2016-04-28 / Regulatory & Industry Trends
Wind vs solar energy – making the right choice
The choice between wind turbines or solar modules is never a choice of selecting a better technology at face value. Both come with their own strengths and weaknesses and both can be incredibly valuable. But choosing one, is a common question of contention among various stakeholders.
However, industry experts point out that currently, wind power generation is a step behind as developments in solar override developments in wind. Among other reasons, the delay in signing power purchase agreement and the new draft policy of re-powering the turbines below 1MW capacity, is keeping wind power developers in a dilemma. Close to 550 MW of wind generation capacity is lying idle in Maharashtra as the state has refused to sign power purchase agreement with the producers. Furthermore, the reduction of levelized tariff from 5.92 kwH to 4.78 kwH in the state of Madhya Pradesh for all the wind power projects commissioned this financial year, have made these projects unviable.
Adding to the industry woes, the new draft wind re-powering policy expects wind turbines below 1 MW of capacity to be replaced. However, the incentives offered on it are insufficient and the overall cost of re-powering is likely to be greater than the cost of setting up a green-field facility, including the cost of power substations.
Among the various schemes and incentives to promote the use of renewables in India, the government recently affirmed sanctioning of 30% capital subsidy for rooftop solar installations to residential, government, social and institutional segments. Commercial and industrial entities are excluded from this scheme, ensuring that the funds are made available to those who are genuine need of funds. The doubling of coal cess in the Union Budget 2016-17 is likely to amass INR 18000-20000 crore annually. Out of these, approximately INR 5000-8000 crore will be diverted to renewable sector, primarily solar, to fund the solar rooftop subsidies, depriving wind energy altogether.
A study by Bloomberg New Energy Finance echoed that the pace of investments of renewables in India soared to $10.9 billion in 2015 from an annual average of $8 billion over the preceding three years. Solar, leading the front, outperformed wind for the very first time in attracting capital.
|Total installed capacity (GW) March 2016
|Target by 2022 (in GW)
|Investments till 2015 (in $ billions)
*Source:-Ministry of New and Renewable Energy & Bloomberg Energy Finance
It’s time for us to refocus our efforts towards wind energy. A long term policy horizon across different states is the way forward. India already has an advantage in wind power and accounts for over 60% of the renewable energy capacity in the country. Cutting edge technology such as high capacity turbines and efficient windmill blades are all manufactured and developed indigenously. Extension of incentives like Generation Based Incentives and accelerated depreciation benefits beyond March 2017 would be a welcome step to add capacities in the wind energy sector.
Technologies such as wind and solar energy are heavily reliant on specific weather conditions. In such a situation, ‘hybrid’ offers a reasonable solution. A hybrid, in normal parlance, is a system paired with a smart grid, which effectively connects two or more forms of renewables together for a greater balance in energy supply. Countries such as Spain, Morocco, China and US have successfully implemented this notion.
In a hybrid set up, storage is vital as solar and wind energy balance each other. As renewable installed capacity grows, the grid may not be able to absorb all the power produced instantly and the need for storing the generated energy will become increasingly imperative. Storage could also be used as a spinning reserve to stabilize grid from the intermittent renewable energy. One concern for policy makers is that storage costs are high. At this moment, storage is at an inflection point seeking investments in research and development. The government must channelize its efforts under the storage mission in development rather than deployment. Furthermore, in a hybrid combination, transmission costs are optimized; a 1 MW of installed solar and wind power each at the same location can result in a third of savings.
There is a clear indication that hybrid could be one of key factor for future deployment. Remember, energy consumption can be reduced significantly through energy conservation and energy efficiency techniques, thereby having a direct bearing on emission reduction at lower cost. All of this is reason enough for us to collectively work towards conservation.
Contributed by Sunil Jain, CEO & ED, Hero Future Energies