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W E D N E S D A Y , N O V E M B E R 2 1 , 2 0 1 2

Will Solar Policy help Tamilnadu to solve its Power Crisis?

The cornerstone of the solar policy announced by the Government of Tamil Nadu on October 20 is that it has created ademand for solar power by imposing obligations on an industry that is already suffering from crippling power cuts and arecent hike in tariffs.

More tariff hikes are ahead, as the State‟s electricity generation and distribution utility, Tangedco, needs to clear out losses of around Rs 50,000 crore. And now, the industry (as well as colleges, residential schools and buildings with built-up area of 20,000 sq. m or more) will have to buy 3 per cent of their electricity consumption from solar power till December 2013 and 6per cent from January 2014. Therefore, a demand is created, as one industrialist put it, by “arm-twisting the industry.” Whatof generation?

The State‟s solar policy has various things to offer to utility -scale power projects and the rooftop ones.

If you are a utility-scale (that is, large) project developer, you could sell your power to either Tangedco and be paid a „solar‟tariff or to consumers directly. That the financial situation of Tangedco is terrible is common knowledge. It has not paid itsdues to various generators, especially wind-power producers, for well over a year. Given this situation, it is hard to believethat any bank will come forward to fund a solar project that has a power-purchase agreement with Tangedco.

Open access 

The developer then will have to sell it directly to consumers. Here is where the Tamil Nadu policy pales in comparison withthe recently announced policy of Andhra Pradesh. AP exempts a developer from wheeling and transmission charges andcross-subsidy charges and electricity duty. Tamil Nadu does not. The least the State could have done is to have followed the AP example.

In April, the State‟s regulatory commission allowed the utility to hike the long -term open-access transmission charges fromRs 2,781 a MW a day to Rs 6,483. The short-term open-access charges were raised from Rs 28.96 a unit to Rs 270.11 — nearly 10 times. And then, there are cross-subsidy charges.

Therefore, it wouldn‟t make sense for solar developers to sell power directly to consumers on the „open access.‟ That leav esthe developer with the only other choice: group captive. Form a special purpose vehicle with your customers as yourshareholders, and sell power to them. Conditions apply, though. This is what is most likely to happen in Tamil Nadu.

Now, here is where the State‟s policy distinguishes itself positively from AP‟s. The AP policy relies heavily on the renewablecertificate mechanism. The State‟s does too, but in Tamil Nadu, you can sell power at any tariff to a captive customer and yetget tradeable renewable energy certificates (RECs). By relying less on RECs, the State has reduced risk in the projects.Consumers, for sure, will have to pay more, but presumably they will be happy to do so, because they at least get power torun their plants.

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Tamil Nadu could have exempted developers from wheeling and transmission charges, and cross-subsidy charges andelectricity duty, as AP did. But the AP model conflicts with the spirit of the REC mechanism, which is, to be eligible for RECsthe generator shall not have availed itself of any other benefit. This is a legal question mark that hangs on the AP policy, andthe State has gotten rid of it.

Rooftop 

Coming to rooftop projects, the State policy promises quite attractive generation-based incentives (GBI) — Rs 2 in the first

two years, Re 1 in the next two and 50 paise in the following two — for households. Here again, the big issue is paymentsecurity. Given Tangedco‟s track record in payments, banks will be hesitant to fund the projects. 

Otherwise, the Government promises to set an example by putting up solar rooftops on all State-owned buildings.

The policy document also contains statements about encouraging solar module and cell manufacture. The discussion isacademic. Given the global glut situation and the low prices and with the prospect of prices going down further, whetheranyone will be willing to invest in manufacturing in India is a moot point.

Earmark funds 

There are two things that the Government of Tamil Nadu can do in order to make sure that the policy works.

The first is to earmark some funds from its Budget to support solar energy. Rajasthan has done this. This will ring-fencesolar expenses from the rest of Tangedco‟s problems and give tremendous confidence to lenders. If necessary, the

Government could raise tariffs by, say, 2 paise, to defray the costs.

The second is to make land available. Land is a big headache for solar projects, ask any developer. If the Tamil NaduGovernment can make available land for solar parks, the State is sure to win projects.

Finally, to lead the rooftop revolution in India, given the net metering facility is in place, the Government can bring in asystem whereby the GBI payments due to the customers are deducted from the customers‟ monthly bills. This will obviatethe need for them to run after Tangedco for their dues.

Ref: This Article was published in Hindu Business Line on 22 Oct 12

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F R I D A Y , A U G U S T 3 1 , 2 0 1 2

Solar Photovoltaic installations in India cross 1GW in India

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Solar photovoltaic installations in India have crossed the 1,000 MW or 1 gigawatt (GW) mark, data made available by theMinistry of New and Renewable Energy, show.

 As at the end of June, India had grid interactive solar PV installed capacity of 1,030.66 MW. Most of the capacities havecome in Gujarat. In addition, India has 85.21 MW of off-grid solar PV systems, counting only those that are higher than 1kW.

Renewable Energy in India crossed another milestone in the first quarter of the current year — total grid interactive

renewable energy installations crossed 25,000 MW.

During the quarter, 495 MW were added — 291.70 MW of which came from the wind sector.

This addition took the total installed capacity of renewable power plants in the country to 25,409 MW.

TARGET FOR 2012-13

The Ministry has set a target of 4,125 MW of additional green power capacity for the current financial year. This includes2,500 MW of wind power and 800 MW of solar PV.

It is worthy of note that the targeted wind power capacity is lesser than the achievement of last year, which was 3,164 MW.

However, the wind industry expects that even 2,500 MW would be a tough target to achieve, due to two reasons — removalof two key benefits of „accelerated depreciation‟ and „generation -based incentive‟, and the tough operating environment in

key States, especially in the windiest State in the country, viz., Tamil Nadu.

Ref Business Line - the Hindu

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S A T U R D A Y , J U N E 3 0 , 2 0 1 2

Record for Global Renewable Energy Investment

Solar generation surged past wind power to become the renewable energy technology of choice for global investors in 2011. 

Solar attracted nearly twice as much investment as wind, driving the renewable energy sector to yet another record-breaking year,albeit one beset with challenges for the industry, according to two new reports on renewable energy trends issued June 11 by theUnited Nations Environment Programme (UNEP) and the Renewable Energy Policy Network for the 21st Century (REN21).Global Trends in Renewable Energy Investment 2012 is the fifth edition of the UNEP report, based on data from Bloomberg NewEnergy Finance, and has become the standard reference for global clean energy investment figures.This year it shows that despite an increasingly tough competitive landscape for manufacturers, total investment in renewable power and fuels last year increased by 17% to a record $257 billion, a six-fold increase on the 2004 figure and 94% higher than the total in2007, the year before the world financial crisis. Although last year's 17% increase was significantly smaller than the 37% growth recorded in 2010, it was achieved at a time of rapidly falling prices for renewable energy equipment and severe pressure on fiscal budgets in the developed world.The REN21 Renewables 2012 Global Status Report, which has become the most frequently referenced report on renewable energymarket, industry and policy developments, notes that during 2011 renewables continued to grow strongly in all end-use sectors --power, heating and cooling and transport. Renewable sources have grown to supply 16.7 % of global energy consumption. Of that,the share provided by traditional biomass has declined slightly while the share sourced from modern renewable technologies hasrisen.In 2011, renewable energy technologies continued to expand into new markets: around 50 countries installed wind power capacity,and solar PV capacity moved rapidly into new regions and countries. Solar hot water collectors are used by more than 200 million

households as well as in many public and commercial buildings worldwide.The two publications were launched jointly by Achim Steiner, UNEP Executive Director, Mohamed El-Ashry, Chairman of REN21,Michael Liebreich, Chief Executive of Bloomberg New Energy Finance, and Professor Dr. Udo Steffens, President and CEO of theFrankfurt School of Finance & Management, host of the Frankfurt School -- UNEP Collaborating Centre for Climate & SustainableEnergy Finance.Highlights 2011- Total investment in solar power jumped 52% to $147 billion and featured booming rooftop photovoltaic (PV) installations in Italyand Germany, the rapid spread of small-scale PV to other countries from China to the UK and big investments in large-scaleconcentrating solar thermal (CSP) power projects in Spain and the US.- The United States surged back to within an inch of the top of the renewables investment rankings, with a 57% leap to $51 billion,as developers rushed to cash in on three significant incentive programs before they expired during 2011 and 2012. After leading the

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world for two years, China saw its lead over the US shrink to just $1 billion in 2011, as it recorded renewable energy investment of $52 billion, up 17%.- India's National Solar Mission helped to spur an impressive 62% increase to $12 billion, the fastest investment expansion of anylarge renewables market in the world. In Brazil, there was an 8% increase to $7 billion.- Competitive challenges intensified sharply, leading to sharp drops in prices, especially in the solar market -- a boon to buyers butnot to manufacturers, a number of whom went out of business or were forced to restructure.- Renewable power, excluding large hydro-electric, accounted for 44% of all new generating capacity added worldwide in 2011 (upfrom 34% in 2010). This accounted for 31% of actual new power generated, due to lower capacity factors for solar and wind

capacity.- Gross investment in fossil-fuel capacity in 2011 was $302 billion, compared to $237 billion for that in renewable energy capacityexcluding large hydro.- The top seven countries for renewable electricity capacity excluding large hydro -- China, the United States, Germany, Spain, Italy,India and Japan -- accounted for about 70% of total non-hydro renewable capacity worldwide. The ranking among these countrieswas quite different for non-hydro capacity on a per person basis: Germany, Spain, Italy, the US, Japan, China and India. By region,the EU was home to nearly 37% of global non-hydro renewable capacity at the end of 2011, China, India and Brazil accounted for roughly one quarter.- Renewable technologies are expanding into new markets. In 2011, around 50 countries installed wind capacity; solar PV capacityis rapidly moving into new regions and countries; interest in geothermal power has taken hold in East Africa's Rift Valley andelsewhere; interest in solar heating and cooling is on the rise in countries around the world; and the use of modern biomass for energy purposes is expanding in all regions of the globe.- In the power sector, renewables accounted for almost half of the estimated 208 gigawatts (GW) of electric capacity added globallyduring the year. Wind and solar photovoltaic (PV) accounted for almost 40% and 30% of new renewable capacity, respectively,followed by hydropower (nearly 25%). By the end of 2011, total renewable power capacity worldwide exceeded 1,360 GW, up 8%over 2010; renewables comprised more than 25% of total global power-generating capacity (estimated at 5,360 GW in 2011) andsupplied an estimated 20.3% of global electricity.

- At least 118 countries, more than half of which are developing countries, had renewable energy targets in place by early 2012, upfrom 96 one year before, although some slackening of policy support was seen in developed countries. This weakening reflectedausterity pressures, particularly in Europe, and legislative deadlock in the US Congress.- Despite all the additional investments, share prices in the renewable energy sector had a dismal 2011 in the face of overcapacity inthe solar and wind manufacturing chains and investor unease about the direction of support policies in both Europe and North America."There may be multiple reasons driving investments in renewables, from climate, energy security and the urgency to electrify ruraland urban areas in the developing world as one pathway towards eradicating poverty-whatever the drivers the strong and sustainedgrowth of the renewable energy sector is a major factor that is assisting many economies towards a transition to a low carbon,resource efficient Green Economy" says Mr. Steiner."This sends yet another strong signal of opportunity to world leaders and delegates meeting later this month at the Rio+20 Summit:namely that transforming sustainable development from patchy progress to a reality for seven billion people is achievable whenexisting technologies are combined with inspiring policies and decisive leadership," he said."It is essential to continue government policies that support and nurture the sector's growth, and to de-escalate damaging tradedisputes. Otherwise," he warned, "the low-carbon transition could weaken just at the point when exciting cost reductions are startingto transform the economics."Says Dr. El-Ashry: "Despite the continuing economic crisis in some key traditional markets, and continuing political uncertainties,more renewable energy was installed last year than ever before. Policies helped to drive renewable energy forward. Policydevelopment and implementation were stimulated by the Fukushima nuclear catastrophe in Japan, along with improvements inrenewable energy costs and technologies. As a result, renewable energy is spreading to more countries and regions of the globe.Globally there are more than 5 million jobs in renewable energy industries, and the potential for job creation continues to be a maindriver for renewable energy policies."Bumps in the road Faced with plunging green energy technology prices and economic austerity measures, many governments slashed their renewablesubsidies and allowed other support schemes to expire. The result was a succession of company failures and factory closures in2011-2012, including five significant solar manufacturers in the US and Germany. According to Mr. Steiner, "Today's over-capacity situation in some renewables sectors, particularly solar, provides the opportunity toupscale deployment in new markets at costs few thought possible only a few years ago. This is particularly attractive to the manydeveloping countries where much of the population has little or no access to modern energy services."Says Prof. Dr. Steffens: "Renewables are starting to have a very consequential impact on energy supply, but we're also witnessingmany classic symptoms of rapid sectoral growth -- big successes, painful bankruptcies, international trade disputes and more. Thisis an important moment for strategic policymaking as winners in the new economy form and solidify." Adds Mr. Liebreich: "We are entering a fascinating period, with clean energy's costs starting to be competitive with fossil fuels. The

challenge for policy-makers is to reduce support mechanisms at just the right pace -- too fast and the long-term future of the industrywill be harmed. Too slow and you do the world's taxpayers and energy consumers a great disservice.""Right now we are seeing a lot of pain on the supply-side as prices are being compressed, but it is important to remember thaninstallers, generators and consumers are benefiting. It is all part of the maturing of the sector," he says."In 1903, the United States had over 500 car companies, most of which quickly fell by the wayside even as the automobile sector grew into an industrial juggernaut. A century ago, writing off the auto industry based on the failures of weaker firms would have beenfoolish. Today, the renewable energy sector is experiencing similar growing pains as the sector consolidates."The industry's image in the investor community has been harmed by a number of high-profile supply-chain company failures, hesays. At the same time, he points out, Germany's solar installations hit a new record peak output of 22GW at the end of May --equivalent to around one quarter of the country's total power demand.Renewables: an increasingly important contributor to world energy supply In more and more countries, renewable energy represents a significant and rapidly growing share of total energy supply.

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In the United States, renewable energy (including large hydro) provided 12.7% of total domestic electricity in 2011, up from 10.2% in2010, and 9.3% in 2009. An estimated 39% of electric capacity added in 2011 was from renewable sources, mostly wind power.Renewable energy sources accounted for about 11.8% of U.S. domestic primary energy production, for the first time surpassing the11.3% from nuclear power).China again led the world in the installation of wind turbines and was the top hydropower producer and leading manufacturer of PVmodules in 2011. Wind power generation increased by more than 48.2% during the year.In the European Union, renewable energy accounted for more than 71% of total electricity generating capacity additions in 2011,with solar PV alone representing nearly half (46.7%) of new capacity coming on stream.

Germany remained the third biggest market for renewable energy investment. Renewable sources met 12.2% of total final energyconsumption and accounted for 20% of electricity consumption (up from 17.2% in 2010 and 16.4% in 2009). As the world marks the UN "International Year of Sustainable Energy for All," the REN21 Renewables 2012 Global Status Reportincludes a special focus on rural renewable energy, based on input from local experts working from around the world. Renewableenergy is seen increasingly as a means for providing millions of people with a better quality of life through access to moderncooking, heating/cooling and electricity.The impressive deployment of all renewable energy technologies combined with dramatic cost reductions and significant technologyadvances in recent years create an important opportunity for rural renewable energy development that points to a brighter future.However, further efforts will be necessary to reach the UN's outlined objectives: annual investment in the rural energy sector needsto increase more than fivefold to provide universal access to modern energy by 2030.Closing the gap with fossil fuels The price of all major renewable energy technologies continued to fall in 2011 -- to the point where they are challenging fossil-fuelsources, even before climate, health and other benefits are factored in.The dominant reason for the price declines was that manufacturer margins were compressed as the industry continued the shiftfrom a period of under-capacity a few years ago, to overcapacity now as growing demand failed to keep up with a surge in supply.The most spectacular price plunge was in PV cells, whose average price fell from $1.50 per Watt in September 2010, to $1.30 per Watt by January 2011 and $0.60 per Watt by the end of the year, according to the Bloomberg New Energy Finance Solar Price

Index. This fed into a fall in PV module prices of nearly 50% between the start of 2011 and the beginning of this year.Onshore wind turbines showed a similar, although less dramatic, trend. In 2011, prices for turbines to be delivered in the second half of 2013 were 25% lower than for devices delivered in the first half of 2009, according to the Bloomberg New Energy Finance WindTurbine Price Index.While 2011 saw significant falls in the costs of generating a MWh of power from onshore wind (down 9%), and from PV technologies(down more than 30%), the cost of electricity generated by fossil-fuel sources changed less in most parts of the world -- despite thesharp falls in US natural gas prices due to the increased use of "fracking," a hotly contested form of resource extraction.Based on current trends, it is predicted that the average onshore wind project worldwide will be fully competitive with combined-cycle gas turbine generation by 2016 even in the US, as gas prices are expected to rebound to a point where they cover the cost of extraction. At present, this is true only of a minority of wind projects, those that use the most efficient turbines in locations withsuperior wind resources.In solar, analysis suggests that the cost of producing power from rooftop PV panels for domestic use is already competitive with theretail (but not the wholesale) daytime electricity price in several countries including Germany, Denmark, Italy and Spain, as well asthe state of Hawaii.Policy environment drives development REN21's analysis found that stable renewable energy policies continue to be a driving force behind the development of green power capacity. At least 118 countries -- more than half of them in the developing world -- have now established renewable energy targets. Theseinclude shares of total primary energy, total end-use energy, electricity generation (typically 10-30%), heat supply, biofuels asshares of road transport fuels, and total installed capacities for specific technologies.Support for renewable power generation remains the most popular policy option with at least 65 countries and 27 states now havingfeed-in-tariffs (FITs).Most policy activities in 2011 involved revisions to existing FITs, at times under controversy and involving legal disputes.FIT payments vary widely among technologies and countries but are generally trending downwards, mostly due to lower technologycosts than expected.

Ref: REN21 Global Status Report

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T U E S D A Y , M A Y 2 9 , 2 0 1 2

German Solar PV Power Plants makes record production

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German solar power plants produced a world record 22 gigawatts of electricity per hour - equal to 20 nuclear power stations at full

capacity - through the midday hours on Friday and Saturday, according to reliable sources.

The German government decided to abandon nuclear power after the Fukushima nuclear disaster last year, closing eight plants

immediately and shutting down the remaining nine by 2022. They will be replaced by renewable energy sources such as wind, solar and bio-mass.

Norbert Allnoch, director of the Institute of the Renewable Energy Industry (IWR) in Muenster, said the 22 gigawatts of solar power per hour fed into the national grid on Saturday met nearly 50 percent of the nation's midday electricity needs.

"Never before anywhere has a country produced as much photovoltaic electricity," Allnoch told Reuters. "Germany came close tothe 20 gigawatt (GW) mark a few times in recent weeks. But this was the first time we made it over."

The record-breaking amount of solar power shows one of the world's leading industrial nations was able to meet a third of itselectricity needs on a work day, Friday, and nearly half on Saturday when factories and offices were closed.

Government-mandated support for renewables has helped Germany became a world leader in renewable energy and the countrygets about 20 percent of its overall annual electricity from those sources.

Germany has nearly as much installed solar power generation capacity as the rest of the world combined and gets about four percent of its overall annual electricity needs from the sun alone. It aims to cut its greenhouse gas emissions by 40 percent from1990 levels by 2020.

SUNSHINESome critics say renewable energy is not reliable enough nor is there enough capacity to power major industrial nations. ButChancellor Angela Merkel has said Germany is eager to demonstrate that is indeed possible.

The jump above the 20 GW level was due to increased capacity this year and bright sunshine nationwide.

The 22 GW per hour figure is up from about 14 GW per hour a year ago. Germany added 7.5 GW of installed power generationcapacity in 2012 and 1.8 GW more in the first quarter for a total of 26 GW capacity.

"This shows Germany is capable of meeting a large share of its electricity needs with solar power," Allnoch said. "It also showsGermany can do with fewer coal-burning power plants, gas-burning plants and nuclear plants."

 Allnoch said the data is based on information from the European Energy Exchange (EEX), a bourse based in Leipzig.

The incentives through the state-mandated "feed-in-tariff" (FIT) are not without controversy, however. The FIT is the lifeblood for theindustry until photovoltaic prices fall further to levels similar for conventional power production.

Utilities and consumer groups have complained the FIT for solar power adds about 2 cents per kilowatt/hour on top of electricity

prices in Germany that are already among the highest in the world with consumers paying about 23 cents per kw/h.German consumers pay about 4 billion euros ($5 billion) per year on top of their electricity bills for solar power, according to a 2012report by the Environment Ministry.

Critics also complain growing levels of solar power make the national grid more less stable due to fluctuations in output.

Merkel's centre-right government has tried to accelerate cuts in the FIT, which has fallen by between 15 and 30 percent per year, tonearly 40 percent this year to levels below 20 cents per kw/h. But the upper house of parliament, the Bundesrat, has blocked it.

Ref: Reuters