant is within
accessible distance.
India, along with other developing nations, should turn to WTE technology
systems for an agglomeration of cities, but only after other options such as
co-processing in industry have been rendered unfeasible. It should be kept
in mind that, if chosen, WTE is not the lone solution for waste management
of a city — it is simply a part of it.
158

STATISTICS
Energy access and
renewable energy
at a glance
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STATISTICS
Chapter 1: The road to 175 gigawatt
Renewable Energy Capacity in India

FY- 2018-19
Cumulative Achievements
Sector Achievement
Target (as on 31.12.2018)
(April-Dec 2018)
I. GRID-INTERACTIVE POWER (CAPACITIES IN MW)
Wind Power 4,000 993.15 35,138.15
Solar Power - Ground Mounted 10,000 3,270.09 23,858.13
Solar Power - Roof Top 1,000 290.49 1,354.12
Small Hydro Power 250 31.65 4,517.45
Biomass (Bagasse) Cogeneration 250 374.70 9,075.50
Biomass (non-bagasse)
100 49.93 704.74
Cogeneration)/Captive Power
WTE 2 0.00 138.30
Total 15,602 5,002.21 74,786.39
II. OFF-GRID/ CAPTIVE POWER (CAPACITIES IN MW)
WTE 18 4.79 176.94
Biomass Gasifiers 1 0.00 163.37
SPV Systems 200 132.66 804.06
Total 219 137.45 1,144.37
Source: Ministry of New and Renewable Energy (MNRE)
Country-wise Installed Solar Capacity

400,000
Rest of the World
India 350,000
Australia
Spain 300,000
France
Capacity (MW)
UK 250,000
Italy
Germany 200,000
USA
150,000
Japan
China 100,000
50,000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: International Renewable Energy Agency (IRENA), 2018
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Country-wise Installed Wind Capacity

600,000
Others
Denmark
500,000 Italy
Brazil
400,000 Canada
Capacity (MW)
France
UK
300,000 Spain
India
200,000 USA
China
100,000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: International Renewable Energy Agency (IRENA), 2018
Source-wise Installed capacity

Mar-14 Mar-14 Mar-15 Mar-15 Mar-16 Mar-16 Mar-17 Mar-17 Mar-18 Mar-18 June-18 June-18
Source
(GW) (%) (GW) (%) (GW) (%) (GW) (%) (GW) (%) (GW) (%)
Coal 145.27 60 164.63 62 185.17 62 192.16 59 197.17 57 196.96 57
Gas 21.78 9 23.06 9 24.51 8 25.33 8 24.90 7 24.87 7
Hydro 40.53 17 41.26 15 42.78 14 44.48 14 45.29 13 45.40 13
Nuclear 4.78 2 5.78 2 5.78 2 6.78 2 6.78 2 6.78 2
Diesel 1.19 0 1.19 0 0.99 0 0.84 0 0.84 0 0.84 0
Rene-
29.46 12 31.70 12 38.82 13 57.26 18 69.02 20 70.65 20
wable
Source: Central Electricity Authority (CEA); Note: Zero percentage points are an approximation
Foreign Direct Investment (FDI)

in Renewable Energy
USD million Rs crore
FY 2018-19 452 2,996
FY 2017-18 1,204 837
FY 2014-16 2,050 1,608
FY 2000-14 3,131 999
Source: http://dipp.nic.in/foreign-direct-investment/foreign-direct-investment-policy , http://www.makeinindia.com/
documents/10281/114126/New+%26+Renewable+Energy+Sector+-+Achievement+Report.pdf
161
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STATISTICS
Sector-wise Financing Disbursed by IREDA (Rs Crore)

Sector 1987-12 2012-13 2013-14 2014-15 2015-16 2016-17 Total
Wind 4,874 1,207 1,173 1,355 873 2,535 12,017
Hydro 1,831 356 724 388 340 340 3,979
Biomass and Cogeneration 2081 347 198 259 305 86 3,276
Energy Efficiency &
273 59 0 0 0 6 338
Conservation
Solar 562 151 274 576 1,519 1,524 4,606
WTE 56 2 0 2 1 2 63
Biomethanation from
57 0 0 0 0 0 57
Industrial Effluents
Biomass Briquetting 10 0 0 0 0 0 10
Biomass Gasification 5 0 0 0 0 0 5
NCEF 0 0 100 0 0 15 115
Bill Discounting 0 0 0 0 9 23 32
Bridge Loan 3 0 0 38 50 27 118
Short Term Loan & LOCS 0 0 0 0 1,125 2,005 3130
Misc (Manufacturing) 0 0 0 0 0 26 26
Source: Compiled from Indian Renewable Energy Development Agency Ltd (IREDA) Annual reports
Allocation of Funding from the

National Clean Energy Fund (NCEF)
9,000
Unused amount
Ministry of 8,000
Environment, Forest
and Climate Change 7,000
Ministry of Drinking 6,000
Water & Sanitation
Ministry of Water 5,000
RS Crore
Sources, River
Development & 4,000
Ganga Rejuvenation
3,000
Ministry of New
and Renewable 2,000
Energy
1,000
-1,000
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
Source: Comptroller and Auditor General of India (CAG) report
162
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Chapter 2: Utility-scale solar:

Charting a new course
Irradiance at Various Solar Park Sites in India

(kWh/m2/day)
Kurnool, Rewa,
Bhadla, Charanka, Pavagada, India
Month Andhra Madhya
Rajasthan Gujarat Karnataka (Average)
Pradesh Pradesh
Jan 5.83 6.16 6.58 7.25 5.08 6.01
Feb 6.20 6.96 6.90 7.25 6.21 6.86
Mar 6.15 6.58 6.10 6.36 6.69 6.49
Apr 5.59 6.30 5.85 5.98 6.05 6.70
May 6.42 7.16 6.42 6.41 6.51 6.48
Jun 5.63 5.61 4.35 4.63 4.45 4.01
Jul 4.68 2.85 3.41 3.69 2.70 2.44
Aug 4.89 3.05 3.61 3.58 2.99 2.52
Sep 5.93 5.36 4.51 5.16 4.80 4.57
Oct 6.09 6.36 4.91 4.55 5.98 6.12
Nov 5.78 5.97 6.31 5.74 5.81 6.46
Dec 5.35 5.87 6.56 6.70 4.88 6.32
Avg 5.71 5.67 5.45 5.60 5.17 5.40
Source: National Renewable Energy Laboratory (NREL)
163
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STATISTICS
State-wise Solar Potential and Capacity Installed

Installed Capacity (MW)
State Potential (GW)
as of December 2017
Andhra Pradesh 38.44 2,165.21
Arunachal Pradesh 8.65 4.39
Assam 13.76 11.78
Bihar 11.20 141.52
Chhattisgarh 18.27 179.38
Delhi 2.05 58.02
Goa 0.88 0.71
Gujarat 35.77 1,344.69
Haryana 4.56 203.85
Himachal Pradesh 33.84 1.48
Jammu & Kashmir 111.05 2.36
Jharkhand 18.18 23.27
Karnataka 24.70 1,800.85
Kerala 6.11 88.20
Madhya Pradesh 61.66 1,210.11
Maharashtra 64.32 763.08
Manipur 10.63 1.33
Meghalaya 5.86 0.06
Mizoram 9.09 0.20
Nagaland 7.29 0.50
Odisha 25.78 79.51
Punjab 2.81 905.64
Rajasthan 142.31 2,310.46
Sikkim 4.94 0.01
Tamil Nadu 17.67 1,819.42
Telangana 20.41 2,990.07
Tripura 2.08 5.09
Uttar Pradesh 22.83 550.38
Uttarakhand 16.80 246.89
West Bengal 6.26 39.84
Union Territories 0.79 45.79
Total 748.99 17,027.27
Source: Ministry of New and Renewable Energy (MNRE) Annual Report 2017-18
164
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Benchmark CAPEX for Solar Photovoltaics

900
Preliminary and
800 pre-operative expense
Evacuation cost
700
Inverter /Power
600 conditioning unit
RS Lakhs per MW
Mounting
500 structures
Civil work
400
Land cost
300 PV Module cost
200
100
0
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
Source: Compiled from CERC annual benchmark costs; 2017-18 data obtained from Karnataka Electricity Regulatory
Commission’s tariff order
165
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STATISTICS
Chapter 3: Solar rooftop: Overshadowed
State Policies for Solar Rooftop

Max
Cumulative
Capacity
Nodal Solar Policy Power SRT Size
State Subsidy Metering Allowed at
Agency Policy Scope Purchase Limit
a Particular
Distribution
Transformer
Andhra Pradesh NREDCAP Yes (2015) 1 kWp - 30-50% ACoS Net/Gross 60% 100% AC
1000 kWp
Arunachal APEDA No; 1 kWp - 70% APPC Net 15% 100% AC

Pradesh APSERC 1000 kWp
Regulations
(2016)
Assam AEDA Yes (2018) 1 kWp - 500 70% ₹ 3.43 Net/Gross 20% 80% AC
kWp
Bihar BREDA No; less than 1 30% No Net 15% 90% AC

BERC MWp
Regulations
(2015)
Chandigarh CREST Yes (2015) 1 kWp - 500 30% 5.87 - 9.19 Net/Gross 30% 30% AC
kWp
Chhattisgarh CREDA Yes (2013) 50 kWp - 1 30% 4.35 Net 40% 100% SL
MWp
Delhi EE&REM Yes (2016) > 1 kWp 30% APPC + Rs 2 Net 15% 100% SL
(GBI)
Goa GEDA Yes (2017) up to 100 30-50% 7.87 - 8.06 Net/Gross 30% 100% AC
kWp
Gujarat GEDA Yes (2015) up to 1 50% APPC Net 30% 50% SL

MWp
Haryana HAREDA Yes (2016) 1 kWp - 1 30% APPC + GBI Net 15% 90% AC
MWp
Himachal HIMURJA Yes (2016) 1 kWp - 1 80% ₹ 5.00 Net 20% 80% SL
Pradesh MWp
Jammu & JAKEDA Yes (2016) 1 kWp - 1 70% No Net 20% 50% SL
Kashmir MWp
Jharkhand JREDA Yes (2015) up to 1 50% ₹ 0.50 Net/Gross 15% 100% SL

MWp
Karnataka KREDL Yes (2014) 1 kWp - 500 30% ₹ 4.43 - 7.08 Net/Gross 65% 150% SL
kWp
Kerala ANERT Yes (2013) up to 10 30% APPC Net 30% 80%

kWp
Madhya MPNRED/ No; 0.5 kWp - 45% APPC Net 30% 100% AC
Pradesh MPUVN MPERC 250 kWp
Regulations
(2015)
Maharashtra MEDA No; up to 1 30% APPC Net 40% 100% SL

MERC MWp
Regulations
(2015)
166
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Max
Cumulative
Capacity
Nodal Solar Policy Power SRT Size
State Subsidy Metering Allowed at
Agency Policy Scope Purchase Limit
a Particular
Distribution
Transformer
Manipur MANIREDA Yes (2014) 1 kWp - 500 70% ₹ 6.10 - 9.39 Net/Gross 40% 100% SL
kWp
Meghalaya MNREDA No; 1 kWp - 1 70% APPC Net 15% 90% AC

MSERC MWp
Regulations
(2015)
Mizoram* ZEDA Yes (2017) 1 kWp - 500 70% ₹ 6.10 - 9.39 Net 40% 100% SL
kWp
Nagaland NREDA No; up to 1 70% No Net 15% 100% SL
NERC MWp
Regulation
(2016)
Odisha OREDA No; >1 kWp 30% No Net 75% 100 % AC
OERC
Regulations
(2016)
Punjab PEDA Yes (2015) 1 kWp - 10 30% No Net 30% 90% SL
MWp
Rajasthan RRECL Yes (2014) 1 kWp - 1 30% ₹ 4.0 - 5.0 Net 30% 80% SL
MWp
Sikkim SREDA No; up to 1 70% APPC Net 80% --
SSERC MWp
Regulation
(2014)
Tamil Nadu TEDA Yes (2012) >1 kWp 55% No Net 30% 90% AC
Telangana TNREDCL Yes (2015) 1 kWp - 1 30% APPC Net/Gross 50% 100% SL
MWp
Tripura TREDA No; >1 kWp 70% APPC Net 15% 100 SL
TERC
Regulations
(2016)
Union Territories† Regional No up to 500 30 / 70% Regulated Net/Gross 30% 100% AC
kWp
Uttar Pradesh UPNEDA Yes (2017) up to 1 30% ₹ 0.50 Net/Gross 15% 100 % SL
MWp
Uttarakhand UREDA Yes (2013) 1 kWp - 500 70% 3.10-5.20 Net -- --

kWp
West Bengal WBGEDCL Yes (2012) > 5 kWp 30% No Net -- 90% SL
ACoS - Average Cost to Serve (of the Discom as determined by APERC every year); AC - Actual Contracted Load; SL - Sanctioned Load;
APPC - Average (Pooled); Power Purchase Cost; GBI - Generation Based Incentive; *Not available on official website
Source: Compiled by CSE from various sources
167
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STATISTICS
Consumer Segment-wise Share in Total Rooftop Capacity
Commercial 2018
Industrial 2017
Public sector 2016

2015
Residential
2 014
2013
Cumulative capacity 2012
(in MW)
2012 38
2013 117
2014 286
2015 623
2016 1,179
2017 2,177
2018 3,399
Source: Bridge to India
168
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Chapter 4: Solar manufacturing: Moving

out of the doldrums
Leading Solar Module Manufacturers (2017)
Manufacturer Year Megawatts 2,000 4,000 6,000 8,000 10,000 12,000

2018
2017
1. Jinko Solar
2016
2018
2017
2. Trina Solar
2016
2018
3.Canadian 2017
Solar
2016
2018
4.Hanwha 2017
Q CELLS
2016
2018
2017
5. JA Solar
2016
2018
6. LONGi Green
2017
Energy
Tecnology 2016
2018
7.GCLSI 2017
(incl. Chaori)
2016
2018
2017
8.Risen Energy
2016
2018
9.Yingli Green 2017
Energy Estimated capacity in 2018
2016
Capacity
2018
Production
10.Talesun 2017
Solar Capacity and production data based
2016 on company announcements and IHS
estimates
Source : http://16iwyl195vvfgoqu3136p2ly-wpengine.netdna-ssl.com/wp-content/uploads/2018/07/07023_Top_10-
solar_module_manufacturers_2017_Korr21.jpg
169
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STATISTICS
Solar Capacities under Domestic Content Requirement (DCR)

Allocated Cancelled DCR
Programme Commissioned
Domestic Content DCR capacity to
Programme capacity Capacity
Requirement (DCR) Provision Capacity date post WTO
(MW) (MW)
(MW) ruling (MW)
NSM Phase I Crystalline silicon - indigenous;
150 70 70 NA
Batch I Thin film - imported
NSM Phase I Crystalline silicon - indigenous;
350 70 70 NA
Batch II Thin film - imported
NSM Phase II Cells and modules to be
750 375 355
Batch I indigenous
3,000 400 60
Batch II Tranche I indigenous
2,000 250 100 100
Batch III indigenous
Cells and modules to be
NSM Phase II indigenous (MNRE deletes DCR
5,000 375 25 350
Batch IV clause from 5 GW Phase-II
Batch-IV VGF scheme)
1Cr/MW for cells and modules;
CPSU Scheme 1,000 930 NA
50L/MW for modules
Cells and modules have to be
Defense Scheme 300 300 NA
indigenous
Leading Indian Solar Manufacturers

Indian solar PV module manufacturing Solar cell manufacturing
manufacturers capacity (MW) capacity (MW)
Adani Solar 1,200 1,200
Waaree Energies 1,500
Vikram Solar 1,000
Emmvee Group 500
Goldie Solar 500
Indosolar 450 200
Tata Power Solar Systems 400 300
Alpex Solar 400
Bharat Heavy Electricals 226 105
XL Energies 210 60
Source: Compiled by Centre for Science and Environment (CSE)
170
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Chapter 5: Wind energy: Braving the headwinds
Country-wise Share of Installed Wind Capacity
New installed capacity (2017) Cumulative capacity (as of Dec 2017)
Rest of the world China Rest of the world China

10% 37% 15% 35%
Finland Italy
1% 2%
South Africa Canada
1% World total 2% World total
Turkey 52,492 MW Brazil 539,123 MW
1% 2%
France France
3% 3%
Brazil UK
4% 4%
India UK Germany USA Spain India Germany USA
8% 8% 12% 13% 4% 6% 10% 17%
Source: Global Wind Energy Council (GWEC)
171
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STATISTICS
Annual State-wise Wind Installations in India (MW)

State Andhra Pradesh Gujarat Karnataka Madhya Pradesh Maharashtra Rajasthan Tamil Nadu
Up to
93.2 181.4 69.3 23.2 400.3 16.1 877
March’2002
2002-03 0 6.2 55.6 0 2 44.6 133.6
2003-04 6.2 28.9 84.9 0 6.2 117.8 371.2
2004-05 21.8 51.5 201.5 6.3 48.8 106.3 675.5
2005-06 0.4 84.6 143.8 11.4 545.1 73.2 857.5
2006-07 0.8 283.9 265.9 16.4 485.3 111.9 577.9
2007-08 0 616.3 190.3 130.3 268.1 68.9 380.6
2008-09 0 313.6 316.0 25.1 183 199.6 431.1
2009-10 13.6 197.1 145.4 16.6 138.9 350.0 602.2
2010-11 55.4 312.8 254.1 46.5 239.1 436.7 997.4
2011-12 54.1 789.9 206.7 100.5 416.5 545.7 1,083.5
2012-13 202.1 208.3 201.7 9.6 288.5 614.0 174.6
2013-14 335.7 272.7 188.7 37.4 1,043.1 98.6 113.5
2014-15 254.8 195.2 315.6 453.3 372.9 524.7 181.3
2015-16 362.5 385.6 240.3 1,291.9 220.6 687.9 197.1
Total 1,400.6 3,928.0 2,879.8 2,168.5 4,659.2 3,996.0 7,491.0
Total 2018 3,962.7 5,614.3 4,509.1 2,497.8 4,784.7 4,297.72 8,196.5
State-wise Wind Capacity

Available for Repowering (kW)
Repowering Capacity (kW)
State
<=500 kW 500-1,000 kW Total Capacity (kW)
Tamil Nadu 717,050 37,900 754,950
Gujarat 143,745 1,600 145,345
Andhra Pradesh 84,390 84,390
Karnataka 24,525 24,525
Maharashtra 63,715 2,250 65,965
Madhya Pradesh 21,100 21,100
Rajasthan 2,900 2,900
172
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Wind Auctions Conducted in India

Winning
Total
tariff Capacity
Date Conducted by capacity Company Bid (Rs/kWh)
(Rs/ (MW)
(MW)
kWh)
Feb-17 3.46 Solar Energy 1,050 Mytrah Energy 250 3.46
Corporation of Green Infra 250
India (SECI) Inox Wind 250
Ostro Energy 250
Adani Green Energy 50
Aug-17 3.42 Tamil Nadu 950 ReGen Powertech 200 3.42
Generation Leap Green Energy 250 3.43
& Distribution Neyveli Lignite 500 3.45
Co (TANGEDCO)
Oct-17 2.64 Solar Energy 1,000 ReNew Wind Energy 250 2.64
Corporation of Orange Sironj 200
India (SECI) Inox Wind 250 2.65
Green Infra 250
Dec-17 2.43 Gujarat Urja Vikas 1,527 Sprng Energy 197.5 2.43
Nigam Limited Verdant Renewables 100 2.44
(GUVNL) KP Energy 300
Betam Wind Energy 300
Powerica 500
ReNew Power Ventures 17.6 2.45
Feb-18 2.44 Solar Energy 2,000 Inox Wind 200 2.44
Corporation of Torrent Power 500
India (SECI) ReNew Power 400
Green Infra Wind Energy 300
Adani Green Energy (MP) 250 2.45
Saudi Arabia’s Alfanar 300
Mar-18 2.85 Maharashtra 500 Adani Green Energy 75 2.85
State Electricity KCT Renewable Energy 75
Distribution Inox Wind 50 2.86
Company Ltd Mytrah Energy 100
Hero Wind Energy 75
Torrent Power 125 2.87
Apr-18 2.51 Solar Energy 2,000 Srijan Energy Systems 250 2.51
Corporation of Sprng Energy 300
India (SECI) BLP Energy 285
Inox Wind 100
Mytrah Energy 300 2.52
ReNew Wind Energy 265
173
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STATISTICS
Winning
Total
tariff Capacity
Date Conducted by capacity Company Bid (Rs/kWh)
(Rs/ (MW)
(MW)
kWh)
Aug-18 2.77 National Thermal 1,200 Sprng Vayu Vidyut 200 2.77
Power Corporation Mytrah Energy 300 2.79
(NTPC) Srijan Energy quoted 50 2.8
ReNew Wind Energy 300 2.81
Hero Wind Energy 300 2.82
Fasten Power 50 2.83
Sep-18 2.76 Tranche V 1,200 Torrent Power 115 2.76
Adani Green Energy 300 2.76
Alfanar Company 300 2.77
SITAC Kabini Renewables 300 2.77
Ecoren Energy India 175 2.77
Renew Wind Energy 10 2.77
Source: Compiled from MERCOM reports
Status of Wind Auctions

Project
Tariff (Rs/ Scheduled date of
capacity Project locations Intermediary
unit) commissioning
(MW)
1,049.9 Thirunelveli (Tamil Nadu) and Bhuj & Bachau 3.46 425.9 MW SECI
(Gujarat) commissioned.
1,000 Tuticorin (Tamil Nadu) and Bhuj & Bachau (Gujarat) 2.65 03.05.2019 SECI
2,000 Tuticorin (Tamil Nadu) and Bhuj & Bachau (Gujarat) 2.44 23.11.2019 SECI
2,000 Pugalur, Thirunelveli, & Palakkad (Tamil Nadu) and 2.51 28.02.2020 SECI
Bhuj (Gujarat)
1,190 Bhuj (Gujarat) and Hiryur (Karnataka) 2.76 22.07.2020 SECI
1,150 Pavagada (Andhra Pradesh), Osmanabad 2.77 13.07.2020 NTPC
(Maharashtra), Karur & Tirupur (Tamil Nadu), Kutch
(Gujarat) and Devangere (Karnataka)
Source: Compiled from replies to various Lok Sabha questions
174
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Profile of Four Largest Wind Manufacturing Companies in India
Company and Market Share &

Manufacturing Base Installed Base
Headquarters Reach
Suzlon - Pune, • Global reach: 18 • Global: 15 manufacturing units • Global : 17.9 GW
India countries • India: 14 manufacturing facilities • India: 11.9 GW
• India: 35% market located in Tamil Nadu, Karnataka, • Installed next generation
share Maharashtra, Gujarat and Andhra Pradesh turbines of S111, which at 120
• Manufacture various WTG components meters will have a capacity of
such as generators, blades, nacelles and 2.1 MW
hubs etc • A demonstration model for
• Manufactured the largest wind turbine in S111 in Gujarat achieved a plant
India – S128 load factor (PLF) of 42 percent
• Hub height: 140 m over a span of 12 months.
• Rotor blade: 63 m • Hub height: 140 m
• Rotor diameter: 128 m • Rotor diameter: 111.8 m
Inox - Noida, • India: 8 % market • India: 3 manufacturing plants in Gujarat, • India: 2.4 GW
India share Himachal Pradesh and Madhya Pradesh • Installations of 2 MW each and
• Manufacture various WTG components varying rotor diameters (93 m,
such as blades & tubular towers, hubs & 100 m, 113 m). 2 MW platform
nacelles. (100 m, 110 m and 120 m rotor
• Nacelles and Hubs: 1.1 GW diameter),
• Blades : 1.6GW
• Towers: 0.6 GW
Siemens • Global reach: 90 • Global: 84.5 GW; Offshore:
Gamesa - countries 11GW
Zamudio, Spain • India: 16% market • India: 5 GW
share
Vestas - Aarhus, • Global: 90 GW • Global: 15 manufacturing units • Global: 84.5 GW; Offshore:
Denmark • India: 8% market • India: 14 manufacturing facilities - nacelle 11GW
share manufacturing facility in Tamil Nadu and a • India: 2.5 GW
blade manufacturing facility in Gujarat • Installations of 2 MW and
varying rotor diameters (100 m,
110 m and 120 m)
Source: Compiled from various company websites
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STATISTICS
Chapter 6: Energy access: Bridging the gaps
Electricity Distribution Circle (EDC): Shamli

Energy
Re-
Energy Through Through
Energy Assess- Realiza- ceived Energy Assess- Realiza-
Re- AT&C Rate AT&C Rate
Sold ment (in tion (in (MU) Sold ment (in tion (in
Month ceived losses (Rs/ losses (Rs/
(MU) Lac) Lac) Energy (MU) Lac) Lac)
(MU) kWh) kWh)
Sold
(MU)
Year 2017-2018 Year 2018-2019
Apr-18 107.22 73.06 2,156.82 1,009.04 68.12% 0.94 95.62 78.52 2,410.50 1,363.67 53.54% 1.43
May-18 140.27 83.23 2,605.95 2,563.76 41.63% 1.83 127.93 92.21 3,386.19 2,065.68 56.03% 1.61
Jun-18 142.92 90.11 2,475.11 2,216.85 43.53% 1.55 147.99 80.64 3,353.21 2,701.33 56.10% 1.83
Jul-18 149.92 88.83 2,530.89 1,644.06 61.51% 1.10 139.85 83.48 2,762.26 2,270.38 50.74% 1.63
Aug-18 131.61 99.76 2,612.46 1,602.97 53.49% 1.22 110.99 88.17 3,614.35 1,873.26 58.83% 1.69
Sep-18 114.96 86.65 2,398.59 1,669.93 47.52% 1.45 95.99 81.79 2,932.48 1,924.70 44.07% 2.01
Oct-18 127.79 88.45 2,337.42 1,469.62 56.48% 1.15 0.00
Nov-18 85.92 79.36 2,180.96 1,531.81 35.13% 1.78 0.00
Dec-18 97.55 80.12 2,157.03 1,463.73 44.27% 1.5 0.00
Jan-19 100.99 85.76 2,717.40 1,565.85 51.07% 1.55 0.00
Feb-19 89.54 76.26 2,367.83 1,468.94 47.17% 1.64 0.00
Mar-19 99.32 81.25 2,402.13 3,027.12 -3.09% 3.05 0.00
Circle Rural - Urban - Urban -

Division name Rural - metered Rural - total Urban - total
name unmetered metered unmetered
EDC EDD-I SHAMLI 22,419 8,967 31,386 3,872 0 3,872
SHAMLI 16,268 5,740 22,008 1,426 0 1,426
EDD-II SHAMLI
EDD-III SHAMLI 24,135 8,339 32,474 6,723 0 6,723
EDD-IV SHAMLI 22,129 10,193 32,322 6,381 0 6,381
Source: Pashchimanchal Vidyut Vitaran Nigam Limited (PVVNL)
Consumption, Import, Production: LPG

Consumption (TMT) Import (TMT) Production (TMT)
FY 2015 18,000 9,840 8,313
FY 2016 19,623 10,568 8,959
FY 2017 21,608 11,326 11,097
FY 2018 23,343 12,380 11,382
Source: Ministry of Petroleum and Natural Gas (MoPNG)
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Subsidized and Non-subsidized Rates

of LPG in Delhi (May- Sept 2018)
Non-subsidized LPG rate Subsidized LPG rate
May 820 499
June 820 570
July 789 534
August 754 549
September 698 538
Source: Goodreturns.in
Cost of Cooking via Various Mediums

Induction Electric coil
LPG Stove
cooktop cooktop
Energy (in joules) per
1 Cylinder (14.2 kg LPG) 1 kWh 1 kWh
unit
Energy (in joules)
per unit factoring 261 MJ 3 MJ 2.6 MJ
efficiency
Units required to heat
0.012 1.042 1.182
10 litres of water
Cost per unit (in Rs) 423 (Subsidized)
5 5
900 (Non-subsidized)
Cost of heating 10 5.09 (subsidized)
5.21 5.91
litres of water (in Rs) 10.8 (Non-subsidized)
Source: Bijlibachao
177
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STATISTICS
Chapter 7: Discoms: Fundamental

reforms required
Ujwal DISCOM Assurance Yojana (UDAY) Performance

Parameters for Renewable-rich States
Smart Smart
Feeder
ACS-ARR (Rs AT&C metering metering
segregation
/kWh) Losses (%) above (200-
(%)
500kWh 500kWh)
Andhra
0.06 11.60 0 0 100
Pradesh
Gujarat -0.04 14.29 0 0 100
Haryana 0.58 23.80 3 1 100
Karnataka -0.01 15.46 0 1 97
Punjab 1.10 31.30 0 0 95
Rajasthan -0.27 27.31 58 0 24
Uttar Pradesh 0.37 37.92 0 0 15
Madhya
0.37 31.06 20 1 98
Pradesh
Maharashtra -0.02 22.33 0 0 66
Himachal
0.03 4.33 81 100
Pradesh
Telangana 0.39 12.55 8 2 9
Tamil Nadu 0.55 14.76 0 0 0
Source: Ujwal DISCOM Assurance Yojana (Uday) Dashboard, as viewed on October 2018
Revenue Gap: Average Cost of Supply (ACS) – Average

Revenue Realized (ARR)
2013-14 2014-15 2015-16 2016-17 2017-18
0.72 0.52 0.59 0.45 0.27
ACS-ARR
Gap
Source: Compiled from Power Finance Corp reports and Uday Dashboard
178
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Discoms’ Cost of Supply

2013-14 2014-15 2015-16
ACS (Rs/kWh) 5.19 5.23 5.46
ACS-ARR Gap (Rs/kWh) 0.72 0.52 0.59
Interest expenditure (Rs crore) 55,150 57,895 65,444
Power purchase costs (Rs crore) 409,432 459,506 480,118
Generation cost (Rs crore) 69,968 79,609 74,671
Employee cost (Rs crore) 49,180 55,796 58,924
O&M (Rs crore) 10,704 12,022 12,671
Depreciation (Rs crore) 23,584 27,044 30,995
Admin & general (Rs crore) 8,278 8,993 10,075
Others (Rs crore) 19,547 16,067 49,516
Total expenditure (Rs crore) 645,843 716,933 782,413
% of tariff attributed to servicing debt 8.5% 8.1% 8.4%
% of tariff attributed to power 63% 64% 61%

procurement
Y-o-Y increase in PPA expenses - 12% 4%
Y-o-Y increase in expenses - interest - 12% 9%
Source: Power Finance Corp (PFC)

http://www.pfcindia.com/DocumentRepository/ckfinder/files/Operations/Performance_Reports_of_State_Power_Utilities/1_
Report%20on%20the%20Performance%20of%20State%20Power%20Utilities%202013-14%20to%202015-16.pdf
179
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STATISTICS
Chapter 8: Integrating RE: Preparing for the future
Status of Green Corridor-I (ISTS Transmission Lines)

with a Deadline of Dec 2019
Project Component Status as of December 2017
Foundation: 96%
Ajmer-Ajmer 400kV DC line Tower: 92%
Stringing: 63%
Foundation: 100%
Chittorgarh (new)- Chittorgarh(RVPN) 400kV DC line Tower: 92%
Stringing: 53%
Foundation:89%
Tuticorin-Tirunelveli 2x400kV line Tower: 69%
Stringing: 0%
Civil Work: 80%
Chittorgarh substation 765/400 kV Equipment Supply: 85%
Erection: 72%
Civil Work: 84%
Substation Ajmer 765/400 kV Equipment Supply: 80%
Erection: 72%
Civil Work: 97%
Substation Tuticorin pooling station 765/400kV Equipment Supply: 60%
Erection: 55%
Foundation:93%
Banaskantha – Sankhari 400kV line Tower: 73%
Stringing: 10%
Foundation:100%
Chittorgarh – Ajmer 765 kV line Tower: 99%
Stringing: 88%
Civil Work: 70%
Banaskantha substation 765/400/220 kV Equipment Supply: 60%
Erection: 30%
Foundation:51%
Banaskantha – Bhuj 765 kV line Tower: 20%
Stringing: 0%
Civil Work: 50%
Substation at Bhuj pooling station 765/400/220 kV Equipment Supply: 35%
Erection: 5%
Source: Power Grid Corporation of India (PGCIL)
http://apps.powergridindia.com/POWERGRID/docs/ENVIRONMENT/KfW%20Monitoring%20Report/Safeguard%20Monitoring%20Report%20Jan-June%202017.pdf
180
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SCADA Compliance by Generators in Southern

States as of February 2018
Capacity with SCADA
State Plant type
availability
Wind (3,751/3,835.77 MW) 97
Andhra Pradesh
Solar (1,911/2,144.88 MW) 89
Wind (100.8/100.8 MW) 100
Telangana
Solar (3,008.32/3,246.42 MW) 92
Wind (3,633.68/3,633.68 MW) 100
Karnataka
Solar (3,764.37/3,763.37 MW) 100
Wind (16/59.3 MW) 27
Kerala
Solar (71.18/90.858 MW) 78
Wind (6,342/7,909.9 MW) 80
Tamil Nadu
Solar (648/1,950 MW) 33
Source: Southern Regional Load Dispatch Centre
http://www.srpc.kar.nic.in/website/2018/meetings/occ/a142occm.pdf
Status of ADB-financed Solar Park Transmission Projects

Capacity Status as of
Park Project components Deadline
(MW) December 2017
Power grid Bikaner 765
kV DC line; RVPN Bhadla Construction
Bhadla, 400 kV DC line; Bhadla underway— January
2,250
Rajasthan substation (765/400/220kV); halfway through 2019
extension of Bhadla and civil work
Bikaner substations
Hiriyur–Mysore 400kV DC
line; extension of 400/200kV
Tumkur pooling station
and substations; extension Construction
Pavagada, of 400/220 kV Mysore Underway— February
2,000
Karnataka substation; Tumkur pooling commenced 2019
station—Devanahalli civil work
(KPTC) 400kV DC line;
extension of Devanahalli
substation
Banaskantha pooling
Construction
Radhanesada, station—Banaskantha 400 September
700 underway; civil
Gujarat kV DC line; 400 kV Bay 2018
work started
extension at substation
Replacement of existing
3,000
Rihand–Dadri control and protection Contract to be
(evacua- -
HVDC line systems (SCADA); valve awarded
tion)
cooling upgradation
Source: Power Grid Corporation of India (PGCIL); http://apps.powergridindia.com/POWERGRID/docs/Resettlement%20and%20
Rehabilitation/ADB%20SEMI%20ANNUAL%20REPORT/LOAN%203521_8325-IND/Social%20Monitoring%20Report_%20
May%20to%20Dec.%202017.pdf
181
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STATISTICS
Estimated Cost of Transmission Infrastructure for Solar Parks

Total park Estimated cost (Rs crore)
Region
capacity(MW) Inter-state Intra-state
Southern 6,700 1,973 2,068
Western 4,700 921 673
Northern 4,121 5,042 795
Eastern 1,500 - 916
North-Eastern 249 105 293
Total 17,270 8,041 4,745
Source: Power Grid Corporation of India (PGCIL)
Summary of Forecasting and Scheduling Regulations across Major States

Status of Forecasting Scheduling
State Scheduling requirement
regulation responsibility responsibility
RE generator
Week ahead, day ahead
individually or via the RE generator
and intraday with a maximum of
Andhra Pradesh Final QCA; alternatively, individually or
16 revisions a day for wind and 9
accept the forecast through the QCA
for solar
made by the SLDC
RE generator
individually or via the RE generator Week ahead, day ahead and
Karnataka Final QCA; alternatively, individually or intraday with a maximum of 16
accept the forecast through the QCA revisions a day
made by the SLDC
RE generator
Rajasthan Final QCA; alternatively, individually or intraday with a maximum of 16
made by the SLDC
RE generator
Madhya Pradesh Draft QCA; alternatively, individually or intraday with a maximum of 16
made by the SLDC
RE generator
Tamil Nadu Draft QCA; alternatively, individually or intraday with a maximum of 16
made by the SLDC
RE generator
individually or via the RE generator Three days ahead, a day ahead
Gujarat Draft QCA; alternatively, individually or and intraday with a maximum of
accept the forecast through the QCA 16 revisions a day
made by the SLDC
QCA; alternatively, Week ahead, day ahead and
Maharashtra Draft accept the forecast QCA intraday with a maximum of 16
made by the SLDC revisions a day
Source: Forum of Regulators: state Electricity Regulatory Commission (ERCs); http://www.forumofregulators.gov.in/Data/Reports/I.pdf
182
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Chapter 9: Waste to energy: Limited scope
Status of WTE Plants in India

Electricity
Name of the Capacity Capacity Status Type of Rate of
City State Developer purchaser
WTE plant (TPD) (MW) (April 2017) technology power
Power
Reciprocating
Rs 3 for
1,950–2,000 grate technology
BRPL
(average with new filters.
Timarpur-Okhla JITF Eco- Operational BRPL and and Rs
quantity of Delhi New Delhi 16 Has Continuous
WTE plant polis since 2012 Tata Power 6 for
1,818 tonnes Emission Mon-
Tata
utilized) itoring System
Power
(CEMS)
BSES Yamuna
Power Limit-
Forward reverse ed (BYPL) for
ILFS Envi-
reciprocating off take of 49
1,300 (aver- ron- men-
Operational grate technology per cent of
Ghazipur WTE age quantity tal Infra-
Delhi New Delhi 12 since 2016 on coupled with energy. The 7.9
plant of 502 tonnes structure
trial run semi dry type flue rest is sup-
utilized) Services
gas treatment plied to Delhi
Ltd
system. Has CEMS Metro Rail
Corporation
(DMRC).
Reciprocating
1,400 (aver- grate technology The plant is
Bawana-Narela age quantity Ramky Operational coupled with connected
Delhi New Delhi 24 7.03
Energy of 756 tonnes Group since 2017 semi-dry type flue with the grid
utilized) gas treatment under NDMC
system. Has CEMS
Forward acting
reciprocating
600 (average grate technology
Jabalpur MSW Madhya
quantity of Madhya Operational coupled with
Private Limited Jabalpur 11.5 Essel Infra Pradesh 6.39
400 tonnes Pradesh since 2016 semi-dry type flue
(JMPL) discoms
utilized) gas compressed
treatment system.
Has CEMS.
Commis- Himachal
Shimla WTE Himachal Elephant
75 Shimla 1.7 sioned in Gasification State Elec- 7.9
plant Pradesh Energy
2017 tricity Board
(Maharash-
Thermophilic
400 (currently Organic tra State
dry anaerobic
Processing waste Operational Electricity
Solapur WTE Solapur Maharashtra 4 digestion oper- Rs 4.88
200–250 recycling since 2013 Distribution
ation (DRYADTM
tonnes) Ltd Co. Ltd.)
process)
MSEDCL
Hindustan On-grid, Not yet
Saligao– Operational Bio-digestion
35 Saligao Goa 0.2 Treatment given to the decid-
Calangute WTE since 2016 process
Pvt. Ltd State Board ed
Mass incinerator
Under con- Gujarat state
Surat WTE 1,000 Surat Gujarat 11.5 Essel Infra with reciprocat- 7.74
struction discoms
ing technology
183
10ANNEXURE(159-184).indd 183 17/01/19 2:03 PM

STATISTICS
Electricity
Name of the Capacity Capacity Status Type of Rate of
City State Developer purchaser
WTE plant (TPD) (MW) (April 2017) technology power
Power
Essel
Tendered in Mass incinerator
Pallavapuram Vengad-
December with recipro- Tamil Nadu Not de-
and Tambaram 328 aman- Tamil Nadu 5 Essel Infra
2015 Under cating grate discoms cided
MSW Pvt. Ltd galam
construction technology
(EPTMPL)
Was expect-
ed to start Madhya
Madhya
Indore WTE 1,000 Indore 21 Essel Infra operations Incineration Pradesh 6.39
Pradesh
by end of discoms
2017
RDF Power Under Com-
Hydera- RDF-based power
Bibinagar WTE 700 Telangana 7 Projects missioning TSSTCDL 7.9
bad generation
Ltd. stage
Ramky
(Hyder-
Jawaharnagar Hydera- Under con- Not
2,400 Telangana 19.8 abad Mass incineration TSSTCDL
WTE bad struction known
Integrated
MSW Ltd)
Visakhapatnam Visakha- Andhra Under con-
950 5 JITF Mass incineration AP discom 6.2
WTE patnam Pradesh struction
Source: Communication with the plant developers and their reports in 2017; Data taken from the Lok Sabha session held on 4 August 2017.and SBM 2017-18
184
10ANNEXURE(159-184).indd 184 17/01/19 2:03 PM

References
CHAPTER 1: THE ROAD TO 175 GIGAWATT
1. International Renewable Energy Development Agency (IRENA), 2017 Country
Rankings Dashboard
http://resourceirena.irena.org/gateway/dashboard/?topic=4&subTopic=18
2. Compiled from the Central Electricity Authority’s Generation reports
http://www.cea.nic.in/monthlyarchive.html
3. National Electricity Plan
http://erpc.gov.in/wp-content/uploads/2017/03/NEP_slides_200418.pdf
4. Ministry of New and Renewable Energy Annual reports https://mnre.gov.
in/annual-report and MNRE Physical Progress Achievements, viewed on
November 2018
https://mnre.gov.in/physical-progress-achievements
5. Ministry of New and Renewable Energy, viewed on November 2018 https://
mnre.gov.in/physical-progress-achievements
6. Prayas, July 2017 ‘India’s Journey to 175GW by 2022’
http://www.prayaspune.org/peg/publications/item/
download/813_72f650b395383a796d4b5b898a61a10e.html and MNRE Annual
reports https://mnre.gov.in/annual-report
7. http://www.cercind.gov.in/2016/orders/SORE.pdf , http://cercind.gov.in/2015/
orders/SO4.pdf , http://www.cercind.gov.in/2014/orders/SO354.pdf ; Auction
prices compiled from various news reports
8. https://data.bloomberglp.com/bnef/sites/14/2018/01/BNEF-Clean-Energy-
Investment-Investment-Trends-2017.pdf
9. CSE Estimates, based on installed capacity as reported by Ministry of New and
Renewable Energy, viewed on November 2018 https://mnre.gov.in/physical-
progress-achievements ; CAPEX costs were obtained from interviews with
developers;
10. RajyaSabhaUnstarredQuestionNo.62 (dated:18July2016)
11. Centre for Financial Accountability, 2017 ‘Coal vs Renewable Finance
Analysis’ http://www.cenfa.org/wp-content/uploads/2018/06/2017-COAL-vs-
RENEWABLE-Report.pdf
12. Reserve Bank of India https://m.rbi.org.in/Scripts/FAQView.aspx?Id=87
13. PWC India 2018 https://www.pwc.in/assets/pdfs/industries/private-equity/
reflections-indian-private-equity-in-2017.pd
14. https://mercomindia.com/financing-activity-indian-solar-sector/
15. Department of Industrial Policy and Promotion https://dipp.gov.in/sites/
default/files/FDI_FactSheet_29June2018.pdfhttp://dipp.nic.in/foreign-direct-
investment/foreign-direct-investment-policy , http://www.makeinindia.
com/documents/10281/114126/New+%26+Renewable+Energy+Sector+-
+Achievement+Report.pdf
185
11References.indd 185 17/01/19 7:07 PM

REFERENCES
16. Lok Sabha Unstarred Question No 2716, to be answered on 27.12.2018

http://164.100.47.190/loksabhaquestions/annex/16/AU2716.pdf
17. http://www.eib.org/en/infocentre/ten-years-of-green-bonds.htm
18. https://www.climatebonds.net/resources/reports/bonds-and-climate-change-
state-market-2018
19. http://www.teriin.org/sites/default/files/2018-05/Report%20under%20
NFA%20grant_2018.pdf
Box: The Indian Renewable Energy Development Agency (IREDA)

1. Indian renewable Energy Development Agency Ltd http://www.ireda.in/forms/
contentpage.aspx?lid=741
2. http://www.ireda.in/writereaddata/IREDA_Annual_Report_N2017-18.pdf
3. The Economic Times 26 March 2017 https://economictimes.indiatimes.com/
industry/energy/power/ireda-to-sanction-rs-13k-crore-loans-for-renewables-in-
fy18/articleshow/57837727.cms
CHAPTER 2: UTILITY-SCALE SOLAR: CHARTING A NEW COURSE

1. https://mnre.gov.in/physical-progress-achievements , as viewed on September
2018
2. https://bridgetoindia.com/reports/india-solar-compass-q2-2018-august-2018/
3. https://mnre.gov.in/file-manager/UserFiles/Statewise-Solar-Potential-NISE.pdf
4. MNRE Annual Report 2012-2013 https://mnre.gov.in/file-manager/annual-
report/2012-2013/EN/chapter4.html
5. http://seci.co.in/web-data/docs/RFS_Documents%20For%20Selection%20
of%20SPD%20under%20JNNSM%20Phase%20II%20Batch%20I(1).pdf
6. http://pib.nic.in/newsite/PrintRelease.aspx?relid=161755
7. https://economictimes.indiatimes.com/industry/energy/power/except-for-
acme-solar-energy-corporation-cancels-all-projects-allotted-in-july-13-auction/
articleshow/65249746.cms
8. https://bridgetoindia.com/reports/india-solar-compass-february-2018/ same as
ref [2]
9. MNRE Annual Report 2017-18 https://mnre.gov.in/file-manager/annual-
report/2017-2018/EN/pdf/chapter-4.pdf
10. http://www.tnerc.gov.in/orders/commn%20order/2017/Solar-IANo1%20of%20
2017.pdf
11. https://mnre.gov.in/file-manager/UserFiles/Guidelines_for_Tariff_Based_
Competitive_Bidding_Process.pdf
12. https://mercomindia.com/uperc-tariff-solar-projects-tendered/ , https://
mercomindia.com/agreement-renegotiated-ppas-uttar-pradesh/
13. https://mercomindia.com/karnataka-government-annuls-kerc-order-requiring-
state-to-approve-wind-ppas/
14. http://jserc.org/pdf/orders/2018_02.pdf
Box: Quantifying the discom risk

1. https://economictimes.indiatimes.com/industry/energy/power/uttar-
pradesh-annuls-1000-mw-solar-auction-without-citing-any-reasons/
2. https://mercomindia.com/upneda-solar-auction-500-mw-l1-tariff-3-17/
CHAPTER 3: ROOFTOP SOLAR: OVERSHADOWED

1. https://mnre.gov.in/physical-progress-achievements
2. Bridge to India, https://bridgetoindia.com/sputtering-re-needs-decisive-
186

government-help/ Sputtering RE needs decisive government help, 05

November 2018
3. Bridge to India, India Solar Rooftop Map 2018 September. Available at: https://
bridgetoindia.com/wp-content/uploads/2018/12/BRIDGE-TO-INDIA-India-
Solar-Rooftop-Map_-December-2018.pdf
4. http://www.indiaenvironmentportal.org.in/files/file/MODEL%20
BUILDING%20BYE%20LAWS-2016.pdf
5. https://geda.gujarat.gov.in/Gallery/Media_Gallery/Salient_features_of_the_
Rooftop_Project_18_-_19.pdf
6. http://upneda.org.in/MediaGallery/Uttar_Pradesh_Solar_Energy_Policy-2017_
English__0.pdf and
https://www.itsmysun.com/rooftop-solar-applicable-policies/
maharashtra/?category=Residential&id=1
7. Order, Chandigarh Administrative Gazette (Extraordinary), May 18, 2016.
Available at: http://www.crestchd.org.in/Building.pdf
8. KERC Order S/03/1 Date: 2nd May, 2016 Available at: http://kredlinfo.in/
General/KERC%20tariff%20orders/Determination%20of%20tariff%20and%20
other%20norms%20in%20respect%20of%20new%20Solar%20Power%20
Projects.pdf and https://www.ecosoch.com/new-solar-rooftop-policy-for-
karnataka-kerc-bescom-2016-2018/ and https://www.itsmysun.com/rooftop-
solar-applicable-policies/karnataka/?category=Industrial&id=3
9. Delhi Solar Energy Policy 2015, Available at: http://delhi.gov.in/wps/
wcm/connect/136b310049cb1fd89576fd124fa22605/Delhi_Solar_Policy_
Draft_150910.pdf?MOD=AJPERES&lmod=-1251254222&CACHEID=136b31004
9cb1fd89576fd124fa22605
10. Karnataka Renewable Energy Development Limited. Available at: http://
kredlinfo.in/ and http://kredlinfo.in/Solarlistrpt.aspx. Last accessed on 10 Dec
2018 and Karnataka Renewable Energy Development Limited. Solar Rooftop
Grid Connected Systems. Available at: http://kredlinfo.in/Solar_Grid_Rooftop.
aspx and http://kredlinfo.in/solargrid/Solar%20Policy%202014-2021.pdf
11. The Times of India dt: 25 July 2018 Available at: https://timesofindia.
indiatimes.com/city/delhi/how-solar-scheme-will-empower-farmers/
12. Prayas Report: India’s Journey towards 175 GW Renewables by 2022 - A July
2017 Update, Available at: http://www.prayaspune.org/peg/publications/
item/356-india-s-journey-towards-175-gw-renewables-by-2022-version-2-0.
html
13. https://climatepolicyinitiative.org/wp-content/uploads/2018/02/Scaling-up-
Rooftop-Solar-Power-in-India-The-Potential-of-Solar-Municipal-Bonds.pdf
14. https://mercomindia.com/development-banks-loaned-indian-solar-
rooftops-2017/
15. http://www.dhbvn.org.in/staticContent/new/smartgridprojects/gurgaoncity/
DPR_DHBVN_HVPNL_03.05.16.pdf
16. Dhananjay Jha, Hindustan Times dt: 6 June 2017; Available at: https://www.
hindustantimes.com/gurugram/gurugram-s-electricity-consumption-at-record-
high-of-1-700-mw/story-X5kbcGy3ky52dMYo7JWiQK.html
17. Primary data from Dakshin Haryana Bijli Vitran Nigam (DHBVNL), 2018
18. Rajan Kalsotra and Aruna Kumarankandath 2017. Your Own Sun: A Manual
on Solar Rooftop, Centre for Science and Environment, New Delhi
19. Priyavrat Bhati, Shekhar Deepak Singh and Mandvi Singh 2018, Going Solar:
Action Plan to Tap Gurugram’s Solar Rooftop Potential, Centre for Science and
Environment, New Delhi
187

REFERENCES
20. http://hareda.gov.in/writereaddata/document/hareda810524221.pdf
21. https://www.hindustantimes.com/gurugram/50-000-litres-of-diesel-is-burnt-
every-hour-for-power-backup-in-gurugram/story-s9Jd1rgdzy4No3Ap0qnDoM.
html
22. https://www.cseindia.org/pollution-in-residential-societies-from-dg-set-8828
23. Aruna Kumarankandath and Sridhar Sekar 2017. SOLAR ROOFTOP:
Replacing Diesel Generators in Residential Societies, Centre for Science and
Environment, New Delhi
CHAPTER 4: SOLAR MANUFACTURING: MOVING OUT OF THE DOLDRUMS

1. ICRA, Upward trend in imported solar PV module prices to impact the
viability of recently awarded solar PV energy projects, September 2017;
Available at: https://www.icraresearch.in/research/ViewResearchReport/1515.
2. National Development and Reform Commission, Ministry of Finance,
National Energy Board; Notice - Development and Reform Energy [2018] No.
823 dt: May 31, 2018; Available at: http://www.ndrc.gov.cn/gzdt/201806/
t20180601_888639.html
3. https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds456_e.htm
4. https://www.greengazette.in/notices/indian-solar-manufactures-association-
hereinafter-referred-to-as-the-petitioner-has-filed-an-application-before-the-
designated-authority_20170721-110-00179-00000.pdf.pdf
5. https://2rjrmf33rccw3lrxgi3x82yy-wpengine.netdna-ssl.com/wp-content/
uploads/2017/12/India-Solar-Manufacturing-Concept-MNRE-1.pdf
6. http://seci.co.in/web-data/docs/EOI-%2020000%20MW%20Solar%20PV%20
Manufacturing%20Scheme.pdf
7. http://seci.co.in/web-data/docs/tenders/Final%20RfS_5GW%20
Manufacturing.pdf
Box: The changing Chinese dynamics

1. https://economictimes.indiatimes.com/industry/energy/power/imported-solar-
equipment-wont-attract-customs-duty/articleshow/63691100.cms
https://mnre.gov.in/file-manager/UserFiles/Implications-of-GST-on-delivered-
cost-of-Renewable-Energy.pdf
2. CBIC, F.No. 528/90/2016-STO(TU), Clarification regarding
classification of Solar Panel/Module equipped with element. dt. 06-
04-2018. Available at: http://www.cbic.gov.in/resources//htdocs-cbec/
customs/cs-instructions/cs-instructions-2018/cs-ins-08-2018-new.
pdf;jsessionid=47CC390669F6DFEC52B3C4BF9CBFEF82
3. LOK SABHAUNSTARRED QUESTION NO: 3179, ANSWERED ON:
06.08.2018Import of Solar Cells and Modules. Available at:
http://164.100.47.194/Loksabha/Questions/QResult15.
aspx?qref=72098&lsno=16
Box: Innovation and technology

1. MNRE File No. 223/18/2017-R&D Coord. Available at: https://mnre.gov.in/file-
manager/UserFiles/Draft-TDIP_RE.pdf
2. First Solar Annual Report 2017 available at: http://investor.firstsolar.com/
static-files/48c3c6f5-8d9a-453f-9631-1733b69f77dc
https://www.pv-tech.org/editors-blog/first-solar-ramping-series-6-capex-as-rd-
spending-declines
3. US department of Energy, OFFICE OF ENERGY EFFICIENCY AND
RENEWABLE ENERGY OVERVIEW FY 2018 BUDGET AT-A-GLANCE
188

Available at: https://www.energy.gov/sites/prod/files/2017/08/f35/1.%20%20

EERE%20Overview%20-%20FY%202018%20Budget_0.pdf
CHAPTER 5: WIND ENERGY: BRAVING THE HEADWINDS

1. http://www.cea.nic.in/reports/monthly/installedcapacity/2018/installed_
capacity-04.pdf
2. http://files.gwec.net/files/GWR2017.pdf
3. https://mnre.gov.in/file-manager/grid-wind/Scheme-for-Setting-up-of-1000-
MW-ISTS-connected-Wind-Power-Projects.pdf
4. https://niwe.res.in/department_wra_100m%20agl.php
5. https://qz.com/india/1036577/indias-wind-energy-sector-is-a-complete-mess-
right-now-thanks-to-the-narendra-modi-government/
6. https://mercomindia.com/seci-cancels-2-gw-wind-tender-retenders-1-2-gw/
7. https://mnre.gov.in/state-wise-year-wise-wind-power-installed-capacity-mw
8. https://www.investopedia.com/terms/a/accelerateddepreciation.asp
9. https://aws-dewi.ul.com/accelerated-depreciation-wind-energy-india/
10. https://home.kpmg/content/dam/kpmg/in/pdf/2017/02/Energy-and-Natural-
Resources.pdf
11. https://mnre.gov.in/sites/default/files/schemes/guideline-wind.pdf
12. https://gwec.net/global-figures/global-offshore/
13. IBID
14. http://www.klgates.com/files/Upload/2018-08_OG_Offshore-Wind-brochure.
pdf
15. https://mnre.gov.in/sites/default/files/webform/notices/EOI_for_Development_
of_1000_MW_Offshore_Wind_Farm_in_Gujarat.pdf
16. https://mnre.gov.in/file-manager/UserFiles/Repowering-Policy-of-the-Wind-
Power-Projects.pdf
17. https://mnre.gov.in/file-manager/akshay-urja/september-october-2011/EN/
RePowering%20Wind%20Farms.pdf
18. https://mnre.gov.in/annual-report
19. https://www.icraresearch.in/research/ViewResearchReport/2085
20. file:///D:/Backup%20Shweta/Downloads/thesis.pdf
21. https://mnre.gov.in/file-manager/UserFiles/Draft-Wind-Solar-Hybrid-Policy.pdf
23. http://seci.co.in/web-data/docs/tenders/160%20MW%20Hybrid%20SPD.pdf
24. https://mercomindia.com/secis-1-2-gw-hybrid-tender-undersubscribed-150-
mw/
25. http://www.teriin.org/sites/default/files/2018-07/Environmental%20
Governance.pdf
26. https://idaminfra.com/wp-content/uploads/2018/10/Repowering-of-Old-Wind-
Turbines-in-India.pdf
27. https://www.vox.com/energy-and-environment/2018/3/8/17084158/wind-
turbine-power-energy-blades
28. https://www.suzlon.com/press-release-detail/377/suzlon-installs-and-
commissions-s128-indias-largest-wind-turbine-generator
29 https://www.slideshare.net/farsoiya/wind-energy-its-potential-in-india
30. https://economictimes.indiatimes.com/industry/energy/power/wind-power-
companies-in-shock-over-andhra-pradesh-discoms-move-to-renegotiate-ppas/
31. https://www.suzlon.com/in-en/energy-solutions/s111-wind-turbine-generator
32. https://idaminfra.com/wp-content/uploads/2018/10/Repowering-of-Old-Wind-
Turbines-in-India.pdf
189

REFERENCES
33. https://www.windpowermonthly.com/article/1032370/environment-turbine-
recycling---new-lease-life-old-turbine-parts
34. http://ieefa.org/wp-content/uploads/2018/02/Power-Industry-Transition-Here-
and-Now_February-2018.pdf
35. https://niwe.res.in/information_isw.php
36. https://smartinvestor.business-standard.com/market/story-519578-storydet-
TN_power_regulator_for_curbs_on_wind_power_banking_as_discom_losses_
mount.htm#.XDRs6VUzbIU
37. https://www.ndtv.com/south/tamil-nadu-utility-restrained-from-cutting-
power-to-wind-mills-506857
38. http://www.tnerc.gov.in/orders/Tariff%20Order%202009/2018/Wind-6of2018.
pdf
Box: The old and the new

1. https://en.wind-turbine-models.com/turbines/463-src-green-power-src-31-250
CHAPTER 6: ENERGY ACCESS: BRIDGING THE GAPS

1. http://164.100.47.193/lsscommittee/Energy/16_Energy_1.pdf
2. https://thewire.in/government/narendra-modi-government-rural-
electrification-power
3. http://saubhagya.gov.in/ last accessed in October 2018
5. https://www.cseindia.org/heat-on-power-5768
6. https://powermin.nic.in/sites/default/files/webform/notices/Guidelines_of_
SAUBHAGYA.pdf
7. https://www.cseindia.org/mini-grids-in-uttar-pradesh-8826
9. http://www.watchyourpower.org/uploaded_reports.php
10. watchyourpower.org, Prayas (Energy Group), as viewed on May 2018
11. http://saubhagya.gov.in/
13. Ground survey conducted by CSE in Shamli
14. http://pvvnl.org/RTI/TARIFF/Tarrif_order_2017/English_021217.pdf
15. http://www.uppcl.org/site/writereaddata/
uploadedCirculars/C_201712081805472224.pdf
16. https://www.thehindu.com/data/socio-economic-and-caste-censuss-data-on-
standard-of-living-of-rural-households/article7383259.ece
18. Ibid
19. https://powermin.nic.in/sites/default/files/webform/notices/Guidelines_of_
SAUBHAGYA.pdf
21. Ibid
22. http://www.upneda.org.in/mediagallery/Mini-Grid-Policy-2016.pdf
23. http://uperc.org/App_File/DRAFTREGULATIONS-MINIGRID-
pdf382016112112AM.pdf
24. http://www.greengrowthknowledge.org/sites/default/files/downloads/
best-practices/GGGI%20Case%20Study_Solar-Powered%20Irrigation%20
Pumps%20in%20India_June%202017.pdf
25. http://ceew.in/pdf/CEEW%20-%20Adopting%20Solar%20for%20
Irrigation%20(SPIS)%20%20Farmers’%20Perspectives%20from%20UP%20
Report%2017Jan18.pdf
190

26. https://tuewas-asia.org/wp-content/uploads/2017/05/30-Solar-Water-Pumping-
for-Irrigation-Opportunities-in-Bihar-India.pdf
27. https://mnre.gov.in/file-manager/UserFiles/Scheme-for-Solar-Pumping-
Programme-for-Irrigation-and-Drinking-Water-under-Offgrid-and-
Decentralised-Solar-applications.pdf
28. http://www.ceew.in/sites/default/files/CEEW-Adopting-Solar-for-Irrigation-
Farmers-Perspectives-from-UP-Report-17Jan18.pdf
29. https://mnre.gov.in/file-manager/annual-report/2017-2018/EN/cover-inside.
html
30. https://www.epw.in/journal/2018/34/.../kick-starting-kisan-urja-suraksha-
evam.html
31. http://mofapp.nic.in:8080/economicsurvey/
32. http://petroleum.nic.in/sites/default/files/APR_E_1718.pdf
33. https://scroll.in/article/865853/pms-plan-for-free-gas-connections-is-failing-its-
objective-as-government-had-been-warned-it-would
34. http://www.ppac.org.in/WriteReadData/Reports/201710310449342512219Prim
arySurveyReportPPAC.pdf
35. https://www.ppac.gov.in/WriteReadData/Reports/201812060255068030287Da-
taonLPGMarketing1stOctober2018LPGProfile.pdf
37. http://petroleum.nic.in/sites/default/files/MonthSummary.pdf
38. http://niti.gov.in/writereaddata/files/document_publication/NITIBlog28_VC-
AnilJain.pdf
39. ccacoalition.org/en/file/4319/download?token=w21tWT40
41. http://niti.gov.in/writereaddata/files/document_publication/NITIBlog28_VC-
AnilJain.pdf
42. https://www.bijlibachao.com/appliances/cooktop-comparison-gas-electric-and-
induction.html
43. IBID
44. http://www.teriin.org/research-paper/induction-stoves-option-clean-cooking-
rural-india
45. http://www.iitb.ac.in/en/breaking-news/souls-iit-bombay-wins-national-level-
solar-chulha-challenge
Box: Decentralised systems for access

1. https://mnre.gov.in/file-manager/annual-report/2017-2018/EN/pdf/chapter-4.
pdf
CHAPTER 7: DISCOMS: FUNDAMENTAL REFORMS REQUIRED

2. https://powermin.nic.in/pdf/Uday_Ujjawal_Scheme_for_Operational_and_
financial_Turnaround_of_power_distribution_companies.pdf
3. Compiled from the Uday Dashboard’s ACS-ARR Gap Parameter dataset, as
viewed on October 2018
https://www.uday.gov.in/acs_arr_india.php
4. Ministry of Power, Discom Sixth Annual Integrated Rating, July 2018 http://
pfcindia.com/DocumentRepository/ckfinder/files/GoI_Initiatives/Annual_
Integrated_Ratings_of_State_DISCOMs/6th_rating_booklet.pdf
191

REFERENCES
5. Compiled from the Uday Dashboard’s AT&C Loss Parameter dataset, as viewed
on September 2018 https://www.uday.gov.in/atc_india.php
6. Discrepancies were noted by CSE, the starkest being that of Himachal
Pradesh which reports an impossibly low loss of under 5%. Off the record
conversations with the relevant authorities revelaed scope for multiple
interpretations of calculating the numbers. There have been no detailed
reports by Power Finance Corp, as per the norm prior to 2015, to enable cross
verification of the numnbers reported in UDAY.
7. PFC Annual Report 2016-17 http://www.pfcindia.com/DocumentRepository/
ckfinder/files/Investors/Annual_Reports/21_PFC_Annual_Report_2016-17_
Deluxe.pdf
PFC Annual Report 2015-16 http://www.pfcindia.com/DocumentRepository/
ckfinder/files/Investors/Annualreport_2015-16.pdf PFC Annual Report 2014-
15 http://www.pfcindia.com/Default/ViewFile/?id=1472565527097_PFC%20
Annual%20Report%202014-15.pdf&path=Page&Name=2014-15
8. KPMG, December 2017
https://www.iitk.ac.in/ime/anoops/FOR-17/FOR-17%20photos/PPTs/IITK%20
Outreach%20Centre%20Day%201/ppt/UDAY_Challenges%20and%20
Way%20Forward_KPMG%20.pdf
9. Compiled from the Uday Dashboard’s Smart Metering Progress Dataset, viewed
on october 2018
https://www.uday.gov.in/national_parameter_dashboard.php?id=29
10. Compiled from the Uday Dashboard’s Feeder Segregation dataset, as viewed on
October 2018
https://www.uday.gov.in/national_parameter_dashboard.php?id=3
11. Uday Dashboard’s list of states that have undertaken tariff revisions, as viewed
on October 2018
https://www.uday.gov.in/home.php#modal-two
12. KPMG, December 2017 same as ref [8]
https://www.iitk.ac.in/ime/anoops/FOR-17/FOR-17%20photos/PPTs/IITK%20
Outreach%20Centre%20Day%201/ppt/UDAY_Challenges%20and%20
Way%20Forward_KPMG%20.pdf
13. PFC Annual Report 2016-17 same as ref [7] http://www.pfcindia.com/
DocumentRepository/ckfinder/files/Investors/Annual_Reports/21_PFC_
Annual_Report_2016-17_Deluxe.pdf
14. PFC Annual Report 2016-17 same as ref [13] and [7] http://www.pfcindia.
com/DocumentRepository/ckfinder/files/Investors/Annual_Reports/21_PFC_
15. PFC Annual Report 2016-17 same as ref [14] [13] and [7] http://www.pfcindia.
com/DocumentRepository/ckfinder/files/Investors/Annual_Reports/21_PFC_
192

16. https://powermin.nic.in/sites/default/files/webform/notices/RPO_
trajectory_2019-22_Order_dated_14_June_2018.pdf
17. http://niti.gov.in/writereaddata/files/new_initiatives/NEP-ID_27.06.2017.pdf
18. https://cag.gov.in/sites/default/files/audit_report_files/Union_Civil_
Performance_Renewable_Energy_Report_34_2015_annexures.pdf
19. https://www.recregistryindia.nic.in/pdf/REC_Regulation/APTEL_Order_
Dated_20042015.pdf
20. http://www.mperc.nic.in/091215-PNo-34-2015.pdf
21. http://www.mercindia.org.in/pdf/Order%2058%2042/Order%20In%20
Case%20No%20159%20%20of%202013__20%2012%202013_final.pdf
22. http://mercindia.org.in/pdf/Order%2058%2042/Order-191%20of%202014-
21042015.pdf
23. https://solarrooftop.gov.in/notification/Notification-09012017.pdf
24. https://www.recregistryindia.nic.in/pdf/Others/Report_on_REC_Mechanism.
pdf
25. https://www.crisil.com/content/dam/crisil/our-analysis/publications/ratings-
roundup/credit-quality-improvement-sustains-through-the-year.pdf
26. https://economictimes.indiatimes.com/industry/energy/power/increase-in-
power-demand-met-by-improved-hydro-nuclear-generation-india-ratings/
27. https://recregistryindia.nic.in/flasher_attachment/Report_on_REC_Mechanism.
pdf
28. https://recregistryindia.nic.in/flasher_attachment/Report_on_REC_Mechanism.
pdf same as ref [27]
29. Rec registry database, as viewed on September 2018 https://recregistryindia.
nic.in/index.php/publics/Source_Wise_Capacity_Status#
30. https://www.iexindia.com/Uploads/Presentation/REC_WEB_2017.pdf
31. http://www.prayaspune.org/peg/publications/item/364-choosing-green-the-
status-and-challenges-of-renewable-energy-based-open-access.html
32. http://www.cercind.gov.in/report_MM.html
33. http://www.prayaspune.org/peg/publications/item/364-choosing-green-the-
status-and-challenges-of-renewable-energy-based-open-access.html same as ref
[31]
34. https://powermin.nic.in/sites/default/files/webform/notices/Tariff_Policy-
Resolution_Dated_28012016.pdf
35. https://powermin.nic.in/sites/default/files/uploads/The%20Electricity%20
Act_2003.pdf
36. https://powermin.nic.in/sites/default/files/webform/notices/Tariff_Policy-
Resolution_Dated_28012016.pdf same as ref [34]
37. http://prayaspune.org/peg/publications/item/
download/812_1dd0c1b734e1ba45f1dda777d3e12f7e.html
38. http://www.forumofregulators.gov.in/Data/WhatsNew/Open_Access.pdf
39. http://www.mercindia.org.in/pdf/Order%2058%2042/Notice-85%20of%20
2017-27072017.pdf
40. The deviation penalties for intra-state transactions vary from 0.50/kWh to
1.50/kWh. Considering PPA of 3/kWh, the deviation penalties for inter-state
transactions come in the range of 0.30/kWh to 0.90/kWh.
41. https://mnre.gov.in/sites/default/files/webform/notices/RPOper
cent20Complianceper cent20cellper cent20order.pdf
193

REFERENCES
CHAPTER 8: INTEGRATING RE: PREPARING FOR THE FUTURE

1. https://www.iea.org/publications/insights/insightpublications/Getting_Wind_
and_Sun.pdf
2. https://www.bp.com/content/dam/bp/en/corporate/pdf/energy-economics/
statistical-review/bp-stats-review-2018-full-report.pdf
3. http://www.cea.nic.in/reports/committee/nep/nep_jan_2018.pdf
4. https://www.iea.org/publications/insights/insightpublications/
SystemIntegrationofRenewables.pdf
5. https://www.iea.org/media/training/presentations/etw2014/course4and5/
Day_5_Sessions_12_Renewables_GIVAR.pdf
6. http://www.cea.nic.in/reports/monthly/executivesummary/2018/exe_
summary-03.pdf
7. http://www.cercind.gov.in/Regulations/UI_Amendments_regulations_2010.pdf
8. https://www.nrel.gov/docs/fy17osti/68530.pdf
9. http://bridgetoindia.com/revamp/wp-content/uploads/2018/05/BRIDGE-TO-
INDIA-India-RE-CEO-Survey-2018.pdf
10. https://www.financialexpress.com/industry/transmission-woes-seci-halves-
wind-capacity-for-auction/1271885/
11. http://www.cea.nic.in/reports/others/ps/pspa2/draft_nep_trans_2016.pdf
12. http://www.cea.nic.in/reports/others/ps/pspm/trans_capacity.pdf
13. http://re.indiaenvironmentportal.org.in/files/file/Report-Green%20Energy%20
corridor.pdf
15. https://mercomindia.com/need-for-green-energy-corridors-rises/
16. https://powermin.nic.in/sites/default/files/webform/notices/SFC_proposal_
for_establishment_of_renewable_energy_management_centre.pdf
17. https://www.giz.de/en/worldwide/39701.html
18. https://www.genewsroom.com/press-releases/ge-power-deliver-
world%E2%80%99s-largest-wide-area-monitoring-system-wams-284429
19. https://powerline.net.in/2018/09/11/14793/
20. http://www.iitk.ac.in/ime/anoops/IEX%20Training-2018/presentation/
AjitPandit_Idam_IIT%20KanpurIEX_DSM_02052018_forcirculation.pdf
21. http://www.cercind.gov.in/2015/regulation/SOR7.pdf
22. file:///C:/Users/mandvi/Downloads/GridZIntegrationZReport%20(3).pdf
23. https://www.nrel.gov/docs/fy17osti/68530.pdf
24. http://www.cercind.gov.in/2016/regulation/124_1.pdf
25. http://www.cercind.gov.in/2015/orders/SO_11.pdf
26. http://www.cercind.gov.in/2018/Reports/50%20Hz_Committee1.pdf
27. http://www.cercind.gov.in/2018/draft_reg/DP.pdf
28. http://www.moef.gov.in/sites/default/files/Press_Statement__INDC_English.
pdf
29. https://niti.gov.in/writereaddata/files/new_initiatives/NEP-ID_27.06.2017.pdf
30. http://www.esiexpo.in/application/assets/docs/web-docs/oldpdf/13-jan-2017/
UtilityApplications-PowerGrid-ManishKumarTiwari.pdf
31. http://www.sustainabilityoutlook.in/news/india%E2%80%99s-first-utility-
scale-solar-storage-project-realized-andaman-nicobar-islands-761547
33. https://assets.kpmg.com/content/dam/kpmg/in/pdf/2017/11/Electric-Vehicles.
pdf
34. http://www.cea.nic.in/reports/others/planning/resd/mom_pump_storage_
plants.pdf
35. https://inis.iaea.org/search/search.aspx?orig_q=RN:42007655
194

36. https://www.itsmysun.com/solar-state-wise-policy/
37. http://www.comsolar.in/fileadmin/user_upload/I-RE_-_Grid_Study/GIZ_
Mainreport.pdf
38. https://www.uday.gov.in/home.php
Box: The Irish Miracle

1. http://www.eirgridgroup.com/site-files/library/EirGrid/DS3-Programme-
Brochure.pdf
2. http://euanmearns.com/beyond-the-spin-of-green-energy-storage/
Box: The cost of renewable grid integration

1. http://www.cea.nic.in/reports/others/planning/resd/resd_comm_reports/
report.pdf
CHAPTER 9: WASTE TO ENERGY: LIMITED SCOPE

1, Aman Luthra, 1 April 2017, ‘Competing systems of waste management in
urban India, Waste-to-energy and recycling’, Economic & Political Weekly, Vol.
52, Issue No. 13
2. Planning Commission, High Committee Report 1995; http://
planningcommission.nic.in/reports/publications/pub95_hghpwr.pdf
3. Planning Commission task Force Report, 2014 ; http://planningcommission.
nic.in/reports/genrep/rep_WTE1205.pdf
4. Information shared by South Delhi Municipal Council in June 2017.
5. GIZ, 2017, ‘Waste-to-Energy Options in Municipal Solid Waste Management’,
2017; available at: htps://www.giz.de/en/downloads/GIZ_WasteToEnergy_
Guidelines_2017.pdf
6. Original Application No. 22 of 2013, Judgement pronounced in 2017, National
Green Tribunal.
7. Chintan, 2013, Give Back Our Waste; http://www.chintan-india.org/
documents/ research_and_reports/chintan-report-give-back-our-waste.pdf
8. CSE, 2016 A Report on Survey of Implementation of Continuous
Emission Monitoring System in India; http://cseindia.org/userfiles/cems-
implementation-survey-report.pdf
9. MNRE, Standing Committee on Energy, Power Generation From Municipal
Solid Waste Report, 2016; http://164.100.47.193/lsscommittee/Energy/16_
Energy_20.pdf
10. Swachh Bharat dashboard, available on http://www.swachhbharaturban.in/
sbm/home/#/SBM
11. Parliament session dated 3rd August, 2017 ; http://www.
indiaenvironmentportal.org.in/files/file/Generationper cent20ofper
cent20Powerper cent20fromper cent20Wastes.pdf
12. ‘Generation of power from wastes’, LokSabha session- August 4th, 2017.
Available on: http://www.indiaenvironmentportal.org.in/files/file/
Generation%20of%20Power%20from%20Wastes.pdf
13. Swachh Bharat Abhiyan, 2018; http://www.uncrd.or.jp/content
documents/6561 Country-G-1-India.pdf
14. Swachh Bharat Abhiyan Manual, October 2014, revised in August 2017,
MoUD; http:// www.swachhbharaturban.in:8080/sbm/content/writereaddata/
SBM_Guideline.pdf
15. Ibid
195

REFERENCES
16. Ibid
17. Niti Aayog Agenda, 2017;http://niti.gov.in/writereaddata/files/coop/India
Action Plan. pdfurbanupgrading/urbanenvironment/resources/references/
pdfs/ MunicipalSWIncin.
18. Letter issued by MoEF&CC, 2017; http://environmentclearance.
nic.in/writereaddata/ public_display/orders/156128664$SECper
cent20MEFCCLETTER.pdf
19. Planning Commission, High Committee Report 1995; http://
planningcommission.nic.in/reports/publications/pub95_hghpwr.pdf
20. The Central Electricity Regulatory Commission, Norms for determination
of generic tariff for Municipal Solid Waste/Waste to Energy projects and
indicative tariff for 2015-16;
http://www.cercind.gov.in/2015/regulation/SOR115.pdf
21. Value out of Waste, Assocham,2015; http://www.ckinetics.com/publications/
Valueper cent20Outper cent20ofper cent20Waste_2015.pdf
22. Waste To Energy Opportunities In India 2017-2022 - Research and Markets,
2017; http://www.businesswire.com/news/home/20170426006844/en/Waste-
Energy-Opportunities-India-2017-2022---Research
23. Standing Committee Report , MNRE, 2015-16; http://164.100.47.193/
lsscommittee/Energy/16_Energy_16.pdf
24. Energy Opportunities In India 2017-2022 - Research and Markets, 2017; http://
www.businesswire.com/news/home/20170426006844/en/Waste-Energy-
Opportunities-India-2017-2022---Research
25. Waste to Energy (WTE) Market Size By Technology, https://www.gminsights.
com/industry-analysis/waste-to-energy-WTE-market
26. Manual on SWM Rules, MoHUA, 2016; http://moud.gov.in/
pdf/584e4b8b1e3da584e4a5c4a867Book2.pdf
27. Ibid
28. Economic Times, ‘NTPC invites developers to set up 100 waste-to-energy
plan\ts’, https://economictimes.indiatimes.com/industry/energy/power/ntpc-
invites-developers-to-set-up-100-waste-to-energy-plants/articleshow/60718255.
cms
29. CII< Waste to Worth; https://www.cii.in/PhotoGalleryDetail.
aspx?enc=2W4v0yOmC6Lo9MzR/
30. Niti Aayog Agenda, 2017;http://niti.gov.in/writereaddata/files/coop/India
Action Plan. pdfurbanupgrading/urbanenvironment/resources/references/
pdfs/ MunicipalSWIncin.
31. GIZ, 2017, Output-Based Market Development Assistance (OMDA), ‘Proposal
for Promoting Co-processing of Municipal Solid Waste (MSW) Based Refuse
Derive Fuel (RDF)in cement plants in India’
196

In the five years since the publication of the first Citizen’s Report on the
State of Renewable Energy, the renewable energy sector has made
tremendous strides in the country. Riding on a favourable policy
environment and dipping prices, capacity and generation have
grown. But this success has thrown newer challenges.
The second Citizen’s Report on the State of Renewable Energy takes a

close look at where we stand now, what are the strengths of and the
challenges facing the sector, and whether the sector can overcome
these obstacles and emerge as a viable alternative to conventional
energy sources. It offers an analysis which covers the key sub-sectors
and the associated infrastructure — solar (large-scale, rooftop and
manufacturing), wind, waste to energy, integration and transmission,
energy access and distribution companies. And it offers a blueprint
which could help the sector reach its 175-gigawatt goal seamlessly.
The world stands at the cusp of a momentous shift in the energy

sector. For the first time, decarbonised electricity appears feasible in
the foreseeable future; it is not an abstract vision. The question that
the second Citizen’s Report asks is: Can India grab this opportunity
and chart a brave new world of 100 per cent renewable quickly and
efficiently?
CENTRE FOR SCIENCE AND ENVIRONMENT

41, Tughlakabad Institutional Area, New Delhi 110 062
Phone: 91-11-40616000 • Fax: 91-11-29955879
E-mail: sales@cseindia.org • Website: www.cseindia.org

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THE STATE OF

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Research supported and funded by: Shakti Sustainable Energy Foundation

© 2019 Centre for Science and Environment

Material from this publication can be used, but with acknowledgement

Maps used in this report are indicative and not to scale.

Printed at Multi Colour Services

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00Executive Summary(01-10).indd 1 16/01/19 4:18 PM

auction volumes climbed up in 2018 following the release of auction

Issues and challenges

costs are up Hiccups in auctions and PPAs

00Executive Summary(01-10).indd 2 16/01/19 4:18 PM

• Procurement policies: Most discoms have a sizable share of contracted

Power procurement policies need to be more sophisticated, with a

• Non-implementation of policies: New regulations that have been

00Executive Summary(01-10).indd 3 16/01/19 4:18 PM

transmission and distribution charges makes them even more attractive).

Similarly, rooftop installations may lead to revenue losses for discoms.

Decentralised distribution: Not yet in vogue

00Executive Summary(01-10).indd 4 16/01/19 4:18 PM

Wind: In the sun’s shadow

The way forward

00Executive Summary(01-10).indd 5 16/01/19 4:18 PM

00Executive Summary(01-10).indd 6 16/01/19 4:18 PM

SOUPARO BANERJEE/ CSE

Mini-grids: Mini-grids have the potential to efficiently provide energy to

00Executive Summary(01-10).indd 7 16/01/19 4:18 PM

Grid of the future

00Executive Summary(01-10).indd 8 16/01/19 4:18 PM

Reforming discoms The country’s

Building storage ecosystems

00Executive Summary(01-10).indd 9 16/01/19 4:18 PM

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01The Road to 175 Gigawatt(11-22).indd 11 16/01/19 4:19 PM

Graph 1: Installed capacity by source in India

Renewable Diesel Nuclear Hydro Gas Coal

Graph 2: Generation mix over the years

Source: Compiled from Central Electricity Authority’s generation reports, http://www.cea.nic.in/monthlyarchive.html

01The Road to 175 Gigawatt(11-22).indd 12 16/01/19 4:19 PM

The geographical concentration

Renewable capacity in various states — July 2018

Source: Based on information from MNRE and state nodal agencies

Trends in renewable capacity addition

01The Road to 175 Gigawatt(11-22).indd 13 16/01/19 4:19 PM

Graph 3: Share in total capacity and generation mix

% of RE in total generation mix % of RE in total electricity capacity installed

Source: National Electricity Plan, CEA, http://erpc.gov.in/wp-content/uploads/2017/03/NEP_slides_200418.pdf

Graph 4: Annual renewable capacity addition vs yearly targets

Small hydro Biomass & waste to energy Solar Wind

Source: MNRE* as of November 2018, https://mnre.gov.in/physical-progress-achievements

01The Road to 175 Gigawatt(11-22).indd 14 16/01/19 4:19 PM

Solar capacity has increased sharply from 3 to 22 GW between 2015