In India, the expiration of some federal incentives for renewable energy last year has not put a damper on the outlook for wind and solar power.
Wind power is now cost competitive with new coal-fired generation in India, according to a report from HSBC [pdf]. Falling costs are just one reason for the increased interest in wind. For the first time, India has identified water as a scare natural resource in its most recent five-year plan. Nearly 90 percent of India’s industrial water demand comes from thermal power plants, according to the HSBC report.
The appeal of some renewables, such as wind and solar photovoltaic, is that they use far less water than coal, nuclear, or natural gas power plants. Across the globe, water stress is growing within the energy industry and power plants have to partially shut down when there isn’t enough water for cooling. In India, water shortages just before monsoon season in 2012 forced hydro generation and thermal power plants to partially close.
India needs all the power it can get. Last July, a sweeping power outage left about 700 million people without power. Outages are a daily occurrence in India, although usually not at that scale, because of a dearth of generation coupled with an outdated grid. The Central Electricity Authority estimates India has a peak deficit of 12 gigawatts.
The latest five-year plan calls for a doubling of renewable energy from the previous plan, including 15 gigawatts of wind, 10 gigawatts of solar, 2 gigawatts of small hydro and nearly 3 gigawatts of biomass. Individual Indian states have also instituted solar and wind installation targets.
Although there was some uncertainty in the renewable industry as federal incentives expired in 2012, many key wind states have raised the feed-in tariff for wind in the past year. The tariff, however, is still lower than the tariffs for new coal capacity, according to HSBC.
Solar is likely not far behind wind. The report estimates that solar could be at parity with coal in India as soon as 2016. Unlike the United States, India does not have abundant gas reserves, so the switch to gas-fired power plants from coal is unlikely on a large scale.
Solar power, however, is already cheaper than diesel generators, which power everything from homes to businesses to cell towers. The India government has mandated that 75 percent of the nation’s cell towers have to run on renewables by 2020, and mobile companies are looking at everything from solar to fuel cells to replace dirty diesel generators.
Wind and solar look more attractive with every passing year in India, but more work needs to be done on the grid infrastructure that connects new generation to the homes and businesses that need it. HSBC notes that many state utilities don’t have the money to invest in new transmission lines without which, new wind generation can't come online.
Smaller microgrids might help in area that aren’t currently served effectively by a utility. The Indian Tower and Infrastructure Providers Association already has pilot projects in place that will help it understand how telecoms could power their own cell towers using renewables, then sell additional power back to local villages.
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