The document discusses India's increasing reliance on renewable energy like solar to meet its growing power demands. It notes that India faces power deficits and that renewable energy, particularly solar, can help address this since it has high potential in India given the abundant sunlight. The document outlines India's current energy mix, factors driving solar attractiveness, key solar policies and incentives at the central and state levels, and various power and non-power applications of solar energy in India.

1. Indian Power Scenario:
Increasing importance of
renewables
A Knowledgefaber Article focusing on Solar
Power in India
Written by Vipul Vohra and Sushil Rajpurohit, Engagement
Manager and Consulting Partner at Knowledgefaber
respectively. Knowledgefaber can help you at every step of
building and growing successful power generation,
transmission or distribution business
11/14/2011

2. Indian Power Scenario: Increasing importance of renewables
In this article the main objective is to understand the renewable energy scenario in India:
1. What is the current power situation in India?
2. What is the current renewable power portfolio in India?
3. What factors are responsible for attractiveness of renewable energy and solar energy generation sectors in
India?
4. Solar energy policies and incentives offered by Central and State governments in India
Research Methodology
Knowledgefaber researchers have been tracking Indian Power sector on an ongoing basis
Extensive secondary research including but not limited to company websites, journals, magazines, literature
shared by participants, web search, etc. Numerous Interviews (primary research) with key participants from
existing industry players, investors and industry experts
Indian Power situation:
Power deficits are common in India and to some extent is one of key constraint to achieve high GDP growth.
Supply is much less than demand. Power cuts are common in most parts of country and power supply is erratic and
unreliable to be least
The GDP growth of 7-9% in last 7-8 years has fueled a rapid rise in demand which has outpaced the capacity
st
addition/renovation of the power plants in India. As of 31 march, 2011 the Installed power capacity is 176 GW
with energy mix of 65% thermal, 21% hydro, 3% nuclear and 11% from renewables as also indicated in fig.1.
Capacity addition has grown at 7% CAGR from 2007-2011 but still there remains high power and peak power
deficit ranging from 9-11%.
Figure 1: India’s segment-wise installed power generation capacity 2008-2011 (GW)
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3. Indian Power Scenario: Increasing importance of renewables
Renewable portfolio
One of the interesting aspects of India’s energy mix is the relatively high penetration of renewables and this
segment has witnesses the highest growth at about 20-22% in last four years.
As of 31st March, 2011 the installed renewable energy capacity in India is ~ 21 GW. As reflected in Fig. 2 wind has
69% share, small hydro with 15% followed by Cogen at 8% at Biomass at 6%. Solar is at nascent stage with <1%. So
we can see that in India the renewable energy is heavily skewed in favour of wind although enough potential exists
for biomass and bagasse. The biggest potential we believe lies in Solar. Solar has present capacity of ~45 MW with
87% as grid connected and 13% as off grid.
Figure 2: Segment-wise break up of installed renewable power generation capacity (GW)
Attractiveness of Renewable in India
1) India has limited coal availability for power as well the quality of coal has 30-35% ash content which makes it
highly undesirable. Also, coal policies are controlled by government and establishing sufficient coal linkages is
a challenge for the power generators
2) In a bid to secure supplies to high grade coals, many Indian power generating players have to make coal mine
acquisitions abroad resulting in added costs. These players should look at investing in renewable energy
generation to diversify their operations and reduce dependence upon thermal energy alone.
3) Limited domestic production of oil and gas in India restricts its use in power plant
4) Increasing thrust from Indian top leaders on sustainable growth and clean technology
5) Large thermal plants require huge tracts of land adjacent to a water source. Availability of such land and land
acquisition are the major challenges.
The above mentioned issues does indicate the importance of renewable energy and particularly solar to meet the
rising demand of power and also to provide the energy security to India.
Potential and attractiveness of Solar in India
 India receives solar energy equivalent to - 5,000 trillion kWh/year
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4. Indian Power Scenario: Increasing importance of renewables
 Daily average solar energy incident varies from 4 -7 kWh per sqm with about 2,500–3,000 sunshine hrs/year
 High solar yield
 Attractive Feed in tariffs and solar policies(National solar mission and various state solar policies)
 Tremendous opportunity for offgrid solution in India
 Solar In India has potential to reach 20-30 GW by 2020
Figure 3: India’s segment-wise installed power generation capacity 2008-2011 (GW)
Solar policies/incentives
Indian solar policies can easily be divided into two main categories
A) Central level
B) State level
At central level National solar mission(NSM) is the most attractive solar policy with target of adding 20 GW of Solar
by 2022.The intent of this policy is to create a environment for a self-sustaining business models for utility scale
solar power plants and rapid diffusion of solar technologies in India. In long term, promote India as a leader in solar
industry through indigenous R&D, local manufacturing hub and innovative solar solutions
Highly attractive feed in tariff of INR 18-19 Kwh of PV and INR 12-14 kWh for solar thermal has been announced
and also a solar Renewable purchase obligation of 0.25% to start with is also mandated.
NSM has created lot of excitement among domestic and international solar community to look at India as one of
the potential solar hub. Already plants of ~ 300-400 MW are under various stages of construction/approval
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5. Indian Power Scenario: Increasing importance of renewables
At state level the two states of Rajasthan and Gujarat have taken the initiatives to launch state specific solar
polices with attractive tariffs and incentives. Both the states are attracting tremendous investor interest. 500+ MW
of solar projects are under various stages of approval/construction as per state policies
Figure 4: Central and state level solar energy policies in India
With fast rising fuel costs and depleting resources, solar energy will play a vital role in ensuring energy security for
the country. Huge potential of solar energy in India along with investor friendly policies present an attractive
opportunity for investors to enter this largely untapped space and achieve high rate of growth
Solar application in India
India provides varied opportunities for the application of solar technology. Application ranges from power
generation in grid and off grid way to non power application of lighting, water heating and cooking food, irrigation
pumps etc.
Figure 5: Power and non-power applications of solar energy in India
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